Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
May 31, 2021 | Aug. 31, 2021 | Jul. 31, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | UNIQUE LOGISTICS INTERNATIONAL INC | ||
Entity Central Index Key | 0001281845 | ||
Document Type | 10-K | ||
Document Period End Date | May 31, 2021 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --05-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 603,246,759 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | May 31, 2021 | May 31, 2020 |
Current Assets: | ||
Cash and cash equivalents | $ 252,615 | $ 1,349,363 |
Accounts receivable - trade, net | 20,369,747 | 7,932,310 |
Contract assets | 23,423,314 | 4,837,008 |
Factoring reserve | 7,593,665 | 970,724 |
Other prepaid expenses and current assets | 761,458 | 91,671 |
Total current assets | 52,400,799 | 15,181,076 |
Property and equipment - net | 192,092 | 198,988 |
Other long-term assets: | ||
Goodwill | 4,463,129 | 4,773,584 |
Intangible assets - net | 8,044,853 | 8,752,000 |
Operating lease right-of-use assets - net | 3,797,527 | 4,770,280 |
Deposits and other assets | 555,362 | 292,404 |
Other long-term assets | 16,860,871 | 18,588,268 |
Total assets | 69,453,762 | 33,968,332 |
Current Liabilities: | ||
Accounts payable - trade | 38,992,846 | 9,591,780 |
Accrued expenses and other current liabilities | 2,383,915 | 3,619,216 |
Accrued freight | 10,403,430 | 3,477,380 |
Current portion of notes payable - net of discount | 2,285,367 | 1,476,642 |
Current portion of long-term debt due to related parties | 397,975 | 6,380,975 |
Current portion of operating lease liability | 1,466,409 | 1,288,216 |
Total current liabilities | 55,929,942 | 25,834,209 |
Other long-term liabilities | 565,338 | 848,010 |
Long-term-debt due to related parties, net of current portion | 715,948 | 193,328 |
Notes payable, net of current portion - net of discount | 3,193,306 | 2,494,420 |
Operating lease liability, net of current portion | 2,431,144 | 3,482,064 |
Total long-term liabilities | 6,905,736 | 7,017,822 |
Total liabilities | 62,835,678 | 32,852,031 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Common stock, $0.001 par value; 800,000,000 shares authorized; 393,742,663 and 0 shares issued and outstanding as of May 31, 2021 and 2020, respectively | 393,743 | |
Additional paid-in capital | 4,906,384 | 1,523,811 |
Retained earnings (accumulated deficit) | 1,316,987 | (408,510) |
Total Stockholders' Equity | 6,618,084 | 1,116,301 |
Total Liabilities and Stockholders' Equity | 69,453,762 | 33,968,332 |
Series A Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Preferred Stock, Value | 130 | 130 |
Series B Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Preferred Stock, Value | $ 840 | $ 870 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | May 31, 2021 | Jan. 11, 2021 | Jan. 10, 2021 | May 31, 2020 |
Preferred stock, par value | $ .001 | $ .001 | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||
Common stock, par value | $ 0.001 | $ 0.001 | ||
Common stock, shares authorized | 800,000,000 | 800,000,000 | ||
Common stock, shares issued | 393,742,663 | 800,000,000 | 500,000,000 | 0 |
Common stock, shares outstanding | 393,742,663 | 0 | ||
Series A Preferred Stock [Member] | ||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||
Preferred stock, shares issued | 130,000 | 130,000 | ||
Preferred stock, shares outstanding | 130,000 | 130,000 | ||
Series B Preferred Stock [Member] | ||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||
Preferred stock, shares issued | 840,000 | 870,000 | ||
Preferred stock, shares outstanding | 840,000 | 870,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 7 Months Ended | 12 Months Ended |
May 31, 2020 | May 31, 2021 | |
Revenues: | ||
Total revenues | $ 1,070,324 | $ 371,887,272 |
Costs and operating expenses: | ||
Airfreight services | 158,223 | 130,564,578 |
Ocean freight and ocean services | 628,542 | 179,759,763 |
Contract logistics | 3,497 | 1,267,360 |
Customs brokerage and other services | 157,800 | 33,766,727 |
Acquisition expenses | 239,350 | |
Salaries and related costs | 60,776 | 9,184,390 |
Professional fees | 180,000 | |
Rent and occupancy | 21,086 | 1,815,194 |
Selling and promotion | 5,720 | 4,535,373 |
Depreciation and amortization | 765,532 | |
Fees on factoring agreements | 4,471,540 | |
Other | 19,682 | 877,458 |
Total costs and operating expenses | 1,474,676 | 368,358,284 |
Income (loss) from operations | (404,352) | 3,528,988 |
Other income (expenses) | ||
Interest | (4,158) | (1,781,828) |
Gain on forgiveness of promissory notes | 1,646,062 | |
Loss on extinguishment of convertible note | (1,147,856) | |
Total other income (expenses) | (4,158) | (1,283,622) |
Net income (loss) before income taxes | (408,510) | 2,245,366 |
Income tax expense | 519,869 | |
Net income (loss) | $ (408,510) | $ 1,725,497 |
Net income (loss) per common share | ||
- basic | $ (0.04) | |
- diluted | $ (0.04) | |
Weighted average common shares outstanding | ||
- basic | 10,000,000 | 1,408,941,722 |
- diluted | 10,000,000 | 10,030,364,061 |
Airfreight Services [Member] | ||
Revenues: | ||
Total revenues | $ 169,924 | $ 137,055,903 |
Ocean Freight and Ocean Services [Member] | ||
Revenues: | ||
Total revenues | 730,944 | 196,041,832 |
Contract Logistics [Member] | ||
Revenues: | ||
Total revenues | 18,126 | 3,093,626 |
Customs Brokerage and Other Services [Member] | ||
Revenues: | ||
Total revenues | $ 151,330 | $ 35,695,911 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity (Deficit) - USD ($) | Series A Preferred Stock [Member] | Series B Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings (Accumulated Deficit) [Member] | Total |
Beginning balance at Oct. 27, 2019 | ||||||
Beginning balance, shares at Oct. 27, 2019 | ||||||
Series A Preferred Stock | $ 130 | 130 | ||||
Series A Preferred Stock, shares | 130,000 | |||||
Series B Preferred Stock | $ 870 | 870 | ||||
Series B Preferred Stock, shares | 870,000 | |||||
Rollover equity at acquisition | 1,523,811 | 1,523,811 | ||||
Net income (loss) | (408,510) | (408,510) | ||||
Ending balance at May. 31, 2020 | $ 130 | $ 870 | 1,523,811 | (408,510) | 1,116,301 | |
Ending balance, shares at May. 31, 2020 | 130,000 | 870,000 | ||||
Issuance of Common Stock for services rendered | $ 28,291 | 63,375 | 91,666 | |||
Issuance of Common Stock for services rendered, shares | 28,291,180 | |||||
Conversion of Series B Preferred Stock to Common Stock | $ (30) | $ 196,394 | (196,364) | |||
Conversion of Series B Preferred Stock to Common Stock, shares | (30,000) | 196,394,100 | ||||
Recapitalization upon acquisition - net | $ 133,602 | (179,340) | (45,738) | |||
Recapitalization upon acquisition - net, shares | 133,601,511 | |||||
Warrants issued with convertible notes | 1,126,497 | 1,126,497 | ||||
Beneficial conversion feature of convertible notes | 2,540,169 | 2,540,169 | ||||
Issuance of common stock for the conversion of notes and accrued interest | $ 35,456 | 28,236 | 63,692 | |||
Issuance of common stock for the conversion of notes and accrued interest, shares | 35,455,872 | |||||
Net income (loss) | 1,725,497 | 1,725,497 | ||||
Ending balance at May. 31, 2021 | $ 130 | $ 840 | $ 393,743 | $ 4,906,384 | $ 1,316,987 | $ 6,618,084 |
Ending balance, shares at May. 31, 2021 | 130,000 | 840,000 | 393,742,663 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 7 Months Ended | 12 Months Ended |
May 31, 2020 | May 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ (408,510) | $ 1,725,497 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation and amortization | 765,532 | |
Amortization of debt discount | 1,350,389 | |
Share-based compensation | 91,666 | |
Amortization of right of use assets | 1,195,995 | |
Loss on extinguishment of notes payable | 1,147,856 | |
Gain on forgiveness of notes payable | (1,646,062) | |
Bad debt expense | 240,000 | |
Change in deferred tax asset | (264,000) | |
Accretion of consulting agreement | (282,672) | |
Changes in operating assets and liabilities: | ||
Accounts receivable - trade | 2,046,885 | (12,677,437) |
Contract assets | (18,586,306) | |
Factoring reserve | (6,622,941) | |
Prepaid expenses and other current assets | (669,787) | |
Deposits and other assets | (648,996) | 1,042 |
Accounts payable - trade | (192,416) | 29,465,943 |
Accrued expenses and other current liabilities | 765,089 | (1,226,702) |
Accrued freight | 6,926,050 | |
Operating lease liability | (1,095,969) | |
Net Cash (Used in) Provided by Operating Activities | 1,562,052 | (161,906) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Acquisition of business - net of cash acquired | (212,689) | |
Purchase of property and equipment | (51,489) | |
Net Cash Used in Investing Activities | (212,689) | (51,489) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from notes payable | 5,174,902 | |
Repayments of notes payable | (858,330) | |
Repayments of long-term debt due to related parties | (5,149,925) | |
Cash paid for debt issuance costs | (50,000) | |
Net Cash Used in Financing Activities | (883,353) | |
Net change in cash and cash equivalents | 1,349,363 | (1,096,748) |
Cash and cash equivalents - Beginning of Period | 1,349,363 | |
Cash and cash equivalents - End of Period | 1,349,363 | 252,615 |
Cash Paid During the Period for: | ||
Income taxes | 527,583 | |
Interest | 66,717 | |
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Operating lease asset and liability additions | 4,770,280 | 223,242 |
Non-cash note forgiveness due to UL HK | 310,452 | |
Fair value of warrants issued with convertible notes | 1,126,497 | |
Beneficial conversion feature of convertible notes | 2,540,169 | |
Issuance of Common Stock Conversions and Awards | $ 393,743 | |
Non-cash consideration paid in business combination | $ 11,102,022 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies | 12 Months Ended |
May 31, 2021 | |
Accounting Policies [Abstract] | |
Nature of Business and Summary of Significant Accounting Policies | 1. Nature of Business and Summary of Significant Accounting Policies Nature of Business Unique Logistics International, Inc. (the “Company” or “Unique”) (formerly Innocap, Inc.) is a global logistics and freight forwarding company. The Company currently operates via its wholly owned subsidiaries, Unique Logistics International (NYC), LLC, a Delaware limited liability company (“UL NYC”), Unique Logistics International (ATL) LLC, a Georgia limited liability company (“UL ATL”), and Unique Logistics International (BOS) Inc, a Massachusetts corporation (“UL BOS”) and (collectively the “UL US Entities”). 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 services ● Ocean Freight services ● Customs Brokerage and Compliance services ● Warehousing and Distribution services ● Order Management On May 29, 2020, Unique Logistics Holdings, Inc., a privately held Delaware corporation incorporated on October 28, 2019 (date of inception) headquartered in New York (“ULHI”), entered into a Securities Purchase Agreement with Unique Logistics Holdings Ltd, (“UL HK”), a Hong Kong company, (the “UL HK Transaction”). From inception, October 28, 2019 to May 29, 2020, ULHI was inactive. See “Acquisitions” in Note 2 below. The activity on the consolidated statements of operations is that of ULH for the period May 29, 2020 through May 31, 2020. On October 8, 2020, Unique Logistics Holdings, Inc., Innocap, Inc., and Inno Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Innocap Inc. (“Merger Sub”), entered into an Acquisition Agreement and Plan of Merger pursuant to which the Merger Sub was merged with and into ULHI, with ULHI surviving as a wholly owned subsidiary of Innocap, Inc. (the “Merger”). The transaction took place on October 8,2020 (the “Closing”). Innocap, Inc. was incorporated under the laws of the State of Nevada on January 23, 2004. (See “Acquisitions” in Note 2) Effective January 11, 2021, the Company amended and restated its articles of incorporation with the office of the Secretary of State of Nevada to, among other things, change the Company’s name to Unique Logistics International, Inc. and increase the number of shares of common stock that the Company is authorized to issue from 500,000,000 shares to 800,000,000 shares. On January 13, 2021, the Company received notice from the Financial Industry Regulation Authority (“FINRA”) that the above name change had been approved and took effect at the opening of trading on January 14, 2021. In connection with the name change, the Company changed its ticker symbol from “INNO” to “UNQL”. Liquidity The accompanying 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 a consequence of acquisition financing at inception, the Company experienced negative working capital and adverse cash flows from operations. As of May 31, 2021, the Company had cash of approximately $253,000, negative working capital of approximately $3.5 million and cash used in operations of approximately $162,000. This was a significant improvement from May 31, 2020, when its negative working capital was approximately $10.7 million. In response to our liquidity needs and to continue execution of our strategic plan. During the year ended May 31, 2021, the Company paid down most of its acquisition related debt (see Note 8), received forgiveness for PPP loans (Note 7) and signed an Exchange Agreement to exchange its Convertible debt into common stocks (Note 13). In addition, as disclosed in Note 13, Subsequent Events, on August 4, 2021 the parties to the TBK Agreement entered into an agreement to increase the Company’s credit facility from $30 million to $40 million during the period August 4, 2021, through and including December 2, 2021, with all other terms of the original TBK Agreement remaining unchanged. While we continue to execute our strategic plan, we will be tightly managing our cash and monitoring our liquidity position. We have implemented a number of initiatives to conserve our liquidity position including activities such as raising additional capital, increasing credit facilities, reducing cost of debt, controlling general and administrative expenditures, reducing discretionary spending and improving cash collection processes. Many of the aspects of the 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. Based on our evaluation and business performance of the Company subsequent to the balance sheet date, management has concluded that the Company’s cash and operating capital as of May 31, 2021, would be sufficient to continue as a going concern for at least one year from the date these consolidated financial statements are issued. COVID-19 In January 2020, the World Health Organization has declared the outbreak of a novel coronavirus (COVID-19) as a “Public Health Emergency of International Concern,” which continues to have an impact throughout the world and has adversely impacted global commercial activity and contributed to significant declines and volatility in financial markets. The coronavirus outbreak and government responses are creating disruption in global supply chains and adversely impacting many industries. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The extent of the impact of COVID-19 on our operational and financial performance will depend on the effect on our shippers and carriers, all of which are uncertain and cannot be predicted. The rapid development and fluidity of this situation precludes any prediction as to the ultimate material adverse impact of the coronavirus outbreak. Nevertheless, the outbreak presents uncertainty and risk with respect to the Company, its performance, and its financial results. The Company has experienced increased air and ocean freight rates due to overall cargo restraints imposed by shippers and carriers and is in a position to pass these cost increases directly to the customers without significantly effecting its margins. Basis of Presentation The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with the accounting principles generally accepted in the United States of America (“GAAP”). Principles of Consolidation The consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries stated in U.S. dollars, the Company’s functional currency. All intercompany transactions and balances have been eliminated in the consolidated financial statements. Business Combination The Company accounts for business acquisitions using the acquisition method as required by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. The fair values of intangible assets are generally estimated using a discounted cash flow approach with Level 3 inputs. The estimate of fair value of an intangible asset is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To estimate fair value, the Company generally uses risk-adjusted cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believes the level and timing of cash flows appropriately reflects market participant assumptions. For acquisitions that involve contingent consideration, the Company records a liability equal to the fair value of the contingent consideration obligation as of the acquisition date. The Company determines the acquisition date fair value of the contingent consideration based on the likelihood of paying the additional consideration. The fair value is generally estimated using projected future operating results and the corresponding future earn-out payments that can be earned upon the achievement of specified operating objectives and financial results by acquired companies using Level 3 inputs and the amounts are then discounted to present value. These liabilities are measured quarterly at fair value, and any change in the fair value of the contingent consideration liability is recognized in the consolidated statements of operations. During the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding adjustment to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recognized in the consolidated statements of operations. Use of Estimates The preparation of 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. Significant estimates inherent in the preparation of the 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, estimates of valuation assumptions for long-lived assets impairment, estimates and assumptions in valuation of debt and equity instruments and the calculation of share-based compensation. In addition, the Company makes significant judgments to recognize revenue – see policy note “Revenue Recognition” below. 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 corroborate 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, current portion of long-term debt due to related party payables, convertible notes, net and current portion of promissory loans approximate fair value due to their short-term nature as of May 31, 2021 and 2020. The carrying amount of the 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 no Level 3 assets or liabilities as of May 31, 2021 and 2020. There were no transfers between levels during the reporting period. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. The Company maintains its cash in bank deposit accounts, which at times may exceed federally insured limits. No loss had been experienced, and management believes it is not exposed to any significant risk on credit. Accounts Receivable – Trade Accounts receivable - trade 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 - trade, 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 of the receivable recorded, net of allowance for doubtful accounts. As of May 31, 2021 and 2020, the Company recorded an allowance for doubtful accounts of approximately $240,000 and $0, respectively. Concentrations Two customers represented approximately 25% of accounts receivable as of May 31, 2021. No customer represented greater than 10% of accounts receivable as of May 31, 2020. Two customers accounted for 24.6% and 18.9% of revenue, respectively, for the year ended May 31, 2021. Same two customers accounted for 28.4% and 20.8% of revenue, respectively, for the period October 28, 2019 (inception) through May 31, 2020. Off Balance Sheet Arrangements The Company has an agreement with an unrelated third party (the “Factor”) for factoring of specific accounts receivable. The factoring is treated as a sale in accordance with FASB ASC 860, Transfers and Servicing The Company acts as the agent on behalf of the Factor for the arrangements and has no significant retained interests or servicing liabilities related to the accounts receivable sold. The agreement provides the Factor with security interests in purchased accounts until the accounts have been repurchased by the Company or paid by the customer. In order to mitigate credit risk related to the Company’s factoring of accounts receivable, the Company may purchase credit insurance, from time to time, for certain factored accounts receivable, resulting in risk of loss being limited to the factored accounts receivable not covered by credit insurance, which the Company does not believe to be significant. During the years ended May 31, 2021 and 2020 the Company factored accounts receivable invoices totaling approximately $233,896,000 and $4,785,000, respectively, pursuant to the Company’s factoring agreement, representing the face value of the invoices. The Company recognizes factoring costs upon disbursement of funds. The Company incurred expenses totaling approximately $4,472,000 pursuant to the agreements for the year ended May 31, 2021 and none for the year ended May 31, 2020, which is presented in costs and operating expenses on the consolidated statement of operations. Factoring Reserve When an invoice is sold to Factor, the amount received from the Factor is credited to accounts receivable – trade and a reserve is retained, less a fee, by Factor which is debited to “factoring reserve” on the consolidated balance sheets. Factor Recovery In certain instances, the Company receives payment for a factored reserve directly from the customer. In these cases, until the funds are paid to the factor, the Company records the payment as “factor recovery” which is in accrued expenses and other current liabilities on the consolidated balance sheets. Recourse Liability Company policy is to do a collectability review of uncollected factored receivables in conjunction with the Factor at each reporting date and assess the need to provide for risk of potential non-collection and resulting recourse. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and impairment losses. Depreciation is provided for by the straight-line method over the estimated useful lives of the related assets. Estimated useful lives of property and equipment are as follows: Software 3 years Computer equipment 3 – 5 years Furniture and fixtures 5 – 7 years Leasehold improvements Shorter of estimated useful life or remaining term of the lease Both the useful life of an asset and its residual value, if any, are reviewed annually. Expenditures for repairs and maintenance are charged to expense as incurred. For assets sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any related gain or loss is reflected in income for the period. The Company did not record any impairment for the year ended May 21, 2021 and for the period from October 28, 2019 (inception), through May 31, 2020. 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. 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 an 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. For the year ended May 31, 2021 and the period from October 28, 2019 (inception) through May 31, 2020, the Company conducted its annual review of impairment of goodwill and intangible assets and no impairment was identified. Impairment of Long-Lived Assets Long-lived assets are comprised of intangible assets and property and equipment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An estimate of undiscounted future cash flows produced by the asset, or the appropriate grouping of assets, is compared to the carrying value to determine whether an impairment exists, pursuant to the provisions of FASB ASC 360-10 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of”. Income Taxes The Company files a consolidated income tax return for federal and most state purposes. Management has determined that there are no uncertain tax positions that would require recognition in the consolidated financial statements. If the Company were to incur an income tax liability in the future, interest and penalties on any income tax liability would be reported as interest expense. Management’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based on ongoing analysis of tax laws, regulations, and interpretations thereof as well as other factors. Generally, federal, state, and local authorities may examine the Company’s tax returns for three to four years from the filing date and the current and prior three to four years remain subject to examination as of December 31, 2020 for the UL US Entities, January 31, 2020 for the Company and May 31, 2020 for UL HI. The Company uses the assets and liability method of accounting for deferred taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the balance sheet carrying amounts of existing assets and liabilities and their respective tax basis. As of May 31, 2021 and 2020, the Company recognized a deferred tax asset of $264,000 and $0, respectively, which is included in deposits and other assets on the consolidated balance sheets. The Company regularly evaluates the need for a valuation allowance related to the deferred tax asset. No valuation allowance was recorded at May 31, 2021. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“ CARES Act 2017 Tax Act “NOLs In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to the income tax provision. Revenue Recognition During the period ended May 31, 2020, the Company adopted ASC 606, Revenue from Contracts with Customers 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 thru 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 thru 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. 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 US Port of entry (or in the case when the customer requires delivery to a designated point, the arrival at that delivery point). This over time 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. 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. As discussed under ASC 606-10-55, 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 consideration 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 - trade. Contract Liabilities Contract liabilities represent the amount of obligation to transfer goods or services to a customer for which consideration has been received. There were no contract liabilities outstanding as of May 31, 2021 and 2020. Disaggregation of Revenue from Contracts with Customers The following table disaggregates gross revenue by significant geographic area for the year ended May 31, 2021 based on origin of shipment (imports) or destination of shipment (exports): For the For the Period October 28, 2019 (inception) Through China, Hong Kong & Taiwan $ 186,932,382 $ - South East Asia 104,475,697 - United States 31,452,041 - India Sub-continent 28,164,102 - Other 20,863,050 1,070,324 Total revenue $ 371,887,272 $ 1.070,324 Segment Reporting Based on the guidance provided by ASC Topic 280, Segment Reporting Earnings per Share Earnings 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. EPS is computed pursuant to Section 260-10-45 of the FASB ASC. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be 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, stock options or warrants. The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share. For the Year Ended Numerator: Net income $ 1,725,497 Effect of dilutive securities 1,350,389 Diluted net income $ 3,075,886 Denominator: Weighted average common shares outstanding – basic 1,408,941,722 Dilutive securities (a): Series A Preferred 1,316,157,000 Series B Preferred 5,499,034,800 Convertible notes 1,806,230,539 Weighted average common shares outstanding and assumed conversion – diluted 10,030,364,061 Basic net income per common share $ 0.00 Diluted net income per common share $ 0.00 (a) - Anti-dilutive securities excluded: - The Company did not have dilutive securities for the period October 28, 2019 (inception) through May 31, 2020. Leases In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02 “Leases” During the period ended May 31, 2020, the Company adopted ASC 842 upon inception and recognized a right of use (“ROU”) asset and liability in the consolidated balance sheet in the amount of $4,770,280 related to the operating lease for office and warehouse space. For leases in w |
Acquisitions
Acquisitions | 12 Months Ended |
May 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | 2. ACQUISITIONS Reverse Merger On October 8, 2020 (the “Closing Date”) Innocap, Inc., Inno Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and Unique Logistics Holdings, Inc. (“UHLI”), entered into an Acquisition Agreement and Plan of Merger (the “Agreement”) pursuant to which the Merger Sub was merged with and into UHLI, with UHLI surviving as a wholly-owned subsidiary of Innocap, Inc. (the “Merger”). Innocap Inc. acquired, through a reverse triangular merger, all of the outstanding capital stock of ULHI in exchange for issuing ULHI’s shareholders (the “ULHI Shareholders”), pro-rata, an aggregate of 1,000,000 shares of preferred stock, with certain ULHI shareholders receiving 130,000 shares of Innocap Inc.’s Series A Preferred Stock par value $0.001 per share, and certain UHLI shareholders receiving of 870,000 shares of Innocap Inc.’s Series B Preferred Stock, par value $0.001 per share. Immediately after the Merger was consummated, and further to the Agreement, certain affiliates of Innocap Inc. cancelled a total of 45,606,489 shares of Innocap Inc.’s common stock, and 1,000,000 shares of Preferred Stock held by them (the “Cancellation”). In consideration of the Cancellation of such shares of Innocap Inc.’s common stock and preferred stock, ULHI agreed to assume certain liabilities of Innocap Inc. As a result of the Merger and the Cancellation, the ULHI Shareholders became the majority shareholders of Innocap Inc. In connection with the Merger, on October 8, 2020, Innocap Inc., Star Exploration Corporation, a Texas corporation and wholly-owned subsidiary of Innocap (the “Split-Off Subsidiary”), and Paul Tidwell, an individual in his capacity as the Split-Off Subsidiary purchaser, entered into a Split-Off Agreement (the “Split-Off Agreement”). Pursuant to the terms of the Split-Off Agreement, Innocap Inc., as seller, in consideration of the Cancellation and the assignment and assumption of $797,000 of Innocap Inc.’s liabilities, sold to Paul Tidwell all of the issued and outstanding shares of the Split-Off Subsidiary including and all assets related to Innocap Inc.’s current business. The Merger was accounted for as a reverse acquisition involving only the exchange of equity. ULHI is the accounting acquirer and Innocap Inc. is the legal acquirer. In order to account for the acquisition, management closed the books of the Innocap Inc. on the Closing Date, closed all equity accounts to additional paid in capital and merged the balance sheets as of the Closing Date. ULHI maintained its historical financial statements, only recasting the equity accounts to that of the Innocap Inc. All assets and liabilities of Innocap Inc. were spun off, except approximately $46,000 in liabilities as of the Closing Date assumed by Innocap Inc. Because the transaction was between two operating companies, the consideration assumed by ULHI to effectuate the Merger, approximately 2% of fully diluted capital structure post-merger, was fair valued utilizing the market capitalization of Innocap Inc. immediately prior to the merger. The market capitalization prior to merger was approximately $1.2 million ($0.008 market price per share and 172,000,000 shares outstanding). Innocap Inc. consolidated ULHI as of the closing date of the agreement, and the results of operations of Innocap Inc. include that of ULHI. The historical financial statements of Innocap Inc. before the Merger will be replaced with the historical financial statements of ULHI before the Merger in all future filings with the SEC. On January 11, 2021, the Company amended and restated its articles of incorporation with the office of the Secretary of State of Nevada to change the Company’s name to Unique Logistics International, Inc.