UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ~~Quarterly Period Ended~~quarterly period ended February ~~28,~~29, ~~2023~~2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ~~Transition Period~~transition period from _________ to _________

Commission file number: 000-50612

UNIQUE LOGISTICS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Nevada

01-0721929

(State or other ~~Jurisdiction~~jurisdiction

of ~~Incorporation~~incorporation or ~~Organization)~~organization)

(I.R.S. Employer

Identification No.)

~~154-09 146th Ave~~

154-09 146^th Ave, Jamaica, NY

11434

(Address of ~~Principal Executive Offices)~~principal executive offices)

(Zip Code)

678-365-6004

~~(Registrant’s~~(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Act:

Title of each class		Trading symbol(s)		Name of exchange on which registered
None		None		None

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. Yes ☒ No ☐

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). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or ~~a small reporting~~an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” a “smaller reporting ~~company”~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-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 ~~7(a)(2)(B)~~13(a) of the ~~Securities~~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 No☒ ☒

As of ~~April 19, 2023,~~May 2, 2024, there were 799,141,770 shares of the registrant’s common stock outstanding.

UNIQUE LOGISTICS INTERNATIONAL, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED FEBRUARY ~~28, 2023~~29, 2024

TABLE OF CONTENTS

		Page

PART I. FINANCIAL INFORMATION		F-1

ITEM 1.	Financial Statements	F-1

	Condensed Consolidated Balance Sheets as of February 29, 2024 (unaudited) and May 31, 2023	F-1

	Condensed Consolidated Statements of Operations for the Three and Nine Months ended February 29, 2024 and February 28, 2023 (unaudited)	F-2

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months ended February 29, 2024 and February 28, 2023 (unaudited)	~~F-3~~F-4

	Condensed Consolidated Statements of Cash Flows for the Nine Months ended February 29, 2024 and February 28, 2023 (unaudited)	F-5

	Notes to Condensed Consolidated Financial Statements (unaudited)	F-6

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3

ITEM 3.	Quantitative and Qualitative Disclosures ~~About~~about Market Risk	913

ITEM 4.	Controls and Procedures	913

PART II. OTHER INFORMATION		1014

ITEM 1.	Legal Proceedings	1014

ITEM 1A.	Risk Factors	1014

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1014

ITEM 3.	Defaults Upon Senior Securities	1014

ITEM 4.	Mine Safety Disclosures	1014

ITEM 5.	Other Information	1014

ITEM 6.	Exhibits	1115

SIGNATURES		1416

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNIQUE LOGISTICS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

					February 29, 2024			May 31, 2023
	February 28, 2023		May 31, 2022		(Unaudited)			(Audited)
	(Unaudited)		(Audited)
ASSETS
Current Assets:
Cash and cash equivalents	$	14,402,666	$	1,422,393	$	6,743,144		$	6,744,238
Accounts receivable, net		40,438,290		74,746,036		42,059,013			41,402,435
Contract assets		3,859,562		30,970,581		3,047,570			2,886,779
Other current assets and prepaids		3,769,572		1,404,021		5,374,732			9,293,533
Total current assets		62,470,090		108,543,031		57,224,459			60,326,985

Property and equipment, net		1,691,248		188,889		822,230			609,785

Other long-term assets:
Other noncurrent assets:
Goodwill		8,449,454		4,463,129		20,516,018			20,516,018
Identifiable intangible assets, net		13,322,344		7,337,704
Intangible assets, net						11,571,589			12,865,093
Equity-method investments		10,861,111		-		3,449,163			3,381,683
Operating lease right-of-use assets, net		10,931,331		2,408,098		9,395,501			10,269,516
Deferred tax asset, net		1,193,610		942,748		1,978,178			-
Deferred offering cost						-			2,419,976
Other noncurrent assets		2,021,926		1,028,336		670,707			1,133,674
Total other long-term assets		46,779,776		16,180,015
Total other noncurrent assets						47,581,156			50,585,960
Total assets	$	110,941,114	$	124,911,935	$	105,627,845		$	111,522,730

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	17,462,662	$	49,028,862	$	27,712,571		$	25,132,388
Accrued expenses and current liabilities		10,178,857		5,666,159		6,372,823			8,594,947
Accrued freight		8,056,941		9,240,650		2,225,313			3,489,957
Contract Liabilities		358,365		468,209
Revolving credit facility		9,882,529		38,141,451		11,852,663			8,050,227
Current portion of notes payable		17,804,500		608,333		971,081			-
Current portion of noncurrent debt due to related parties		325,478		301,308
Current portion of notes payable to related parties						150,655			4,801,310
Current portion of notes payable						150,655			4,801,310
Current portion of operating lease liability		2,422,306		912,618		2,676,904			2,379,774
Other current liabilities		5,710,057		-
Total current liabilities		72,201,695		104,367,590		51,962,010			52,448,603
Noncurrent liabilities:
Noncurrent portion of notes payable		1,500,000		-
Noncurrent debt due to related parties, net of current portion		150,655		397,968

Noncurrent liabilities
Notes payable						11,028,919			4,000,000
Notes payable to related parties, net of current portion						10,100,000			8,750,000
Notes payable						10,100,000			8,750,000
Operating lease liability, net of current portion						7,194,929			8,212,445
Derivative liabilities		11,628,383		12,437,994		7,439,695			11,558,261
Operating lease liability, net of current portion		8,813,569		1,593,873
Deferred tax liability, net						-			4,405,442
Other noncurrent liabilities		-		282,666		11,558,135			4,552,346
Total noncurrent liabilities		22,092,607		14,712,501		47,321,678			41,478,494

Total liabilities		94,294,302		119,080,091		99,283,688			93,927,097

Commitments and contingencies		-		-
Commitments and contingencies (Note 6)						-			-

Stockholders’ Equity:
Preferred Stock, $0.001 par value: 5,000,000 shares authorized
Series A Convertible Preferred stock, $0.001 par value; 120,065 and 130,000, issued and outstanding as of February 28, 2023, and May 31, 2022, respectively. Liquidation preference $120 on February 28, 2023		120		130
Series B Convertible Preferred stock, $0.001 par value; 820,800 shares issued and outstanding as of February 28, 2023, and May 31, 2022, respectively. Liquidation preference $821 on February 28, 2023		821		821
Series C Convertible Preferred stock, $0.001 par value; 195 shares, issued and outstanding as of February 28, 2023, and May 31, 2022, respectively. Liquidation preference $18.5 million on February 28, 2023		-		-
Series D Convertible Preferred stock, $0.001 par value; 180 and 187, issued and outstanding as of February 28, 2023, and May 31, 2022, respectively. Liquidation preference $17.3 million on February 28, 2023		-		-
Preferred Stock, $.001 par value: 5,000,000 shares authorized

Series A Convertible Preferred stock, $0.001 par value; 120,065 issued and outstanding as of February 29, 2024 and May 31, 2023, respectively. Liquidation preference $120 on February 29, 2024						120			120
Series B Convertible Preferred stock, $0.001 par value; 820,800 issued and outstanding as of February 29, 2024 and May 31, 2023, respectively. Liquidation preference of $821 on February 29, 2024						821			821
Series C Convertible Preferred stock, $0.001 par value; 195, issued and outstanding as of February 29, 2024 and May 31, 2023, respectively. Liquidation preference $7.6 million on February 29, 2024						-			-
Series D Convertible Preferred stock, $0.001 par value; 180 issued and outstanding as of February 29, 2024 and May 31, 2023, respectively. Liquidation preference $7.1 million on February 29, 2024						-			-
Preferred stock, value						-			-

Common stock $0.001 par value; 800,000,000 shares authorized, 799,141,770 and 687,196,478 common shares issued and outstanding as of February 28, 2023, and May 31, 2022, respectively.		799,143		687,197

Common stock, $0.001 par value; 800,000,000 shares authorized; 799,141,770 shares issued and outstanding as of February 29, 2024 and May 31, 2023, respectively.						799,142			799,142
Additional paid-in capital		180,220		292,155		180,220			180,220
Accumulated other comprehensive income						(218,547	)		3,258
Retained earnings		12,107,752		4,851,541		1,976,325			13,066,109
Total Stockholders’ equity attributable to registrant		13,088,055		5,831,844
Total Stockholders’ Equity attributable to common shareholder						2,738,081			14,049,670
Equity attributable to noncontrolling interests		3,558,757		-		3,606,076			3,545,963
Total Stockholder’s Equity		16,646,812		5,831,844
Total Stockholders’ Equity						6,344,157			17,595,633
Total Liabilities and Stockholders’ Equity	$	110,941,114	$	124,911,935	$	105,627,845		$	111,522,730

See notes accompanying condensed consolidated financial statements.

F-1

UNIQUE LOGISTICS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATION

(Unaudited)

	For the Three Months Ended February 28, 2023			For the Three Months Ended February 28, 2022			For the Nine Months Ended February 28, 2023			For the Nine Months Ended February 28, 2022			For the Three Months Ended February 29, 2024			For the Three Months Ended February 28, 2023			For the Nine Months Ended February 29, 2024			For the Nine Months Ended February 28, 2023
Revenues:
Airfreight services	$	13,206,112			127,787,167		$	64,721,816		$	455,020,012		$	31,672,402		$	13,206,112		$	87,102,162		$	64,721,816
Ocean freight and ocean services		23,106,949			104,379,472			159,292,026			343,102,200			27,543,642			23,106,949			74,933,392			159,292,026
Contract logistics		755,034			725,932			2,499,459			2,659,652			579,675			755,034			1,892,954			2,499,459
Customs brokerage and other services		12,559,407			17,543,324			48,460,306			44,856,580			8,034,666			12,559,407			28,612,414			48,460,306
Total revenues		49,627,502			250,435,895			274,973,607			845,638,444			67,830,385			49,627,502			192,540,922			274,973,607

Equity method earnings														224,854			-			675,606			-

Costs and operating expenses:
Airfreight services		11,964,314			127,220,095			59,465,104			447,865,096			29,076,358			11,964,314			81,374,442			59,465,104
Ocean freight and ocean services		19,722,259			99,620,036			142,806,034			323,381,733			23,999,410			19,722,259			62,964,504			142,806,034
Contract logistics		215,245			459,492			846,226			1,529,318			126,523			215,245			507,326			846,226
Customs brokerage and other services		11,397,398			16,011,938			44,773,324			41,330,633			6,346,786			11,397,398			24,263,573			44,773,324
Salaries and related costs		3,076,221			2,551,481			10,036,200			8,120,799			5,529,773			3,076,221			17,293,553			10,036,200
Professional fees		39,082			190,765			1,213,807			669,091			666,850			39,082			2,299,312			1,213,807
Rent and occupancy		883,681			508,621			2,026,363			1,478,600			1,176,612			883,681			3,382,602			2,026,363
Selling and promotion		1,471,236			899,097			2,033,668			4,591,715			609,751			1,471,236			1,888,439			2,033,668
Depreciation and amortization		203,390			196,347			606,030			585,019			752,750			203,390			2,203,093			606,030
Foreign exchange transactions, net														26,858			-			(267,209	)		-
Other		323,747			524,933			993,508			1,975,000			282,871			323,747			948,402			993,508
Total costs and operating expenses		49,296,573			248,182,805			264,800,264			831,527,004			68,594,542			49,296,573			196,858,037			264,800,264

Income from operations		330,929			2,253,090			10,173,343			14,111,440
(Loss) income from operations														(539,303	)		330,929			(3,641,509	)		10,173,343

Other income (expenses)
Other (expenses) income
Interest expense		(546,791	)		(1,395,396	)		(2,876,776	)		(4,566,876	)		(1,407,449	)		(546,791	)		(3,823,822	)		(2,876,776	)
Amortization of debt discount		-			-			-			(776,515	)
Loss on extinguishment of convertible notes payable		-			(1,344,087	)		-			(564,037	)
Gain on forgiveness of promissory note		-			-			-			358,236
Change in fair value of derivative liabilities		64,955			(4,275,986	)		809,611			(4,275,986	)		4,300,429			64,955			4,118,566			809,611
Other Income		-			60,000			-			60,000
SPAC merger termination cost														(10,415,816	)		-			(10,415,816	)		-
Uplist termination cost														(3,054,514	)		-			(3,054,514	)		-
Total other (expenses) income														(10,577,350	)		(481,836	)		(13,175,586	)		(2,067,165	)

Total other income (expenses)		(481,836	)		(6,955,469	)		(2,067,165	)		(9,765,178	)
Net (loss) income before income taxes														(11,116,653	)		(150,907	)		(16,817,095	)		8,106,178

Net income (loss) before income taxes		(150,907	)		(4,702,379	)		8,106,178			4,346,262
Income tax (benefit) expense														(5,268,793	)		(814,080	)		(5,787,424	)		849,967

Income tax (credit) expense		(814,080	)		228,207			849,967			2,765,207
Net (loss) income														(5,847,860	)		663,173			(11,029,671	)		7,256,211

Net income (loss)		663,173			(4,930,586	)		7,256,211			1,581,055
Noncontrolling interest														(114,538	)		-			(60,113	)		-

Deemed Dividend		-			(4,565,725	)		-			(4,565,725	)
Net income (loss) available to common shareholders	$	663,173		$	(9,496,311	)	$	7,256,211		$	(2,984,670	)
Net income per common share
Net (loss) income attributable to for common shareholders													$	(5,962,398	)	$	663,173		$	(11,089,784	)	$	7,256,211

Net (loss) income available for common shareholders per common share
– basic	$	-		$	(0.01	)	$	0.01		$	(0.01	)	$	(0.01	)	$	-		$	(0.01	)	$	0.01
– diluted	$	-		$	(0.01	)	$	-		$	(0.01	)	$	(0.01	)	$	-		$	(0.01	)	$	-

Weighted average common shares outstanding
– basic		799,141,770			655,781,078			780,768,778			582,680,746			799,141,770			799,141,770			799,141,770			780,768,778
– diluted		9,677,967,424			655,781,078			9,659,594,432			582,680,746			799,141,770			9,677,967,424			799,141,770			9,659,594,432

See notes to accompanying condensed consolidated financial statements.

F-2

UNIQUE LOGISTICS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

For the Three For the Three
Months Ended Months Ended
February 29, 2024 February 28, 2023
Net (loss) income $ (5,847,860 ) $ 663,173
Other comprehensive income (OCI), net of tax:
Foreign currency translation adjustments 21,432 -
OCI tax effect - -
Total comprehensive (loss) income (5,826,428 ) 663,173
Net loss attributable to noncontrolling interest 114,538 -
Comprehensive (loss) income attributable to common shareholder $ (5,940,966 ) $ 663,173
For the Nine For the Nine
Months Ended Months Ended
February 28, 2023 February 28, 2023
Net (loss) income $ (11,029,671 ) $ 7,256,211
Other comprehensive income, net of tax:
Foreign currency translation adjustments (236,674 ) -
OCI tax effect 14,869 -
Total comprehensive (loss) income (11,251,476 ) 7,256,211
Net loss attributable to noncontrolling interest 60,113 -
Comprehensive (loss) income attributable to common shareholder $ (11,311,589 ) $ 7,256,211
F-3
UNIQUE LOGISTICS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
~~(unaudited)~~For the Three and Nine Months Ended February 29, 2024

Series A
Preferred Stock

Series B
Preferred Stock

Series C
Preferred Stock

Series D
Preferred Stock
Common Stock
Additional
Paid in

Accumulated
Comprehensive
Retained
Total
Stockholders’
equity
attributable
to common

Non-
Controlling

Total
Stockholders

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount capital income earning stockholder Interest Equity

Balance, June 1, 2023 120,065 $ 120 820,800 $ 821 195 $          - 180 $       - 799,141,770 $ 799,142 $ 180,220 $ 3,258 $ 13,066,109 $ 14,049,670 $ 3,545,963 $ 17,595,633

Other comprehensive income (loss), net of tax - - - - - - - - - - - (166,750 ) - (166,750 ) - (166,750 )

Net loss - - - - - - - - - - - - (2,230,651 ) (2,230,651 ) (80,477 ) (2,311,128 )

Balance, August 31, 2023 120,065 120 820,800 821 195 - 180 - 799,141,770 799,142 180,220 (163,493 ) 10,835,458 11,652,269 3,465,486 15,117,755
Other comprehensive income (loss), net of tax - - - - - - - - - - - (76,487 ) - (76,487 ) - (76,487 )

Net loss - - - - - - - - - - - - (2,896,735 ) (2,896,735 ) 26,052 (2,870,683 )
Balance, November 30, 2023 120,065 120 820,800 821 195 - 180 - 799,141,770 $ 799,142 180,220 (239,979 ) 7,938,723 8,679,047 3,491,538 12,170,585
Other comprehensive income (loss), net of tax - - - - - - - - - - - 21,432 - 21,432 - 21,432

Net loss - - - - - - - - - - - - (5,962,398 ) (5,962,398 ) 114,538 (5,847,860 )
Balance, February 29, 2024 120,065 $ 120 820,800 $ 821 195 $ - 180 $ - 799,141,770 $ 799,142 $ 180,220 $ (218,547 ) $ 1,976,325 $ 2,738,081 3,606,076 $ 6,344,157

For the Three and Nine Months Ended February 28, 2023
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount capital Earning Equity Interest (1) Total
Series A Preferred Stock Series B Preferred Stock Series C Preferred Stock Series D Preferred Stock Common Stock Additional Paid in Retained Total Stockholders’ equity attributable
Non-
Controlling
Total Stockholders
Series A
Preferred Stock

Series B
Preferred Stock

Series C
Preferred Stock

Series D
Preferred Stock
Common Stock
Additional
Paid in
Retained
Total
Stockholders’
equity
attributable

Non-
Controlling

Total
Stockholders

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount capital earning to registrant Interest(1) Equity Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount capital earning to registrant Interest(1) Equity
Balance, May 31 2022 130,000 $ 130 820,800 $ 821 195 $ - 187 $ - 687,196,478 $ 687,197 $ 292,155 $ 4,851,541 $ 5,831,844 $ - $ 5,831,844 130,000 $ 130 820,800 $ 821 195 $          - 187 $         - 687,196,478 $ 687,197 $ 292,155 $ 4,851,541 $ 5,831,844 $ - $ 5,831,844

Conversion of Preferred A to Common Stock (9,935 ) (10 ) - - - - - - 67,963,732 67,964 (67,954 ) - - - - (9,935 ) (10 ) - - - - - - 67,963,732 67,964 (67,954 ) - - - -

Conversion of Preferred D to Common Stock - - - - - - (7 ) - 43,981,560 43,981 (43,981 ) - - - - - - - - - - (7 ) - 43,981,560 43,981 (43,981 ) - - - -

Net income - - - - - - - - - - - 3,321,341 3,321,341
-

3,321,341
- - - - - - - - - - - 3,321,341 3,321,341 - 3,321,341

Balance, August 31, 2022 120,065 120 820,800 821 195 - 180 - 799,141,770 799,142 180,220 8,172,882 9,153,185 - 9,153,185 120,065 120 820,800 821 195 - 180 - 799,141,770 799,142 180,220 8,172,882 9,153,185 - 9,153,185

Net income - - - - - - - - - - - 3,271,697 3,271,697 -
3,271,697
- - - - - - - - - - - 3,271,697 3,271,697 - 3,271,697

Balance, November 30, 2022 120,065 120 820,800 821 195 - 180 - 799,141,770 799,142 180,220 11,444,579 12,424,882 - 12,424,882 120,065 120 820,800 821 195 - 180 - 799,141,770 799,142 180,220 11,444,579 12,424,882 - 12,424,882
Balance 120,065 120 820,800 821 195 - 180 - 799,141,770 799,142 180,220 11,444,579 12,424,882 - 12,424,882

Recognition of non-controlling interest upon acquisition - - - - - - - - - - - - - 3,558,757 3,558,757 - - - - - - - - - - - - - 3,558,757 3,558,757

Net income - - - - - - - - - - - 663,173 663,173 - 663,173 - - - - - - - - - - - 663,173 663,173 - 663,173
Net income (loss) - - - - - - - - - - - 663,173 663,173 - 663,173

Balance, February 28, 2023 120,065 $ 120 820,800 $ 821 195 $ - 180 $ - 799,141,770 $ 799,142 $ 180,220 $ 12,107,752 $
13,088,055
$ 3,558,757 $ 16,646,812 120,065 $ 120 820,800 $ 821 195 $ - 180 $ - 799,141,770 $ 799,142 $ 180,220 $ 12,107,752 $ 13,088,055 $ 3,558,757 $ 16,646,812
Balance 120,065 $ 120 820,800 $ 821 195 $ - 180 $ - 799,141,770 $ 799,142 $ 180,220 $ 12,107,752 $ 13,088,055 $ 3,558,757 $ 16,646,812
~~(1)~~ ~~The net income(loss) attributable to the non-controlling interest for the period from the date of acquisition of February 21, 2023 to February 28, 2023 was not material.~~
See notes to accompanying condensed consolidated financial statements.
~~For the Three and Nine Months Ended February 28, 2022~~
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Earnings Total

Series A
Preferred Stock

Series B
Preferred Stock

Series C
Preferred Stock

Series D
Preferred Stock
Common Stock
Additional
Paid-in
Retained
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Earnings Total
Balance, June 1, 2021 130,000 $ 130 840,000 $ 840 - $ - - - 393,742,663 $ 393,743 $ 4,906,384 $ 1,316,987 $ 6,618,084

Conversion of Preferred B to Common Stock - - (19,200 ) (19 ) - - - - 125,692,224 125,692 (125,673 ) - -

Issuance of Common Stock for the conversion of notes and accrued interest - - - - - - - - 83,811,872 83,812 66,746 - 150,558

Net income - - - - - - - - - - - 2,023,416 2,023,416

Balance, August 31, 2021 130,000 $ 130 820,800 $ 821 - $ - - $ - 603,246,759 $ 603,247 $ 4,847,457 $ 3,340,403 $ 8,792,058

Issuance of Common Stock for the conversion of notes and accrued interest - - - - - - - - 52,534,319 52,534 41,838 - 94,372

Net income - - - - - - - - - - - 4,488,225 4,488,225

Balance, November 30, 2021 130,000 $ 130 820,800 $ 821 - - - - 655,781,078 $ 655,782 $ 4,889,295 $ 7,828,628 $ 13,374,656
Beginning balance 130,000 $ 130 820,800 $ 821 - - - - 655,781,078 $ 655,782 $ 4,889,295 $ 7,828,628 $ 13,374,656
Conversion of debt to preferred C and D 195 - 192 - - - - - -

Deemed dividend - - - - - - - - - - (4,565,725 ) - (4,565,725 )

Net income - - - - - - (4,930,586 ) (4,930,586 )
Balance, February 28, 2022 130,000 $ 130 820,800 $ 821 195 $   - 192 $   - 655,781,078 $ 655,782 323,570 2,898,042 3,878,345
Ending balance 130,000 $ 130 820,800 $ 821 195 $   - 192 $   - 655,781,078 $ 655,782 323,570 2,898,042 3,878,345
F-4
~~See notes to accompanying condensed consolidated financial statements.~~
UNIQUE LOGISTICS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

For the Nine
Months Ended
February 28, 2023

For the Nine
Months Ended
February 28, 2022

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,256,211 $ 1,581,055
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 606,030 585,019
Amortization of debt discount - 776,515
Amortization of right of use assets 1,269,299 1,103,649
Change in fair value of derivative liability (809,611 ) 4,275,986
Bad debt expense - 850,000
Gain on forgiveness of note payable - (358,236 )
Loss on extinguishment of convertible notes payable - 564,037
Change in deferred tax asset (261,118 ) 99,000
Accretion of consulting agreement (282,666 ) (212,004 )
Changes in operating assets and liabilities:
Accounts receivable 58,562,998 (82,890,241 )
Contract assets 27,111,019 (12,706,657 )
Factoring reserve - 7,593,665
Other prepaid expenses and current assets (2,716,596 ) 256,716
Deposits and other assets (1,533,533 ) (20,000 )
Accounts payable (44,314,785 ) 18,807,393
Accrued expenses and other current liabilities (9,511,815 ) 2,962,457
Accrued freight (1,183,709 ) 5,397,339
Contract liabilities (109,844 ) 10,403,335
Operating lease liability (1,049,118 ) (1,098,769 )
Net Cash Provided by (Used in) Operating Activities 33,032,762 (42,029,741 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment
(94,900
)
(54,474
)
Acquisitions of businesses, net of cash acquired 8,828,309 -
Net Cash Used in Investing Activities 8,733,409 (54,474 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving credit facility, net (28,258,922 ) 43,888,787
Proceeds from notes payable - 2,000,000
Repayments of notes payable (303,833 ) (2,821,664 )
Repayments of debt due to related parties (223,143 ) (239,924 )
Net Cash (Used in) Provided by Financing Activities (28,785,898 ) 42,827,199