(the “Company” or “Unique”). See Note 1. The following presents the pro-forma combined results of operations of Innocap Inc. with ULHI as if the entities were combined on June 1, 2019 and show activity for the year ended May 31, 2020. For the year ended Revenues $ 115,148,267 Net income (loss) $ (2,126,697 ) Net income (loss) per share - basic $ (0.21 ) Weighted average number of shares outstanding 10,000,000 The pro-forma results of operations are presented for information purposes only. The pro-forma results of operations are not intended to present actual results that would have been attained had the acquisitions been completed as of June 1, 2019 or to project potential operating results as of any future date or for any future periods. UL US Entities On May 29, 2020 (“Acquisition Date”), ULHI entered into a Securities Purchase Agreement (SPA) with Unique Logistics Holdings Ltd, (“UL HK”), a Hong Kong company, (the “UL HK Transaction”), pursuant to which the Company purchased from UL HK (i) sixty percent (60%) of the membership interests of (“UL ATL Membership Interests”) of Unique Logistics International (ATL) LLC, a Georgia limited liability company (“UL ATL”); (ii) eighty percent (80%) of the common stock of Unique Logistics International (BOS) Inc., a Massachusetts corporation (“UL BOS”); and (iii) sixty-five percent (65%) of the Unique Logistics International (USA) Inc., a New York corporation (“UL NYC”), for the following consideration: (i) $6,000,000, to be paid in accordance with the following (a) $1,000,000 in cash; (b) $5,000,000 in the form of subordinated promissory note (zero percent interest rate and has a maturity of three years) issued in favor of UL HK and (c) 1,500,000 shares of common stock of the ULHI, representing 15% of common stock outstanding. In connection with the UL HK Transaction, the ULHI also entered into a Consulting Services Agreement for a term of three years with Great Eagle Freight Limited (“GEFL”), a wholly owned subsidiary of UL HK. UL ATL, UL BOS, and UL NYC are collectively referred to as “UL US Entities”. ULHI also entered into three separate securities purchase agreements with the minority interest holders of UL ATL (the, “UL ATL Transaction”), UL BOS (the “UL BOS Transaction”) and UL NYC (the “UL NYC Transaction”), respectively, whereby, together with the consummation of the UL HK Transaction, each such entity became a wholly-owned subsidiary of the ULHI. In connection with the UL ATL Transaction, ULHI purchased from the minority shareholder, the remaining forty percent (40%) of the UL ATL Membership Interests, for the following consideration transferred: (i) US $2,819,000, which was paid in accordance with the following: (a) $994,000 in cash; and (b) $1,825,000 through subordinated, non-interest bearing, promissory note with a maturity of three years issued in favor of the minority shareholder. In connection with UL ATL Transaction, ULHI also entered into a non-compete, non-solicitation and non-disclosure agreement with the minority holder for $500,000 for a three-year period. In connection with the UL BOS Transaction, ULHI purchased from the minority shareholder, the remaining twenty percent (20%) of the UL BOS Common Stock for a purchase price of up to $290,000 to be paid in accordance with the following: (a) $90,000 to be paid in monthly cash payments of $2,500 for a period of thirty-six (36) months (non-interest), and (b) assumption of up to $200,000 of debt owed to UL HK. In connection with the UL BOS Transaction, ULHI entered into an employment agreement with the minority shareholder (“UL BOS Employment Agreement”). The UL BOS Employment Agreement contains an initial term of three years, beginning on May 29, 2020 and ending May 29, 2023. Following the initial term, the UL BOS Employment Agreement may be terminated by either party on 60 days’ written notice. In connection with the UL NYC Transaction, ULHI purchased from a minority shareholder, the remaining thirty-five (35%) of the UL NYC Common Stock for considerations to be paid in accordance with the following: (a) the issuance of 7,199,000 shares of the ULHI and (b) the execution of an Employment Agreement (“UL NYC Employment Agreement”). The UL NYC Agreement has an initial term of approximately three years, and automatically renews for successive consecutive one-year period terms, unless either party provides notice to the other party as provided in the UL NYC Employment Agreement. In addition, ULHI paid $239,350 of closing costs for legal, accounting and other professional fees which were expensed during the period ended May 31, 2020. The price consideration is as follows: Cash consideration $ 1,994,000 Notes payable 6,706,439 Consulting service contract liability 848,010 Non-compete payable 481,211 Assumption of seller debt 200,000 Assumed long term liabilities 1,394,533 Rollover equity 613,693 Total purchase price consideration $ 12,237,886 GAAP defines the acquirer in a business combination as the entity that obtains control of one or more businesses in a business combination and establishes the acquisition date as the date the acquirer achieves control. GAAP requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquirer (if any) at the acquisition date, measured at their fair values as of that date. GAAP also requires the acquirer to recognize contingent consideration (if any) at the acquisition date, measured at its fair value at that date. The following summarizes the fair values of the assets acquired and liabilities assumed at the acquisition: Assets: Current assets $ 16,571,270 Property and equipment 206,873 Security deposits 292,404 Other intangibles 8,752,000 Goodwill (1) 4,773,585 Total identified assets acquired $ 30,596,132 Liabilities: Current liabilities $ 16,115,703 Consulting service contract liability 848,010 Long-term assumed liabilities 1,394,533 Total liabilities assumed 18,358,246 Total net assets assumed $ 12,237,886 (1) The goodwill acquired is primarily attributable to the workforce of the acquired business and significant synergies expected to arise after ULHI’s acquisition of UL US Entities. ULHI is assessing the amount of goodwill that will be deductible for income tax purposes. For the year ended May 31, 2021, the amount of goodwill deductible for income tax purposes was immaterial. The Company will continue to analyze the goodwill for deductibility over the 15-year life. See Note 4. Other intangible assets and their amortization periods are as follows: Cost Basis Useful Life Tradenames/trademarks $ 806,000 10 years Customer relationships – ATL 5,605,000 15 years Customer relationships – BOS 310,000 12 years Customer relationships – NYC 1,718,000 14 years Non-compete agreements 313,000 3 years $ 8,752,000 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. The amounts used in computing the purchase price differ from the amounts in the purchase agreements due to fair value measurement conventions prescribed by accounting standards. ULHI consolidated the UL US Entities as of the closing date of the agreement, and the results of operations of Unique include that of UL US Entities. |
Property and Equipment
Property and Equipment | 12 Months Ended |
May 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 3. Property and Equipment Major classifications of property and equipment are summarized below as of May 31, 2021 and 2020. May 31, 2021 May 31, 2020 Furniture and fixtures $ 84,085 $ 68,685 Computer equipment 108,479 78,743 Software 27,780 24,414 Leasehold improvements 27,146 27,146 247,490 198,988 Less: accumulated depreciation (55,398 ) - $ 192,092 $ 198,988 Depreciation expense charged to income for the year ended May 31, 2021 amounted to $58,384. The Company did not incur depreciation expense for the period October 28, 2019 (inception) through May 31, 2020. |
Goodwill
Goodwill | 12 Months Ended |
May 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | 4. GOODWILL The carrying amount of goodwill was $4,463,129 and $4,773,584 at May 31, 2021 and 2020, respectively. On February 19, 2021, the Company and UL HKagreed to reduce an existing $325,000 note assumed by the Company in the May 29, 2020 acquisition (Note 2). The settlement amount of $310,452 was accounted for as a measurement period adjustment and resulted in a reduction to goodwill. The Company conducted its annual review of impairment and no impairment in the carrying amount of goodwill was recognized during the year ended May 31, 2021 and for the period from October 28, 2019 (inception) through May 31, 2020. |
Intangible Assets
Intangible Assets | 12 Months Ended |
May 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 5. INTANGIBLE ASSETS Intangible assets consist of the following at May 31, 2021 and 2020: May 31, 2021 May 31, 2020 Trade names / trademarks $ 806,000 $ 806,000 Customer relationships 7,633,000 7,633,000 Non-compete agreements 313,000 313,000 8,752,000 8,752,000 Less: Accumulated amortization (707,147 ) - $ 8,044,853 $ 8,752,000 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. For the year ended May 31, 2021, amortization expense related to the intangible assets was $707,147. For the period from October 28, 2019 (inception) through May 31, 2020, there was no amortization expense related to the intangible assets due to timing of the acquisition and the Company’s fiscal year-end. As of May 31, 2021, the weighted average remaining useful lives of these assets were 8.33 years. Estimated amortization expense for the next five years and thereafter is as follows: Twelve Months Ending May 31, 2022 $ 707,143 2023 707,143 2024 693,800 2025 693,800 2026 693,800 Thereafter 4,549,167 $ 8,044,853 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
May 31, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | 6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following at May 31, 2021 and 2020: May 31, 2021 May 31, 2020 Accrued salaries and related expenses $ 672,455 $ 145,165 Accrued sales and marketing expense 539,810 116,500 Accrued professional fees 75,000 117,040 Accrued income tax 256,286 - Accrued overdraft liabilities 790,364 97,519 Other accrued expenses and current liabilities 50,000 3,142,992 $ 2,383,915 $ 3,619,216 |
Financing Arrangements
Financing Arrangements | 12 Months Ended |
May 31, 2021 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | 7. FINANCING ARRANGEMENTS Financing arrangements on the consolidated balance sheets consists of: May 31, 2021 May 31, 2020 Promissory notes (PPP Program) $ 358,236 $ 1,646,062 Promissory notes (EIDL) 150,000 - Notes payable 2,528,886 2,325,000 Convertible notes – net of discount of $1,607,283 2,441,551 - 5,478,673 3,971,062 Less: current portion (2,285,367 ) (1,476,642 ) $ 3,193,306 $ 2,494,420 Paycheck Protection Program Loans The Company’s wholly-owned subsidiaries received proceeds under the Paycheck Protection Program (“PPP”). The PPP, established as part of the CARES Act, provided for loans to qualifying business for amounts up to 2.5 times the average monthly payroll expenses of the qualifying business. The PPP Loan (“Note”) and accrued interest are forgivable after twenty-four weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities and maintains its payroll levels. The amount of forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. During April and May 2020, the UL US Entities received aggregate proceeds of $1,646,062 through this program. The promissory notes mature for dates ranging from April 2022 through May 2022. As of May 31, 2021 and 2020, the outstanding balance due under these promissory notes was $358,236 and $1,646,062, respectively. The interest rate on the above PPP notes is 1.0% per annum, with interest accruing on the unpaid principal balance computed on the basis of the actual number of days elapsed in a year of 360 days. No payments of principal or interest are due during the six-month period beginning on the date of the Note (“Deferral Period”). As noted above, the principal and accrued interest under the Note evidencing the PPP Loans are forgivable after twenty-four weeks as long the Company has used the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the Company terminates employees or reduces salaries during the twenty-four-week period. The Company used the proceeds for purposes consistent with the PPP. In order to obtain full or partial forgiveness of the PPP Loan, the Company must request forgiveness and must provide satisfactory documentation in accordance with applicable Small Business Administration (“SBA”) guidelines. Interest payable on the Note may be forgiven only if the SBA agrees to pay such interest on the forgiven principal amount of the Note. The Company will be obligated to repay any portion of the principal amount of the Note that is not forgiven, together with interest accrued and accruing thereon at the rate set forth above, until such unforgiven portion is paid in full. Beginning one month following expiration of the Deferral Period and continuing monthly until 24 months from the date of the Note (the “Maturity Date”), the Company is obligated to make monthly payments of principal and interest to the Lender with respect to any unforgiven portion of the Note, in such equal amounts required to fully amortize the principal amount outstanding on the Note as of the last day of the Deferral Period by the Maturity Date. The Company is permitted to prepay the Note at any time without payment of any premium. During January 2021, the PPP notes, which were assumed without recourse in the May 2020 acquisition (see Note 2) were utilized for eligible purposes under the terms of the agreements and were forgiven after the expiration of the twenty four week period discussed above. The total amount forgiven was $1,646,062 and is included in gain on forgiveness of promissory notes on the consolidated statements of operations. On March 9, 2021, the Company was granted an SBA loan (the “Loan”) by Century Bank in the aggregate amount of $358,236, pursuant to the second round of the Paycheck Protection Program (the “PPP”) under the CARES Act. The Loan, which was in the form of a note, matures on March 5, 2026 and bears interest at a rate of 1% per annum. The Loan is payable in equal monthly installments after the Deferral Period which ends on the day of the Forgiveness Deadline. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. The funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, and utilities. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. As of May 31, 2021 and 2020, the outstanding balance due was $358,236 and $0, respectively, which is included in promissory notes on the consolidated balance sheets. Economic Injury Disaster Loan Pursuant to a certain Loan Authorization and Agreement (the “SBA Loan Agreement”) in June 2020, the Company securing a loan (the “EIDL Loan”) with a principal amount of the EIDL Loan of $150,000, with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75% per annum and will accrue only on funds advanced from the date of each advance. Installment payments, including principal and interest, are due monthly beginning June 2021. The balance of principal and interest is payable thirty years from the date of the SBA Note. As of May 31, 2021 and 2020, the outstanding balance due was $150,000 and $0, respectively, which is included in promissory notes on the consolidated balance sheets. Notes Payable On May 29, 2020, the Company entered into a $1,825,000 note payable as part of the acquisition related to UL ATL. The loan bears a zero percent interest rate and has a maturity of three years, or May 29, 2023. The agreement calls for six semi-annual payments of $304,166.67, for which the first payment was due on November 29, 2020. As of May 31, 2021 and 2020, the outstanding balance due under the note was $1,216,667 and $1,825,000, respectively. On May 29, 2020, the Company entered into a non-compete, non-solicitation and non-disclosure agreement with a former owner of ATL. The amount payable under the agreement is $500,000 over a three-year period. The agreement calls for twenty-four monthly non-interest bearing payments of $20,833.33 with the first payment on June 29, 2020. As of May 31, 2021 and 2020, the outstanding balance due under the agreement was $250,004 and $500,000, respectively. Promissory Note On March 19, 2021 (the “Effective Date”), Unique Logistics International, Inc. (the “Company”) issued to an accredited investor (the “Investor”) a 10% promissory note in the principal aggregate amount of $1,000,000 (the “Note”). The Company received aggregate gross proceeds of $1,000,000. The purpose of the funds is to augment working capital resulting from a surge in business and new customer acquisition. The Note matures on the date that is thirty (30) days following the Effective Date (the “Maturity Date”). The Note bears interest at a rate of ten percent (10%) per annum (the “Interest Rate”). The Company may prepay the Note without penalty. On April 7, 2021, Unique Logistics International, Inc. (the “Company”) entered into an Amended and Restated Promissory Note (the “Amended and Restated Note”) with an investor pursuant to which the Company and the Investor agreed to amend and restate in its entirety that certain promissory note, issued to the Investor on March 19, 2020 (the “ Original Note”). The Amended and Restated Note supersedes and replaces the Original Note. The Amended and Restated Note is in the principal aggregate amount of $1,000,000 and bears interest at a rate of a guaranteed 7.5% or Seventy-Five Thousand dollars ($75,000) at maturity. The Amended and Restated Note matures on June 15, 2021 (the “Maturity Date”), This Note was subsequently extended to October 15, 2021, and is subject to the Exchange Agreement consummated on August 19, 2021 (See Subsequent Event Note 13). The Company may prepay the Amended and Restated Note without penalty. The Amended and Restated Note contains certain events of default. In the event of a default, at its’ option and sole discretion, the Investor may consider the Amended and Restated Note immediately due and payable. Upon such an event of default, the interest rate increases to eighteen percent (18%) per annum. As of May 31, 2021 and 2020, the outstanding balance due under the agreement was $1,062,215 and $0, respectively. Convertible Notes Payable Trillium SPA On October 8, 2020, the Company entered into a Securities Purchase Agreement (the “Trillium SPA”) with Trillium Partners (“Trillium”) pursuant to which the Company sold to Trillium (i) a 10% secured subordinated convertible promissory note in the principal aggregate amount of $1,111,000 (the “Trillium Note”) realizing gross proceeds of $1,000,000 (the “Proceeds”) and (ii) a warrant to purchase up to 570,478,452 shares of the Company’s common stock at an exercise price of $0.001946, subject to adjustment as provided therein (the “Trillium Warrant”). The note was amended on October 14, 2020 to adjust the conversion price to $0.00179638 as noted below. The transaction with Trillium closed on October 19, 2020 upon receipt of the proceeds. The Trillium Note matures on October 6, 2021 (the “Maturity Date”) and is convertible at any time. The Trillium Note was subsequently extended to October 6, 2022 and is subject to the Exchange Agreement consummated on August 19, 2021 (See Subsequent Event Note 13). The conversion price of the Trillium Note shall be equal to $0.00179638 (the “Conversion Price”); provided, however, that in no instance shall the investor be entitled to convert at a price lower than $0.00119759 (the “Trillium Note Floor Price”) and in no instance shall Trillium be entitled to convert into such an amount of common stock that, together with all shares of common stock which have been previously converted, would equal greater than 13.8875% of the total issued and outstanding shares of common stock of the Company, subject to adjustment as provided herein, including, but not limited to, adjustments for any stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the common stock during such measuring period. The Conversion Price shall be rounded down to the nearest $0.0001 and in no event lower than $0.00119759. Provided that the Company has satisfied all of the Equity Conditions (as defined in the Trillium Note) the Company may deliver a notice to Trillium an “Optional Redemption Notice”, of its irrevocable election to redeem some or all of the then outstanding principal or interest amount of the Trillium Note for cash in an amount equal to the Optional Redemption Amount as further described in the Trillium Note (the “Optional Redemption Amount”) on the 20th Trading Day following the Optional Redemption Notice. The Trillium Warrant has a term of five years and may only be exercised on a cash basis at an “Exercise Price” equal to $0.001946, subject to adjustment (the “Exercise Price”); provided, however, that in no instance shall Trillium be entitled to at a price lower than $0.001946 (the “Floor Price”) and in no instance shall Trillium be entitled to exercise the Trillium Warrant into such an amount of common stock that, together with all shares of Common Stock which have been previously exercised by Trillium, would equal greater than 8.546% of the total issued and outstanding shares of common stock of the Company, subject to adjustment, including, but not limited to, adjustments for any stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the common stock during such measuring period. The Exercise Price shall be rounded down to the nearest $0.0001 and in no event lower than $0.001946. The original issue discount of $111,000 will be amortized to interest expense over the life of the note. In addition, the Company paid legal fees of $50,000 which will be amortized to interest expense over the life of the note. As discussed below, the note was amended on October 14, 2020 at which point all unamortized discount was written off. The Company determined the fair value of the warrant and the beneficial conversion feature of the note using the Black-Scholes model and recorded an adjustment to the carrying value of the note liability with an equal and offsetting adjustment to Stockholders’ Equity. The warrant was valued at $563,341 and the beneficial conversion feature was originally valued at $65,453. Upon amendment of the note on October 14, 2020, the Company accounted for the modification as debt extinguishment and the Company recorded a loss on extinguishment of $1,147,856. In addition, the Company recorded a beneficial conversion feature with a value of $436,844 which was recorded to additional paid in capital. See assumptions used for fair value calculation below. There was no unamortized debt discount related to the Trillium SPA as of May 31, 2021. During the year ended May 31, 2021, the Company recorded amortization of debt discount totaling $13,054 until amendment of the note as discussed above. On April 12, 2021, a noteholder converted $63,692 in convertible notes into 35,455,872 shares of the Company’s common stock at a rate of $0.00179638 per share. As of May 31, 2021, the outstanding balance on the Trillium Note was $1,104,500 and the Company was deemed in default. On January 29, 2021, the Company and Trillium entered into a waiver agreement which waived any and all defaults underlying the Trillium SPA and the Trillium Note for a period of six months. 3a SPA On October 14, 2020, the Company entered into a Securities Purchase Agreement (the “3a SPA”) with 3a Capital Establishment (“3a”) pursuant to which the Company sold to 3a (i) a 10% secured subordinated convertible promissory note in the principal aggregate amount of $1,111,000 (the “3a Note”) realizing gross proceeds of $1,000,000 (the “Proceeds”) and (ii) a warrant to purchase up to 570,478,452 shares of the Company’s common stock at an exercise price of $0.001946, subject to adjustment as provided therein (the “3a Warrant”). The transaction with 3a closed on October 19, 2020 upon receipt of the Proceeds. The 3a Note matures on October 6, 2021 (the “Maturity Date”) and is convertible at any time. The 3a Note was subsequently extended to October 6, 2022 and is subject to the Exchange Agreement consummated on August 19, 2021 (See Subsequent Event Note 13). The conversion price of the 3a Note shall be equal to $0.00179638 (the “Conversion Price”); provided, however, that in no instance shall the investor be entitled to convert at a price lower than $0.00119759 (the “3a Note Floor Price”) and in no instance shall 3a be entitled to convert into such an amount of common stock that, together with all shares of common stock which have been previously converted, would equal greater than 13.8875% of the total issued and outstanding shares of common stock of the Company, subject to adjustment as provided herein, including, but not limited to, adjustments for any stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the common stock during such measuring period. The Conversion Price shall be rounded down to the nearest $0.0001 and in no event lower than $0.00119759. Provided that the Company has satisfied all of the Equity Conditions (as defined in the 3a Note) the Company may deliver a notice to 3a an “Optional Redemption Notice”, of its irrevocable election to redeem some or all of the then outstanding principal or interest amount of the 3a Note for cash in an amount equal to the Optional Redemption Amount as further described in the 3a Note (the “Optional Redemption Amount”) on the 20th Trading Day following the Optional Redemption Notice. The 3a Warrant has a term of five years and may only be exercised on a cash basis at an “Exercise Price” equal to $0.001946, subject to adjustment (the “Exercise Price”); provided, however, that in no instance shall 3a be entitled to at a price lower than $0.001946 (the “Floor Price”) and in no instance shall 3a be entitled to exercise the 3a Warrant into such an amount of common stock that, together with all shares of Common Stock which have been previously exercised by 3a, would equal greater than 8.546% of the total issued and outstanding shares of common stock of the Company, subject to adjustment, including, but not limited to, adjustments for any stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the common stock during such measuring period. The Exercise Price shall be rounded down to the nearest $0.0001 and in no event lower than $0.001946. The original issue discount of $111,000 will be amortized to interest expense over the life of the note. The Company determined the fair value of the warrant using the Black-Scholes model and recorded an adjustment to the carrying value of the note liability with an equal and offsetting adjustment to Stockholders Equity. The warrant had a grant date fair value of $563,156 and the beneficial conversion feature was valued at $436,844. There was total unamortized debt discount related to the 3a SPA of $391,757 as of May 31, 2021. During the year ended May 31, 2021, the Company recorded amortization of debt discount totaling $719,243. If the Company or any subsidiary thereof, as applicable, at any time while the Trillium Note or the 3a Note are outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any common stock or common stock equivalents, at an effective price per share less than the Conversion Price then in effect other than in respect of an Exempt Issuance (as defined therein) (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”), then simultaneously with the consummation of each Dilutive Issuance, the Conversion Price shall be reduced and only reduced to equal the Base Share Price. Such adjustment shall be made whenever such common stock or common stock equivalents are issued. As of May 31, 2021, the outstanding balance on the 3a Note was $1,111,000 and the Company was deemed in default. On January 29, 2021, the Company and 3a entered into a waiver agreement which waived any and all defaults underlying the 3a SPA and the 3a Note for a period of six months. The estimated fair value of the warrants was valued using the Black-Scholes option pricing model, using the following assumptions during the year ended May 31, 2021: Estimated dividends None Expected volatility 38.5 % Risk free interest rate 0.30 – 0.33 % Expected term 5 years Trillium and 3a On January 28, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Trillium Partners LP (“Trillium”) and 3a Capital Establishment (“3a” together with Trillium, the “Investors”) pursuant to which the Company sold to each of the Investors (i) a 10% secured subordinated convertible promissory note in the principal aggregate amount of $916,666 or $1,833,333 in the aggregate (each a “Note” and together the “Notes”) realizing gross proceeds of $1,666,666 (the “Proceeds”). The Notes mature on January 28, 2022 (the “Maturity Date”) and are convertible at any time. The conversion price of the Note is $0.0032 (the “Conversion Price”). These Notes were subsequently extended to January 28, 2023 and are subject to the Exchange Agreement consummated on August 19, 2021 (See Subsequent Event Note 13). The original issue discount of $166,667 will be amortized to interest expense over the life of the note. The Company determined the fair value of the warrant using the Black-Scholes model and recorded an adjustment to the carrying value of the note liability with an equal and offsetting adjustment to Stockholders Equity. beneficial conversion feature for both Notes was valued at $1,666,666 There was total unamortized debt discount related to the Notes of $1,215,526 as of May 31, 2021. During the year ended May 31, 2021, the Company recorded amortization of debt discount totaling $617,808 Provided that the Company has satisfied all of the Equity Conditions (as defined in the Notes) the Company may deliver a notice to the Investors (an “Optional Redemption Notice”, of its irrevocable election to redeem some or all of the then outstanding principal or interest amount of the Notes for cash in an amount equal to the Optional Redemption Amount as further described in the Notes (the “Optional Redemption Amount”) on the 20 th If the Company or any subsidiary thereof, as applicable, at any time while the Notes are outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any common stock or common stock equivalents, at an effective