Net change in cash and cash equivalents 12,980,273 742,984

Cash and cash equivalents - Beginning of Period 1,422,393 252,615
Cash and cash equivalents - End of Period $ 14,402,666 $ 995,598
SUPPLEMENTARY CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes $ 1,932,100 $ 2,375,900
Interest $ 2,571,748 $ 4,072,366
Non-cash transactions:
Right-of-use assets obtained in exchange for lease liabilities $ 8,897,639 $ 1,098,769
Non-cash consideration paid in business acquisition (Note 2) $
25,250,000
$
-

Conversion of Series B Preferred to Common Stock $ - $ 125,673
Issuance of common stock for the conversion of principal net of accrued interest capitalized to principal to Notes Payable $ - $ 244,931
Reduction of debt due to exchange of convertible Notes for Preferred Stock Series C&D $ - $ 3,861,162

For the
Nine Months Ended
February 29, 2024

For the
Nine Months Ended
February 28, 2023

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (11,029,671 ) $ 7,256,211
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization 2,203,093 606,030
Bad debt recovery (1,203,978 ) -
Amortization of right of use assets 2,144,717 1,269,299
Equity method earnings (675,606 ) -
Change in net deferred tax provision (6,838,466 ) (261,118 )
Change in fair value of derivative liabilities (4,118,566 ) (809,611 )
Accretion of consulting agreement - (282,666 )
Uplist termination cost previously deferred 2,419,976 -
Changes in operating assets and liabilities:
Accounts receivable 547,400 58,562,998
Contract assets (160,791 ) 27,111,019
Prepaid expenses and current assets 3,918,801 (2,716,596 )
Other noncurrent assets 462,967 (1,533,533 )
Accounts payable 3,035,028 (44,314,785 )
Accrued expenses and other liabilities 4,783,665 (9,511,815 )
Accrued freight (1,264,644 ) (1,183,709 )
Contract liabilities - (109,844 )
Operating lease liability (1,991,088 ) (1,049,118 )
Net Cash (Used in) Provided by Operating Activities (7,767,163 ) 33,032,762
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,122,034 ) (94,900 )
Dividends received from equity method investments 608,127 8,828,309
Net Cash (Used in) Provided by Investing Activities (513,907 ) 8,733,409
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from notes payable 8,000,000 (303,833 )
Repayments of debt due to related parties (3,300,655 ) (223,143 )
Borrowing (repayments) line of credit, net 3,802,436 (28,258,922 )
Net Cash Provided by (Used in) Financing Activities 8,501,781 (28,785,898 )

Difference on the effect of exchange rate on cash and equivalents (221,805 ) -

Net change in cash and cash equivalents (1,094 ) 12,980,273

Cash and cash equivalents - Beginning of period 6,744,238 1,422,393
Cash and cash equivalents - End of period $ 6,743,144 $ 14,402,666
SUPPLEMENTARY CASH FLOW INFORMATION:
Cash Paid During the period for:
Income taxes $ 1,013,900 $ 1,932,100
Interest $ 3,088,765 $ 2,571,748
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Operating lease asset and liability additions $ 1,270,702 $ 8,897,639
Non-cash consideration paid in business acquisition $ - $ 25,250,000

~~See notes to accompanying condensed consolidated financial statements.~~
F-5

UNIQUE LOGISTICS INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
February ~~28, 2023~~29, 2024

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Unique Logistics International, Inc. and its subsidiaries (the “Company” or “Unique”) is a non-asset-based provider of global logistics and freight forwarding ~~company.~~services operating through a worldwide network of offices and exclusive or non-exclusive agents. The Company’s customers include retailers and wholesalers, electronics, high technology, industrial and manufacturing companies around the world. The Company provides a range of international logistics services that enable its customers to outsource sections of their supply chain process. This range of services can be categorized as follows:

● Air Freight
● Ocean Freight
● Customs Brokerage and Compliance
● Warehousing and Distribution
● Order Management

Basis of Presentation
These condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include all accounts of the Company and its majority owned subsidiaries stated in U.S. dollars, the Company’s functional currency. For subsidiaries operating outside the U.S., the financial information will be accounted for on a one-month lag. Substantially all unremitted earnings of international subsidiaries are free of legal and contractual restrictions. All intercompany transactions and balances have been eliminated in the condensed consolidated financial statements.

The unaudited interim financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. The results reported in these interim condensed consolidated financial statements should not be regarded as necessary indicative of results that may be expected for an entire fiscal year. This report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended May 31, ~~2022.~~2023. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The condensed consolidated balance sheet on May 31, ~~2022~~2023 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

~~Principles of Consolidation~~Liquidity

The accompanying condensed consolidated financial statements ~~of the Company include the accounts of the Company and its majority owned subsidiaries stated in U.S. dollars, the Company’s functional currency. All intercompany transactions and balances~~ have been ~~eliminated~~prepared on a going concern basis. Substantial doubt about an entity’s ability to continue as a going concern exists when conditions and events, considered in the ~~condensed consolidated~~aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial ~~statements.~~statements are issued.

The Company’s working capital was $~~Acquisitions~~5.3 million and $7.9 million as of February 29, 2024 and May 31, 2023, respectively. The Company maintains its operating line of credit with TBK Bank, SSB, and on July 20, 2023 the Company entered into an agreement with TBK Bank to renew the TBK line of credit with a credit limit of up to $25.0 million. The Company has experienced negative operating cash flows during the nine months ended February 29, 2024 due to adverse market conditions. The Company relied heavily on its cash collections, cash reserves, dividends received from the ULHK Entities, new loans, and the use of its operating line of credit. The funds available under the current TBK line of credit are sufficient to provide the Company with the cash required to support its ongoing operations until market conditions improve.

While the Company continues to execute its strategic plan and grow its customer base, management is focused on managing cash and monitoring liquidity position. Many of the aspects of the liquidity plan involve management’s judgments and estimates that include factors that could be beyond our control and actual results could differ from our estimates. These ~~condensed~~and other factors could cause the strategic plan to be unsuccessful, which could have a material adverse effect on our operating results, financial condition, and liquidity. Based on our evaluation of the Company’s projected cash flows and business performance as of and subsequent to February 29, 2024, management has concluded that the Company’s current cash and cash availability under the TBK Facility would be sufficient to fund its planned operations for at least one year from the date the consolidated financial statements include the operations of acquired businesses from the date of the acquisitions. The decision of whether to consolidate an entity for financial reporting purposes requires consideration of majority voting interests, as well as effective economic or other control over the entity.
We account for acquired businesses that we control using the acquisition method of accounting, which requires, among other things, that most assets acquired, and liabilities assumed be recognized at their estimated fair values as of the acquisition date. Transaction costs are expensed as incurred. Any excess of the consideration transferred over the assigned values of the net assets acquired is recorded as goodwill.
Contingent consideration in a business combination is included as part of the contingent liability and is recognized at fair value as of the acquisition date. Fair value is generally estimated by using a probability-weighted discounted cash flow approach. Any liability resulting from contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved. These changes in fair value are recognized in earnings.
For equity-method investments in share capital of the subsidiaries where share interest acquired is less than 50%, but we have significant influence over the financial and operating policies of the investee, we use the equity method of accounting. Under the equity-method, we record our share of the investee’s income and expenses in income from operation and any share of the earnings and loss would be recorded against investment reduced by cash dividends received. The initial excess of the cost of the investment over our share of the underlying equity in the net assets of the investee as of the acquisition date is allocated to the identifiable assets and liabilities of the investee, with any remaining excess amount allocated to goodwill. Such investments are initially recorded at cost, which is the fair value of consideration paid and typically does not include contingent consideration. For equity-method investments, an impairment charge is recorded only if and when a decline in fair value is determined to be other-than-temporary.were issued.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates.

F-6

Significant estimates inherent in the preparation of the condensed consolidated financial statements include determinations of the useful lives and expected future cash flows of long-lived assets, including intangibles, valuation of assets and liabilities acquired in business combinations, and estimates and assumptions in valuation of debt and equity instruments, including derivative liabilities. In addition, the Company makes significant judgments to recognize revenue – see policy note “Revenue Recognition” below.
~~Foreign Currency Translation~~
For most of our international operations conducted by the subsidiaries operating outside the U.S, local currencies have been determined to be functional currencies. We translate functional currency assets and liabilities to their U.S. dollar equivalents at exchange rates in effect as of the balance sheet date and income and expense amounts at average exchange rates for the period. The U.S. dollar affects that arise from changing translation rates are recorded in Other comprehensive income/(loss). The effects of converting non-functional currency monetary assets and liabilities into the functional currency are recorded in Other (income)/deductions.
~~Liquidity~~
The accompanying condensed consolidated financial statements have been prepared on a going concern basis. Substantial doubt about an entity’s ability to continue as a going concern exists when conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued.
~~As of February 28, 2023, the Company reported negative working capital of $9.7~~ ~~million compared to positive working capital of $4.2~~ ~~million as of May 31, 2022. This change is mainly due to the completion of the ULHL Entities Acquisition on February 21, 2023. At the time of the acquisition, the Company paid $3.5~~ ~~million in cash and assumed further $23.8~~ ~~million as current liabilities and $1.5~~ ~~million in noncurrent liabilities by either issuing promissory notes to the seller or by recognizing contingent liabilities at fair value on its balance sheet as of February 28, 2023. The amount of $3.8~~ ~~million of the purchase price was recorded as goodwill, $6.5~~ ~~million was recorded as intangibles and $10.9~~ million of the purchase price was recorded as equity method investments. All these assets were classified as noncurrent assets while most of the liabilities associated with the acquisition were recorded as current liabilities, resulting in a temporary negative impact on working capital.
~~The Company intends to either timely pay off the $23.8~~ million in current liabilities associated with the acquisition with cash generated by its operations, cash accumulated in the acquired ULHL Entities or by refinancing a portion of the current liabilities with non-current debt, which will have a positive effect on the working capital. As of the date of filing this form, the Company paid off $~~10.0~~ ~~million of the promissory notes, ahead of scheduled maturity. See Note 9,~~ ~~Subsequent Events~~
As previously reported, on December 18, 2022, the Company entered into an Agreement and Plan of Merger with Edify Acquisition Corp. and Edify Merger Sub, Inc. that, subject to various conditions, included a commitment from a lender for a senior secured financing facility in the maximum aggregate principal amount of $~~35.0~~ ~~million. In this regard,~~ ~~on March 10, 2023, the Company entered into a financing agreement and related fee letter as borrower with certain of its subsidiaries party thereto as guarantors, the lenders party thereto, CB Agent Services LLC,~~ as ~~origination agent, and Alter Domus (US) LLC, as collateral agent and administrative agent, that provides for an initial senior secured term loan in a principal amount of $4,210,526.32~~ ~~and a delayed draw term loan facility in an aggregate principal amount of up to $14,789,473.68~~. This debt will be classified as a noncurrent liability, which will have a positive effect on the working capital. The Company intends to use some of the proceeds of these term loans to pay off approximately $~~9.0~~ ~~million of the promissory notes and, after the closing of the business combination transaction with Edify Acquisition Corp. and to pay any deferred expenses relating to that transaction. See Note 9,~~ ~~Subsequent Events.~~
In addition, the Company maintains its operating line of credit with TBK Bank, SSB, under which TBK Bank will, from time to time, buy approved receivables from the Company, which has a credit limit up to $~~47.5~~ million (the “TBK Facility”). The TBK Facility matures on May 31, 2023, and we expect that TBK Bank will renew the TBK Facility prior to its expiration, which will provide the Company with the cash required to support its ongoing operations in addition to cash generated by operating activities.
While we continue to execute our strategic plan, growing the Company and its customer base, management is focused on managing cash and monitoring our liquidity position. We have implemented several initiatives to conserve our liquidity position, including activities such as increasing credit facilities, when needed, reducing the cost of debt by obtaining more favorable financing, controlling general and administrative expenditures and improving our collection processes. Many of the aspects of the liquidity plan involve management’s judgments and estimates that include factors that could be beyond our control and actual results could differ from our estimates. These and other factors could cause the strategic plan to be unsuccessful, which could have a material adverse effect on our operating results, financial condition, and liquidity. Negative operating capital may be an indicator that there could be a going concern issue, but based on our evaluation of the Company’s projected cash flows and business performance as of and subsequent to February 28, 2023, management has concluded that the Company’s current cash and cash availability under the TBK Facility as of February 28, 2023, would be sufficient to fund its planned operations for at least one year from the date the consolidated financial statements were issued.

~~F-7~~
~~Fair Value Measurement~~
The Company follows the authoritative guidance that establishes a formal framework for measuring fair values of assets and liabilities in the consolidated financial statements that are already required by generally accepted accounting principles to be measured at fair value. The guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The transaction is based on a hypothetical transaction in the principal or most advantageous market considered from the perspective of the market participant that holds the asset or owes the liability.
The Company utilizes market data or assumptions that market participants who are independent, knowledgeable, and willing and able to transact would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company attempts to utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.
The Company is able to classify fair value balances based on the observability of those inputs. The guidance establishes a formal fair value hierarchy based on the inputs used to measure fair value. The hierarchy gives the highest priority to Level 1 measurements and the lowest priority to level 3 measurements, and accordingly, Level 1 measurement should be used whenever possible.
~~The hierarchy is broken down into three levels based on the reliability of inputs as follows:~~
~~Level 1 – Quoted prices in active markets for identical assets or liabilities or published net asset value for alternative investments with characteristics similar to a mutual fund.~~
~~Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.~~
~~Level 3 – Unobservable inputs for the asset or liability.~~
The methods used may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while management believes its valuation methods are appropriate, the fair value of certain financial instruments could result in a difference fair value measurement at the reporting date. There were no changes in the Company’s valuation methodologies from the prior year.
For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amounts for financial assets and liabilities such as cash and cash equivalents, accounts receivable - trade, contract assets, factoring reserve, other prepaid expenses and current assets, accounts payable – trade and other current liabilities, including contract liabilities, convertible notes, promissory notes, all approximate fair value due to their short-term nature as of February 28, 2023, and May 31, 2022. The carrying amount of the long-term debt approximates fair value because the interest rates on these instruments approximate the interest rate on debt with similar terms available to the Company. Lease liabilities approximate fair value based on the incremental borrowing rate used to discount future cash flows. The Company had Level 3 liabilities (See Derivative liabilities note) as of February 28, 2023 and May 31, 2022. There were no transfers between levels during the reporting period.
~~Accounts Receivable~~
Accounts receivable from revenue transactions are based on invoiced prices which the Company expects to collect. In the normal course of business, the Company extends credit to customers that satisfy pre-defined credit criteria. The Company generally does not require collateral to support customer receivables. Accounts receivable, as shown on the consolidated balance sheets, is net of allowances when applicable. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the consolidated financial statements, assessments of collectability based on an evaluation of historic and anticipated trends, the financial condition of the Company’s customers, and an evaluation of the impact of economic conditions. The maximum accounting loss from the credit risk associated with accounts receivable is the amount receivable recorded, net of allowance for doubtful accounts. As of February 28, 2023, and May 31, 2022 the Company recorded an allowance for doubtful accounts of approximately $~~1.7~~ ~~million and $2.7~~ ~~million, respectively.~~
~~F-8~~
~~Concentrations~~
~~As of February 28, 2023, three major customers represented approximately~~ ~~13.0% of all accounts receivable and no single customer represented more than~~ ~~10.0% of total accounts receivable. Revenue from these customers in the aggregate as a percentage of the Company’s total revenue was~~ ~~18.0% and~~ ~~20.0% for the three and nine months ended February 28, 2023, respectively, and no single customer represented more than~~ ~~10.0% of total revenue.~~
~~As of May 31, 2022, three major customers represented approximately~~ ~~21.0% of all accounts receivable and no single customer represented more than~~ ~~10.0% of total accounts receivable. Revenue from these customers in the aggregate as a percentage of the Company’s total revenue was approximately~~ ~~50.0% and~~ ~~52.0% for three months ended February 28, 2022, and nine months ended February 28, 2022, respectively with only one customer A at~~ ~~39.0% and~~ ~~38.0% respectively, and customers B and C were less than~~ ~~10.0% each.~~
~~Derivative Liability~~
On December 10, 2021, the Company entered into an amended securities exchange agreement with the holders of convertible notes to exchange all Convertible Notes of the Company into shares of the Convertible Preferred Stock Series C and D.
Similar to the Convertible Preferred Stock Series A, these preferred stocks featured anti-dilution provision that expire on a specified date. Management has determined the anti-dilution provision embedded in preferred stock Series A, C and D is required to be accounted for separately from the preferred stock as a derivative liability and recorded at fair value. Separation of the anti-dilution option as a derivative liability is required because its economic characteristics are considered more akin to an equity instrument and therefore the anti-dilution option is not considered to be clearly and closely related to the economic characteristics of the preferred stock.
The Company has identified and recorded derivative instruments arising from an anti-dilution provision in the Company’s Series A, C and D Preferred Stock. An embedded derivative liability is representing the rights of holders of Convertible Preferred Stock Series A, C and D to receive additional common stock of the Company upon issuance of any additional common stock by the Company prior to qualified financing event as defined in the agreement. Each reporting period, the embedded derivative liability, if material, would be adjusted to reflect fair value at each period end with changes in fair value recorded in the “Change in fair value of embedded derivative liability” financial statement line item of the company’s statements of operations. During the nine months ended February 28, 2023, the Company recorded a change in fair value of $~~809,611~~ ~~in the condensed consolidated statements of operations.~~
~~SCHEDULE OF DERIVATIVE LIABILITIES~~
Level 1 Level 2 Level 3
Derivative liabilities as May 31, 2022 $ - $ - $ 12,437,994
Addition       -       - -
Change in fair value - - (809,611 )
Derivative liabilities as February 28, 2023 $ - $ - $ 11,628,383
The underlying value of the anti-dilution provision is calculated from estimating the probability and value of the provision assuming a near term financing event. For the period ended May 31, 2022, the model used estimates the potential that the company completes a capital raise prior to the expiration of the anti-dilution feature and determines the value of the anti-dilution feature given these assumptions. The model required the use of certain assumptions. These assumptions include the probability of a raise is completed, probability certain anti-dilution features are extended, estimated raise amount, term to a raise, and an appropriate risk-free interest rate. For the period ended February 28, 2023, due to changes in the way antidilutive shares of Convertible Preferred Series A, C and D would be exchanged in the near future for common stock, and the fact that the antidilution provision of these shares was extended through December 31, 2023, the assumptions were changed to include probability of the financing event, estimated value of common stock at the exchange point and estimated time to financing event.
~~The key inputs into the model were as follows:~~
~~SCHEDULE OF FAIR VALUE ASSUMPTION~~
February 28, 2023 May 31, 2022
Risk-free interest rate
5.0
% 1.60 %
Probability of financing event or capital raise 90 % 50 %
Estimated capital raise - 39.0 million
Estimated value of common stock $ 10.00 per share -
Estimated time to financing event 0.25 years 0.5 years
Revenue Recognition

The Company adopted ASC 606, Revenue from Contracts with Customers. Under ASC 606, revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to receive in exchange for services. The Company recognizes revenue upon meeting each performance obligation based on the allocated amount of the total consideration of the contract to each specific performance obligation.

To determine revenue recognition, the Company applies the following five steps:

1. Identify the contract(s) with a customer;

2. Identify the performance obligations in the contract;

3. Determine the transaction price;

4. Allocate the transaction price to the performance obligations in the contract; and

5. Recognize revenue as or when the performance obligation is satisfied.

Revenue is recognized as follows:

i. Freight income - export sales

Freight income from the provision of air, ocean, and land freight forwarding services are recognized over time based on a relative transit time basis through the sail or departure from origin port. The Company is the principal in these transactions and recognizes revenue on a gross basis.

ii. Freight income - import sales

Freight income from the provision of air, ocean, and land freight forwarding services are recognized over time based on a relative transit time basis through the delivery to the customer’s designated location. The Company is the principal in these transactions and recognizes revenue on a gross basis.

iii. Customs brokerage and other service income

Customs brokerage and other service income from the provision of other services are recognized at the point in time the performance obligation is met.
~~F-10~~
The Company’s business practices require, for accurate and meaningful disclosure, that it recognizes revenue over time. The “over time” policy is the period from point of origin to arrival of the shipment at the Port of entry (or in the case when the customer requires delivery to a designated point, the arrival at that delivery point). This overtime policy requires the Company to make significant judgements to recognize revenue over the estimated duration of time from port of origin to arrival at port of entry. The point in the process when the Company meets its obligation in the port of entry and the subsequent transfer of the goods to the customer is when the customer has the obligation to pay, has taken physical possession, has legal title, risk and awards (ownership) and has accepted the goods. The Company has elected to not disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied as of the end of the period as the Company’s contracts with its customers have an expected duration of one year or less.
F-7

The Company uses independent contractors and third-party carriers in the performance of its transportation services. The Company evaluates who controls the transportation services to determine whether its performance obligation is to transfer services to the customer or to arrange for services to be provided by another party. The Company determined it acts as the principal for its transportation services performance obligation since it is in control of establishing the prices for the specified services, managing all aspects of the shipments process and assuming the risk of loss for delivery and collection.

Revenue billed prior to realization is recorded as contract liabilities on the consolidated balance sheets and contract costs incurred prior to revenue recognition are recorded as contract assets on the consolidated balance sheets.

Contract Assets

Contract assets represent amounts for which the Company has the right to consider for the services provided while a shipment is still in-transit but for which it has not yet completed the performance obligation and has not yet invoiced the customer. Upon completion of the performance obligations, which can vary in duration based upon the method of transport and billing the customer, these amounts become classified within accounts receivable.

Contract Liabilities

Contract liabilities represent the amount of obligation to transfer goods or services to a customer for which consideration has been received.