price per share less than the Conversion Price then in effect other than in respect of an Exempt Issuance (as defined therein) (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”), then simultaneously with the consummation of each Dilutive Issuance the Conversion Price shall be reduced and only reduced to equal the Base Share Price. Such adjustment shall be made whenever such common stock or common stock equivalents are issued. Additionally, while the Notes remain outstanding the Company shall not, without prior written approval from Investors, enter into a Variable Rate Transaction (as defined in the Notes). Further, as long as the Notes remain outstanding, upon any issuance by the Company of common stock, common stock equivalents or other indebtedness or other securities, whether for cash consideration or a combination of units thereof (a “Subsequent Financing”), the Investors shall have the right to participate up to is Pro Rata Portion (as defined in the Purchase Agreement) of a percentage of such Subsequent Financing equal to, in the aggregate, one hundred percent (100%) in case of any offering on the same terms, conditions and price provided for in the Subsequent Financing. In connection with the issuance of the Notes, the Company entered into a Security Agreement (the “Security Agreement”) by and among the Company, certain wholly owned subsidiaries of the Company (the “Guarantors”), as guarantors, and Trillium, whereby the Company and the Guarantors pledged and granted to Trillium for the benefit of the Investors, a lien on and security interest in all of the right, title and interest in substantially all of the assets of the Company and the Guarantors, subject to certain exceptions specified therein. Additionally, in connection with the issuance of the Notes, the Company entered into a Guaranty Agreement (the “Guaranty Agreement”) by and among the Company, the Guarantors, and the Investors, whereby the Guarantors absolutely and unconditionally guarantee the payment by the Company of all amounts due with respect to the Notes and the performance by the Company of its obligations under the Notes. In connection with the issuance of the Notes the Company and the Investor also entered into a registration rights agreement (“Registration Rights Agreement”) pursuant to which the Company has agreed to register the common stock underlying the Notes within a period of 180 days from the date of the Closing. Further, on January 28, 2021, the Company and the Investors entered into a waiver (“Waiver”) waiving any and all defaults for a period of six months in connection with (i) the Purchase Agreement and Notes (ii) the securities purchase agreement (as modified from time to time, the “Trillium Purchase Agreement”), dated as of October 7, 2020 by and between the Company and Trillium providing for, among other things, the issuance at the applicable closing, (A) a 10% Secured Subordinated Convertible Promissory Note (as modified from time to time, the “Trillium Note”) and (B) Warrants to purchase shares of the Common Stock (as modified from time to time, the “Trillium Warrants”); and (iii) securities purchase agreement (as modified from time to time, the “3a Capital Purchase Agreement”), dated as of October 14, 2020 between the Company and 3a providing for, among other things, the issuance at the applicable closing, (A) a 10% Secured Subordinated Convertible Promissory Note (as modified from time to time, the “3a Note”) and (B) Warrants to purchase shares of the Common Stock (as modified from time to time, the “3a Warrants”). The Waiver is applicable to the January 2021 notes issued to Trillium and 3A. The convertible notes are subordinated to Corefund Capital LLC (See Note 1, Accounts Receivable – Trade). Future maturities related to the above promissory notes, notes payable and convertible notes are as follows: Future Minimum Payments for the Twelve Months Ending May 31, 2022 $ 2,285,367 2023 4,665,938 2024 8,772 2025 8,772 2026 8,772 Thereafter 108,335 7,085,956 Less: current portion (2,285,367 ) Less: unamortized discount (1,607,283 ) $ 3,193,306 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
May 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 8. related party transactions As part of the UL HK Transaction and related transactions, the Company assumed the following debt due to related parties: May 31, 2021 May 31, 2020 Due to Frangipani Trade Services (1) $ 903,927 $ 959,303 Due to Unique Logistics Hong Kong (“UL HK”) (2) - 325,000 Note Payable UL HK (3) - 5,000,000 Due to employee (4) 60,000 90,000 Due to employee (5) 149,996 200,000 1,113,923 6,574,303 Less: current portion (397,975 ) (6,380,975 ) $ 715,948 $ 193,328 (1) Due to Frangipani Trade Services (“FTS”), an entity owned by the Company’s CEO, is due on demand and is non-interest bearing. The principal amount of this Promissory Note 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 first payment due on November 30, 2021, with each succeeding payment to be made six months after the preceding payment. (2) Due to Unique Logistics Holding Limited (“ULHK”) is non-interest bearing and due within 12 months from the date of acquisition. On February 19, 2021, the Company and UL HK agreed to reduce an existing $325,000 note assumed by the Company in the May 29, 2020 acquisition (Note 2). The settlement amount of $310,452 was accounted for as a measurement period adjustment and resulted in a reduction to goodwill. See Note 4. (3) On May 29, 2020, the Company entered into a $5,000,000 note payable with UL HK as part of the ULUS acquisition. The loan bears a zero percent interest rate and has a maturity of 180 days from the date of the note. On November 12, 2020, the Company amended the note with UL HK in order to (i) extend the maturity date from November 25, 2020 to May 18, 2021, (ii) begin monthly payments of $833,333 commencing on December 18, 2020, (iii) change the interest rate to one-half percent (0.5%) per month and (iv) provide the Company the right to prepay the outstanding liability in whole or in part. Pursuant to the amendment, if the Company should default on the note, UL HK has the option to convert the outstanding principal and interest into shares of common stock of the Company. Upon the earlier of (i) a default in the monthly payment of principal or interest due and owing under the loan or, (ii) in the event that any outstanding balance of the loan remains outstanding as of May 31, 2021, UL HK at its option may convert the principal and interest then outstanding into an amount of shares of common stock of the Company equal to 0.2125% of the then outstanding common stock of the Company on a fully diluted basis for every $25,000 of the outstanding principal balance plus accrued but unpaid interest of this loan outstanding on the date of such conversion, provided, however, that the UL HK shall not be permitted to convert the loan in the event that such conversion would provide the UL HK more than 34% of the Company’s issued and outstanding common stock when including and aggregating all prior conversions of the loan. As of May 31, 2021 the note was paid in full. (4) 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. (5) On May 29, 2020, the Company entered into a $200,000 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 $5,556 from the date of closing. Consulting Agreements On May 29, 2020, in connection with the Management Buyout Transaction, Unique entered into a Consulting Services Agreement for a term of three years with Great Eagle Freight Limited (“Great Eagle” or “GEFD”), a Hong Kong Company (the “Consulting Services Agreement”). Pursuant to the Consulting Services Agreement, GEFD will provide Unique with logistics services, agents management services, support services, accounting and financial controls support, software, and IT support. Great Eagle will also provide the Company with strategic introductions and negotiations with new customers. The Company shall pay to GEFD $500,000 per year until the expiration of the agreement on May 28, 2023. The fair value of the services was determined to be less than the cash payments and the difference was recorded as Contingent Liability on the consolidated balance sheets and amortized over the life of the agreement. Unique paid $250,000 during the year ended May 31, 2021, and amortized balances were $565,338 and $848,010 as of May 31, 2021, and 2020, respectively. The Company utilizes a financial reporting firm owned and controlled by David Briones, a member of our Board of Directors. The service fees are $5,000 per month. Total fees were $60,000 and none for years ended May 31, 2021 and the period October 28, 2019 (Inception) through May 31,2020, respectively. Security Deposit FTS provides Importer of Record (“IOR”) services to the Company’s customers on behalf of the Company. Pursuant to the IOR agreement with the Company, FTS maintains a Customs Bond in order to continue the agreed upon IOR services. In addition, FTS requires a security deposit which will be utilized by FTS to settle any charges, penalties or tax assessments incurred when performing IOR services for the Company. As of May 31, 2021 and 2020, the security deposit was $175,000. Accounts Receivable - trade and Accounts Payable - trade Transactions with related parties account for $1,274,250 and $10,839,224 of accounts receivable - trade and accounts payable – trade as of May 31, 2021, respectively, and $1,321,473 and $4,171,839 of accounts receivable – trade and accounts payable – trade as of May 31, 2020, respectively. 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 year ended May 31, 2021, these transactions represented $2,355,214 of revenue. Direct costs are services billed to the Company by related parties for shipping activities. For the year ended May 31, 2021, these transactions represented $54,898,109 of total direct costs. |
Retirement Plan
Retirement Plan | 12 Months Ended |
May 31, 2021 | |
Retirement Benefits [Abstract] | |
Retirement Plan | 9. Retirement Plan The Company had three separate 401(k) plans up to July 31, 2020. In each Plan employees could contribute up to a maximum permitted by law. For one of the plans, the Company had the discretionary option of matching employee contributions. The second plan was a Safe Harbor Plan where up to first 3% contribution was matched at 100% and additional 2% contribution at 50% match. The third plan allowed for maximum of 100% match. Effective August 1, 2020 the Company consolidated its 401(k) plans into two plans, in one of which the Company has the discretionary option of matching employee contributions and in the other the Company matches 20% on the first 100% contribution. In either Plan, employees can contribute 1% to 98% of gross salary up to a maximum permitted by law. The Company recorded expense of $45,867 for the year ended May 31, 2021, respectively, and $0 for the period from October 28, 2019 (inception) through May 31, 2020. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
May 31, 2021 | |
Equity [Abstract] | |
Stockholders' Equity | 10. Stockholders’ equity Common Stock The Company is authorized to issue 800,000,000 shares of stock, a par value of $0.001 per share. During the year ended May 31, 2021, the Company issued 28,291,180 shares of the Company’s common stock to a consultant. The shares have an aggregated fair value of approximately $91,666 which was expensed immediately. On October 9, 2020, the Company’s Chief Executive Officer converted 30,000 shares of Series B Preferred Stock into an aggregate of 196,394,100 shares of the Company’s common stock. On April 12, 2021, a noteholder converted $63,692 in principal and interest into 35,455,872 shares of the Company’s common stock. See Note 7. As of May 31, 2021 and 2020, there were 393,742,663 and 0 shares of Common Stock issued and outstanding, respectively. Series A Convertible Preferred The Company has designated 130,000 shares of preferred stock as Series A Preferred Stock, $0.001 par value per share (the “Series A Preferred”). The holders of Series A Preferred, subject to the rights of holders of shares of the Company’s Series B Preferred Stock, which shares will be pari passu with the Series A Preferred in terms of liquidation preference and dividend rights, 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. Each share of Series A Preferred shall have a stated value equal to $0.001. Each share of Series A Preferred Stock can be converted into 6,546.47 shares of the Company’s authorized but unissued shares of Common Stock. Share amounts at May 31, 2021 have been retroactively restated to account for the share exchange in connection with reverse merger. As of May 31, 2021 and 2020, there were 130,000 shares of Series A Preferred Stock issued and outstanding. Series B Convertible Preferred The Company has designated 870,000 shares of preferred stock as Series B Preferred Stock, $0.001 par value per share (the “Series B Preferred”). The holders of Series B Preferred, subject to the rights of holders of shares of the Company’s Series A Preferred Stock which shares will be pari passu with the Series B Preferred in terms of liquidation preference and dividend rights, shall be entitled to receive, at their option, immediately prior an 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. Each share of Series B Preferred shall have a stated value equal to $0.001. Each share of Series A Preferred can be converted into 6,546.47 shares of the Company’s authorized but unissued shares of Common Stock. As noted above, on October 9, 2020, the Company’s Chief Executive Officer converted 30,000 shares of Series B Preferred Stock into an aggregate of 196,394,100 shares of the Company’s common stock. Share amounts at May 31, 2021 have been retroactively restated to account for the share exchange in connection with reverse merger. As of May 31, 2021 and 2020, there were 840,000 and 870,000 shares of Series B Preferred Stock issued and outstanding, respectively. Warrants The following is a summary of the Company’s warrant activity: Weighted Average Warrants Exercise Price Outstanding – May 31, 2020 - $ - Exercisable – May 31, 2020 - $ - Granted 1,140,956,904 $ 0.002 Outstanding – May 31, 2021 1,140,956,904 $ 0.002 Exercisable – May 31, 2021 1,140,956,904 $ 0.002 Warrants Outstanding Warrants Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $ 0.002 1,140,956,904 4.36 $ 0.002 1,140,956,904 $ 0.002 At May 31, 2021, the total intrinsic value of warrants outstanding and exercisable was $111,875,388. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
May 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. 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 and office equipment under non-cancelable 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: For the Operating lease $ 1,506,090 Interest on lease liabilities 148,039 Total net lease cost $ 1,654,129 Supplemental balance sheet information related to leases was as follows: May 31, 2021 May 31, 2020 Operating leases: Operating lease ROU assets – net $ 3,797,527 $ 4,770,280 Current operating lease liabilities, included in current liabilities $ 1,466,409 $ 1,288,216 Noncurrent operating lease liabilities, included in long-term liabilities 2,431,144 3,482,064 Total operating lease liabilities $ 3,897,553 $ 4,770,280 Supplemental cash flow and other information related to leases was as follows: For the For the Period from Inception, October 28, 2019 Through ROU assets obtained in exchange for lease liabilities: Operating leases $ 223,242 $ 4,770,280 Weighted average remaining lease term (in years): Operating leases 4.04 4.48 Weighted average discount rate: Operating leases 4.25 % 4.25 % As of May 31, 2021, future minimum lease payments under noncancelable operating leases are as follows: Future Minimum Payments for the Twelve Months Ending May 31, 2022 $ 1,598,287 2023 958,942 2024 528,755 2025 455,771 2026 256,978 Thereafter 467,008 Total lease payments 4,265,740 Less: imputed interest (368,187 ) Total lease obligations $ 3,897,553 Accounts Receivable Facility On May 29, 2020, the Company entered into a Secured Accounts Receivable Facility (the “Facility”) with Corefund Capital, LLC (“Core”), pursuant to which Core agreed to purchase from the Company up to an aggregate of $12,000,000 of accounts receivables. The Facility provides Core with security interests in purchased accounts until the accounts have been repurchased by the Company or paid by the customer. The Facility includes fees payable to Core based on the number of days between the date on which an account was purchased by Core and the date on which the Company repurchased the account or the customer paid, as follows: (i) Less than or equal to 30 days, a 1.5% fee; (ii) more than 30 days but less than or equal to 40 days, a 1.75% fee; (iii) more than 40 days but less than or equal to 50 days, a 2.0% fee; (iv) more than 50 days but less than or equal to 60 days, a 2.25% fee; (v) more than 60 days but less than or equal to 90 days, a 2.50% fee; (vi) if more than 90 days, a 2.50% fee for each additional week or portion thereof. Fees related to factoring transactions with Core were approximately $4,472,000 for the year ended May 31, 2021. The net principal balance of trade accounts receivable outstanding under the factoring agreement was approximately $31,750,000 and $3,900,000 as of May 31, 2021 and 2020, respectively. On November 2, 2020, the Company, entered into an Amendment to the Facility (the “Amendment”) with Core, pursuant to which the Company and Core agreed to increase the credit line provided in the original Secured Accounts Receivable Facility, dated May 29, 2020, from $12,000,000 up to $25,000,000. The remaining terms of the Facility were unchanged by the Amendment. The Facility has been terminated by the Company on May 29, 2021, and was renewed on June 17, 2021, under the same terms and conditions as the original agreement and the credit line was set at $2.0 million. |
Income Tax Provision
Income Tax Provision | 12 Months Ended |
May 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Tax Provision | 12. Income Tax Provision The income tax provision consists of the following: May 31, 2021 May 31, 2020 Federal Current $ 521,293 - Deferred (208,560 ) - State and Local Current 262,576 - Deferred (55,440 ) - Income tax benefit $ 519,869 $ - The Company has U.S. federal net operating loss carryovers (NOLs) of approximately $66,087 as of May 31, 2021, available to offset taxable income through 2021. If not used, these NOLs may be subject to limitation under Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under the regulations. The Company plans on undertaking a detailed analysis of any historical and/or current Section 382 ownership changes that may limit the utilization of the net operating loss carryovers. The Company also has California State Net Operating Loss carry overs of $262,678 as of May 31, 2021, available to offset future taxable income through 2041. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future generation 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 year ended May 31, 2021, there was no valuation allowance necessary. 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 related to the unrecognized tax benefits are required to be calculated and would be classified as “Other expenses – Interest” in the statement of operations. Penalties would be recognized as a component of “General and administrative.” No interest or penalties on unpaid tax were recorded during the year ended May 31, 2021 and no liability for unrecognized tax benefits was required to be reported. The Company does not expect any significant changes in its unrecognized tax benefits in the next year. The Company’s deferred tax assets (liabilities) consisted of the effects of temporary differences attributable to the following: Deferred Tax Assets Year Ended For the Period October 28, 2019 (Inception) through May 31, 2020 Net Operating Loss $ - $ 40,000 Debt discount liability 288,555 Allowance for doubtful accounts 39,414 Goodwill 19,513 Total deferred tax assets 347,482 40,000 Valuation allowance - (40,000 ) Deferred tax asset, net of valuation allowance 347,482 - Deferred Tax Liabilities Fixed assets (84,261 ) Net deferred tax asset (liability) $ 263,221 $ - The expected tax expense (benefit) based on the statutory rate is reconciled with actual tax expense benefit as follows: Year Ended For the Period October 28, 2019 (Inception) through May 31, 2020 US Federal statutory rate (%) 21.0 21.0 State income tax, net of federal benefit 8.4 9.0 Change in valuation allowance (1.7 ) (30.0 ) Other permanent differences, net (4.5 ) Income tax provision (benefit) (%) 23.2 - |
Subsequent Events
Subsequent Events | 12 Months Ended |
May 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. 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 the following reportable subsequent events other than those disclosed elsewhere in these consolidated financial statements. The Company has evaluated subsequent events through the date the condensed consolidated financial statements were available to be issued. Based on this evaluation, the Company has identified the following reportable subsequent events other than those disclosed elsewhere in these condensed consolidated financial statements. On June 1, 2021, the Company entered into a Revolving Purchase, Loan and Security Agreement (the “TBK Agreement”) with TBK BANK, SSB, a Texas State Savings Bank (“Purchaser”), for a facility under which Purchaser will, from time to time, buy approved receivables from the Seller. The TBK Agreement provides for Seller to have access to the lesser of (i) $30 million (“Maximum Facility”) and (ii) the Formula Amount (as defined in the TBK Agreement). Upon receipt of any advance, Seller agreed to sell and assign all of its rights in accounts receivables and all proceeds thereof. Seller granted to Purchaser a continuing ownership interest in the accounts purchased under the Agreement (the “Purchased Accounts”) and, secured and as collateral security for all Obligations (as defined below), Seller granted to Purchaser a continuing first priority security interest in all of Seller’s assets. The facility is for an initial term of twenty-four (24) months (the “Term”) and may be extended or renewed, unless terminated in accordance with the TBK Agreement. The TBK Agreement replaces the Company’s prior agreement with Corefund Capital, LLC (“Core”) entered into on May 29, 2020, pursuant to which Core agreed to purchase from the Company up to an aggregate of $25 million of accounts receivables (the “Core Facility”). The Core Facility provided Core with security interests in purchased accounts until the accounts have been repurchased by the Company or paid by the customer. As of June 1, 2021, the Core Facility has been terminated along with all security interests granted to Core and replaced with the TBK Agreement. On June 1, 2021, Trillium Partners LP (“Trillium”) and 3a Capital Establishment (“3a”), together (the “Investors”) extended the maturity dates of the October 8, 2020, subordinated convertible promissory note in the principal aggregate amount of $1,111,000 (the “Trillium Note”) Trillium Note and October 14, 2020, 10% secured subordinated convertible promissory note in the principal aggregate amount of $1,111,000 (the “3a Note”) from October 6, 2021, to October 6, 2022. On June 1, 2021, the Investors also extended the maturity dates of the January 28, 2021, 10% secured subordinated convertible promissory note in the principal amount of $916,666 or $1,833,333 in the aggregate (each a “Note” and together the “Notes”) Trillium Note and the 3a Note from January 28, 2022, to January 28, 2023. On June 17, 2021, the Company and Corefund Capital, LLC amended the Prior Agreement (the “Addendum”) rescinding the Company’s termination notice of the Prior Agreement. The Addendum provides for a credit line of $2 million with no term and no early termination fee which is in addition to the facility provided under the TBK Agreement. Pursuant to the Addendum, the Company and Core agreed that Core would refile a UCC lien on the Company. The UCC lien will include the following collateral: all seller’s assets now owned and hereafter acquired accounts; chattel paper; deposit accounts; contract rights; letter of credit rights; instruments; payment and general intangibles; goods; inventory; insurance proceeds; equipment and fixtures; investment property; and all books and records relating to all the foregoing property, including without limitation, all computer programs; and all proceeds of the foregoing. All other terms and conditions not amended by the Addendum will remain in full force and effect. On June 28, 2021, a noteholder converted $71,855.20 in convertible notes (principal and interest) into 40,000,000 shares of the Company’s common stock at a rate of $0.00179638 per share. On July 8, 2021, a noteholder converted $15,620.83 in convertible notes (principal and interest) into 8,695,727 shares of the Company’s common stock at a rate of $0.00179638 per share. On July 22, 2021, the Company entered into an amendment of the 10% promissory note in the principal aggregate amount of $1 million with Trillium Partners L.P to extend he original maturity date of the note from June 15, 2021 to October 31, 2021 to provide Company with additional time for payment. The remaining terms of the note remained unchanged by the amendment. On August 3, 2021, a noteholder converted $24,418.89 in convertible notes (principal and interest) into 13,593,388 shares of the Company’s common stock at a rate of $0.00179638 per share. On August 4, 2021, the parties to the TBK Agreement entered into a First Amendment Agreement (the “First Amendment”) to increase the credit facility from $30 million to $40 million during the Temporary Increase Period, the period commencing on August 4, 2021, through and including December 2, 2021, with all other terms of the original TBK Agreement remained unchanged. On August 9, 2021, a noteholder converted $12,820.83 in convertible notes (principal and interest) into 7,137,037 shares of the Company’s common stock at a rate of $0.00179638 per share. On August 9, 2021, the Company was notified by the Century Bank that the SBA loan received on March 9, 2021, pursuant to the second round of the Paycheck Protection Program (the “PPP”) under the CARES Act, (the “PPP Loan”) in the aggregate amount of $358,236 has been approved by the SBA for the forgiveness. On August 13, 2021, Unique Logistics International, Inc. (the “Company”) issued 125,692,224 shares of the Company’s common stock (the “Preferred Conversion Shares”) 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. On August 19, 2021, we entered into a securities exchange agreement (the “Exchange Agreement”) with certain holders holding notes and warrants of the Company, 3a Capital Establishment and Trillium Partners, LP, respectively (each, including its successors and assigns, a “Holder” and collectively the “Holders”). Pursuant to the Exchange Agreement, the Company agreed to issue, and the Holders agreed to acquire the New Securities (as defined herein) in exchange for the Surrendered Securities (as defined in the Exchange Agreement). “New Securities” means a number of Exchange Shares determined by applying the Exchange Ratio upon consummation of a Qualified Financing (as defined in the exchange Agreement). “Surrendered Securities” means the October Notes, January Notes, October Warrants, and January Warrants (as aforesaid notes and warrants defined in the Exchange Agreement). In the event the number of Exchange Shares would result in the Holder beneficially owning more than the Beneficial Ownership Limitation (as defined in the Exchange Agreement), all such Exchange Shares in excess of the Beneficial Ownership Limitation shall be issued as a number of shares of newly created Series C Convertible Preferred Stock. The closing will occur on the Trading Day on which all of the Transaction Documents (as defined in Exchange Agreement) have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Holders’ obligations to tender the Surrendered Securities at such Closing, and (ii) the Company’s obligations to deliver the New Securities, in each case, have been satisfied or waived (the “Closing Date”). Registration Rights Agreement In connection with the Exchange Agreement, on August 19, 2021, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Holders, pursuant to which the Company agreed to register the Registrable Securities (as defined in the Registration Rights Agreement). Pursuant to the Registration Rights Agreement, the Company is required with respect to the registration statement filed in connection with the Qualified Financing (the “Qualified Financing Registration Statement”), on or prior to each filing date, to prepare and file with the SEC a Registration Statement (as defined below) covering the resale of all of the Registrable Securities that are not then registered on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. The Qualified Financing Registration Statement shall include Registrable Securities only on behalf of 3a Capital Establishment, comprised of 25,000,000 shares of Common Stock currently held by 3a Capital Establishment, which, if such 25,000,000 shares is not equal to $1,000,000 of value valued at the lowest price at which shares of Common Stock are issued in the Qualified Financing, shall be increased or decreased to a number of shares of Common Stock equal to $1,000,000 valued at the lowest price at which shares of Common Stock are issued in the Qualified Financing. Each other Registration Statement to be filed under the Registration Rights Agreement shall include all Registrable Securities, except as described above. |
Nature of Business and Summar_2
Nature of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
May 31, 2021 | |
Accounting Policies [Abstract] | |
Nature of Business | Nature of Business Unique Logistics International, Inc. (the “Company” or “Unique”) (formerly Innocap, Inc.) is a global logistics and freight forwarding company. The Company currently operates via its wholly owned subsidiaries, Unique Logistics International (NYC), LLC, a Delaware limited liability company (“UL NYC”), Unique Logistics International (ATL) LLC, a Georgia limited liability company (“UL ATL”), and Unique Logistics International (BOS) Inc, a Massachusetts corporation (“UL BOS”) and (collectively the “UL US Entities”). 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 services ● Ocean Freight services ● Customs Brokerage and Compliance services ● Warehousing and Distribution services ● Order Management On May 29, 2020, Unique Logistics Holdings, Inc., a privately held Delaware corporation incorporated on October 28, 2019 (date of inception) headquartered in New York (“ULHI”), entered into a Securities Purchase Agreement with Unique Logistics Holdings Ltd, (“UL HK”), a Hong Kong company, (the “UL HK Transaction”). From inception, October 28, 2019 to May 29, 2020, ULHI was inactive. See “Acquisitions” in Note 2 below. The activity on the consolidated statements of operations is that of ULH for the period May 29, 2020 through May 31, 2020. On October 8, 2020, Unique Logistics Holdings, Inc., Innocap, Inc., and Inno Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Innocap Inc. (“Merger Sub”), entered into an Acquisition Agreement and Plan of Merger pursuant to which the Merger Sub was merged with and into ULHI, with ULHI surviving as a wholly owned subsidiary of Innocap, Inc. (the “Merger”). The transaction took place on October 8,2020 (the “Closing”). Innocap, Inc. was incorporated under the laws of the State of Nevada on January 23, 2004. (See “Acquisitions” in Note 2) Effective January 11, 2021, the Company amended and restated its articles of incorporation with the office of the Secretary of State of Nevada to, among other things, change the Company’s name to Unique Logistics International, Inc. and increase the number of shares of common stock that the Company is authorized to issue from 500,000,000 shares to 800,000,000 shares. On January 13, 2021, the Company received notice from the Financial Industry Regulation Authority (“FINRA”) that the above name change had been approved and took effect at the opening of trading on January 14, 2021. In connection with the name change, the Company changed its ticker symbol from “INNO” to “UNQL”. |