Significant Changes in Contract Asset and Contract Liability Balances for the nine months ended February ~~28,2023:~~29, 2024:
SCHEDULE OF CHANGES IN CONTRACT ASSET AND CONTRACT LIABILITY
Contract Contract
Assets Liabilities Contract Assets Contract Liabilities
Increase (Increase) Increase (Increase)
(Decrease) Decrease (Decrease) Decrease
Reclassification of the beginning contract liabilities to revenue, as the result of performance obligation satisfied $ - $ 468,209 $ - $         -
Cash Received in advance and not recognized as revenue - (358,365 ) - -
Reclassification of the beginning contract assets to receivables, as the result of rights to consideration becoming unconditional (39,978,761 ) - (4,307,081 ) -
Contract assets recognized, net reclassification to receivables 12,867,742 -
Contract assets recognized 4,467,872 -
Net Change $ (27,111,019 ) $ 109,844 $ 160,791 $ -

~~F-11~~
Disaggregation of Revenue from Contracts with Customers

The following table disaggregates gross revenue from our clients by significant geographic area for the three and ~~six~~nine months ended February 29, 2024, and February 28, 2023, ~~and 2022,~~ based on origin of shipment (imports) or destination of shipment (exports):
SCHEDULE OF DISAGGREGATION OF REVENUE

For the
Three Months Ended
February 29, 2024

For the
Three Months Ended
February 28, 2023

China, Hong Kong & Taiwan $ 16,597,938 $ 17,427,833
Southeast Asia 12,329,911 9,335,793
United States 17,455,213 8,022,489
India Sub-continent 11,868,317 8,602,665
Other 9,529,007 6,238,722
Total revenue $ 67,830,385 $ 49,627,502
For the Three For the Three
Months Ended Months Ended
For the
Nine Months Ended

For the
Nine Months Ended

February 28, 2023 February 28, 2022 February 29, 2024 February 28, 2023
China, Hong Kong & Taiwan $ 17,427,833 $ 82,006,657 $ 52,412,801 $ 123,977,602
Southeast Asia 9,335,793 121,340,162 34,667,956 72,449,913
United States 8,022,489 5,049,985 46,648,201 29,699,664
India Sub-continent 8,602,665 34,943,595 32,490,278 37,919,338
Other 6,238,722 7,095,496 26,321,685 10,927,090
Total revenue $ 49,627,502 $ 250,435,895 $ 192,540,922 $ 274,973,607
F-8
Foreign Currency
For the Nine For the Nine
Months Ended Months Ended
February 28, 2023 February 28, 2022
China, Hong Kong & Taiwan $ 123,977,602 $ 285,424,103
Southeast Asia 72,449,913 361,600,180
United States 29,699,664 28,254,253
India Sub-continent 37,919,338 134,393,170
Other 10,927,090 35,966,738
Total revenue $ 274,973,607 $ 845,638,444
For most of our international operations conducted by the subsidiaries operating outside the U.S, local currencies have been determined to be functional currencies. We translate functional currency assets and liabilities to their U.S. dollar equivalents at exchange rates in effect as of the balance sheet date and income and expense amounts at average exchange rates for the period. The U.S. dollar affects that arise from changing translation rates are recorded in Other comprehensive income/(loss).
Transaction gains or losses result from a change in exchange rates between the functional currency and the currency in which a foreign currency transaction is denominated. We aggregate all transaction gains and losses and classify the net amount in a single caption in the income statement in operating income as foreign exchange transactions, net.
Fair Value Measurement
The Company follows the authoritative guidance that establishes a formal framework for measuring fair values of assets and liabilities in the consolidated financial statements that are already required by generally accepted accounting principles to be measured at fair value. The guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The transaction is based on a hypothetical transaction in the principal or most advantageous market considered from the perspective of the market participant that holds the asset or owes the liability.
The Company utilizes market data or assumptions that market participants who are independent, knowledgeable, and willing and able to transact would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company attempts to utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.
The Company is able to classify fair value balances based on the observability of those inputs. The guidance establishes a formal fair value hierarchy based on the inputs used to measure fair value. The hierarchy gives the highest priority to Level 1 measurements and the lowest priority to level 3 measurements, and accordingly, Level 1 measurement should be used whenever possible.
The hierarchy is broken down into three levels based on the reliability of inputs as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities or published net asset value for alternative investments with characteristics similar to a mutual fund.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 – Unobservable inputs for the asset or liability.
F-9
The methods used may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while management believes its valuation methods are appropriate, the fair value of certain financial instruments could result in a difference fair value measurement at the reporting date. There were no changes in the Company’s valuation methodologies from the prior year.
For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amounts for financial assets and liabilities such as cash and cash equivalents, accounts receivable - trade, contract assets, other prepaid expenses and current assets, accounts payable and other current liabilities, promissory notes, all approximate fair value due to their short-term nature as of February 29, 2024, and May 31, 2023. The carrying amount of the long-term debt approximates fair value because the interest rates on these instruments approximate the interest rate on debt with similar terms available to the Company. Lease liabilities approximate fair value based on the incremental borrowing rate used to discount future cash flows. The Company had Level 3 liabilities (See Derivative liabilities note) as of February 29, 2024, and May 31, 2023. There were no transfers between levels during the reporting period.
Accounts Receivable
Accounts receivable from revenue transactions are based on invoiced prices which the Company expects to collect. In the normal course of business, the Company extends credit to customers that satisfy pre-defined credit criteria. The Company generally does not require collateral to support customer receivables. Accounts receivable, as shown on the consolidated balance sheets, is net of allowances when applicable. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the consolidated financial statements, assessments of collectability based on an evaluation of historic and anticipated trends, the financial condition of the Company’s customers, and an evaluation of the impact of economic conditions. The maximum accounting loss from the credit risk associated with accounts receivable is the amount receivable recorded, net of allowance for doubtful accounts. As of February 29, 2024, and May 31, 2023 the Company recorded an allowance for doubtful accounts of approximately $0.5 million and $1.7 million, respectively and the bad debt expense was immaterial for each of the three and nine months ended February 29, 2024 and February 28, 2023. The reason for the reduction in an allowance for doubtful accounts from the prior period is a successful settlement and subsequent collection of $1.2 million on a specific customer reserved account.
Concentrations
As of February 29, 2024, three major customers represented approximately 13% of all accounts receivable and no single customer represented more than 10.0% of total accounts receivable. As of May 31, 2023, three major customers represented approximately 21.0% of all accounts receivable and no single customer represented more than 10.0% of total accounts receivable.
Revenue from three customers in the aggregate as a percentage of the Company’s total revenue was approximately 35.0% and 25.0%, respectively, for the three months and nine months ended February 29, 2024, and no single customer represented more than 10.0% of total revenue except for customer A who represented approximately 16.0% and 12.0% respectively. Revenue from these customers in the aggregate as a percentage of the Company’s total revenue was 18.0% and 20.0% for the three and nine months ended February 28, 2023, respectively, and no single customer represented more than 10.0% of total revenue.
Goodwill and Other Intangibles
The Company accounts for business acquisitions in accordance with GAAP. Goodwill in such acquisitions is determined as the excess of fair value over amounts attributable to specific tangible and intangible assets. GAAP specifies criteria to be used in determining whether intangible assets acquired in a business combination must be recognized and reported separately from goodwill. Amounts assigned to goodwill and other identifiable intangible assets are based on independent appraisals or internal estimates.
F-10
In accordance with GAAP, the Company does not amortize goodwill or indefinite-lived intangible assets. Management evaluates the remaining useful life of an intangible asset that is not being amortized each reporting period to determine whether events and circumstances continue to support an indefinite useful life. If an intangible asset that is not being amortized is subsequently determined to have a finite useful life, it is amortized prospectively over its estimated remaining useful life. Amortizable intangible assets, including tradenames and non-compete agreements, are amortized on a straight-line basis over 3 to 10 years. Customer relationships are amortized on a straight-line basis over 12 to 15 years.
The Company tests goodwill for impairment annually as of May 31 or if an event occurs or circumstances change that indicate that the fair value of the entity, or the reporting unit, may be below its carrying amount (a “triggering event”). Whenever events or circumstances change, entities have the option to first make a qualitative evaluation about the likelihood of goodwill impairment. If impairment is deemed more likely than not, management would perform the two-step goodwill impairment test. Otherwise, the two-step impairment test is not required. In assessing the qualitative factors, the Company assessed relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of the relevant events and circumstances and how these may impact a reporting unit’s fair value or carrying amount involve significant judgements and assumptions. The judgement and assumptions include the identification of macroeconomic conditions, industry and market considerations, overall financial performance, Company specific events and share price trends, an assessment of whether each relevant factor will impact the impairment test positively or negatively, and the magnitude of such impact.
If a quantitative assessment is performed, a reporting unit’s fair value is compared to its carrying value. A reporting unit’s fair value is determined based upon consideration of various valuation methodologies, including the income approach, which utilizes projected future cash flows discounted at rates commensurate with the risks involved and multiples of current and future earnings. If the fair value of a reporting unit is less than its carrying amount, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit.

Equity-method investments
Equity methods investments were acquired from Unique Logistics Holdings Limited, a Hong Kong corporation on February 21, 2023. These are less than 50% owned operating entities. Under the equity method, we record our share of the investee’s income and expenses in income from operation and any share of the earnings and loss would be recorded against investment reduced by cash dividends received. The following activity took place for the nine months ended February 29, 2024.
SCHEDULE OF EQUITY METHOD INVESTMENTS

Equity method investment as of June 1, 2023 $ 3,381,683
Net income 675,606
Dividends paid (608,126 )
Equity method investment as of February 29, 2024 $ 3,449,163
Derivative Liability
SCHEDULE OF DERIVATIVE LIABILITIES
Level 1 Level 2 Level 3
Derivative liability as of June 1, 2023 $ - $ - $ 11,558,261
Additions - - -
Change in fair value - - (4,118,566 )
Derivative liability as of February 29, 2024 $ - $ - $ 7,439,695
Convertible Preferred Stock
Convertible Preferred Stock Series A, C and D feature anti-dilution provision that expires on a specified date. Management has determined the anti-dilution provision embedded in preferred stock Series A, C and D is required to be accounted for separately from the preferred stock as a derivative liability and recorded at fair value. Separation of the anti-dilution option as a derivative liability is required because its economic characteristics are considered more akin to a debt instrument and therefore the anti-dilution option is not considered to be clearly and closely related to the economic characteristics of the preferred stock.
The Company has identified and recorded derivative instruments arising from an anti-dilution provision. An embedded derivative liability is representing the rights of holders of Convertible Preferred Stock Series A, C and D to receive additional common stock of the Company upon issuance of any additional common stock by the Company prior to qualified financing event as defined in the agreement. Each reporting period, the embedded derivative liability, if material, would be adjusted to reflect fair value at each period end with changes in fair value recorded in the “Change in fair value of embedded derivative liability” financial statement line item of the company’s statements of operations.
F-11
The underlying value of the anti-dilution provision is calculated from estimating the probability and value of the provision assuming a near term financing event. For the period ended February 29, 2024, based on the assumption of how antidilutive shares of Convertible Preferred Series A, C and D would be exchanged in the near future for common stock, and the fact that the antidilution provision of these shares is effective through December 31, 2024, the assumptions include probability of the financing event, estimated value of common stock at the exchange point and estimated time to financing event.
The key inputs into the model were as follows:
SCHEDULE OF FAIR VALUE ASSUMPTION
February 29, 2024 May 31, 2023
Risk-free interest rate 4.5 % 5.5 %
Probability of financing event or capital raise 63.8 % 90 %
Estimated value of common stock $ 60,971,000 $ 10.00 per share
Estimated time to financing event 2.00 years 0.42 years
Income Taxes
Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in the applicable quarter. In each quarter, the estimated annual effective tax rate is updated and a year-to-date adjustment to the provision is made. The estimated annual effective tax rate is subject to significant volatility due to several factors, including the mix of pretax income or loss across multiple jurisdictions and certain book-tax differences.
Income taxes are accounted for under the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, the tax effect of loss carryforwards and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized.
F-12
The Company uses a two-step approach to recognizing and measuring uncertain income tax positions (tax contingencies). The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating its tax positions and estimating our tax benefits, which may require periodic adjustments, and which may not match the ultimate future outcome.
Segment Reporting

Based on the guidance provided by ASC Topic 280, Segment Reporting, management has determined that the Company currently operates in one primary geographical segment, the US where most of the customers are and consists of a single reporting unit given the similarities in economic characteristics between its operations and the common nature of its products, services, and customers.

Earnings per Share

~~The Company adopted ASC 260,~~ Basic Earnings ~~per share,~~ ~~guidance from inception. Earnings per share~~Per Share (“EPS”) ~~is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. Basic EPS~~ is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding, including warrants exercisable for less than a penny, (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from ~~income from continuing operations (if that amount appears in the consolidated statements of operations) and also from~~ net income.
The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, preferred stock, stock options or warrants.
~~F-12~~
The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income (loss) attributable to common stockholders per common share.
SCHEDULE OF EARNING PER SHARE
February 28, 2023 February 28, 2022
For the Three Months Ended
February 28, 2023 February 28, 2022
Numerator:
Net income (loss) attributable to common stockholders $ 663,173 $ (9,496,311 )
Effect of dilutive securities: - -

Diluted net income (loss) $ 663,173 $ (9,496,311 )

Denominator:
Weighted average common shares outstanding – basic 799,141,770 655,781,078

Dilutive securities:
Series A Preferred 1,168,177,320 -
Series B Preferred 5,373,342,576 -
Series C Preferred 1,206,351,359 -
Series D Preferred 1,130,954,399 -

Weighted average common shares outstanding and assumed conversion – diluted 9,677,967,424 655,781,078

Basic net income per common share $ 0.00 $ (0.01 )

Diluted net income per common share $ 0.00 $ (0.01 )
February 28, 2023 February 28, 2022 February 29, 2024 February 28, 2023
For the Nine Months Ended For the Three Months Ended
February 28, 2023 February 28, 2022 February 29, 2024 February 28, 2023
Numerator:
Net income (loss) attributable to common stockholders $ 7,256,211 $ (2,984,670 )
Net (loss) income $ (5,847,860 ) 663,173
Effect of dilutive securities: - - -

Diluted net income (loss) $ 7,256,211 $ (2,984,670 ) $ (5,847,860 ) 663,173

Denominator:
Weighted average common shares outstanding – basic 780,768,778 582,680,746 799,141,770 799,141,770

Dilutive securities:
Dilutive securities*: -
Series A Preferred 1,168,177,320 - * - 1,168,177,320
Series B Preferred 5,373,342,576 - * - 5,373,342,576
Series C Preferred 1,206,351,359 - * - 1,206,351,359
Series D Preferred 1,130,954,399 - * - 1,130,954,399

Weighted average common shares outstanding and assumed conversion – diluted 9,659,594,432 582,680,746 799,141,770 9,677,967,424

Basic net income per common share $ 0.01 $ (0.01 )
Basic net income (loss) per common share $ (0.01 ) $ 0.00

Diluted net income per common share $ 0.00 $ (0.01 )
Diluted net income (loss) per common share $ (0.01 ) $ 0.00

February 29, 2024 February 28, 2023
For the Nine Months Ended
February 29, 2024 February 28, 2023
Numerator:
Net (loss) income $ (11,029,671 ) $ 7,256,211
Effect of dilutive securities:

Diluted net income $ (11,029,671 ) $ 7,256,211

Denominator:
Weighted average common shares outstanding – basic 799,141,770 780,768,778

Dilutive securities*:
Series A Preferred * - 1,168,177,320
Series B Preferred * - 5,373,342,576
Series C Preferred * - 1,206,351,359
Series D Preferred * - 1,130,954,399
799,141,770
Weighted average common shares outstanding and assumed conversion – diluted 799,141,770 9,659,594,432

Basic net income per common share $ (0.01 ) $ 0.01

Diluted net income per common share $ (0.01 ) $ 0.00
* ~~F-13~~ Due to a net loss for the three and nine months ended February 29, 2024, only weighted average common shares are used in calculations. In case of net income for these periods, the Company’s dilution of all outstanding securities would be as follows:
~~Leases~~

The Company recognizes a right of use (“ROU”) asset and liability in the consolidated balance sheet primarily related to its operating leases of office space, warehouse space and equipment. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. All ROU assets and lease liabilities are recognized at the commencement date at the present value of lease payments over the lease term. ROU assets are adjusted for lease incentives and initial direct costs. The lease term includes renewal options exercised at the Company’s sole discretion when the Company is reasonably certain to exercise that option. As the Company’s leases generally do not have an implicit rate, the Company uses an estimated incremental borrowing rate based on borrowing rates available to them at the commencement date to determine the present value. Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. The Company excludes variable payments from ROU assets and lease liabilities to the extent not considered fixed, and instead expenses variable payments as incurred. Lease expense is recognized on a straight-line basis over the lease term and is included in rent and occupancy expenses in the consolidated statements of operations.SCHEDULE OF ANTI-DILUTIVE SHARES
~~Reclassifications~~
~~Certain prior year amounts have been reclassified for consistency with the current year presentation.~~
2. ~~ACQUISITIONS AND EQUITY METHOD INVESTMENTS~~February 29, 2024
Weighted average common shares outstanding – basic 799,141,770
Series A Preferred 1,168,177,320
Series B Preferred 5,373,342,576
Series C Preferred 1,206,351,359
Series D Preferred 1,130,954,399
Weighted average common shares outstanding and assumed conversion – diluted 9,677,967,424
On February 21, 2023, the Company completed the acquisition via a stock purchase agreement (“SPA”) signed on April 28, 2022, and applicable amendments by and between the Company and Unique Logistics Holdings Limited, a Hong Kong corporation (the “ULHL”), whereby the Company acquired all ULHL’s share capital in eight (8) of ULHL’s operating subsidiaries as follows:
~~Schedule Of Acquired Subsidiary~~
~~Name of acquired operating subsidiary~~ ~~Purchased Percentage~~ ~~Designation~~
~~Unique Logistics International (H.K.) Limited~~ ~~100~~% ~~Consolidated subsidiary~~
~~Unique Logistics International (Vietnam) Co., Ltd.~~ 65% ~~Consolidated subsidiary~~
~~ULI (South China) Limited~~ 70% ~~Consolidated subsidiary~~
~~Unique Logistics International (South China) Limited~~ 70% ~~Consolidated subsidiary~~
~~Unique Logistics International (India) Private Ltd.~~ 65% ~~Consolidated subsidiary~~
~~ULI (North & East China) Company Limited~~ 50% ~~Equity-method investment~~
~~Unique Logistics International Co., Ltd~~ 50% ~~Equity-method investment~~
~~TGF Unique Limited~~ ~~49.99~~% ~~Equity-method investment~~
F-14

~~Purchase Price~~
~~The total fair value of the consideration transferred was $28.8~~ ~~million ($15.5~~ ~~million, net of cash acquired).~~
~~SCHEDULE OF BUSINESS COMBINATION CONTINGENT CONSIDERATION~~
Maturity Date Description Fair Value Interest rate

Cash at closing $ 3,500,000

Promissory Notes 3/7/2023 Note 1 to ULHL 4,500,000 15.0 %
4/7/2023 Note 2 to ULHL 5,000,000 15.0 %
6/30/2023 Note 3 to ULHL 5,000,000 15.0 %
2/21/2025 Note 4 to ULHL 1,000,000 -
2/21/2025 Note 5 to FTS 500,000 -
6/30/2023 Note 6 to ULHL 2,000,000 -
6/30/2023 Note 7 to ULHL 1,000,000 -
19,000,000
Contingent considerations
6/30/2023 Note 8 to ULHL 2,500,000 15.0 %
2/21/2024 Note 9 to ULHL 2,000,000 -
2/21/2024 Earnout payment (estimated) 1,750,000 -
6,250,000

Purchase Price $ 28,750,000
~~Promissory Notes~~
~~As part of the acquisition, the~~ ~~Company issued certain promissory notes consisting of the following:~~
~~Promissory Note 1 in the principal amount of $4,500,000~~ ~~which matures~~ ~~March 7, 2023, having an interest rate of~~ 15%.
~~Promissory Note 2 in the principal amount of $5,000,000~~ ~~which matures~~ ~~April 7, 2023, having an interest rate of~~ 15%.
~~Promissory Note 3 in the principal amount of $5,000,000~~ ~~which matures~~ ~~June 30, 2023, having an interest rate of~~ 15%
~~Promissory Note 4 in the principal amount of $1,000,000~~ ~~which matures~~ ~~February 21, 2025~~ ~~and bearing no interest.~~
~~Promissory Note 5 in the principal amount of $500,000~~ ~~for the remaining~~ 35% share capital of Unique Logistics International (India) Private Ltd. acquired by the Company from Frangipani Trade Services, Inc. (“FTS”), a New York corporation owned by Sunandan Ray, Chief Executive Officer of the Company, maturing ~~February 21, 2025~~ ~~and bearing no interest.~~
~~Promissory Note 6 in the principal amount of $2,000,000~~ ~~due~~ ~~June 30, 2023~~(the “Initial Taiwan Maturity Date”), bearing no interest and payable on: (a) July 15, 2023, provided that all government and other regulatory approvals necessary or required by Taiwan in order to consummate the Transaction as the same relates to Unique-Taiwan (the “Taiwan Approvals”) have been received by the Initial Taiwan Maturity Date; or (b) in the event that the Taiwan Approvals have not been received by the Taiwan Maturity Date, payment under this promissory note will be due and payable within fifteen (15) days of receipt of the Taiwan Approvals. This promissory note was issued in lieu of cash otherwise due under the original Local SPA in respect of the Purchased Shares of Unique-Taiwan.
~~Promissory Note 7 in the principal amount of $1,000,000~~ ~~due~~ ~~June 30, 2023~~(the “Initial Vietnam Maturity Date”), bearing no interest and payable on: (a) July 15, 2023, provided that all government and other regulatory approvals necessary or required by Vietnam in order to consummate the Transaction as the same relates to Unique-Vietnam (the “Vietnam Approvals”) have been received by the Initial Vietnam Maturity Date; or (b) in the event that the Vietnam Approvals have not been received by the Vietnam Maturity Date, payment under this promissory note will be due and payable within fifteen (15) days of receipt of the Vietnam Approvals. This promissory note was issued in lieu of cash otherwise due under the original Local SPA in respect of the Purchased Shares of Unique-Vietnam.
~~F-15~~
~~Contingent Considerations~~
~~At Closing, the Company issued two additional promissory notes, in lieu of cash, as payment of certain milestones set forth in the SPA that were already achieved:~~
● ~~Promissory Note 8 in the principal amount of $2,500,000~~ ~~due on~~ ~~June 30, 2023, having an interest rate of~~ 15~~%. This Promissory Note was issued in respect of the purchase price adjustment provided for under the SPA.~~
● ~~Promissory Note 9 in the principal amount of $2,000,000~~ ~~due on~~ ~~February 21, 2024, and bearing no interest. This Promissory Note was issued in respect of the purchase price adjustment provided for under the SPA.~~
As of the acquisition date and based on the preliminary assessment by management, the seller (ULHL) fully met its obligation as it relates to the purchase price adjustments provided by the SPA and would be entitled to full amount of the contingent consideration, therefore the Company recorded these notes at fair value as stated in the promissory notes as of February 28, 2023.
~~In addition to the Initial Purchase Price, ULHL will be eligible for a one-time cash earn-out payment in the amount of (i) $2,500,000, if the EBITDA of the Purchased Shares, in the aggregate, exceeds $5,000,000~~ ~~for the one-year period beginning on July 1, 2022 and ending June 30, 2023 (the “Earn Out Period”), or (ii) $2,000,000, if the EBITDA of the Purchased Shares, in the aggregate is equal to or less than $5,000,000~~ ~~but exceeds $4,500,000~~, for the Earn Out Period, in each case, to be paid by the Company within 90 days of June 30, 2023. Management estimated fair value of the earnout payment based on the actual up to date performance of the acquired entities and the probability of the earn out payment occurrence to be at $~~1,750,000~~ ~~as of February 28, 2023.~~
~~All contingent considerations and earn out payment are recorded in other current liabilities on the balance sheet as of February 28, 2023, in the amount of $5,710,057~~. While the first two contingent considerations were met by the Seller in its entirety, given the uncertain nature of the earn out payment, we conducted a sensitivity analysis based on both historical performance and projected performance throughout the period covered by the earn out payment. We determined the present value of the earn out payment based on the anticipated payment date of September 28, 2023, and the cost of debt of ~~15.0~~%.
~~Purchase~~ ~~Price Allocation~~
The Company obtained full control of five subsidiaries during the acquisition identified above and consolidated these subsidiaries as of the acquisition date. US GAAP requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquirer at the acquisition date, measured at their fair values as of that date. The acquisition method of accounting requires extensive use of estimates and judgments to allocate the considerations transferred to the identifiable tangible and intangible assets acquired and liabilities assumed.
~~F-16~~
~~The following summarizes preliminary estimates of fair values of the assets acquired and liabilities assumed at the acquisition:~~
~~SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED~~
Fair Value
Assets Acquired:
Current assets $ 36,232,526
Equity method investments 10,861,111
Identifiable intangible assets 6,515,000
Fixed Assets and other non-current assets 2,367,272

Liabilities Assumed:
Current liabilities (27,326,110 )
Other long-term liabilities (327,861 )
Non-Controlling Interest (3,558,263 )

Goodwill
3,986,325

Purchase Price $
28,750,000

~~Total amount of goodwill recognized in this transaction was $9,478,477, with $5,492,152~~ ~~allocated to equity method investments and $3,986,325~~ recorded as additional goodwill on the balance sheet. The goodwill acquired is primarily attributable to the workforce retained of the acquired businesses and synergies expected to arise after the Company’s acquisition of the above operating subsidiaries. It is also anticipated that the goodwill will be deductible for tax purposes.
~~The Company paid approximately $0.5~~ ~~million of closing costs for legal, accounting, and other professional fees which were expensed during the period ended February 28, 2023.~~
~~Identifiable intangible assets and their amortization periods are estimated as follows:~~
~~SCHEDULE OF IDENTIFIABLE INTANGIBLE ASSETS AND AMORTIZATION PERIOD~~
Cost Basis Useful Life
Customer relationships $
6,292,000
7 years
Non-compete agreements
223,000
1 year
$
6,515,000

~~Amortization of intangible assets was immaterial for the period from the acquisition date to the end of the reporting period February 28, 2023. The future amortization schedule is as follows:~~
~~AMORTIZATION OF INTANGIBLE ASSETS~~
2024 $ 1,121,857
For the Twelve Months Ending February 28,
2024 $ 1,121,857
2025 898,857
2026 898,857
2027 898,857
2028 898,857
Thereafter 1,797,715
Total. $ 6,515,000
~~Equity Method Investments~~
~~SCHEDULE OF FINANCIAL INFORMATION AT FAIR VALUE FOR EQUITY METHOD INVESTMENT~~
The following summarizes financial information at fair value for the equity-method investments at the acquisition:
Fair Value
Current assets $ 17,493,164
Noncurrent assets 152,658
Total Assets 17,645,822
Current liabilities 6,907,904
Noncurrent liabilities -
Total liabilities 6,907,904
Net assets of the equity investee 10,737,918
Equity attributable to non-controlling interest (5,368,959 )
Equity attributable to registrant 5,368,959
Equity goodwill attributable to registrant
5,492,152

Total Equity method investment $
10,861,111

~~F-17~~
Business Combination - Pro Forma Information (Unaudited)

The results of operations of eight entities which the Company acquired on February 21, 2023, have not been included in ~~our~~the Company’s results for the three months ended February 28, 2023 ~~condensed consolidated financial statements~~ because offor the ~~company’s decision to include earnings~~period from ~~consolidated subsidiaries and equity method investments on a one-month lag basis.~~February 21, 2023 through February 28, 2023, such amount was not deemed material. The following unaudited pro forma financial information represents a summary of the consolidated results of operations for the ~~three~~nine and ~~nine~~three months ended February 28, ~~2022,~~2023 assuming the acquisitions had been completed as of June 1, ~~2021,~~2022, first day of the period presented. The proforma adjustments include the elimination of intercompany revenue and expense transactions. The pro forma financial information is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had been effective as of these dates, or of future results.
SCHEDULE OF PRO FORMA INFORMATION

Three Months Ended
February 28, 2023

Nine Months Ended
February 28, 2023

Revenue, net $ 77,956,880 $ 397,275,349
Net income attributable to registrant 2,177,952 14,671,414
Weighted average shares of common stock outstanding, basic (as previously reported) 799,141,770 780,768,778
Weighted average shares of common stock outstanding, diluted (as previously reported) - -
Net (loss) income per share, basic $ 0.00 $ 0.02
Net (loss) income per share, diluted $ 0,00 $ 0.00
2. SPAC MERGER TERMINATION
Merger Termination
As previously disclosed, on December 18, 2022, the Company entered into an Agreement and Plan of Merger by and among Edify Acquisition Corp., a Delaware corporation, Edify Merger Sub, Inc., a Nevada corporation (“Merger Sub”), and the Company, as amended and supplemented (the “Merger Agreement”). On March 1, 2024, the Company, Buyer and Merger Sub entered into a mutual termination agreement, pursuant to which they mutually agreed to terminate the Merger Agreement effective as of such date (Subsequent Event Note 9).
As a result of terminating the merger, besides the merger termination costs of approximately $10.4 million, the Company recognized an impairment charge for the previously deferred uplist costs in the amount of $3.1 million as reflected on the statement of operations for the period ended February 29, 2024, of which approximately $2.4 million was deferred as of December 31, 2023.
Amendment to the financing agreement and a waiver
As previously disclosed, on March 10, 2023, the Company entered into a financing agreement (the “Agreement”) as borrower with certain of its subsidiaries party thereto as guarantors (collectively, the “Borrowers”), the lenders party thereto (collectively, the “Lenders”), CB Agent Services LLC, as origination agent, and Alter Domus (US) LLC, as collateral agent and administrative agent (together with CB Agents, the “Agents”)(collectively, the “Parties”), for an initial senior secured term loan in a principal amount of $4,210,526 and a delayed draft term loan in an aggregate principal amount of up to $14,789,474.
Effective March 1, 2024, the Parties entered into a waiver and amendment no. 2 to financing agreement (the “Second Waiver”), (Subsequent Event Note 9) whereby the Agents and the Lenders agreed to waive (i) (a) that certain event of default that has occurred or may occur, due to the borrower’s’ noncompliance with Section 7.03(a) of the Agreement for each of the fiscal quarters in the fiscal year ending May 31, 2024 and for the fiscal quarter ending August 31, 2024 (the “FCCR Event of Default”), (b) that certain Event of Default that has occurred or may occur, due to the Loan Parties’ noncompliance with Section 7.03(b) of the Agreement for each of the fiscal quarters in the fiscal year ending May 31, 2024 and for the fiscal quarter ending August 31, 2024 (the “Liquidity Event of Default”) and (c) that certain Event of Default that has occurred or may occur, due to the Loan Parties’ noncompliance with Section 7.03(c) of the Agreement for each of the fiscal quarters in the fiscal year ending May 31, 2024 and for the fiscal quarter ending August 31, 2024” and, together with the FCCR Event of Default and the Liquidity Event of Default, the “Specified Events of Default”). Each of the Specified Events of Default constitute an Event of Default under Section 9.01(c) of the Agreement; and (ii) interest at the post-default rate with respect to the Specified Events of Default from the date such event occurred through the Second Waiver effective date.
In addition, pursuant to the Second Waiver, the borrowers agreed to (i) pay the administrative agent a non-refundable Waiver Fee in an aggregate amount equal to $3,000,000, which was deemed fully earned on the effective date; and (ii) issue the origination agent or its designee warrants, in form and substance satisfactory to the origination agent, entitling the holder thereof to purchase a number of shares of the Company’s common stock equal to the greater of (a) seven percent (7%) of enterprise value as calculated in a manner to be mutually agreed and acceptable to the origination agent and the Company on a fully diluted basis and (b) $7,000,000, on terms, conditions and in a form reasonably acceptable to origination agent, and having an exercise price of $0.01 per share.
The anti-dilution provisions applicable to the warrants shall at no time be less favorable to the holder thereof than those accorded by the parent to any other person on or after the effective date. The warrants shall be exercisable for a period of 7.5 years. This contract did not meet qualification requirements to be classified as equity because there is no explicit limit on the number of shares to be delivered in a share settlement. Accordingly, the warrants were classified as a liability as the issuer is obligated to settle the warrant by issuing a variable number of shares and the monetary value of the obligation based on a predetermined fixed amount, variation in something other than the issuers stock price, in this case the amount is the enterprise value of the Company at the time of the future financing event. As the warrants were not issued on the balance sheet date, these expected warrants were recorded as other long-term liability at initially estimated fair market value of $7,415,816.
F-15
For the period ended February 29, 2024, both amounts related to the nonrefundable waiver fee and the warrant, or $3.0 million and $7.4 million, respectively, were expensed as SPAC merger termination cost on the condensed consolidated statements of operations, since the terms of the agreements were agreed to as of February 28, 2024 and the documents were executed on March 1, 2024.
Due to the unique nature of these warrants, which the Company anticipates will have an effective date of March 1, 2024, a Monte Carlo simulation was necessary in order to properly perform the valuation. Monte Carlo simulation analysis is mathematically similar to that used in a Black-Scholes option pricing model. However, in a Monte Carlo simulation, a computer is used to generate random price movements, which are constrained by the expected volatility of the underlying security. Where each step in a binomial model contains two possible outcomes, each step in a Monte Carlo simulation contains an unlimited number of potential outcomes. For the fair value of the warrants to be issued, a simulation using a risk neutral drift factor, the risk-free rate, was used.
The key inputs into the model were as follows:
Three Months Ended February 28, 2022 Nine Months Ended February 28, 2022

Revenue, net $ 339,213,905 $
1,040,963,776

Net Income attributable to registrant 1,030,332 18,653,614
Weighted average shares of common stock outstanding, basic and diluted (as previously reported) 655,781,078
582,680,746

Net income per share, basic and diluted $ - $
0.03

SCHEDULE OF FAIR VALUE ASSUMPTION
February 29, 2024
Risk-free interest rate 4.3 %
Probability of financing event next 2 years 85.0 %
Probability of financing event years 2 through 7.5 90.0 %
Probability of financing event 90.0 %
Volatility: 100.0 %

3. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following on February ~~28, 2023,~~29, 2024, and May 31, ~~2022:~~2023:
SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
February 28, 2023 May 31, 2022

Accrued salaries and related expenses $ 2,519,124 $ 625,000
Accrued sales and marketing expense 1,173,564 2,383,500
Accrued professional fees 1,805,259 1,350,170
Accrued income tax 2,713,523 559,544
Accrued overdraft liabilities 1,156,708 681,058
Other accrued expenses and current liabilities 810,679 66,887
Accrued expenses and other current liabilities $ 10,178,857 $ 5,666,159
February 29, 2024 May 31, 2023

Accrued salaries and related expenses $ 720,132 $ 1,938,111
Accrued sales and marketing expense 306,980 768,713
Accrued professional fees 2,878,114 2,574,542
Accrued income tax - 1,531,789
Accrued Interest 739,951 -
Other accrued expenses and current liabilities 1,727,646 1,781,812
Accrued expenses and other current liabilities $ 6,372,823 $ 8,594,947
4. FINANCING ARRANGEMENTS

Financing arrangements on the consolidated balance sheets consists of:
SCHEDULE OF FINANCING ARRANGEMENT
February 28, 2023 May 31, 2022 February 29, 2024 May 31, 2023

Revolving Credit Facility $ 9,882,529 $ 38,141,451 $ 11,852,663 $ 8,050,227
Current portion of notes payable 17,804,500 608,333
Term loans 12,000,000 4,000,000
Notes payable, gross 27,687,029 38,749,784 23,852,663 12,050,227
Noncurrent portion of notes payable 1,500,000 -
Less: Current portion (12,823,744 ) (8,050,227 )
Long term, notes payable $ 29,187,029 $ 38,749,784 $ 11,028,919 $ 4,000,000

Revolving Credit Facility

~~On June 1, 2021, the Company entered a~~The Company’s Revolving Purchase, Loan and Security Agreement ~~(the “TBK Agreement”)~~ with TBK ~~BANK,~~Bank, SSB, a Texas State Savings Bank ~~(“TBK”~~matured on May 31, 2023. The parties agreed to extend the maturity date and on July 20, 2023, the Company and TBK Bank entered into a new loan and security agreement (the “New TBK Agreement,”), amending and restating in their entirety, the terms, conditions, agreements, covenants, obligations, representations, and warranties of the existing TBK Agreement. The terms of the new agreement are substantially the same as the original agreement. The New TBK Agreement provides for a facility under which TBK Bank will, from time to time, ~~buy approved receivables from~~make advances under the ~~Company.~~Revolving Credit Facility to the Company in such amounts as the Company may request, but not to exceed $25,000,000. This ~~line was subject to periodic increases and on April 14, 2022, the parties entered into a Fourth Amendment to temporarily increase the credit facility availability from $47.5~~ ~~million to $57.5~~ ~~million through October 31, 2022. The line of credit facility returned to $47.5~~ ~~million as of November 30, 2022 and~~loan is scheduled to mature on ~~May 31, 2023.~~June 1, 2025.

~~Notes Payable~~Term Loans

On ~~May 29, 2020, as part of the acquisition of UL ATL~~March 10, 2023, the Company entered into a $~~1,825,000~~ ~~note payable~~financing agreement and related fee letter as a borrower with certain of its subsidiaries party thereto as guarantors, the lenders party thereto, CB Agent Services LLC, as origination agent, and Alter Domus (US) LLC, as collateral agent, and administrative agent (“the Lenders”). The Financing Agreement provides for an initial senior secured term loan in a ~~former shareholder.~~ ~~The agreement calls for six semi-annual payments~~principal amount of $~~304,167~~4,210,526~~, for~~ which was received on March 13, 2023 and a delayed draft term loan in an aggregate principal amount of up to $14,789,474. On June 30, 2023, the Company borrowed on the delayed draft term loan amount of $5,263,158. Each term loan under the financing agreement shall be, at the option of the Company, either a base rate loan or a SOFR Loan. Interest on each term loan shall be payable monthly in arrears, on the first ~~payment was due~~business day of each month. The outstanding principal amounts for all loans are subject to mandatory quarterly amortization at various rates, payable quarterly, throughout the life of the loan. These loans mature on ~~November 29, 2020.~~March 10, 2026 ~~The loan bears a zero percent interest rate and has a maturity of three years, or~~ ~~May 29, 2023~~. ~~The note’s remaining balance was recorded in the current portion of notes payable with balance of $304,167~~ ~~and $608,333~~ ~~as of February 28, 2023 and May 31, 2022, respectively.~~

~~On February 21, 2023,~~As discussed in more details in Subsequent Events Note 8, effective March 1, 2024, the Company and the Lenders entered into a waiver and amendment no. 2 to financing agreement (the “Second Waiver”), whereby the Lenders agreed to waive a certain event of default that has occurred or may occur, due to noncompliance with Section 7.03(a) of the agreement for each of the fiscal quarters in the fiscal year ending May 31, 2024 and for the fiscal quarter ending August 31, 2024. In addition, pursuant to the Second Waiver, the Borrowers agreed to pay the administrative agent as part of the ~~acquisitions of ULHL operating subsidiaries,~~SPAC termination costs a non-refundable waiver fee in an aggregate amount equal to $3,000,000, which was deemed fully earned on the ~~Company recorded $19.0~~ ~~million of new promissory notes payable to ULHL. $17.5~~ ~~million of these notes were recorded as the current~~effective date with interest on this portion of ~~notes payable~~the loan accrued through maturity with no interest or principal payments until maturity March 10, 2026. This instrument was classified as a liability that existed on the balance sheet date and $~~1.5~~ ~~million was recorded~~recognized at fair value and reported as ~~noncurrent portion of notes payable as of February 28, 2023.~~an additional term loan. (See Note 2).

As of February 29, 2024, the outstanding principal amount for the above loans combined was $12,000,000.
Debt Covenant
The Company is subject to certain financial covenants. As of February 29, 2024, the Company was in compliance with the financial covenants except for the following:
An event of default has occurred with the loan and security agreement with TBK Bank as a result of the Company failing to maintain, as of the last day of the fiscal quarter ended February 29, 2024, a fixed charge coverage ratio at a specified rate. On April 30, 2024, the Company entered into a waiver and amendment to the loan and security agreement with TBK Bank where the bank agreed to waive this default and to make certain modifications to the loan agreement.
~~F-18~~ F-16

5. RELATED PARTY TRANSACTIONS

The Company has the following debt due to related parties:
SCHEDULE OF RELATED PARTY ~~TRANSACTION~~TRANSACTIONS
February 28, 2023 May 31, 2022

Due to Frangipani Trade Services ⁽¹⁾ $ 451,964 $ 602,618
Due to employee ⁽²⁾ 7,500 30,000
Due to employee ⁽³⁾ 16,661 66,658
476,124 699,276
Less: current portion (325,478 ) (301,308 )
$ 150,655 $ 397,968
February 29, 2024 May 31, 2023

Due to FTS ⁽¹⁾ $ 650,655 $ 801,310
Due to ULHK⁽²⁾ 9,600,000 12,750,000
Total due to related party transaction 10,250,655 13,551,310
Less: current portion (150,655 ) (4,801,310 )
Non current portion $ 10,100,000 $ 8,750,000

(1) ~~Due~~Two Notes due to Frangipani Trade Services (“FTS”), an entity owned by the Company’s ~~CEO, is due on demand and is non-interest bearing.~~ CEO:
The Promissory Note dated March 30, 2021 in the principal amount ~~of this Promissory Note~~$903,927 bears no interest provided that any amount due under this Note which is not paid when due shall bear interest at an interest rate equal to six percent (6%) per annum. The principal amount is due and payable in six payments of $150,655 ~~the~~. The first payment was due on November 30, 2021, with each succeeding payment to be made six months after the preceding payment. The balance of this Promissory Note due within the next 12 months is $150,655 as of February 29, 2024.
~~(2)~~ ~~On May 29, 2020, the Company entered into a $90,000~~ ~~payable with an employee for the acquisition of UL BOS common stock from a previous owner. The payment terms consist of thirty-six monthly non-interest-bearing payments of $2,500~~ ~~from the date of closing.~~
~~(3)~~Promissory Note dated February 21, 2023, in connection with the acquisitions completed in the principal amount of $500,000 for the remaining 35% share capital of Unique Logistics International (India) Private Ltd. acquired by the Company from FTS maturing February 21, 2025, and bearing no interest.
(2) Due to ULHK, the entity with over 10% investment in the Company.
On ~~May 29, 2020,~~February 21, 2023, the Company ~~entered into a $200,000~~ ~~payable with an employee for~~completed the acquisition of ~~UL BOS common stock from~~eight ULHK operating subsidiaries, in a ~~previous owner. The payment terms consist~~combination of ~~thirty-six monthly non-interest-bearing payments~~cash and promissory notes issued to the Seller. As of $~~5,556~~ ~~from the date~~February 29, 2024, some of ~~closing.~~these notes were paid off or had been refinanced.
Transactions listed below are between the Company and ULHK and its operating subsidiaries. These are considered related party transactions due to ULHK being an entity with over 10% investment in the Company.

Accounts Receivable and Payable

Transactions with related parties account for $~~7.2~~0.2 million and $~~10.8~~3.1 million, respectively, of accounts receivable and accounts payable as of February ~~28, 2023, respectively,~~29, 2024, compared to $~~3.0~~ 3.5million and $~~15.2~~2.9 million, respectively, of accounts receivable and accounts payable as of May 31, ~~2022, respectively.~~2023.

Revenue and Expenses

Revenue from related party transactions is for export services from related parties or for delivery at place imports nominated by such related parties. For the three months ended February 29, 2024, and February 28, 2023, ~~and 2022~~ these transactions represented approximately $~~6.4~~0.2 million and $~~1.2~~6.4 million, respectively. For the nine months ended February ~~28,~~29, 2024, and February 2, 2023, ~~and 2022,~~ these transactions represented $~~5.5~~ 0.8million and $~~1.9~~5.5 million, respectively.

Direct costs are services billed to the Company by related parties for shipping activities. For the three months ended February 29, 2024, and February 28, 2023 ~~and 2022~~ these transactions represented approximately $~~4.5~~2.4 million and $~~13.1~~4.5 ~~million.~~million, respectively. For the nine months ended February 29, 2024, and February 28, 2023, ~~and 2022,~~ these transactions represented $~~32.5~~4.9 million and $~~39.0~~32.5 million, respectively.
~~F-19~~
6. STOCKHOLDERS’ EQUITY

Common Stock

The Company is authorized to issue 800,000,000 shares of stock, a par value of $0.001 per share.

F-17
During the ~~three and~~ nine months ended February ~~28, 2023,~~29, 2024, there were no common stock issuances ~~except for the~~and no conversions of Preferred ~~Shares as discussed below.~~Shares.

Preferred Shares

The Company is authorized to issue 5,000,000 shares of preferred stock, $0.001 par value per share.

Preferred Shares
Series A Convertible Preferred

The holders of Series A ~~Preferred.~~Preferred stock. subject to the rights of holders of shares of the Company’s Series B Preferred stock which shares will be pari passu with Series B Preferred in terms of liquidation preference and dividend rights and are subject to an anti-dilution provision, making the holders subject to an adjustment necessary to maintain their agreed upon fully diluted ownership percentage.
Each holder of shares of Series A Preferred stock has the right to convert all or any portion of such holder’s Series A Preferred stock into fully paid and non-assessable shares of common stock at any time or from time to time at such holder’s sole discretion. Each share of Series A Preferred Stock as to which the conversion right is exercised may be converted into 6,546.47 shares of the Company’s authorized but unissued shares of common stock.
If the common stock issuable upon conversion of Series A Preferred may be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise, then, in any such event, in lieu of the number of shares of common stock which the holders would otherwise have been entitled to receive, each holder of Series A Preferred Stock may have the right thereafter to convert such shares of Series A Preferred stock into a number of shares of such other class or classes of stock which a holder of the number of shares of common stock deliverable upon conversion of the Series A Preferred Stock immediately before that change would have been entitled to receive in such reorganization or reclassification, all subject to further adjustment as provided herein with respect to such other shares.
If and whenever on or after the date on which the holder received shares of Series A Preferred stock (the “Issuance Date”) and through December 31, 2024, the anti-dilution termination date, the Company issues or sells, or in accordance with the terms herein is deemed to have issued or sold, any shares of common stock or equivalents, the number of conversion shares issuable upon conversion will be adjusted to entitle the holder to acquire such number of shares of common stock necessary to maintain the holders fully-diluted ownership percentage at the time of the Issuance Date.

In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the stockholders of record of shares of Series A Preferred shall be entitled to receive, at their option, immediately prior and in preference to any distribution to the holders of the Company’s common stock, $0.001 par value per share and other junior securities, a liquidation preference equal to the Stated Value per share.

During the nine months ended February ~~28, 2023, a shareholder converted~~ ~~9,935~~ ~~shares of Series A Convertible Preferred Stock into~~ ~~67,963,732~~ ~~shares of the Company’s common stock. During the nine months ended February 28, 2022~~29, 2024, there were no conversions of Series A Preferred ~~Shares.~~stock.
Series B Convertible Preferred

The holders of Series B Preferred stock, subject to the rights of holders of shares of the Company’s Series A Preferred ~~Stock~~stock which shares will be pari passu with the Series B Preferred in terms of liquidation preference and dividend rights, ~~shall~~may be entitled to receive, at their option, immediately prior an in preference to any distribution to the holders of the Company’s common stock.
F-18
Each holder of shares of Series B Preferred stock has the right to convert all or any portion of such holder’s Series A Preferred Stock into fully paid and non-assessable shares of common stock at any time or from time to time at such holder’s sole discretion. Each share of Series B Preferred stock as to which the conversion right is exercised may be converted into 6,546.47 shares of the Company’s authorized but unissued shares of common stock.
If the common stock issuable upon conversion of Series B Preferred may be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise, then, in any such event, in lieu of the number of shares of common stock which the holders would otherwise have been entitled to receive, each holder of Series B Preferred stock may have the right thereafter to convert such shares of Series B Preferred stock into a number of shares of such other class or classes of stock which a holder of the number of shares of common stock deliverable upon conversion of the Series B Preferred Stock immediately before that change would have been entitled to receive in such reorganization or reclassification, all subject to further adjustment as provided herein with respect to such other shares.

In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the stockholders of record of shares of Series B Preferred shall be entitled to receive, at their option, immediately prior and in preference to any distribution to the holders of the Company’s common stock, $0.001 par value per share and other junior securities, a liquidation preference equal to the stated value per share.

~~During the nine months ended February 28, 2023 there were no conversions of Series B Preferred Shares.~~
~~During the nine months ended February 28, 2022 the Company issued~~ ~~125,692,224~~ ~~shares of the Company’s common stock pursuant to the conversion of~~ ~~19,200~~ ~~shares of Series B Convertible Preferred Stock held by Frangipani Trade Services Inc, an entity~~ ~~100% owned by the Company’s Chief Executive Officer~~
Series C & D Convertible Preferred

The number of shares designated as Series C and D Preferred stock may be 200 each. Such number may not be subject to increase without the written consent of the Series C and D holders of a majority of the then-issued and outstanding Series C or D Preferred stock. The Series C and D Preferred Stock have no voting rights.
Each share of Series C Preferred Stock may be convertible, at any time and from time to time from and after the date of issuance, at the option of the Series C holder thereof, into a number of shares of common stock determined in accordance with the conversion ratio calculated on the conversion date where each share of Series C Preferred stock may be a number of shares of common stock equal to 0.064113% (or up to 12.48% in the aggregate) of the Corporation’s common stock on a fully diluted basis, subject to anti-dilution adjustment.
Each share of Series D Preferred stock may be convertible, at any time and from time to time from and after the date of issuance, at the option of the Series D holder thereof, into a number of shares of common stock determined in accordance with the conversion ratio calculated on the conversion date where each share of Series D Preferred stock may be a number of shares of common stock equal to 0.0651869% (or up to 12.48% in the aggregate) of the Corporation’s common stock on a fully diluted basis, subject to anti-dilution adjustment.
In order to maintain the conversion ratio, the fully diluted basis may be calculated as of the conversion date and after an anti-dilution termination event the conversion ratio will be set to the fully diluted basis as of the moment after the anti-dilution termination event without any further adjustments for any subsequent issuance of common stock or equivalents, by the Corporation after the anti-dilution termination event. An anti-dilution termination event is the earlier of (i) December 31, 2024, or (ii) the closing of the qualified financing or SPAC merger.
The holders of the Series C and D Preferred ~~Stock shall~~stock may be entitled to receive, upon liquidation, dissolution or winding up of the Company, the amount of cash, securities, or other property to which such holder would be entitled to receive with respect to such shares of Series C and D Preferred ~~Stock~~stock if such shares had been converted to common stock immediately prior to such liquidation.

During the nine months ended February ~~28, 2023, a shareholder converted~~29, 2024, there were 7no ~~shares~~conversions of Series D ~~Convertible~~ Preferred ~~Stock into~~ ~~43,981,560~~ ~~shares of the Company’s common~~ stock.

~~During the nine months ended February 28, 2022 there were no conversions of Series C and D Preferred Shares.~~
~~F-20~~ F-19

7. COMMITMENTS AND CONTINGENCIES

Litigation

From time to time, the Company may become involved in litigation relating to claims arising in the ordinary course of the business. There are no claims or actions pending or threatened against the Company that, if adversely determined, would in the Company’s management’s judgment have a material adverse effect on the Company.

Leases

The Company leases office space, warehouse facilities and equipment under non-cancellable lease agreements expiring on various dates through October 2028. Office leases contain provisions for future rent increases. The Company adopted ASC 842 from inception, requiring the Company to recognize an asset and liability on the consolidated balance sheets for lease arrangements with terms longer than 12 months. The Company has elected the practical expedient to not apply the recognition requirement to leases with a term of less than one year (short term leases). The Company uses its incremental borrowing rate to discount lease payments to present value. The incremental borrowing rate is based on the estimated interest rate the Company could obtain for borrowing over a similar term of the lease at commencement date. Rental escalations, renewal options and termination options, when applicable, have been factored into the Company’s determination of lease payments when appropriate. The Company does not separate lease and non-lease components of contracts. Variable payments related to pass-through costs for maintenance, taxes and insurance or adjustments based on an index such as Consumer Price Index are not included in the measurement of the lease liability or asset and are expensed as incurred.