Liquidity | Liquidity The accompanying 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 a consequence of acquisition financing at inception, the Company experienced negative working capital and adverse cash flows from operations. As of May 31, 2021, the Company had cash of approximately $253,000, negative working capital of approximately $3.5 million and cash used in operations of approximately $162,000. This was a significant improvement from May 31, 2020, when its negative working capital was approximately $10.7 million. In response to our liquidity needs and to continue execution of our strategic plan. During the year ended May 31, 2021, the Company paid down most of its acquisition related debt (see Note 8), received forgiveness for PPP loans (Note 7) and signed an Exchange Agreement to exchange its Convertible debt into common stocks (Note 13). In addition, as disclosed in Note 13, Subsequent Events, on August 4, 2021 the parties to the TBK Agreement entered into an agreement to increase the Company’s credit facility from $30 million to $40 million during the period August 4, 2021, through and including December 2, 2021, with all other terms of the original TBK Agreement remaining unchanged. While we continue to execute our strategic plan, we will be tightly managing our cash and monitoring our liquidity position. We have implemented a number of initiatives to conserve our liquidity position including activities such as raising additional capital, increasing credit facilities, reducing cost of debt, controlling general and administrative expenditures, reducing discretionary spending and improving cash collection processes. Many of the aspects of the 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. Based on our evaluation and business performance of the Company subsequent to the balance sheet date, management has concluded that the Company’s cash and operating capital as of May 31, 2021, would be sufficient to continue as a going concern for at least one year from the date these consolidated financial statements are issued. |
COVID-19 | COVID-19 In January 2020, the World Health Organization has declared the outbreak of a novel coronavirus (COVID-19) as a “Public Health Emergency of International Concern,” which continues to have an impact throughout the world and has adversely impacted global commercial activity and contributed to significant declines and volatility in financial markets. The coronavirus outbreak and government responses are creating disruption in global supply chains and adversely impacting many industries. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The extent of the impact of COVID-19 on our operational and financial performance will depend on the effect on our shippers and carriers, all of which are uncertain and cannot be predicted. The rapid development and fluidity of this situation precludes any prediction as to the ultimate material adverse impact of the coronavirus outbreak. Nevertheless, the outbreak presents uncertainty and risk with respect to the Company, its performance, and its financial results. The Company has experienced increased air and ocean freight rates due to overall cargo restraints imposed by shippers and carriers and is in a position to pass these cost increases directly to the customers without significantly effecting its margins. |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with the accounting principles generally accepted in the United States of America (“GAAP”). |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries stated in U.S. dollars, the Company’s functional currency. All intercompany transactions and balances have been eliminated in the consolidated financial statements. |
Business Combination | Business Combination The Company accounts for business acquisitions using the acquisition method as required by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. The fair values of intangible assets are generally estimated using a discounted cash flow approach with Level 3 inputs. The estimate of fair value of an intangible asset is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To estimate fair value, the Company generally uses risk-adjusted cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believes the level and timing of cash flows appropriately reflects market participant assumptions. For acquisitions that involve contingent consideration, the Company records a liability equal to the fair value of the contingent consideration obligation as of the acquisition date. The Company determines the acquisition date fair value of the contingent consideration based on the likelihood of paying the additional consideration. The fair value is generally estimated using projected future operating results and the corresponding future earn-out payments that can be earned upon the achievement of specified operating objectives and financial results by acquired companies using Level 3 inputs and the amounts are then discounted to present value. These liabilities are measured quarterly at fair value, and any change in the fair value of the contingent consideration liability is recognized in the consolidated statements of operations. During the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding adjustment to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recognized in the consolidated statements of operations. |
Use of Estimates | Use of Estimates The preparation of 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. Significant estimates inherent in the preparation of the 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, estimates of valuation assumptions for long-lived assets impairment, estimates and assumptions in valuation of debt and equity instruments and the calculation of share-based compensation. In addition, the Company makes significant judgments to recognize revenue – see policy note “Revenue Recognition” below. |
Fair Value Measurement | 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 corroborate 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, accrued expenses and other current liabilities, accrued freight, current portion of long-term debt due to related party payables, convertible notes, net and current portion of promissory loans approximate fair value due to their short-term nature as of May 31, 2021 and 2020. The carrying amount of the 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 no Level 3 assets or liabilities as of May 31, 2021 and 2020. There were no transfers between levels during the reporting period. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts, which at times may exceed federally insured limits. No loss had been experienced, and management believes it is not exposed to any significant risk on credit. |
Accounts Receivable - Trade | Accounts Receivable – Trade Accounts receivable - trade 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 - trade, 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 of the receivable recorded, net of allowance for doubtful accounts. As of May 31, 2021 and 2020, the Company recorded an allowance for doubtful accounts of approximately $240,000 and $0, respectively. Concentrations Two customers represented greater than 10% of accounts receivable as of May 31, 2021. No customer represented greater than 10% of accounts receivable as of May 31, 2020. Two customers accounted for 24.6% and 18.9% of revenue, respectively, for the year ended May 31, 2021. Same two customers accounted for 28.4% and 20.8% of revenue, respectively, for the period October 28, 2019 (inception) through May 31, 2020. Off Balance Sheet Arrangements The Company has an agreement with an unrelated third party (the “Factor”) for factoring of specific accounts receivable. The factoring is treated as a sale in accordance with FASB ASC 860, Transfers and Servicing The Company acts as the agent on behalf of the Factor for the arrangements and has no significant retained interests or servicing liabilities related to the accounts receivable sold. The agreement provides the Factor with security interests in purchased accounts until the accounts have been repurchased by the Company or paid by the customer. In order to mitigate credit risk related to the Company’s factoring of accounts receivable, the Company may purchase credit insurance, from time to time, for certain factored accounts receivable, resulting in risk of loss being limited to the factored accounts receivable not covered by credit insurance, which the Company does not believe to be significant. During the years ended May 31, 2021 and 2020 the Company factored accounts receivable invoices totaling approximately $233,896,000 and $4,785,000, respectively, pursuant to the Company’s factoring agreement, representing the face value of the invoices. The Company recognizes factoring costs upon disbursement of funds. The Company incurred expenses totaling approximately $4,472,000 pursuant to the agreements for the year ended May 31, 2021 and none for the year ended May 31, 2020, which is presented in costs and operating expenses on the consolidated statement of operations. Factoring Reserve When an invoice is sold to Factor, the amount received from the Factor is credited to accounts receivable – trade and a reserve is retained, less a fee, by Factor which is debited to “factoring reserve” on the consolidated balance sheets. Factor Recovery In certain instances, the Company receives payment for a factored reserve directly from the customer. In these cases, until the funds are paid to the factor, the Company records the payment as “factor recovery” which is in accrued expenses and other current liabilities on the consolidated balance sheets. Recourse Liability Company policy is to do a collectability review of uncollected factored receivables in conjunction with the Factor at each reporting date and assess the need to provide for risk of potential non-collection and resulting recourse. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation and impairment losses. Depreciation is provided for by the straight-line method over the estimated useful lives of the related assets. Estimated useful lives of property and equipment are as follows: Software 3 years Computer equipment 3 – 5 years Furniture and fixtures 5 – 7 years Leasehold improvements Shorter of estimated useful life or remaining term of the lease Both the useful life of an asset and its residual value, if any, are reviewed annually. Expenditures for repairs and maintenance are charged to expense as incurred. For assets sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any related gain or loss is reflected in income for the period. The Company did not record any impairment for the year ended May 21, 2021 and for the period from October 28, 2019 (inception), through May 31, 2020. |
Goodwill and Other Intangibles | 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. 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 an 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. For the year ended May 31, 2021 and the period from October 28, 2019 (inception) through May 31, 2020, the Company conducted its annual review of impairment of goodwill and intangible assets and no impairment was identified. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets are comprised of intangible assets and property and equipment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An estimate of undiscounted future cash flows produced by the asset, or the appropriate grouping of assets, is compared to the carrying value to determine whether an impairment exists, pursuant to the provisions of FASB ASC 360-10 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of”. |
Income Taxes | Income Taxes The Company files a consolidated income tax return for federal and most state purposes. Management has determined that there are no uncertain tax positions that would require recognition in the consolidated financial statements. If the Company were to incur an income tax liability in the future, interest and penalties on any income tax liability would be reported as interest expense. Management’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based on ongoing analysis of tax laws, regulations, and interpretations thereof as well as other factors. Generally, federal, state, and local authorities may examine the Company’s tax returns for three to four years from the filing date and the current and prior three to four years remain subject to examination as of December 31, 2020 for the UL US Entities, January 31, 2020 for the Company and May 31, 2020 for UL HI. The Company uses the assets and liability method of accounting for deferred taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the balance sheet carrying amounts of existing assets and liabilities and their respective tax basis. As of May 31, 2021 and 2020, the Company recognized a deferred tax asset of $264,000 and $0, respectively, which is included in deposits and other assets on the consolidated balance sheets. The Company regularly evaluates the need for a valuation allowance related to the deferred tax asset. No valuation allowance was recorded at May 31, 2021. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“ CARES Act 2017 Tax Act “NOLs In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to the income tax provision. |
Revenue Recognition | Revenue Recognition During the period ended May 31, 2020, the Company adopted ASC 606, Revenue from Contracts with Customers 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 thru 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 thru 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. 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 US Port of entry (or in the case when the customer requires delivery to a designated point, the arrival at that delivery point). This over time 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. 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. As discussed under ASC 606-10-55, 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 consideration 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 - trade. Contract Liabilities Contract liabilities represent the amount of obligation to transfer goods or services to a customer for which consideration has been received. There were no contract liabilities outstanding as of May 31, 2021 and 2020. Disaggregation of Revenue from Contracts with Customers The following table disaggregates gross revenue by significant geographic area for the year ended May 31, 2021 based on origin of shipment (imports) or destination of shipment (exports): For the For the Period October 28, 2019 (inception) Through China, Hong Kong & Taiwan $ 186,932,382 $ - South East Asia 104,475,697 - United States 31,452,041 - India Sub-continent 28,164,102 - Other 20,863,050 1,070,324 Total revenue $ 371,887,272 $ 1.070,324 |