The components of lease expense were as follows:
SCHEDULE OF COMPONENTS OF LEASE EXPENSE
For the
Three Months Ended For the
Three Months Ended
February 28, 2023 February 28, 2022
Operating lease $ 531,728 $ 310,965
Interest on lease liabilities 202,885 16,910
Total net lease cost $ 734,613 $ 327,875

For the
Three Months Ended

For the
Three Months Ended

February 29, 2024 February 28, 2023
Operating lease cost – Right of Use Asset Amortization $ 734,957 531,728
Interest on lease liabilities 209,561 202,885
Total net lease cost $ 944,518 734,613

For the
Nine Months Ended For the
Nine Months Ended
For the
Nine Months Ended

For the
Nine Months Ended

February 28, 2023 February 28, 2022 February 29, 2024 February 28, 2023
Operating lease $ 1,269,299 $ 1,103,649
Operating lease cost – Right of Use Asset Amortization $ 2,144,717 1,269,299
Interest on lease liabilities 363,398 104,242 650,419 363,398
Total net lease cost $ 1,632,697 $ 1,207,891 $ 2,795,136 1,632,697

Supplemental balance sheet information related to leases was as follows:
SCHEDULE OF ~~SUPPLEMENT~~SUPPLEMENTAL BALANCE SHEET INFORMATION
February 28, 2023 May 31, 2022 February 29, 2024 May 31, 2023

Operating leases:
Operating lease ROU assets – net $ 10,931,331 $ 2,408,098 $ 9,395,501 $ 10,269,516

Current operating lease liabilities, included in current liabilities 2,422,306 912,618 2,676,904 2,379,774
Noncurrent operating lease liabilities, included in long-term liabilities 8,813,569 1,593,873 7,194,929 8,212,445
Total operating lease liabilities $ 11,235,875 $ 2,506,491 $ 9,871,833 $ 10,592,219

~~F-21~~ F-20

The operating lease right of use asset and corresponding lease liabilities were significantly impacted during the nine-month ended February 28, 2023, by a renewal of a warehouse lease located in in Santa Fe Springs, CA with a term of ~~5 years~~ ~~and the addition of new office warehouse lease in Lawrence, NY and an office in Garden City, NY with terms of~~ ~~5 years~~ ~~and~~ ~~3 years, respectively. The discount rate used to account for new leases was approximately~~ ~~10.0~~ %. The Company assessed the renewal options as a part of the adoption of ASC 842, if the renewal options were determined to be reasonably assured/certain at inception they would be appropriately captured within the future minimum lease payment schedule within the footnote of the Company’s financial statement and included in the ROU Asset and ROU liability upon transition.

Supplemental cash flow and other information related to leases was as follows:
SCHEDULE OF SUPPLEMENTAL CASH FLOW AND OTHER INFORMATION RELATED TO LEASES

For the
Three Months Ended

For the
Three Months Ended

February 29, 2024 February 28, 2023

ROU assets obtained in exchange for lease liabilities:
Operating leases $ 21,371 $ -
Weighted average remaining lease term (in years):
Operating leases 3.68 4.60
Weighted average discount rate:
Operating leases 9.01 % 8.57 %
For Nine Months For Nine Months
Ended Ended
February 28, 2023 February 28, 2022

ROU assets obtained in exchange for lease liabilities:
Operating leases $ 8,897,639 $ 1,098,769
Weighted average remaining lease term (in years):
Operating leases 4.60 3.98
Weighted average discount rate:
Operating leases 8.57 % 4.25 %
For For
Nine Months Ended Nine Months Ended
February 29, 2024 February 28, 2023

ROU assets obtained in exchange for lease liabilities:
Operating leases $ 1,270,702 $ 8,897,639
Weighted average remaining lease term (in years):
Operating leases 3.68 4.60
Weighted average discount rate:
Operating leases 8.96 % 8.57 %

~~As of February 28, 2023, future~~Future minimum lease payments under noncancelable operating leases are as follows:
SCHEDULE OF MINIMUM LEASE PAYMENTS
For the Twelve Months Ending February 28,
2024 $ 3,281,807
February 29, 2024
2024 (remaining) $ 3,397,531
2025 3,024,640 2,875,024
2026 2,660,969 2,753,892
2027 2,537,799 2,194,694
2028 1,978,600 238,279
Thereafter 131,485
Total lease payments 13,615,299 11,459,420
Less: imputed interest (2,379,424 ) (1,587,587 )
Total lease obligations $ 11,235,875 $ 9,871,833

~~F-22~~ F-21

8. INCOME TAX PROVISION

The expense (benefit) for income ~~tax provision~~taxes consists ~~of the following:~~of:
SCHEDULE OF INCOME TAX EXPENSE
For the
Three Month Ended
February 28, 2023
For the
Three Month Ended
February 28, 2022

Federal provision (benefit)
Current $ (134,755 ) $ (93,752 )
Deferred (135,654 ) 343,363
Foreign
10,299 -
State and Local provision (benefit)
Current (542,436 ) (81,039 )
Deferred (11,534 ) 59,635
Total provision $ (814,080 ) $ 228,207

For the
Three Months Ended
February 29, 2024

For the
Three Months Ended
February 28, 2023

Current:
Federal $ (676,503 ) $ (134,755 )
State (286,900 ) (542,436 )
Foreign 897,801 10,299
Total (65,602 ) (666,892 )
Deferred:
Federal (4,525,137 ) (135,654 )
State (156,917 ) (11,534 )
Foreign (521,138 )
Total (5,203,191 ) (147,188 )
Total tax expense (benefit) $ (5,268,793 ) $ (814,080 )

For the
Nine Months Ended
February 29, 2024

For the
Nine Months Ended
February 28, 2023

Current:
Federal $ (784,480 ) $ 1,194,842
State 107,978 (138,956 )
Foreign 1,727,544 10,299
Total 1,051,042 1,066,185
Deferred:
Federal (5,675,695 ) (188,613 )
State (413,042 ) (27,605 )
Foreign (749,730 ) -
Total (6,838,466 ) (216,218 )
Total tax expense (benefit) $ (5,787,424 ) $ 849,967
For the
Nine Month Ended
February 28, 2023
For the
Nine Month Ended
February 28, 2022

Federal provision (benefit)
Current $
1,194,842
$ 2,294,248
Deferred (188,613 ) 83,784
Foreign 10,299 -
State and Local provision (benefit)
Current (138,956 ) 371,961
Deferred (27,605 ) 15,214
Total provision $ 849,967   $ 2,765,207

~~In assessing~~
The Company recorded a provision for income tax benefit of $5.3 million, reflecting an effective tax rate of 48.3%, and $0.8 million of income tax benefit, reflecting an effective tax rate of 539.82%, for the ~~realization of deferred~~three months ended February 29, 2024, and February 28, 2023, respectively. For the three-months ended February 29, 2024, our effective tax ~~assets, management considers whether it is more likely than not that some portion or all~~rate differed from the U.S. federal statutory rate primarily due to the section 245A Deduction on distributions from foreign subsidiaries and equity investments. For the three-months ended February 28, 2023, our effective tax rate differed from the U.S. federal statutory rate primarily as a result of the ~~deferred~~foreign derived intangible income deduction.
The Company recorded a provision for income taxes benefit of $5.8 million, reflecting an effective tax ~~assets will not be realized. The ultimate realization~~rate of ~~deferred~~35.3%, and $0.8 million of income tax ~~assets is dependent upon future generation~~expense, reflecting an effective tax rate of 10.49%, for ~~taxable income during~~ the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. For the three and nine months ended February 29, 2024, and February 28, 2023, respectively. For the nine-months ended February 29, 2024, our effective tax rate differed from the U.S. federal statutory rate primarily due to the section 245A Deduction on distributions from foreign subsidiaries and ~~2022, there was~~ equity investments. For the nine-months ended February 28, 2023, our effective tax rate differed from the U.S. federal statutory rate primarily as a result of the foreign derived intangible income deduction.
Other noncurrent liabilities include liabilities for uncertain tax provision (UTP) as follows:
SCHEDULE OF UNCERTAIN TAX PROVISIONno ~~valuation allowance necessary.~~

For the
Nine Months Ended
February 29, 2024

For the
Nine Months Ended
February 28, 2023

Total UTP balance on June 1 $ 2,582,341 $         -
Additions based on tax provisions related to the current year - -
Additions for tax positions of prior years - -
Reductions for tax positions of prior years - -
Settlements - -
Reductions due to lapse of applicable statute of limitations - -

Total UTP balance on February 29, 2024 $ 2,582,341 $ -

The Company evaluated the provisions of ASC 740 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740 prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions that the Company has taken or expects to take in its tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized (or amount of net operating loss carry forward or amount of tax refundable is reduced) for unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740.
~~If applicable, interest costs~~ Interest and penalties related to the unrecognized tax ~~benefits~~positions are required to be calculated and would be classified as ~~“Other expenses – Interest”~~“tax expense” in the statement of operations. ~~Penalties would be recognized as a component~~Interest expense in the amount of ~~“General~~$0.3 million has been recorded related to the unrecognized tax positions for the period ended February 29, 2024 and ~~administrative.”~~
Nonone ~~interest or penalties on unpaid tax were recorded during~~for the ~~three and nine months~~period ended February 28, ~~2023 and 2022 and no liability for unrecognized~~2023. These reserves would impact income tax ~~benefits was required to be reported.~~expense if released into income. The Company does not expect ~~any significant changes in~~a change to its ~~unrecognized~~unrealized tax ~~benefits~~positions in the next ~~year.~~twelve months.

~~F-23~~ F-22

The ~~Company’s deferred~~Taxing jurisdiction that is significant to Company is the U.S. open tax ~~assets (liabilities) consisted of the effects of temporary differences attributable~~years related to ~~the following:~~this taxing jurisdiction remains subject to examination and could result in additional tax liabilities. The Company is no longer subject to income tax examinations for years before fiscal year 2019.
~~SCHEDULE OF DEFERRED TAX ASSETS (LIABILITIES)~~
Deferred Tax Assets February 28, 2023 May 31, 2022
Allowance for doubtful accounts $ 694,532 $ 733,139
Consulting contract liability 218,137 230,263
Lease liability 2,512,188 659,460
Other 548,364 238,006
Total deferred tax assets 3,973,221 1,860,868

Deferred Tax Liabilities
Operating lease right-of-use assets $ (2,418,863 ) $ (631,173 )
Goodwill and intangibles (321,736 ) (256,533 )
Fixed assets (39,012 ) (30,414 )
Net deferred tax asset $ 1,193,610 $ 942,748
~~The expected tax expense (benefit) based on the statutory rate is reconciled with actual tax expense benefit as follows:~~
~~SCHEDULE OF EXPECTED TAX EXPENSE (BENEFIT)~~

For the
Nine Months Ended February 28, 2023

For the
Nine Months Ended February 28, 2022

US Federal statutory rate 21.0- % 21.0 %
State income tax, net of federal benefit 2.0 % 9 %
Foreign income taxes and adjustments
0.6
%

-
%
Prior year provision adjustment to actual

(6.3
)%
- %
FDII deduction (6.7 )% - %
Change in valuation allowance - (3.0 )%
Other permanent differences, net (0.1 )% 1.0 %
Income tax provision 10.5 % 28.0 %
9. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date the consolidated financial statements were available to be issued. Based on this evaluation, the Company has identified no reportable subsequent events other than those disclosed elsewhere in these consolidated financial statements.

Merger Termination
As previously disclosed, on December 18, 2022, The Company entered into an Agreement and Plan of Merger by and among Edify Acquisition Corp., a Delaware corporation, Edify Merger Sub, Inc., a Nevada corporation (“Merger Sub”), and the Company, as amended and supplemented (the “Merger Agreement”). On March 1, 2024, the Company, Buyer and Merger Sub finalized a mutual termination agreement, pursuant to which they mutually agreed to terminate the Merger Agreement effective as of such date. (See Note 2: SPAC Merger Termination)
Amendment to the financing agreement and a waiver
As previously disclosed, on March 10, 2023, the Company entered into a financing agreement ~~and related fee letter~~(the “Agreement”) as borrower with certain of its subsidiaries party thereto as guarantors (collectively, the “Borrowers”), the lenders party thereto (collectively, the “Lenders”), CB Agent Services LLC, as origination agent, and Alter Domus (US) LLC, as collateral agent and administrative ~~agent. The Financing Agreement provides~~agent (together with CB Agents, the “Agents”)(collectively, the “Parties”), for an initial senior secured term loan in a principal amount of $~~4,210,526.32~~4.2 million and a delayed draft term loan available in an aggregate principal amount of up to $~~14,789,473.68~~14.8 million (See Note 4: Financing Arrangements)
Effective March 1, 2024, the Parties entered into a waiver and amendment no. 2 to financing agreement (the “Second Waiver”), whereby the Agents and the Lenders agreed to waive (i) (a) that certain event of default that has occurred or may occur, due to the borrower’s’ noncompliance with Section 7.03(a) of the Agreement for each of the fiscal quarters in the fiscal year ending May 31, 2024 and for the fiscal quarter ending August 31, 2024 (the “FCCR Event of Default”), (b) that certain Event of Default that has occurred or may occur, due to the Loan Parties’ noncompliance with Section 7.03(b) of the Agreement for each of the fiscal quarters in the fiscal year ending May 31, 2024 and for the fiscal quarter ending August 31, 2024 (the “Liquidity Event of Default”) and (c) that certain Event of Default that has occurred or may occur, due to the Loan Parties’ noncompliance with Section 7.03(c) of the Agreement for each of the fiscal quarters in the fiscal year ending May 31, 2024 and for the fiscal quarter ending August 31, 2024” and, together with the FCCR Event of Default and the Liquidity Event of Default, the “Specified Events of Default”). ~~The proceeds~~Each of the Specified Events of Default constitute an Event of Default under Section 9.01(c) of the Agreement; and (ii) interest at the post-default rate with respect to the Specified Events of Default from the date such ~~term loans may be used~~event occurred through the Second Waiver effective date (See Note 2: SPAC Merger Termination)
F-23
Line of credit waiver of financial covenant
On April 30, 2024, the Company entered into an amendment and waiver to ~~(i) pay fees~~the loan and ~~expenses~~security agreement, dated as of July 20, 2023 with TBK Bank, SSB where the bank agreed to waive a specified event of default and to make certain modifications to the loan agreement. All other terms and conditions of the original and amended loan and security agreement remain the same. This loan is scheduled to mature on June 1, 2025.
Amendment to Promissory Notes
As previously reported, on February 21, 2023, the Company issued to Unique Logistics Holdings Limited, a Hong Kong corporation (“ULHK”), three promissory notes related to ~~entering into the Financing Agreement and the related transaction documents and~~ the acquisitions of ~~those~~ certain ULHK entities ~~contemplated~~ by ~~that certain Stock Purchase Agreement~~the Company, as amended, with the following original principal amounts: (i) $2,500,000 (the “Net Assets Note”), (ii) $2,000,000 (the “Second Net Assets Note”), (iii) $2,000,000 (the “Taiwan Note”), and (iv) $1,000,000 (the “Original Seller Note”), respectively.
On October 3, 2023, the Company and ULHK agreed to cancel, replace and supersede the Net Assets Note and the Taiwan Note, each in their entirety, in favor of a newly issued promissory note as of the same date (“Note 9”). Note 9 includes the remaining balances of the Net Assets Note and the Taiwan Note, along with an additional loan in the principal amount of $1,100,000 for an aggregate principal amount of $4,500,000. Note 9 matures on March 31, 2025, and has an interest rate of fifteen percent (15%) per annum.
On October 9, 2023, the Company amended the Second Net Assets Note (the “Amended Second Net Assets Note”), which extended the maturity date thereof from February 21, 2024, to March 31, 2025. The Amended Second Net Assets Note includes simple interest accruing at a rate of fifteen percent (15%) per annum starting February 21, 2024, until such time as the principal amount is paid in full.
On March 5, 2024, the Company and ULHK agreed to cancel, replace and supersede Note 9, in its entirety, in favor of (i) a promissory note in the aggregate principal amount of $2,500,000 (“Note 11”) and (ii) a promissory note in the aggregate principal amount of $3,400,000 (“Note 12”).
Note 11 matures on June 30, 2025, with an interest rate of 15% per annum, payable to ULHK in quarterly installments.
Note 12 matures on June 30, 2025, with an interest rate of 15% per annum.
On March 5, 2024, the Company and ULHK further amended the Amended Second Net Assets Note”), which extended the maturity date thereof from March 31, 2025 to June 30, 2025.
Additionally, on March 6, 2024, the Company and ULHK amended the Original Seller Note which extended the maturity date thereof from the second anniversary of the date of the Note to June 30, 2025 and increased the principal amount of the Note to $1,053,000.
Acquisitions
On April 29, 2024, the Company entered into a share sale and purchase agreement between the Company and ~~seller thereunder and those separate certain Share Sale and Purchase Agreements, as previously reported on~~Unique Logistics Holdings Limited, a Hong Kong corporation (the “ULHK”), to acquire 100% ULHK’s share capital in Unique Logistics International (Sin) Pte Ltd., with a purchase price of $2.2 million, to be settled in cash in the ~~Company’s Current Report on Form 8-K filed on February 27, 2023 (the “Acquisitions”), (ii) redeem certain~~amount of the notes issued to the Seller in connection with the Acquisition, and (iii) pay fees and expenses related of the transactions contemplated by that certain Agreement and Plan of Merger, dated as of December 18, 2022, by and among Edify Acquisition Corp., a Delaware corporation, Edify Merger Sub, Inc., a Nevada corporation,$0.4 million and the assumption by the Company ~~as previously reported on the Company’s Current Report on Form 8-K filed on December 19, 2022.~~of $1.8 million existing indebtedness to ULHK.

Subsequently to quarter ended on February 28, 2023, the Company paid off two of the Promissory Notes to the Seller (See Note 2, Acquisitions) including associated interest, and made a partial payment on another note, as follows:
~~SCHEDULE OF PROMISSORY NOTES DUE~~
Promissory Notes Due 3/7/2023 Note 1 to ULHL $ 4,500,000 15.0 %
4/7/2023 Note 2 to ULHL 5,000,000 15.0 %
6/30/2023 Note 3 to ULHL
500,000
15.0 %
Total: $ 10,000,000
F-24
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes a number of 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”) that reflect management’s current views with respect to future events and financial performance. These statements are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by the Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, ~~judgments~~judgements and assumptions. We believe that the estimates, ~~judgments~~judgements and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, ~~judgments~~judgements and assumptions are made. These estimates, ~~judgments~~judgements and assumptions can affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our condensed consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results. The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto appearing elsewhere in this report. The forward-looking statements made in this report are based only on events or information as of the date on which the statements are made in this report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents we refer to in this report and have filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect. These risks include, by way of example and without limitation:

● The ~~company~~Company provides services to customers engaged in international commerce. Everything that affects international trade has the potential to expand or contract our primary market and adversely impact our operating ~~results.~~results

● We depend on operators of aircrafts, ships, trucks, ports and ~~airports.~~airports

● We derive a significant portion of our total revenues and net revenues from our largest ~~customers.~~customers

● Due to our dependence on a limited number of customers, we are subject to a concentration of credit ~~risk.~~risk

● Our earnings may be affected by seasonal changes in the transportation ~~industry.~~industry
3
● Our business is affected by ever increasing regulations from a number of sources in the United States and in foreign locations in which we ~~operate.~~operate
3
● As a ~~multinational~~ corporation transacting business in multiple countries, we are subject to formal or informal investigations from governmental authorities or others in the countries in which we do ~~business.~~business

● The global economy and capital and credit markets continue to experience uncertainty and ~~volatility.~~volatility

● Our business is subject to significant seasonal fluctuations driven by market demands and each quarter is affected by seasonal trends.

● Our revenue and direct costs are subject to significant fluctuations depending on supply and demand for freight capacity.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or performance. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission (“SEC”). We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions.

Business Overview and Recent Developments

The Company is a global logistics and freight forwarding company.
Unique Logistics provides a range of international logistics services that enable its customers to outsource to the Company sections of their supply chain process. ~~The services provided by the Company are seamlessly managed by its~~Our global network of trained employees and integrated information ~~systems.~~systems seamlessly manage the services that we provide. We enable our customers to share data regarding their international vendors and purchase orders with us, execute the flow of goods and information under their operating instructions, provide visibility to the flow of goods from factory to distribution center or store and, when required, update their inventory records.

Our range of services can be categorized as follows:

● Air ~~Freight~~freight services
● Ocean ~~Freight~~freight services
● Customs ~~Brokerage~~brokerage and ~~Compliance~~compliance services
● Warehousing and ~~Distribution~~distribution services
● Order management

On February 21, 2023, we ~~closed~~the Company completed the acquisition of all of the share capital ~~(the “Purchased Shares”)~~ owned by Unique Logistics Holdings Limited, a Hong Kong company (“~~ULHL”~~ULHK”), in eight subsidiaries ~~(the “ULHL~~(the “ULHK Entities”) for $26.5 million (the ~~“ULHL~~“ULHK Entities Acquisition”), provided that the acquisition of the Purchased Shares in each of Unique Logistics International Co., Ltd (“Unique-Taiwan”) and Unique Logistics International (Vietnam) Co., Ltd. (“Unique-Vietnam”) is subject to receipt of all required governmental approvals in Taiwan and Vietnam, respectively, and the Company’s acquisition of the Purchased Shares in those entities will therefore not officially close until after such approvals are obtained, which we expect will be second or third quarter of 2023.. In addition to the acquisition of the shares in the ~~ULHL~~ULHK Entities, we Unique Logistics acquired two companies that are owned by two of the ~~ULHL~~ULHK Entities. We expect that the acquisition of these entities will have a material favorable impact on the Company’s revenues and consolidated income going forward.
At
On December 18, 2022, the ~~closing~~Company entered into an Agreement and Plan of Merger by and among Edify Acquisition Corp., a Delaware corporation, Edify Merger Sub, Inc., a Nevada corporation, and the Company, as amended and supplemented (the “Merger Agreement”). On March 1, 2024, the parties entered into a mutual termination agreement, pursuant to which they mutually agreed to terminate the Merger Agreement effective as of such date.
Market and Business Trends - Overview of Impact on Results of Operations
The logistics industry experienced a global slowdown in 2023 compared with calendar year 2022. Typically, the flow of imported goods to the United States starts to pick up for the “back to school” and “holiday sales” seasons during the June to November period, with a particular increase in air shipping to meet store deadlines towards the later part of this peak period. In 2023, however, overall volumes remained depressed even during the traditional peak period, possibly due to excess inventory overhang and conservative ordering by retailers. The trend started to reverse itself, somewhat, in the later part of the ~~ULHL Entities Acquisition,~~traditional June to November peak with conversions of shipping mode, to air freight from sea freight, and the Company ~~paid $3.5~~benefited through increased air freight revenue but at low margins.
By December 2023, attacks on ships in the Red Sea, which required re-routing of vessels traveling from Asia to Europe and the East Coast of the United States, created shipping bottlenecks and increased freight rates. Air freight volumes were already on an elevated trend driven by Chinese e-commerce shipments and the Red Sea situation added to this volume as shippers converted ocean shipments to air. Thus, air freight rates have been driven up and they remain at elevated levels as Chinese e-commerce shipping continues to grow and the Red Sea situation has become worse.
4
Results of Operations for the Three Months ended February 29, 2024 and February 28, 2023
Revenue
For the three months ended February 29, 2024 and February 28, 2023, Unique Logistics’ revenue by product line was as follows:

For the
Three Months ended
February 29, 2024

For the
Three Months ended
February 28, 2023
$ change % change

Airfreight services $ 31,672,402 $ 13,206,112 $ 18,466,290 139.8 %
Ocean freight and ocean services 27,543,642 23,106,949 4,436,693 19.2 %
Contract logistics 579,675 755,034 (175,359 ) (23.2 )%
Customs brokerage and other services 8,034,666 12,559,407 (4,524,741 ) (36.0 )%
Total revenues $ 67,830,385 $ 49,627,502 $ 18,202,883 36.0 %
For the three months ended February 29, 2024 and February 28, 2023, the Company’s revenue by product line, excluding the operations of the ULHK Entities acquired on February 21, 2023, were as follows:

For the
Three Months ended
February 29, 2024

For the
Three Months ended
February 28, 2023
$ change % change

Airfreight services $ 23,150,157 $ 13,206,112 $ 9,944,045 75.3 %
Ocean freight and ocean services 19,331,728 23,106,949 (3,775,221 ) (16.3 )%
Contract logistics 579,675 755,034 (175,359 ) (23.2 )%
Customs brokerage and other services 7,363,918 12,559,407 (5,195,489 ) (41.4 )%
Total revenues $ 50,425,478 $ 49,627,502 $ 797,976 1.6 %
The 36.0% increase in total revenues for the three months ended February 29, 2024, compared to the three months ended February 28, 2023, is primarily due to increases in airfreight revenue and, to a lesser extent, ocean freight and ocean services revenue, offset by a decrease in revenue from customs brokerage and other services.
The 139.8% increase in airfreight revenue was primarily due to the acquisition of the ULHK Entities and the market trends discussed above. A 209.8% increase in volume resulted in a 149.3% increase in air freight revenue, offset by a 49.3% reduction in such revenue as a result of a 22.3% decrease in air freight pricing compared to the same period last year.
Excluding airfreight revenues of $8.5 million (net of intercompany eliminations) attributable to the operations of the ULHK Entities, air freight revenue increased by 75.3% over the same period last year. A 97.1% increase in ~~cash~~volume resulted in a 129.0% increase in air freight revenue, offset by a 29.0% reduction in such revenue as a result of an 11.1% decrease in pricing, quarter over quarter.
The 19.2% increase in ocean freight and ~~issued promissory notes~~ocean services revenue was due to ~~ULHL totaling $23.0~~the acquisition of the ULHK Entities in February 2023, offset by a decrease in ocean freight and ocean services revenue from our legacy operations. The overall increase in ocean freight and ocean services revenues was the result of an 81.8% increase in volume, which resulted in a 426.1% increase in such revenue, offset by a 326.1% decrease in such revenue resulting from a 34.4% reduction in pricing, quarter over quarter.
Excluding ocean revenues of $8.2 million (net of intercompany eliminations) attributable to ~~purchase~~ the ~~Purchased Shares.~~acquisition of the ULHK Entities, ocean freight and ocean services revenue decreased by 16.3% over the same period last year. Such decrease is the result of a 22.5% decrease in pricing for such services, which resulted in a 148.8% decrease in revenues, offset by an increase of 48.8% in such revenue resulting from an 8.0% increase in volume, quarter over quarter.
The decline in revenue from customs brokerage and other services during the three months ended February 29, 2024 as compared with the same period of 2023 was a direct result of our asking customers to pay their own duties.
While not a material contributor to the decrease in revenues generally, contract logistics revenue declined by 23.2% during the three months ended February 29, 2024 compared with the same period of 2023, both with and without the inclusion of the operations of the ULHK Entities, because of the overall decrease in demand for ocean freight and services, meaning less cargo was being handled in the Company’s warehouses.
5
Costs and Operating Expenses
For the three months ended February 29, 2024 and February 28, 2023, Unique Logistics’ costs and operating expenses were as follows:

For the
Three Months ended
February 29, 2024

For the
Three Months ended
February 28, 2023
$ change % change
Costs and operating expenses:
Airfreight services $ 29,076,358 $ 11,964,314 $ 17,112,044 143.0 %
Ocean freight and ocean services 23,999,410 19,722,259 4,277,151 21.7 %
Contract logistics 126,523 215,245 (88,722 ) (41.2 )%
Customs brokerage and other services 6,346,786 11,397,398 (5,050,612 ) (44.3 )%
Salaries and related costs 5,529,773 3,076,221 2,453,552 79.8 %
Professional fees 666,850 39,082 627,768 1606.3 %
Rent and occupancy 1,176,612 883,681 292,931 33.1 %
Selling and promotion 609,751 1,471,236 (861,485 ) (58.6 )%
Depreciation and amortization 752,750 203,390 549,360 270.1 %
Foreign exchange transactions, net 26,858 - 26,858 100 %
Other expense 282,871 323,747 (40,876 ) (12.6 )%
Total costs and operating expenses $ 68,594,542 $ 49,296,573 19,297,969 39.1 %
For the three months ended February 29, 2024 and February 28, 2023, the Company’s costs and operating expenses, excluding the operations of the ULHK Entities, were as follows:

For the
Three Months ended
February 29, 2024

For the
Three Months ended
February 28, 2023
$ change % change
Costs and operating expenses:
Airfreight services $ 21,877,801 $ 11,964,314 $ 9,913,487 82.9 %
Ocean freight and ocean services 17,206,923 19,722,259 (2,515,336 ) (12.8 )%
Contract logistics 145,747 215,245 (69,498 ) (32.3 )%
Customs brokerage and other services 5,743,583 11,397,398 (5,653,815 ) (49.6 )%
Salaries and related costs 3,334,963 3,076,221 258,742 (8.4 )%
Professional fees 627,225 39,082 588,143 1,504.9 %
Rent and occupancy 846,327 883,681 (37,354 ) (4.2 )%
Selling and promotion 527,871 1,471,236 (943,365 ) (64.1 )%
Depreciation and amortization 464,708 203,390 261,318 128.5 %
Other expense 456,037 323,747 132,290 40.9 %
Total costs and operating expenses $ 51,231,185 $ 49,296,573 1,934,612 3.9 %
The $16.3 million or 37.5% increase in cost of sales correlates with the 36.0% increase in product revenue for the period, specifically in airfreight and ocean freight and ocean services revenue.
In addition, other operating and administrative expenses increased by $3.0 million during the three months ended February 29, 2024, compared to the same period of 2023, primarily due to a $2.5 million increase in salaries and related costs, $2.2 million of which is attributable to the employees of our new subsidiaries acquired in the ULHK Entities Acquisition; the balance of this increase resulted primarily from increases in professional fees, rent and occupancy, and amortization of newly acquired intangible assets, offset by a decrease in selling and promotional expenses. The Company doesn’t expect significant increases in salaries and benefits going forward and is considering actions it can implement to curtail these costs in future periods. Professional fees increased during the three months ended February 29, 2024 compared to the same period of 2023 primarily due to additional legal fees incurred in connection with the now-abandoned merger transaction pursuant to the Merger Agreement. Approximately half of the 33.1% increase in rent and occupancy expenses was due to an increase in the rental rates of our warehouse facility in Los Angeles and the other half to leases of the newly acquired ULHK Entities. The Company doesn’t expect significant increases in rent and occupancy expenses going forward. The 270.1% increase in depreciation and amortization was the result of recognition of approximately $6.5 million of identifiable intangible assets such as customer relations and non-compete agreements as part of the ULHK Entities Acquisition. These intangible assets are now being amortized over the useful life of the assets contributing to approximately half of the increase, with the other half being contributed by depreciation expense recorded by the ULHK Entities. Finally, selling and promotion expenses decreased by 58.6% quarter-over-quarter due to lower sales commissions as a result of revisions of commission-based sales targets.
6
Excluding costs (net of intercompany eliminations) attributable to the operations of the ULHK Entities, costs of sales increased by $1.6 million or 3.8% during the quarter ended February 29, 2024, compared to the same period of 2023, which is consistent with the $0.8 million or 1.6% increase in product revenue for the same period.
Other operating and administrative expenses, excluding the operations of the ULHK Entities, increased by $0.3 million, primarily as a result of increases in professional fees, salaries and related costs, and depreciation and amortization, offset by a decrease in selling and promotion expenses. Professional fees increased by $0.6 million primarily due to additional legal fees incurred in connection with the now-abandoned merger, as discussed above. The 128.5% increase in depreciation and amortization was the result of our recognition of approximately $6.5 million of identifiable intangible assets such as customer relations and non-compete agreements as part of the ULHK Entities Acquisition. Selling and promotion expenses decreased by $0.9 million or 64.1% period-over-period due to lower sales commissions as a result of revisions of commission-based sales targets.
Gross Margins
Gross margin as a percentage of revenue decreased from 12.8% for three months ended February 28, 2023, to 10.0%, or to 10.8% excluding the operations of the ULHK Entities, during the three months ended February 29, 2024.as a result of market pricing fluctuations Gross margin is an important measurement of a logistics company’s efficiency and profitability. The Company is focused on this and other measures when making strategic decisions and investments.
Other Income (Expenses)
During the quarter ended February 29, 2024, total other expenses were $10.6 million and consisted of $1.4 million of interest paid ~~off one such promissory note~~on our operating line of credit with TBK Bank, SSB, term debt and related party debt, a net gain in derivative liabilities of $4.3 million, a $10.4 million expense related to the termination of the Merger Agreement in the form of an additional loan and issuance of a warrant and an uplist termination cost of previously deferred offering costs in the amount of $4.5 million, which matured on March 7, 2023, using cash held by the ULHL Entities. One such promissory note in the amount of $5.0 million matures on April 7, 2023, four promissory notes in the aggregate amount of $10.5 million mature on June 30, 2023, and one promissory note in the amount of $1.0 million matures on February 21, 2024.$3.1 million.
While the promissory notes related to the purchase price for the Purchased Shares in Unique-Taiwan and Unique-Vietnam, in the amount of $2.0 million and $1.0 million, respectively, mature on June 30, 2023, they are not payable until the later of July 15, 2023, or 15 days after receipt of all required or necessary government and other regulatory approvals. These promissory notes and the promissory note due in 2024 bear no interest, while the promissory notes due during 2023 have an annual interest rate of 15%.
In addition, the Company may be obligated to pay ULHL an earn-out payment of either $2.5 million or $2.0 million if the ULHL Entities achieve certain EBITDA-related milestones during the 12 month-period ending June 30, 2023. Any such earn-out payment would be due, in cash, on or before September 28, 2023.
$1.0 million of the cash portion of the purchase price was used to establish a reserve against certain potential existing and contingent liabilities relating to certain of the ULHL Entities that had not been disclosed to the Company as of the date of the original Stock Purchase Agreement with respect to the ULHL Entities Acquisition. To the extent that any claims related to such undisclosed liabilities are asserted on or before February 20, 2024, any amounts that the relevant ULHL Entities pay upon settlement or are found liable for by a competent court, tribunal or governmental authority will be paid to Unique Logistics up to the $1.0 million amount of the reserve. If no such claims are made then the entire $1.0 million reserve, or the amount left, if any, after deducting such settlement or liability amounts, will be released to ULHL.
~~We expect that the closing of the ULHL Entities Acquisition during~~During the quarter ended February 28, 2023, ~~will result in significant increases in revenues and~~total other expenses ~~over the next 12 months as we integrate the operations~~ of ~~the ULHL entities with our own.~~$0.5 million consisted primarily of interest expense of $0.5 million.

Results of Operations for the Nine Months Ended February 29, 2024 and February 28, 2023
~~Market and Business Trends~~Revenue

~~The current fiscal year~~For the nine months ended February 29, 2024 and February 28, 2023, that commenced June 1, 2022, can be considered the Company’s first fiscal year in the post Covid period. The impact of Covid in the previous two fiscal years resulted in an initial drop in shipping volumes and then the post Covid surge in shipping volumes including all related logistics challenges.Unique Logistics’ revenue by product line was as follows:

Market conditions have trended towards a slowdown in shipping in the current fiscal year. This slowdown significantly impacted the Company in the third quarter. The impact was particularly severe in the air freight sector. The uncertainty created by inflation and high inventory levels coupled with the fact that the Company’s third quarter is traditionally a slow period due to shipping market seasonality, has resulted in lower shipping volumes and lower shipping costs. Lower shipping costs result in lower revenue for the Company. However, we believe that the Company is positioned to improve net revenue yield through improved procurement; the Company has also added to its customer base in the last twelve months, which will mitigate the impact of a declining shipping market.

For the
Nine Months ended
February 29, 2024

For the
Nine Months ended
February 28, 2023
$ change % change

Airfreight services $ 87,102,162 $ 64,721,816 $ 22,380,346 35.6 %
Ocean freight and ocean services 74,933,392 159,292,026 (84,358,634 ) (53.0 )%
Contract logistics 1,892,954 2,499,459 (606,505 ) (24.3 )%
Customs brokerage and other services 28,612,414 48,460,306 (19,847,892 ) (41.0 )%
Total revenues $ 192,540,922 $ 274,973,607 (82,432,685 ) (30.0 )%

The Company continues to invest in sales and marketing to increase market share. The ULHL Entities Acquisition has added to the Company’s customer base and its ability to target new business. The Company continues to seek strategic acquisitions to supplement organic growth. We believe that these actions put the Company in a good position to maintain growth trends even without a significant turnaround in global shipping in the foreseeable future.
47

~~Results of Operations for~~For the ~~Three Months~~nine months ended February 29, 2024 and February 28, 2023, ~~and~~the Company’s revenue by product line, excluding the operations of the ULHK Entities acquired on February ~~28, 2022~~21, 2023, were as follows:

~~Revenue~~

For the
Nine Months ended
February 29, 2024

For the
Nine Months ended
February 29, 2023
$ change % change

Airfreight services $ 61,548,566 $ 64,721,816 $ (3,173,250 ) (4.9. )%
Ocean freight and ocean services 57,451,916 159,292,026 (101,840,110 ) (63.9 )%
Contract logistics 1,892,954 2,499,459 (606,505 ) (24.3 )%
Customs brokerage and other services 23,373,286 48,460,306 (25,087,020 ) (51.8 )%
Total revenues $ 144,266,722 $ 274,973,607 (130,706,885 ) (47.5 )%

The ~~Company’s~~30.0% decrease in total ~~revenue~~revenues for the ~~three~~nine months ended February 29, 2024, compared to the nine months ended February 28, 2023, ~~and 2022 was $49.6 million and $250.4 million, respectively. This 80.2% decrease period over period~~ is ~~primarily~~almost entirely due to decreases ~~of 83.1%~~in ocean freight and ocean services revenue and, to a lesser extent, in customs brokerage revenue, offset by an increase in air ~~freight revenue and 54.1% in ocean~~ freight revenue.

The ~~air~~53.0% decrease in ocean freight and ocean services revenue ~~reduction~~ was ~~primarily driven by an approximately 90%~~attributable to a reduction in ~~airfreight~~pricing period over period, offset by a slight increase in volume. ~~Shipping volumes~~A20.3% increase in volume, primarily as a result of the ~~United States~~acquisition of the ULHK Entities, resulted in a 38.4% increase in ocean freight and ocean services revenue, offset by a 138.4% decrease in such revenue resulting from a 60.9% reduction in pricing based on market ~~has declined significantly~~conditions, period over period.
Excluding revenues of $17.5 million (net of intercompany eliminations) attributable to the operations of the ULHK Entities, ocean freight and ocean services revenue decreased 63.9% during the ~~Company feels its impact through lower shipping volumes by its existing customers. Comparatively,~~nine months ended February 29, 2024, compared to the nine months ended February 28, 2023, which decrease is attributable to reductions in both pricing and volume period over period. A 22.4% decrease in volume accounted for 35.1% of the ~~corresponding quarter~~decrease while a 53.5% decrease in the prior fiscal year demand for air freight was so great that the Company was operating dedicated air cargo charters for its customers. The air charter program was an agreement with several major airlines to add a substantial number of charter flightspricing accounted for the ~~period of August 1, 2021, through December 31,2021 peak season. The charter flights were concluded in the third quarter~~remaining 64.9% of the ~~prior fiscal year.~~decrease in ocean freight and ocean services revenue, period over period.

The 41.0% decline in ~~ocean freight~~ revenue from customs brokerage and other services during the nine months ended February 29, 2024, as compared to the same period of 2023 was a direct result of our asking customers to pay their own duties as duty is a pure cash outlay.
The 35.6% increase in airfreight revenue during the nine months ended February 29, 2024, as compared to the same period of 2023, was due to the acquisition of the ULHK Entities and the market trends discussed above. A 114.7% increase in volume resulted in a 331.8% increase in air freight revenue, offset by a 231.8% decrease in such revenue resulting from a 37.3% reduction in pricing ~~reduction~~due to market conditions, period over period.
Excluding revenues of ~~approximately 58.0% and a volume reduction~~$25.6 million (net of ~~approximately 47.0% over the comparable period last year, equally contributing~~intercompany eliminations) attributable to the ~~overall ocean~~operations of the ULHK Entities, airfreight revenue reduction for the period. The overall shipping volumes are currently experiencing a steady global decline in the past 12 months, with additional ocean freight capacity available, putting further pressure on pricing. The Company’s third quarter is traditionally a slow shipping perioddecreased 4.9%, mostly due to ~~seasonal factors.~~a decrease in market prices, period over period. While volume increased 25.5%, resulting in a 519.2% increase in air freight revenue, this increase was offset by a 619.2% decrease in such revenue resulting from a 24.2% reduction in pricing period over period.
~~Going forward, management is expecting~~While not a material contributor to the decrease in revenues generally, contract logistics revenue declined by 24.3%, both with and without the ~~air and~~inclusion of the ~~ocean freight business to steadily improve in terms~~operations of ~~volumes and to remain stable in terms~~the ULHK Entities, during the nine months ended February 29, 2024 compared with the same period of ~~pricing in the second half of calendar~~ 2023 ~~based on the customer projections and secured customer commitments received to date.~~mostly due a lower warehousing activity off peak season.
8
Costs and Operating Expenses

~~Cost of freight~~For the nine months ended February 29, 2024 and ~~other~~February 28, 2023, Unique Logistics’ costs and operating expenses were ~~$49.3 million for~~as follows:

For the
Nine Months ended
February 29,
2024

For the
Nine Months ended
February 28,
2023
$ change % change
Costs and operating expenses:
Airfreight services $ 81,374,442 $ 59,465,104 $ 21,909,338 36.8 %
Ocean freight and ocean services 62,964,504 142,806,034 (79,841,530 ) (55.9 )%
Contract logistics 507,326 846,226 (338,900 ) (40.0 )%
Customs brokerage and other services 24,263,573 44,773,324 (20,509,751 ) (45.8 )%
Salaries and related costs 17,293,553 10,036,200 7,257,353 72.3 %
Professional fees 2,299,312 1,213,807 1,085,505 89.4 %
Rent and occupancy 3,382,602 2,026,363 1,356,239 66.9 %
Selling and promotion 1,888,439 2,033,668 (145,229 ) (7.1 )%
Depreciation and amortization 2,203,093 606,030 1,597,063 263.5 %
Foreign exchange transactions, net (267,209 ) - (267,209 ) %
Other expense 948,402 993,508 (45,106 ) (4.5 )%
Total costs and operating expenses $ 196,858,037 $ 264,800,264 (67,942,227 ) (25.7 )%
For the ~~three~~nine months ended February 29, 2024 and February 28, 2023, ~~compared to $248.2~~Unique Logistics’ costs and operating expenses, excluding the operations of the ULHK Entities, were as follows:

For the
Nine Months ended
February 29, 2024

For the
Nine Months ended
February 28,
2023
$ change % change
Costs and operating expenses:
Airfreight services $ 59,064,241 $ 59,465,104 $ (400,863 ) (0.7 )%
Ocean freight and ocean services 50,176,428 142,806,034 (92,629,606 ) (64.9 )%
Contract logistics 507,326 846,226 (338,900 ) (40.0 )%
Customs brokerage and other services 20,338,896 44,773,324 (24,434,428 ) (54.6 )%
Salaries and related costs 10,733,395 10,036,200 697,195 6.9 %
Professional fees 2,150,093 1,213,807 936,286 77.1 %
Rent and occupancy 2,516,493 2,026,363 490,130 24.2 %
Selling and promotion 1,651,463 2,033,668 (382,205 ) (18.8 )%
Depreciation and amortization 1,394,290 606,030 788,260 130.1 %
Other expense 1,046,785 993,508 (53,277 ) 5.4 %
Total costs and operating expenses $ 149,579,410 $ 264,800,264 (115,220,854 ) (43.5 )%
the $78.8 million or 31.8% reduction in cost of sales correlates with the 30.0% decrease in product revenue for the ~~three~~period, as discussed above.
The overall decrease in cost and operating expenses for the period of $67.9 million or 25.7% was due to the decrease in cost of sales offset by increases in other operating and administrative expenses, which in total increased by $10.8 million during the nine months ended February ~~28, 2022, a reduction of 80.1% that correlates with the reduction in total revenue during~~29, 2024, compared to the same period of 2023, primarily due to a $7.3 million increase in salaries and related costs, $6.6 million of which is attributable to the employees of our new subsidiaries acquired in the ULHK Entities Acquisition; the balance of this increase resulted primarily from increases in professional fees, rent and occupancy costs and amortization of newly acquired intangible assets. Professional fees increased during the nine months ended February 29, 2024, compared to the same period of 2023, primarily due to additional legal fees incurred in connection with the now-abandoned merger transaction pursuant to the Merger Agreement. Approximately half of the 66.9% increase in rent and occupancy expenses was due to an increase in the rental rates of our warehouse facility in Los Angeles and the other half related to leases of the newly acquired ULHK Entities. The 263.5% increase in depreciation and amortization was the result of recognition of approximately $6.5 million of identifiable intangible assets such as ~~discussed above~~customer relations and non-compete agreements as ~~air freight services~~part of the ULHK Entities Acquisition. These intangible assets are now being amortized over the useful life of the assets contributing to approximately half of the increase, with the other half being contributed by depreciation expense recorded by the ULHK Entities.
Excluding the cost of sales of the acquired ULHK Entities of $39.9 million, cost of sales decreased by $117.1 million period over period or 43.5%, which is consistent with the 47.5% decrease in product revenue for the period.
9
The overall decrease in total cost and operating expenses for the period, excluding the operations of the ULHK Entities, of $115.2 million or 43.5% was due to the cost of sales decrease offset by a $2.5 million increase in other operating and administrative expenses during the nine months ended February 29, 2024, compared to the same period of 2023, as a result of increases in salaries and related costs, ~~were 90.6% lower~~professional fees, rent and ~~ocean freight~~occupancy expenses and ~~ocean services costs were 80.2% lower~~amortization of newly acquired intangible assets, offset by a decrease in selling and promotion expenses. Professional fees increased during the three months ended February ~~28, 2023,~~29, 2024, compared ~~with~~to the same period of ~~2022.~~
~~Other operating and administrative expenses increased~~2023, primarily due to additional legal fees incurred in ~~total by $1.1 million or 23 %, primarily because~~connection with the no-abandoned merger transaction pursuant to the Merger Agreement. Most of the ~~timing~~$0.5 million increase in rent and occupancy expenses was due to an increase in the rental rates of our warehouse facility in Los Angeles. The 130.1% increase in depreciation and amortization was the result of recognition of approximately $6.5 million of identifiable intangible assets such as customer relations and non-compete agreements as part of the ULHK Entities Acquisition. Selling and promotion expenses decreased by 58.6% period-over-period due to lower sales ~~commissions and hiring new employees. During~~commission as a result of revision of commission-based sales targets.
Gross Margin
The gross margin as a percentage of revenue increased from 9.9% for the ~~three~~nine months ended February 28, 2023 ~~salaries and related costs increased 20.6% mostly due~~ to adding and promoting employees, selling and promotion costs increased 73.7% primarily due to the timing of the sales commission recognition with rents and occupancy costs increased 63.6% primarily due to opening of new offices and rising rent prices, in each case compared to the three months ended February 28, 2022. The Company doesn’t expect these costs to significantly change going forward.
~~Other Income (Expense)~~
For the three months ended February 28, 2023, other expenses were approximately $0.5 million and comprised of interest expense from the operating line of credit of $0.55 million and a gain in fair value of derivative liabilities of $0.05 million associated with the antidilution provision imbedded in our convertible preferred stock.
For the three months ended February 28, 2022, other expenses were $7.0 million and comprised mostly of interest expense of $1.4 million, loss on the exchange of convertible notes for shares of convertible preferred stock of $1.3 million and a loss in fair value of derivative liabilities of $4.3 million related to the antidilution provisions imbedded in our convertible preferred stock.
~~The slight gain in the fair value of derivative liabilities during the three months ended February 28, 2023 compared to the $4.3 million loss~~11.4% for the same period of 2022 is due to derivative recognition for the first time during the quarter ended February 28, 2022. Interest expense decreased period over period primarily due to our reduced amount of borrowing on the operating line of credit due to lower shipping volumes and a decline in the costs of freight services.
~~Net Income~~
Net income was approximately $0.7 million for the three months ended February 28, 2023, compared to a net loss of $4.9 million for the three months ended February 28, 2022 while net loss available to common shareholders was $9.5 million for the three months ended February 28, 2022, due to a deemed dividend of $4.6 million.
As a result of the Company exchanging $3.9 million of convertible notes into Series C and D Preferred Stock on December 10, 2022, the Company recognized net loss on the extinguishment of convertible notes payable and warrants of approximately $1.3 million in Other Income (Expenses) and recognized approximately $4.6 million as deemed dividends as reflected in Comprehensive Income line item of the statement of operations, both reflected in the statement of operations for the three and nine months ended February ~~28, 2022. The Company also recorded a $4.3 million net loss on~~29, 2024, excluding the ~~mark to market~~operations of the ~~derivative liability associated with the Series A Preferred Stock in Other Income (Expenses) in the statement of operations for the three and nine months, ended February 28, 2022.~~
~~Results of Operations for the Nine Months ended February 28, 2023, and 2022.~~
~~Revenue~~
~~The Company’s total revenue~~ULHK Entities, gross margins was at 9.8% for the nine months ended February 28, 2023 and ~~2022 was $275.0 million and $845.6 million, respectively. This 67.5% decrease period over period is primarily due to decreases of 85.8% in air freight revenue and 53.6% in ocean freight revenue.~~February 29, 2024.
~~The air freight revenue reduction was primarily driven by an 82.5% reduction in volume, mostly due to our discontinuation of the air charter program in December of 2022, as discussed above.~~
The decline in ocean freight revenue was due to a pricing reduction of approximately 24.0% and a volume reduction of approximately 43.0% over the same period of 2022 equally contributing to reduction in ocean revenue for the period.
The overall shipping volumes are currently experiencing a steady global decline in the past 12 months, with additional ocean freight capacity available, putting further pressure on pricing. Going forward, management is expecting both the air and the ocean freight business to steadily improve in terms of volumes and to remain stable in terms of pricing in the second half of calendar 2023 based on the customer projections and secured customer commitments received to date.
5

~~Costs and Operating Expenses~~Other Income (Expenses)

~~Cost of freight and operating expenses were $264.8 million for~~For the nine months ended February ~~28, 2023, compared to $831.5~~29, 2024, other expenses were $13.2 million ~~for the nine months ended February 28, 2022,~~and consisted of interest expense of $3.8 million on our operating line of credit with TBK Bank, SSB, term loan interest and interest on related party debts, a ~~reduction~~net gain in derivative liabilities of 68.2% that correlates with the reduction in revenue during the same period as discussed above as air freight costs were 86.7% lower and ocean freight costs were 55.8% lower during the nine months ended February 28, 2023, compared with the same period of 2022.
~~In addition, other selling and administrative decreased in total by approximately $0.5~~$4.1 million, mostly due to total selling and promotional expenses decreased by 55.7% during the nine months ended February 28, 2023 compared to the nine months ended February 28, 2022 due to lower sales commissions as a result of the overall revenue decrease during current fiscal year. Salaries and related costs were higher by 23.6% primarily because of adding and promoting employees in connection with positioning the Company for future growth. Professional fees increased 81.4% primarily due to legal and audit expenses$10.4 million expense related to the ~~closing~~termination of the ~~acquisitions~~Merger Agreement in the ~~quarter ended February 28, 2023. While we expect professional fees to remain at~~form of an ~~elevated level compared to prior periods as the Company continues to execute its growth plans, we do not expect professional fees to continue to increase at a significant rate going forward. Rent~~additional loan and ~~occupancy expenses increased 37.0% due to the opening~~an issued warrant and an uplist termination cost of ~~new offices. Finally, other expenses decreased by 49.7%, primarily as a result of a decrease~~previously deferred offering costs in the ~~bad debt reserve.~~
~~Other Income (Expense)~~amount of $3.1 million.

For the nine months ended February 28, 2023, other expenses were $2.1 million and ~~were comprised~~consisted of interest expense of $2.9 million offset by ~~$0.8 million in gain in fair value of derivative liabilities related to the antidilution provision imbedded in our convertible preferred stock.~~
For the nine months ended February 28, 2022, other expenses were $9.8 million, and were comprised primarily of interest expense of $4.6 million, gain on forgiveness of promissory note of $0.4 million, plus a $0.8 million loss on amortization of debt discount on convertible notes, a $0.6 million loss on exchange of the convertible note for preferred convertible shares, and a $4.3 million loss in fair value of derivative liabilities related to the antidilution provisions imbedded in our convertible preferred stock.
~~As explained above, $0.8 gain~~increase in the fair value of derivative liabilities during the nine months ended February 28, 2023 compared to the $4.3 million loss for the same period of 2022 is due to recognition of derivative liability for the first time in 2022. Interest expense decreased period over period primarily due to our reduced amount of borrowing on the operating line of credit due to lower shipping volumesliabilities.
Liquidity and ~~a decline in the costs of freight services.~~
~~Net Income~~Capital Resources

Net income was $7.3 million and $1.6 million for the nine months ended February 28, 2023 and 2022, respectively. Net loss available to common shareholders was $3.0 million for the nine months ended February 28, 2022, due to a deemed dividend of $4.6 million during the 2022 period, as explained above.
~~Liquidity~~
The accompanying condensed consolidated financial statements have been prepared on a going concern basis. Substantial doubt about an entity’s ability to continue as a going concern exists when conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued.
The following table summarizes the Company’s total current assets, liabilities and working ~~capital:~~
February 28, 2023 May 31, 2022 Change
Current Assets $ 62,470,090 $ 108,543,031 $ (46,072,941 )
Current Liabilities 72,201,695 $ 104,367,590 (32,165,895 )
Net Working Capital (Deficit) $ (9,731,605 ) $ 4,175,441 $ (13,907,046 )
~~As of February 28, 2023,~~capital at the Company reported negative working capital of $9.7 million compared to positive working capital of $4.2 million as of May 31, 2022. This change is mainly due to the completion of the ULHL Entities Acquisition on February 21, 2023. At the time of the acquisition, the Company paid $3.5 million in cash and assumed further $23.8 million as current liabilities and $1.5 million in noncurrent liabilities by either issuing promissory notes to the seller or by recognizing contingent liabilities at fair value on its balance sheet as of February 28, 2023. The amount of $3.8 million of the purchase price was recorded as goodwill, $6.5 million was recorded as intangibles and $10.9 million of the purchase price was recorded as equity method investments. All these assets were classified as noncurrent assets while most of the liabilities associated with the acquisition were recorded as current liabilities, resulting in a temporary negative impact on working capital.dates indicated:

The Company intends to either timely pay off the $23.8 million in current liabilities associated with the acquisition with cash generated by its operations cash accumulated in the acquired ULHL Entities or by refinancing a portion of the current liabilities with non-current debt, which will have a positive effect on the working capital. As of the date of filing this form, the Company paid off $10.0 million of the promissory notes, ahead of scheduled maturity. See Note 9, ~~Subsequent Events~~

February 29,
2024
May 31, 2023 Change % change
Current Assets $ 57,224,459 $ 60,326,985 $ (3,102,526 ) (5.1 )%
Current Liabilities 51,962,012 52,448,603 (486,591 ) 0.9 %
Working Capital $ 5,262,447 $ 7,878,382 $ (2,615,935 ) (33.2 )%

~~As previously reported, on December 18, 2022, the Company entered into an Agreement~~
The Company’s working capital was $5.3 million and ~~Plan~~$7.9 million as of ~~Merger with Edify Acquisition Corp.~~February 29, 2024 and Edify Merger Sub, Inc. that, subject to various conditions, included a commitment from a lender for a senior secured financing facility in the maximum aggregate principal amount of $35.0 million. In this regard, ~~on March 10,~~May 31, 2023, ~~the Company entered into a financing agreement and related fee letter as borrower with certain of its subsidiaries party thereto as guarantors, the lenders party thereto, CB Agent Services LLC,~~ as origination agent, and Alter Domus (US) LLC, as collateral agent and administrative agent, that provides for an initial senior secured term loan in a principal amount of $4,210,526.32 and a delayed draw term loan facility in an aggregate principal amount of up to $14,789,473.68. This debt will be classified as a noncurrent liability, which will have a positive effect on the working capital.respectively. The Company intends to use some of the proceeds of these term loans to pay off approximately $9.0 million of the promissory notes and, after the closing of the business combination transaction with Edify Acquisition Corp. and to pay any deferred expenses relating to that transaction.
~~In addition, the~~ Company maintains its operating line of credit with TBK Bank, SSB, ~~under which~~and on July 20, 2023 the Company entered into an agreement with TBK Bank ~~will, from time~~ to ~~time, buy approved receivables from~~renew the ~~Company, which has~~TBK line of credit with a credit limit of up to ~~$47.5 million (the “TBK Facility”).~~$25.0 million. The Company has experienced negative operating cash flows during the nine months ended February 29, 2024 due to adverse market conditions. The Company relied heavily on its cash collections, cash reserves, dividends received from the ULHK Entities, new loans, and the use of its operating line of credit. The funds available under the current TBK ~~Facility matures on May 31, 2023, and we expect that TBK Bank will renew the TBK Facility prior~~line of credit are sufficient to ~~its expiration, which will~~ provide the Company with the cash required to support its ongoing operations ~~in addition to the cash flows generated by operating activities.~~until market conditions improve.

While ~~we continue~~the Company continues to execute ~~our~~its strategic plan ~~growing the Company~~ and grow its customer base, management is focused on managing cash and monitoring ~~our~~ liquidity position. We have implemented several initiatives to conserve our liquidity position, including activities such as increasing credit facilities, when needed, reducing the cost of debt by obtaining more favorable financing, controlling general and administrative expenditures and improving our collection processes. Many of the aspects of the liquidity plan involve management’s judgments and estimates that include factors that could be beyond our control and actual results could differ from our estimates. These and other factors could cause the strategic plan to be unsuccessful, which could have a material adverse effect on our operating results, financial condition, and liquidity. ~~Negative operating capital may be an indicator that there could be a going concern issue, but based~~Based on our evaluation of the Company’s projected cash flows and business performance as of and subsequent to February ~~28, 2023,~~29, 2024, management has concluded that the Company’s current cash and cash availability under the TBK Facility ~~as of February 28, 2023,~~ would be sufficient to fund its planned operations for at least one year from the date the consolidated financial statements were issued.

10

Cash generated and used by the Company during the nine months ended February 29, 2024 and for the nine months ended February 28, 2024 was as follows:

For the Nine Months Ended, February 28, 2023 For the Nine Months Ended, February 28, 2022 Change
Net cash provided by (used in) by operating activities $
33,032,762
$ (42,029,741 ) $
75,062,503

Net cash provided by (used in) investing activities 8,733,409 (54,474 ) 8,787,883
Net cash provided by (used in) financing activities
(28,785,898
) 42,827,199
(71,613,097
)
Net increase in cash and cash equivalents $
12,980,273
$ 742,984 $
12,237,289

For the
Nine Months ended
February 29, 2024

For the
Nine Months ended
February 28, 2023
Change
Net cash (used in) provided by operating activities $ (7,767,163 ) $ 33,032,762 $ (40,799,925 )
Net cash used in investing activities (513,907 ) 8,733,409 (9,247,316 )
Net cash provided (used in) by financing activities 8,501,781 (28,785,898 ) 37,287,679
Effect of exchange rate changes on cash (221,805 ) - (221,805 )
Net (decrease) in cash and cash equivalent $ (1,094 ) $ 12,980,273 $ (12,981,367 )

Operating activities used cash of $7.8 million during the nine months ended February 29, 2024 compared to net cash provided ~~cash~~by operations of $33.0 million for the nine months ended February 28, ~~2023 compared to net cash used in operations of $42.0 million for the nine months ended February 28, 2022.~~2023. The primary reason for the cash provided during the 2023 period was the $66.0 million collection on accounts receivable and contact assets, offset by a $43.1 million reduction in accounts payable and accrued freight. It should be noted thatused during the nine months ended February ~~28, 2022, the Company repurchased approximately $30.0~~29, 2024 was our $11.0 million ~~of previously factored accounts receivable. This repurchase created a negative impact on the operating~~net loss adjusted for non-cash items. The primary reason for cash ~~flow that was fully offset by a positive cash flow impact from the investing activities as the Company borrowed cash to repurchase these receivables.~~
~~Investing activities~~ provided ~~cash of $8.7 million~~ for the nine months ended February 28, 2023, ~~compared~~was collections on accounts receivables offset by a reduction in accounts payable and accrued freight.
Investing activities used cash of $0.5 million to ~~cash used of $0.05 million for~~purchase equipment during the nine months ended February ~~28, 2022. During~~29, 2024 compared to net cash generated of $8.7 million during the nine months ended February 28, 2023, mostly due to February 21, 2023 acquisitions of operating subsidiaries from ULHK with approximately $13.3 million of cash on hand at the time of the acquisition.
Financing activities provided cash of $8.5 million during the nine months ended February 29, 2024, primarily as a result of borrowing on the TBK line of credit and ~~February 28, 2022, investing activities consisted of~~net borrowing on the term debt to partially repay seller notes assumed during the acquisition of ~~subsidiaries and equity method investments, net of cash paid and acquired as discussed in Note 2 to~~ the ~~condensed consolidated financial statements for the period ended~~ULHK Entities on February ~~28,~~21, 2023.
~~Financing~~ Cash used by financing activities ~~used cash of $28.8 million for~~during the nine months ended February 28, ~~2023~~2023was primarily ~~as a result of~~ repayment of ~~$28.3 million on~~ the TBK ~~Facility. Financing activities provided cash in the amount~~line of $42.8 million for the nine months ended February 28, 2022, primarily because of borrowing on the TBK Facility during the year when the cost of freight increased significantly in the post Covid period of unprecedented demand and the record high prices.credit.
Critical Accounting ~~Policies~~Estimates

Accounting policies, methods and estimates are an integral part of the condensed consolidated financial statements prepared by management and are based upon management’s current judgments. These judgments are normally based on knowledge and experience regarding past and current events and assumptions about future events. Certain accounting policies, methods and estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ from management’s current judgments. While there are a number of accounting policies, methods and estimates that affect our condensed consolidated financial statements, the areas that are particularly significant include revenue recognition; the fair value of acquired assets and liabilities; fair value of contingent consideration; the assessment of the recoverability of long-lived assets, goodwill and intangible assets; and leases.

7
We perform an impairment test of goodwill for each year unless events or circumstances indicate impairment may have occurred before that time. We assess qualitative factors to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than the carrying amount. After assessing qualitative factors, if further testing is necessary, we would determine the fair value of each reporting unit and compare the fair value to the reporting unit’s carrying amount.

Intangible assets consist of customer relationships, trade names and trademarks and non-compete agreements arising from our acquisitions. Customer relationships are amortized on a straight-line basis over 12 to 15 years. Tradenames, trademarks and non-compete agreements, are amortized on a straight-line basis over 3 to 10 years.

We review long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. If the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset is less than its carrying amount, the asset is considered to be impaired. Impairment losses are measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. When fair values are not available, we estimate fair value using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the asset. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

The Company has identified derivative instruments arising from an antidilution provision in the Company’s preferred stock. Each reporting period, the embedded derivative liability is adjusted to reflect fair value at each period end with changes in fair value recorded in the “change in fair value of embedded derivative liability” financial statement line item of the Company’s condensed consolidated statements of operations.
11
Our significant accounting policies are summarized in Note 1 of our condensed consolidated financial statements.

Adjusted EBITDA

We define adjusted EBITDA to be earnings before interest, taxes, depreciation and amortization, ~~factoring fees,~~transaction gains and losses, other income, ~~net, stock-based compensation and expenses,~~ merger and acquisition costs, ~~restructuring, transition and acquisitions expense, net, goodwill~~ impairment charges and certain other non-recurring items.

Adjusted EBITDA is not a measurement of financial performance under GAAP and may not be comparable to other similarly titled measures of other companies. We present adjusted EBITDA because we believe that adjusted EBITDA is a useful supplement to net income ~~from operations~~ as an indicator of operating ~~performance.~~performance and represents income that is within management’s control. We use adjusted EBITDA as a financial metric to measure the financial performance of the business because management believes that it provides additional information with respect to the performance of ~~its~~our fundamental business activities. For this reason, we believe that adjusted EBITDA will also be useful to others, including our stockholders, as a valuable financial metric.

We believe that adjusted EBITDA is a performance measure and not a liquidity measure, and therefore a reconciliation between net income from continuing operations and adjusted EBITDA has been provided in the financial results. Adjusted EBITDA should not be considered as an alternative to ~~income from operations or~~ net income, ~~from operations~~ as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of cash flows, in each case as determined in accordance with GAAP, or as a measure of liquidity. In addition, adjusted EBITDA does not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows. We do not intend the presentation of ~~these~~this non-GAAP ~~measures~~financial measure to be considered in isolation or as a substitute for results prepared in accordance with GAAP. ~~These~~This non-GAAP ~~measures~~financial measure should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP.
8
Following is the reconciliation of our consolidated net income to adjusted ~~EBITDA:~~EBITDA for the three and nine months ended February 29, 2024 and February 28, 2023:

For the Three
Months Ended
February 28, 2023

For the Three
Months Ended
February 28, 2022

Net income (loss) $ 663,173 $ (4,930,586 )

Add Back:
Income tax (814,080 ) 228,207
Depreciation and amortization 203,390 196,347
(Gain) loss on extinguishment of convertible notes - 1,344,087
Interest expense (including accretion of debt discount) 546,791 1,395,396
Change in fair value of derivative liabilities (64,955 ) 4,275,986

Adjusted EBITDA $ 534,319 $ 2,509,437

For the
Three Months Ended
February 29, 2024

For the
Three Months Ended
February 28, 2023

Net (loss) income $ (5,847,860 ) $ 663,173

Add Back:
Income tax expense (benefit) (5,268,793 ) (814,080 )
Depreciation and amortization 752,750 203,390
Foreign exchange transactions, net 26,858 -
Change in fair value of derivative liability (4,300,429 ) 546,791
Uplist termination cost 3,054,514 -
SPAC Merger termination cost 10,415,816 -
Interest expense 1,407,449 (64,955 )

Adjusted EBITDA $ 240,305 $ 534,319

For the Nine
Months Ended
February 28, 2023

For the Nine
Months Ended
February 28, 2022

Net income $ 7,256,211 $ 1,581,055

Add Back:
Income tax 849,967 2,765,207
Depreciation and amortization 606,030 585,019
Gain on forgiveness of promissory notes (358,236 )
Loss on extinguishment of convertible notes 564,037
Factoring fees 27,000
Change in fair value of derivative liabilities (809,611 ) 4,275,986
Interest expense (including accretion of debt discount) 2,876,776 5,343,391

Adjusted EBITDA $ 10,752,373 $ 14,783,459

For the
Nine Months Ended
February 29, 2024

For the
Nine Months Ended
February 28, 2023

Net (loss) income $ (11,029,671 ) $ 7,256,211

Add Back:
Income tax expense (benefit) (5,787,424 ) 849,967
Depreciation and amortization 2,203,093 606,030
Foreign exchange transactions, net (267,209 ) -
Change in fair value of derivative liability (4,118,566 ) (809,611 )
Uplist termination cost 3,054,514 -
SPAC Merger termination cost 10,415,816 -
Interest expense 3,823,822 2,876,776

Adjusted EBITDA $ (1,705,625 ) $ 10,779,373
12

~~Item~~ITEM 3. ~~Quantitative and Qualitative Disclosures about Market Risk~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this ~~Item.~~item.
~~Item~~ITEM 4. ~~Controls and Procedures~~CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosureWe maintain “disclosure controls and procedures,” as ~~of February 28, 2023, as such term is~~ defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Management has determined there are control deficiencies as it relates to financial statement closing process due to limited formal documentation around disclosure procedures and controls. This control deficiency constitutes a material weakness in internal control over financial reporting. As a result, our principal executive officer and principal financial and accounting officer have concludedAct, that during the period covered by this report, our disclosure controls and procedures were not effective. We plan to take steps to remedy this material weakness by completing the formal documentation process of our controls and procedures.
~~Disclosure controls and procedures~~ are designed to ensure that ~~the~~ information ~~that is~~ required to be disclosed by us in ~~our~~reports that we file or submit under the Exchange Act ~~report~~ is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our ~~management, including our~~ principal executive officer ~~and principal financial and accounting officer or persons performing similar functions, as appropriate~~ to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, the Company recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance of achieving the desired control objectives, and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

As of February 29, 2024, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our Chief Executive Officer and Chief Financial Officer have concluded, based upon the evaluation described above, that as of February 29, 2024, our disclosure controls and procedures were not effective and require remediation in order to be effective at the reasonable assurance level.
In addition, our auditors identified material weaknesses in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the audit of the fiscal year ended May 31, 2023. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified relate to the fact that we did not design and maintain an effective control environment commensurate with our financial reporting requirements, including (a) lack of a sufficient number of trained professionals with an appropriate level of accounting knowledge, training and experience and (b) we have not completed a full risk assessment of our internal control over financial reporting at the activity level, including process documentation and testing. In the course of preparing the financial statements for the year ended May 31, 2023, we identified separate material weaknesses in internal control over financial reporting, which relates to the ineffective design and implementation of information technology general controls (“ITGC”) combined with the lack of properly designed management review controls to compensate for these deficiencies. The Company’s ITGC deficiencies included improperly designed controls pertaining to user access rights and segregation of duties over systems that are critical to the Company’s system of financial reporting. Management’s general assessment of the above processes in light of the company’s size, maturity and complexity, as to the design and effectiveness of the internal control over financial reporting, is that the key controls and procedures in each of these processes provide reasonable assurance regarding reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
13
Changes in Internal Control ~~Over~~over Financial Reporting

During the ~~nine months~~quarter ended February ~~28, 2023, we~~29, 2024, the Company actively addressed and ~~remediated~~commenced to remediate a number of previously identified material weaknesses in its internal ~~controls~~control over financial reporting ~~we significantly~~that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting. We improved our accounting processes and documentation, introduced new accounting policies and procedures, ~~upgraded~~and provided training to our accounting ~~personnel~~personnel. The Company has not completed a full risk assessment of its internal control over financial reporting at the activity level, including process documentation and ~~provided our employees with necessary tools~~testing and ~~resources, but~~ because we have not completed a full risk assessment of the internal ~~controls~~control over financial reporting at the activity level, including extensive process documentation and testing, we are not able to conclude that our internal ~~controls~~control over financial reporting ~~are~~is operating effectively and efficiently at this time. The ~~Company anticipates~~Company’s principal executive officer, principal financial officer, and board of directors are fully ~~remediating its material weaknesses~~committed to achieving full compliance by ~~the end of its May~~August 31, ~~2024 fiscal year end.~~2024.
9
PART II -– OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~We are currently~~The Company is not involved in any disputes and does not have any litigation matters pending that ~~we believe~~it believes could have a material adverse effect on ~~our~~its financial condition or results of ~~operations, except as set forth below.~~operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company’s executive officers ~~of our company~~ or any of ~~our~~its subsidiaries, threatened against or affecting ~~our company, our~~the Company, its common stock, any of ~~our~~its subsidiaries or of ~~our companies~~the Company’s or ~~our~~the Company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
From time to time, however, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of our business. Litigation is subject to inherent uncertainties, and an adverse result in any such matters may arise from time to time that may harm our business.

ITEM 1A. RISK FACTORS

Our business, financial condition, results of operations, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth in our most recent Annual Report on Form 10-K and in our other filings with the SEC, the occurrence of any one of which could have a material adverse effect on our actual results. There have been no material changes to the Risk Factors previously disclosed in our Annual Report on Form 10-K and our other filings with the SEC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, ~~AND~~ USE OF PROCEEDS, AND ISSUER REPURCHAES OF EQUITY SECURITIES.

There were no unregistered sales of the Company’s equity securities during the quarter ended February ~~28, 2023.~~29, 2024.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

On April 19, 2023, the Company filed with the Secretary of State of the State of Nevada certificates of amendments to the Certificates of Designations, Preferences and Rights of each of its Series A, C and D Convertible Preferred Stock (collectively, the “Certificates of Designations”), amending (i) Section IV(b)(iii) of the Certificate of Designations, Preferences and Rights of its Series A Convertible Preferred Stock, (ii) Section 7(a)(ii) of the Certificate of Designations, Preferences and Rights of its Series C Convertible Preferred Stock, and (iii) Section 7(a)(ii) of the Certificate of Designations, Preferences and Rights of its Series D Convertible Preferred Stock (collectively, the “the “Certificates of Amendments”), extending the Anti-dilution Termination Date (as defined in the Certificates of Amendments) to the earlier of (i) December 31, 2023 or (ii) a Qualified Financing (as defined in the Certificates of Designations).None.

1014

ITEM 6. EXHIBITS

Incorporated by
Exhibit Reference Filed or Furnished
Number Exhibit Description Form Exhibit Filing Date Herewith
3.1 Certificate of Amendment of Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of Unique Logistics International, Inc., filed with the Nevada Secretary of State on March 31, 2023 X
3.2 Certificate of Amendment of Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock of Unique Logistics International, Inc., filed with the Nevada Secretary of State on March 31, 2023 X
3.3 Certificate of Amendment of Certificate of Designations, Preferences and Rights of Series D Convertible Preferred Stock of Unique Logistics International, Inc., filed with the Nevada Secretary of State on March 31, 2023 X
10.1 Amendment No. 1 to Stock Purchase Agreement, dated January 23, 2023, by and between Unique Logistics International, Inc. and Unique Logistics Holdings Limited. 8-K 10.1 02/27/23
10.2 Amendment No. 2 to Stock Purchase Agreement dated February 21, 2023, by and between Unique Logistics International, Inc. and Unique Logistics Holdings Limited. 8-K 10.2 02/27/23
10.3 Amendment No. 1 to the Share Sale and Purchase Agreement for Unique Logistics International (India) Private Limited, dated February 21, 2023, by and between Unique Logistics International, Inc. and Unique Logistics Holdings Limited. 8-K 10.3 02/27/23
10.4 Amendment No. 1 to the Share Sale and Purchase Agreement for ULI (North & East China) Company Limited, dated February 21, 2023, by and between Unique Logistics International, Inc. and Unique Logistics Holdings Limited. 8-K 10.4 02/27/23
10.5 Amendment No. 1 to the Share Sale and Purchase Agreement for Unique Logistics International Co., Ltd, dated February 21, 2023, by and between Unique Logistics International, Inc. and Unique Logistics Holdings Limited. 8-K 10.5 02/27/23
10.6 Amendment No. 1 to the Share Sale and Purchase Agreement for TGF Unique Limited, dated February 21, 2023, by and between Unique Logistics International, Inc. and Unique Logistics Holdings Limited. 8-K 10.6 02/27/23
10.7 Amendment No. 1 to the Share Sale and Purchase Agreement for Unique Logistics International (H.K.) Limited, dated February 21, 2023, by and between Unique Logistics International, Inc. and Unique Logistics Holdings Limited. 8-K 10.7 02/27/23
10.8 Amendment No. 1 to the Share Sale and Purchase Agreement for Unique Logistics International (Vietnam) Co., Ltd., dated February 21, 2023, by and between Unique Logistics International, Inc. and Unique Logistics Holdings Limited. 8-K 10.8 02/27/23
10.9 Amendment No. 1 to the Share Sale and Purchase Agreement for Unique Logistics International (South China) Limited, dated February 21, 2023, by and between Unique Logistics International, Inc. and Unique Logistics Holdings Limited. 8-K 10.9 02/27/23
10.10 Amendment No. 1 to the Share Sale and Purchase Agreement for ULI (South China) Limited, dated February 21, 2023, by and between Unique Logistics International, Inc. and Unique Logistics Holdings Limited. 8-K 10.10 02/27/23
10.11 Promissory Note in the principal amount of $1,000,000, dated February 21, 2023, in favor of Unique Logistics Holdings Limited. 8-K 10.11 02/27/23
11
10.12 Promissory Note in the principal amount of $4,500,000, dated February 21, 2023, in favor of Unique Logistics Holdings Limited. 8-K 10.12 02/27/23
10.13 Promissory Note in the principal amount of $5,000,000, dated February 21, 2023, in favor of Unique Logistics Holdings Limited. 8-K 10.13 02/27/23
10.14 Promissory Note in the principal amount of $5,000,000, dated February 21, 2023, in favor of Unique Logistics Holdings Limited. 8-K 10.14 02/27/23
10.15 Promissory Note in the principal amount of $2,000,000, dated February 21, 2023, in favor of Unique Logistics Holdings Limited. 8-K 10.15 02/27/23
10.16 Promissory Note in the principal amount of $1,000,000, dated February 21, 2023, in favor of Unique Logistics Holdings Limited. 8-K 10.16 02/27/23
10.17 Promissory Note in the principal amount of $2,500,000, dated February 21, 2023, in favor of Unique Logistics Holdings Limited. 8-K 10.17 02/27/23
10.18 Promissory Note in the principal amount of $2,000,000, dated February 21, 2023, in favor of Unique Logistics Holdings Limited. 8-K 10.18 02/27/23
10.19 Stock Purchase Agreement, dated February 21, 2023, by and between Unique Logistics International, Inc. and Frangipani Trade Services, Inc. 8-K 10.19 02/27/23
10.20 Promissory Note in the principal amount of $500,000, dated February 21, 2023, in favor of Frangipani Trade Services, Inc. 8-K 10.20 02/27/23
10.21 Shareholders Agreement for ULI (South China) Company Limited 8-K 10.21 02/27/23
10.22 Shareholders Agreement for TGF Unique Limited 8-K 10.22 02/27/23
10.23 Share Purchase and Asset Transfer Agreement for ULI (North and East China) Company Limited and Supplement 8-K 10.23 02/27/23
10.24 Financing Agreement, dated March 10, 2023, by and among Unique Logistics International, Inc., Unique Logistic Holdings, Inc., Unique Logistics International (NYC), LLC, Unique Logistics International (BOS), Inc., Alter Domus (US) LLC, CB Agent Services LLC, CB Participations SPV, LLC, and CP IV SPV, LLC 8-K 10.1 03/14/23
12
10.25 Fee Letter, dated March 10, 2023, by and among Unique Logistics International, Inc., Unique Logistic Holdings, Inc., Unique Logistics International (NYC), LLC, Unique Logistics International (BOS), Inc., Alter Domus (US) LLC, and CB Agent Services LLC 8-K 10.2 03/14/23
10.26 Security Agreement, dated March 10, 2023, by and among Unique Logistics International, Inc., Unique Logistic Holdings, Inc., Unique Logistics International (NYC), LLC, Unique Logistics International (BOS), Inc., and Alter Domus (US) LLC 8-K 10.3 03/14/23
10.27 Collateral Assignment, dated March 10, 2023, by and among Unique Logistics International, Inc. and Alter Domus (US) LLC 8-K 10.4 03/14/23
10.28 Intercompany Subordination Agreement, dated March 10, 2023, by and among Unique Logistics International, Inc., Unique Logistic Holdings, Inc., Unique Logistics International (NYC), LLC, Unique Logistics International (BOS), Inc., Unique Logistics International (India) Private Ltd., ULI (North & East China) Company Limited, Unique Logistics International (H.K.) Limited, ULI (South China) Limited, Unique Logistics International (South China) Limited, Unique Logistics International (Shanghai) Co., Ltd., Shenzhen Unique logistics International Limited, and Alter Domus (US) LLC 8-K 10.5 03/14/23
10.29 Agent Fee Letter, dated March 10, 2023, by and among Unique Logistics International, Inc. and Alter Domus (US) LLC 8-K 10.6 03/14/23
31.1* Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer. X
31.2* Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer. X
32.1** Section 1350 Certification of Chief Executive Officer. X
32.2** Section 1350 Certification of Chief Financial Officer. X
101.INS* Inline XBRL Instance Document
101.SCH* Inline XBRL Taxonomy Extension Schema Document
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
Exhibit Incorporated by Reference Filed or Furnished
Number Exhibit Description Form Exhibit Filing Date Herewith
3.1 Certificate of Amendment of Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of Unique Logistics International, Inc., filed with the Nevada Secretary of State on January 17, 2024 8-K 3.1 1/19/2024
3.2 Certificate of Amendment of Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock of Unique Logistics International, Inc., filed with the Nevada Secretary of State on January 17, 2024 8-K 3.2 1/19/2024
3.3 Certificate of Amendment of Certificate of Designations, Preferences and Rights of Series D Convertible Preferred Stock of Unique Logistics International, Inc., filed with the Nevada Secretary of State on January 16, 2024 8-K 3.3 1/19/2024
31.1 Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer. X
31.2 Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer. X
32.1 Section 1350 Certification of Chief Executive Officer. X
32.2 Section 1350 Certification of Chief Financial Officer. X
101.INS Inline XBRL Instance Document X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X
104 Cover Page Interactive Data File (embedded within the Inline XBRL document) X

** In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.
1315

SIGNATURES

Pursuant to the requirements ~~of Section 13 or 15(d)~~ of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UNIQUE LOGISTICS INTERNATIONAL, INC.

By: /s/ Sunandan Ray
Sunandan Ray
Chief Executive Officer (Principal Executive Officer)
~~Date:~~ ~~April 19, 2023~~
~~UNIQUE LOGISTICS INTERNATIONAL, INC.~~ May 2, 2024

By: /s/ Eli Kay
Eli Kay
Chief Financial Officer (Principal Financial Officer)
~~Date:~~ ~~April 19, 2023~~
May 2, 2024
1416

	For the Three			For the Three
	Months Ended			Months Ended
	February 29, 2024			February 28, 2023
Net (loss) income	$	(5,847,860	)	$	663,173
Other comprehensive income (OCI), net of tax:
Foreign currency translation adjustments		21,432			-
OCI tax effect		-			-
Total comprehensive (loss) income		(5,826,428	)		663,173
Net loss attributable to noncontrolling interest		114,538			-
Comprehensive (loss) income attributable to common shareholder	$	(5,940,966	)	$	663,173

	For the Nine			For the Nine
	Months Ended			Months Ended
	February 28, 2023			February 28, 2023
Net (loss) income	$	(11,029,671	)	$	7,256,211
Other comprehensive income, net of tax:
Foreign currency translation adjustments		(236,674	)		-
OCI tax effect		14,869			-
Total comprehensive (loss) income		(11,251,476	)		7,256,211
Net loss attributable to noncontrolling interest		60,113			-
Comprehensive (loss) income attributable to common shareholder	$	(11,311,589	)	$	7,256,211


	Series A Preferred Stock				Series B Preferred Stock				Series C Preferred Stock				Series D Preferred Stock				Common Stock				Additional Paid in		Accumulated Comprehensive			Retained			Total Stockholders’ equity attributable to common			Non- Controlling			Total Stockholders
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		capital		income			earning			stockholder			Interest			Equity

Balance, June 1, 2023		120,065	$	120		820,800	$	821		195	$	-		180	$	-		799,141,770	$	799,142	$	180,220	$	3,258		$	13,066,109		$	14,049,670		$	3,545,963		$	17,595,633

Other comprehensive income (loss), net of tax		-		-		-		-		-		-		-		-		-		-		-		(166,750	)		-			(166,750	)		-			(166,750	)

Net loss		-		-		-		-		-		-		-		-		-		-		-		-			(2,230,651	)		(2,230,651	)		(80,477	)		(2,311,128	)

Balance, August 31, 2023		120,065		120		820,800		821		195		-		180		-		799,141,770		799,142		180,220		(163,493	)		10,835,458			11,652,269			3,465,486			15,117,755
Other comprehensive income (loss), net of tax		-		-		-		-		-		-		-		-		-		-		-		(76,487	)		-			(76,487	)		-			(76,487	)

Net loss		-		-		-		-		-		-		-		-		-		-		-		-			(2,896,735	)		(2,896,735	)		26,052			(2,870,683	)
Balance, November 30, 2023		120,065		120		820,800		821		195		-		180		-		799,141,770	$	799,142		180,220		(239,979	)		7,938,723			8,679,047			3,491,538			12,170,585
Other comprehensive income (loss), net of tax		-		-		-		-		-		-		-		-		-		-		-		21,432			-			21,432			-			21,432

Net loss		-		-		-		-		-		-		-		-		-		-		-		-			(5,962,398	)		(5,962,398	)		114,538			(5,847,860	)
Balance, February 29, 2024		120,065	$	120		820,800	$	821		195	$	-		180	$	-		799,141,770	$	799,142	$	180,220	$	(218,547	)	$	1,976,325		$	2,738,081			3,606,076		$	6,344,157

	For the Nine Months Ended February 28, 2023			For the Nine Months Ended February 28, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	7,256,211		$	1,581,055
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		606,030			585,019
Amortization of debt discount		-			776,515
Amortization of right of use assets		1,269,299			1,103,649
Change in fair value of derivative liability		(809,611	)		4,275,986
Bad debt expense		-			850,000
Gain on forgiveness of note payable		-			(358,236	)
Loss on extinguishment of convertible notes payable		-			564,037
Change in deferred tax asset		(261,118	)		99,000
Accretion of consulting agreement		(282,666	)		(212,004	)
Changes in operating assets and liabilities:
Accounts receivable		58,562,998			(82,890,241	)
Contract assets		27,111,019			(12,706,657	)
Factoring reserve		-			7,593,665
Other prepaid expenses and current assets		(2,716,596	)		256,716
Deposits and other assets		(1,533,533	)		(20,000	)
Accounts payable		(44,314,785	)		18,807,393
Accrued expenses and other current liabilities		(9,511,815	)		2,962,457
Accrued freight		(1,183,709	)		5,397,339
Contract liabilities		(109,844	)		10,403,335
Operating lease liability		(1,049,118	)		(1,098,769	)
Net Cash Provided by (Used in) Operating Activities		33,032,762			(42,029,741	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		(94,900	)		(54,474	)
Acquisitions of businesses, net of cash acquired		8,828,309			-
Net Cash Used in Investing Activities		8,733,409			(54,474	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving credit facility, net		(28,258,922	)		43,888,787
Proceeds from notes payable		-			2,000,000
Repayments of notes payable		(303,833	)		(2,821,664	)
Repayments of debt due to related parties		(223,143	)		(239,924	)
Net Cash (Used in) Provided by Financing Activities		(28,785,898	)		42,827,199

Net change in cash and cash equivalents		12,980,273			742,984

Cash and cash equivalents - Beginning of Period		1,422,393			252,615
Cash and cash equivalents - End of Period	$	14,402,666		$	995,598
SUPPLEMENTARY CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes	$	1,932,100		$	2,375,900
Interest	$	2,571,748		$	4,072,366
Non-cash transactions:
Right-of-use assets obtained in exchange for lease liabilities	$	8,897,639		$	1,098,769
Non-cash consideration paid in business acquisition (Note 2)	$	25,250,000		$	-
Conversion of Series B Preferred to Common Stock	$	-		$	125,673
Issuance of common stock for the conversion of principal net of accrued interest capitalized to principal to Notes Payable	$	-		$	244,931
Reduction of debt due to exchange of convertible Notes for Preferred Stock Series C&D	$	-		$	3,861,162

	●	Air Freight
	●	Ocean Freight
	●	Customs Brokerage and Compliance
	●	Warehousing and Distribution
	●	Order Management

	Level 1		Level 2		Level 3
Derivative liabilities as May 31, 2022	$	-	$	-	$	12,437,994
Addition		-		-		-
Change in fair value		-		-		(809,611	)
Derivative liabilities as February 28, 2023	$	-	$	-	$	11,628,383

	February 28, 2023			May 31, 2022
Risk-free interest rate		5.0	%		1.60	%
Probability of financing event or capital raise		90	%		50	%
Estimated capital raise		-			39.0 million
Estimated value of common stock	$	10.00 per share			-
Estimated time to financing event		0.25 years			0.5 years

	1.	Identify the contract(s) with a customer;

	2.	Identify the performance obligations in the contract;

	3.	Determine the transaction price;

	4.	Allocate the transaction price to the performance obligations in the contract; and

	5.	Recognize revenue as or when the performance obligation is satisfied.

	i.	Freight income - export sales

		Freight income from the provision of air, ocean, and land freight forwarding services are recognized over time based on a relative transit time basis through the sail or departure from origin port. The Company is the principal in these transactions and recognizes revenue on a gross basis.

	ii.	Freight income - import sales

		Freight income from the provision of air, ocean, and land freight forwarding services are recognized over time based on a relative transit time basis through the delivery to the customer’s designated location. The Company is the principal in these transactions and recognizes revenue on a gross basis.

	iii.	Customs brokerage and other service income

		Customs brokerage and other service income from the provision of other services are recognized at the point in time the performance obligation is met.

	Contract			Contract
	Assets			Liabilities			Contract Assets			Contract Liabilities
	Increase			(Increase)			Increase			(Increase)
	(Decrease)			Decrease			(Decrease)			Decrease
Reclassification of the beginning contract liabilities to revenue, as the result of performance obligation satisfied	$	-		$	468,209		$	-		$	-
Cash Received in advance and not recognized as revenue		-			(358,365	)		-			-
Reclassification of the beginning contract assets to receivables, as the result of rights to consideration becoming unconditional		(39,978,761	)		-			(4,307,081	)		-
Contract assets recognized, net reclassification to receivables		12,867,742			-
Contract assets recognized								4,467,872			-
Net Change	$	(27,111,019	)	$	109,844		$	160,791		$	-

	For the Three Months Ended February 29, 2024		For the Three Months Ended February 28, 2023
China, Hong Kong & Taiwan	$	16,597,938	$	17,427,833
Southeast Asia		12,329,911		9,335,793
United States		17,455,213		8,022,489
India Sub-continent		11,868,317		8,602,665
Other		9,529,007		6,238,722
Total revenue	$	67,830,385	$	49,627,502


Equity method investment as of June 1, 2023	$	3,381,683
Net income		675,606
Dividends paid		(608,126	)
Equity method investment as of February 29, 2024	$	3,449,163

	February 28, 2023		February 28, 2022
	For the Three Months Ended
	February 28, 2023		February 28, 2022
Numerator:
Net income (loss) attributable to common stockholders	$	663,173	$	(9,496,311	)
Effect of dilutive securities:		-		-

Diluted net income (loss)	$	663,173	$	(9,496,311	)

Denominator:
Weighted average common shares outstanding – basic		799,141,770		655,781,078

Dilutive securities:
Series A Preferred		1,168,177,320		-
Series B Preferred		5,373,342,576		-
Series C Preferred		1,206,351,359		-
Series D Preferred		1,130,954,399		-

Weighted average common shares outstanding and assumed conversion – diluted		9,677,967,424		655,781,078

Basic net income per common share	$	0.00	$	(0.01	)

Diluted net income per common share	$	0.00	$	(0.01	)

		February 29, 2024			February 28, 2023
		For the Nine Months Ended
		February 29, 2024			February 28, 2023
Numerator:
Net (loss) income		$	(11,029,671	)	$	7,256,211
Effect of dilutive securities:

Diluted net income		$	(11,029,671	)	$	7,256,211

Denominator:
Weighted average common shares outstanding – basic			799,141,770			780,768,778

Dilutive securities*:
Series A Preferred	*		-			1,168,177,320
Series B Preferred	*		-			5,373,342,576
Series C Preferred	*		-			1,206,351,359
Series D Preferred	*		-			1,130,954,399
			799,141,770
Weighted average common shares outstanding and assumed conversion – diluted			799,141,770			9,659,594,432

Basic net income per common share		$	(0.01	)	$	0.01

Diluted net income per common share		$	(0.01	)	$	0.00

	2.	~~ACQUISITIONS AND EQUITY METHOD INVESTMENTS~~February 29, 2024
Weighted average common shares outstanding – basic			799,141,770
Series A Preferred			1,168,177,320
Series B Preferred			5,373,342,576
Series C Preferred			1,206,351,359
Series D Preferred			1,130,954,399
Weighted average common shares outstanding and assumed conversion – diluted			9,677,967,424

~~Name of acquired operating subsidiary~~	~~Purchased Percentage~~	~~Designation~~
~~Unique Logistics International (H.K.) Limited~~	~~100~~%	~~Consolidated subsidiary~~
~~Unique Logistics International (Vietnam) Co., Ltd.~~	65%	~~Consolidated subsidiary~~
~~ULI (South China) Limited~~	70%	~~Consolidated subsidiary~~
~~Unique Logistics International (South China) Limited~~	70%	~~Consolidated subsidiary~~
~~Unique Logistics International (India) Private Ltd.~~	65%	~~Consolidated subsidiary~~
~~ULI (North & East China) Company Limited~~	50%	~~Equity-method investment~~
~~Unique Logistics International Co., Ltd~~	50%	~~Equity-method investment~~
~~TGF Unique Limited~~	~~49.99~~%	~~Equity-method investment~~

	Maturity Date	Description		Fair Value	Interest rate

Cash at closing			$	3,500,000

Promissory Notes	3/7/2023	Note 1 to ULHL		4,500,000	15.0	%
	4/7/2023	Note 2 to ULHL		5,000,000	15.0	%
	6/30/2023	Note 3 to ULHL		5,000,000	15.0	%
	2/21/2025	Note 4 to ULHL		1,000,000	-
	2/21/2025	Note 5 to FTS		500,000	-
	6/30/2023	Note 6 to ULHL		2,000,000	-
	6/30/2023	Note 7 to ULHL		1,000,000	-
				19,000,000
Contingent considerations
	6/30/2023	Note 8 to ULHL		2,500,000	15.0	%
	2/21/2024	Note 9 to ULHL		2,000,000	-
	2/21/2024	Earnout payment (estimated)		1,750,000	-
				6,250,000

Purchase Price			$	28,750,000

	●	~~Promissory Note 8 in the principal amount of $2,500,000~~ ~~due on~~ ~~June 30, 2023, having an interest rate of~~ 15~~%. This Promissory Note was issued in respect of the purchase price adjustment provided for under the SPA.~~

	●	~~Promissory Note 9 in the principal amount of $2,000,000~~ ~~due on~~ ~~February 21, 2024, and bearing no interest. This Promissory Note was issued in respect of the purchase price adjustment provided for under the SPA.~~

	Fair Value
Assets Acquired:
Current assets	$	36,232,526
Equity method investments		10,861,111
Identifiable intangible assets		6,515,000
Fixed Assets and other non-current assets		2,367,272

Liabilities Assumed:
Current liabilities		(27,326,110	)
Other long-term liabilities		(327,861	)
Non-Controlling Interest		(3,558,263	)

Goodwill		3,986,325
Purchase Price	$	28,750,000

	Cost Basis		Useful Life
Customer relationships	$	6,292,000		7 years
Non-compete agreements		223,000		1 year
	$	6,515,000

2024	$	1,121,857
For the Twelve Months Ending February 28,
2024	$	1,121,857
2025		898,857
2026		898,857
2027		898,857
2028		898,857
Thereafter		1,797,715
Total.	$	6,515,000

The following summarizes financial information at fair value for the equity-method investments at the acquisition:
	Fair Value
Current assets	$	17,493,164
Noncurrent assets		152,658
Total Assets		17,645,822
Current liabilities		6,907,904
Noncurrent liabilities		-
Total liabilities		6,907,904
Net assets of the equity investee		10,737,918
Equity attributable to non-controlling interest		(5,368,959	)
Equity attributable to registrant		5,368,959
Equity goodwill attributable to registrant		5,492,152
Total Equity method investment	$	10,861,111

	Three Months Ended February 28, 2023		Nine Months Ended February 28, 2023

Revenue, net	$	77,956,880	$	397,275,349
Net income attributable to registrant		2,177,952		14,671,414
Weighted average shares of common stock outstanding, basic (as previously reported)		799,141,770		780,768,778
Weighted average shares of common stock outstanding, diluted (as previously reported)		-		-
Net (loss) income per share, basic	$	0.00	$	0.02
Net (loss) income per share, diluted	$	0,00	$	0.00

	Three Months Ended February 28, 2022		Nine Months Ended February 28, 2022

Revenue, net	$	339,213,905	$	1,040,963,776
Net Income attributable to registrant		1,030,332		18,653,614
Weighted average shares of common stock outstanding, basic and diluted (as previously reported)		655,781,078		582,680,746
Net income per share, basic and diluted	$	-	$	0.03

	February 29, 2024
Risk-free interest rate		4.3	%
Probability of financing event next 2 years		85.0	%
Probability of financing event years 2 through 7.5		90.0	%
Probability of financing event		90.0	%
Volatility:		100.0	%

	February 28, 2023		May 31, 2022

Accrued salaries and related expenses	$	2,519,124	$	625,000
Accrued sales and marketing expense		1,173,564		2,383,500
Accrued professional fees		1,805,259		1,350,170
Accrued income tax		2,713,523		559,544
Accrued overdraft liabilities		1,156,708		681,058
Other accrued expenses and current liabilities		810,679		66,887
Accrued expenses and other current liabilities	$	10,178,857	$	5,666,159

	February 28, 2023			May 31, 2022

Due to Frangipani Trade Services ⁽¹⁾	$	451,964		$	602,618
Due to employee ⁽²⁾		7,500			30,000
Due to employee ⁽³⁾		16,661			66,658
		476,124			699,276
Less: current portion		(325,478	)		(301,308	)
	$	150,655		$	397,968

	February 29, 2024			May 31, 2023

Due to FTS ⁽¹⁾	$	650,655		$	801,310
Due to ULHK⁽²⁾		9,600,000			12,750,000
Total due to related party transaction		10,250,655			13,551,310
Less: current portion		(150,655	)		(4,801,310	)
Non current portion	$	10,100,000		$	8,750,000

	(1)	~~Due~~Two Notes due to Frangipani Trade Services (“FTS”), an entity owned by the Company’s ~~CEO, is due on demand and is non-interest bearing.~~ CEO:

	The Promissory Note dated March 30, 2021 in the principal amount ~~of this Promissory Note~~$903,927 bears no interest provided that any amount due under this Note which is not paid when due shall bear interest at an interest rate equal to six percent (6%) per annum. The principal amount is due and payable in six payments of $150,655 ~~the~~. The first payment was due on November 30, 2021, with each succeeding payment to be made six months after the preceding payment. The balance of this Promissory Note due within the next 12 months is $150,655 as of February 29, 2024.
	~~(2)~~	~~On May 29, 2020, the Company entered into a $90,000~~ ~~payable with an employee for the acquisition of UL BOS common stock from a previous owner. The payment terms consist of thirty-six monthly non-interest-bearing payments of $2,500~~ ~~from the date of closing.~~
	~~(3)~~Promissory Note dated February 21, 2023, in connection with the acquisitions completed in the principal amount of $500,000 for the remaining 35% share capital of Unique Logistics International (India) Private Ltd. acquired by the Company from FTS maturing February 21, 2025, and bearing no interest.

(2)	Due to ULHK, the entity with over 10% investment in the Company.

	On ~~May 29, 2020,~~February 21, 2023, the Company ~~entered into a $200,000~~ ~~payable with an employee for~~completed the acquisition of ~~UL BOS common stock from~~eight ULHK operating subsidiaries, in a ~~previous owner. The payment terms consist~~combination of ~~thirty-six monthly non-interest-bearing payments~~cash and promissory notes issued to the Seller. As of $~~5,556~~ ~~from the date~~February 29, 2024, some of ~~closing.~~these notes were paid off or had been refinanced.

	For the Three Months Ended		For the Three Months Ended
	February 28, 2023		February 28, 2022
Operating lease	$	531,728	$	310,965
Interest on lease liabilities		202,885		16,910
Total net lease cost	$	734,613	$	327,875