Segment Reporting | Segment Reporting Based on the guidance provided by ASC Topic 280, Segment Reporting |
Earnings Per Share | Earnings per Share Earnings 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. EPS is computed pursuant to Section 260-10-45 of the FASB ASC. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be 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, stock options or warrants. The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share. For the Year Ended Numerator: Net income $ 1,725,497 Effect of dilutive securities 1,350,389 Diluted net income $ 3,075,886 Denominator: Weighted average common shares outstanding – basic 1,408,941,722 Dilutive securities (a): Series A Preferred 1,316,157,000 Series B Preferred 5,499,034,800 Convertible notes 1,806,230,539 Weighted average common shares outstanding and assumed conversion – diluted 10,030,364,061 Basic net income per common share $ 0.00 Diluted net income per common share $ 0.00 (a) - Anti-dilutive securities excluded: - The Company did not have dilutive securities for the period October 28, 2019 (inception) through May 31, 2020. |
Leases | Leases In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02 “Leases” During the period ended May 31, 2020, the Company adopted ASC 842 upon inception and recognized a right of use (“ROU”) asset and liability in the consolidated balance sheet in the amount of $4,770,280 related to the operating lease for office and warehouse space. For leases in which the acquiree is a lessee, the Company shall measure the lease liability at the present value of the remaining lease payments, as if the acquired lease were a new lease of the Company at the acquisition date. The Company shall measure the right-of-use asset at the same amount as the lease liability as adjusted to reflect favorable and unfavorable terms of the lease when compared with market terms. The values of the leases acquired in the business acquisition discussed in Note 2 were representative of fair value at the acquisition date and no favorable or unfavorable terms were noted. The Company adopted the package of practical expedients that allows it to (i) not reassess whether an arrangement contains a lease, (ii) carry forward its lease classification as operating or capital leases, (iii) not to apply the recognition requirements in ASC 842 to short-term leases, (iv) not record a right of use asset or right of use liability for leases with an asset or liability balance that would be considered immaterial. and (v) not reassess its previously recorded initial direct costs. In addition, the Company elected the practical expedient to not separate lease and non-lease components, and therefore both components are accounted for and recognized as lease components. The Company determines if an arrangement is a lease at inception. 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 exercisable 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. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC Topic 718, “ Compensation – Stock Compensation” “ASC 718” The Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest. Share-based payments, excluding restricted stock, are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. Stock-based compensation expenses are included in costs and operating expenses depending on the nature of the services provided in the consolidated statements of operations. For the year ended May 31, 2021, share-based compensation amounted to $91,666 for services provided. The Company did not record share-based compensation for the period October 28, 2019 (inception) through May 31, 2020. |
Advertising and Marketing | Advertising and Marketing All costs associated with advertising and marketing of the Company products are expensed during the period when the activities take place and are included in selling and promotion on the consolidated statements of operations. |
Convertible Debt | Convertible Debt The Company accounts for Convertible Debt based on the guidance in ASC 470, “Debt with Conversion and Other Options” |
Sequencing Policy | Sequencing Policy Under ASC 815-40-35, “Derivatives and Hedging – Contracts in Entity’s Own Equity” |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current year’s presentation. |
Adoption of Recent Accounting Standards | Adoption of Recent Accounting Standards In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes (ASU 2019-12, “ Income Taxes Simplifying the Accounting for Income Taxes income In August 2020, the FASB issued ASU 2020-06, Debt—” Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” |
Nature of Business and Summar_3
Nature of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
May 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Lives of Property And Equipment | Estimated useful lives of property and equipment are as follows: Software 3 years Computer equipment 3 – 5 years Furniture and fixtures 5 – 7 years Leasehold improvements Shorter of estimated useful life or remaining term of the lease |
Schedule of Disaggregation of Revenue | The following table disaggregates gross revenue by significant geographic area for the year ended May 31, 2021 based on origin of shipment (imports) or destination of shipment (exports): For the For the Period October 28, 2019 (inception) Through China, Hong Kong & Taiwan $ 186,932,382 $ - South East Asia 104,475,697 - United States 31,452,041 - India Sub-continent 28,164,102 - Other 20,863,050 1,070,324 Total revenue $ 371,887,272 $ 1.070,324 |
Schedule of Earning Per Share | The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share. For the Year Ended Numerator: Net income $ 1,725,497 Effect of dilutive securities 1,350,389 Diluted net income $ 3,075,886 Denominator: Weighted average common shares outstanding – basic 1,408,941,722 Dilutive securities (a): Series A Preferred 1,316,157,000 Series B Preferred 5,499,034,800 Convertible notes 1,806,230,539 Weighted average common shares outstanding and assumed conversion – diluted 10,030,364,061 Basic net income per common share $ 0.00 Diluted net income per common share $ 0.00 (a) - Anti-dilutive securities excluded: - |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
May 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Pro-forma Information | The following presents the pro-forma combined results of operations of Innocap Inc. with ULHI as if the entities were combined on June 1, 2019 and show activity for the year ended May 31, 2020. For the year ended Revenues $ 115,148,267 Net income (loss) $ (2,126,697 ) Net income (loss) per share - basic $ (0.21 ) Weighted average number of shares outstanding 10,000,000 |
Schedule of Purchase Price Consideration | In addition, ULHI paid $239,350 of closing costs for legal, accounting and other professional fees which were expensed during the period ended May 31, 2020. The price consideration is as follows: Cash consideration $ 1,994,000 Notes payable 6,706,439 Consulting service contract liability 848,010 Non-compete payable 481,211 Assumption of seller debt 200,000 Assumed long term liabilities 1,394,533 Rollover equity 613,693 Total purchase price consideration $ 12,237,886 |
Schedule of Assets Acquired and Liabilities Assumed | The following summarizes the fair values of the assets acquired and liabilities assumed at the acquisition: Assets: Current assets $ 16,571,270 Property and equipment 206,873 Security deposits 292,404 Other intangibles 8,752,000 Goodwill (1) 4,773,585 Total identified assets acquired $ 30,596,132 Liabilities: Current liabilities $ 16,115,703 Consulting service contract liability 848,010 Long-term assumed liabilities 1,394,533 Total liabilities assumed 18,358,246 Total net assets assumed $ 12,237,886 (1) The goodwill acquired is primarily attributable to the workforce of the acquired business and significant synergies expected to arise after ULHI’s acquisition of UL US Entities. ULHI is assessing the amount of goodwill that will be deductible for income tax purposes. For the year ended May 31, 2021, the amount of goodwill deductible for income tax purposes was immaterial. The Company will continue to analyze the goodwill for deductibility over the 15-year life. See Note 4. |
Schedule of Other Intangible Assets and Amortization | Other intangible assets and their amortization periods are as follows: Cost Basis Useful Life Tradenames/trademarks $ 806,000 10 years Customer relationships – ATL 5,605,000 15 years Customer relationships – BOS 310,000 12 years Customer relationships – NYC 1,718,000 14 years Non-compete agreements 313,000 3 years $ 8,752,000 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
May 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Major classifications of property and equipment are summarized below as of May 31, 2021 and 2020. May 31, 2021 May 31, 2020 Furniture and fixtures $ 84,085 $ 68,685 Computer equipment 108,479 78,743 Software 27,780 24,414 Leasehold improvements 27,146 27,146 247,490 198,988 Less: accumulated depreciation (55,398 ) - $ 192,092 $ 198,988 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
May 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consist of the following at May 31, 2021 and 2020: May 31, 2021 May 31, 2020 Trade names / trademarks $ 806,000 $ 806,000 Customer relationships 7,633,000 7,633,000 Non-compete agreements 313,000 313,000 8,752,000 8,752,000 Less: Accumulated amortization (707,147 ) - $ 8,044,853 $ 8,752,000 |
Schedule of Estimated Amortization Expense | Estimated amortization expense for the next five years and thereafter is as follows: Twelve Months Ending May 31, 2022 $ 707,143 2023 707,143 2024 693,800 2025 693,800 2026 693,800 Thereafter 4,549,167 $ 8,044,853 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
May 31, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following at May 31, 2021 and 2020: May 31, 2021 May 31, 2020 Accrued salaries and related expenses $ 672,455 $ 145,165 Accrued sales and marketing expense 539,810 116,500 Accrued professional fees 75,000 117,040 Accrued income tax 256,286 - Accrued overdraft liabilities 790,364 97,519 Other accrued expenses and current liabilities 50,000 3,142,992 $ 2,383,915 $ 3,619,216 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 12 Months Ended |
May 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Financing Arrangement | Financing arrangements on the consolidated balance sheets consists of: May 31, 2021 May 31, 2020 Promissory notes (PPP Program) $ 358,236 $ 1,646,062 Promissory notes (EIDL) 150,000 - Notes payable 2,528,886 2,325,000 Convertible notes – net of discount of $1,607,283 2,441,551 - 5,478,673 3,971,062 Less: current portion (2,285,367 ) (1,476,642 ) $ 3,193,306 $ 2,494,420 |
Schedule of Fair Value Assumptions of Warrants | The estimated fair value of the warrants was valued using the Black-Scholes option pricing model, using the following assumptions during the year ended May 31, 2021: Estimated dividends None Expected volatility 38.5 % Risk free interest rate 0.30 – 0.33 % Expected term 5 years |
Schedule of Future maturities of Promissory Notes | Future maturities related to the above promissory notes, notes payable and convertible notes are as follows: Future Minimum Payments for the Twelve Months Ending May 31, 2022 $ 2,285,367 2023 4,665,938 2024 8,772 2025 8,772 2026 8,772 Thereafter 108,335 7,085,956 Less: current portion (2,285,367 ) Less: unamortized discount (1,607,283 ) $ 3,193,306 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
May 31, 2021 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | As part of the UL HK Transaction and related transactions, the Company assumed the following debt due to related parties: May 31, 2021 May 31, 2020 Due to Frangipani Trade Services (1) $ 903,927 $ 959,303 Due to Unique Logistics Hong Kong (“UL HK”) (2) - 325,000 Note Payable UL HK (3) - 5,000,000 Due to employee (4) 60,000 90,000 Due to employee (5) 149,996 200,000 1,113,923 6,574,303 Less: current portion (397,975 ) (6,380,975 ) $ 715,948 $ 193,328 (1) Due to Frangipani Trade Services (“FTS”), an entity owned by the Company’s CEO, is due on demand and is non-interest bearing. The principal amount of this Promissory Note 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 first payment due on November 30, 2021, with each succeeding payment to be made six months after the preceding payment. (2) Due to Unique Logistics Holding Limited (“ULHK”) is non-interest bearing and due within 12 months from the date of acquisition. On February 19, 2021, the Company and UL HK agreed to reduce an existing $325,000 note assumed by the Company in the May 29, 2020 acquisition (Note 2). The settlement amount of $310,452 was accounted for as a measurement period adjustment and resulted in a reduction to goodwill. See Note 4. (3) On May 29, 2020, the Company entered into a $5,000,000 note payable with UL HK as part of the ULUS acquisition. The loan bears a zero percent interest rate and has a maturity of 180 days from the date of the note. On November 12, 2020, the Company amended the note with UL HK in order to (i) extend the maturity date from November 25, 2020 to May 18, 2021, (ii) begin monthly payments of $833,333 commencing on December 18, 2020, (iii) change the interest rate to one-half percent (0.5%) per month and (iv) provide the Company the right to prepay the outstanding liability in whole or in part. Pursuant to the amendment, if the Company should default on the note, UL HK has the option to convert the outstanding principal and interest into shares of common stock of the Company. Upon the earlier of (i) a default in the monthly payment of principal or interest due and owing under the loan or, (ii) in the event that any outstanding balance of the loan remains outstanding as of May 31, 2021, UL HK at its option may convert the principal and interest then outstanding into an amount of shares of common stock of the Company equal to 0.2125% of the then outstanding common stock of the Company on a fully diluted basis for every $25,000 of the outstanding principal balance plus accrued but unpaid interest of this loan outstanding on the date of such conversion, provided, however, that the UL HK shall not be permitted to convert the loan in the event that such conversion would provide the UL HK more than 34% of the Company’s issued and outstanding common stock when including and aggregating all prior conversions of the loan. As of May 31, 2021 the note was paid in full. (4) 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. (5) On May 29, 2020, the Company entered into a $200,000 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 $5,556 from the date of closing. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
May 31, 2021 | |
Equity [Abstract] | |
Schedule of Warrants Activity | The following is a summary of the Company’s warrant activity: Weighted Average Warrants Exercise Price Outstanding – May 31, 2020 - $ - Exercisable – May 31, 2020 - $ - Granted 1,140,956,904 $ 0.002 Outstanding – May 31, 2021 1,140,956,904 $ 0.002 Exercisable – May 31, 2021 1,140,956,904 $ 0.002 |
Schedule of Warrants Outstanding and Exercisable | Warrants Outstanding Warrants Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $ 0.002 1,140,956,904 4.36 $ 0.002 1,140,956,904 $ 0.002 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
May 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Components of Lease Expense | The components of lease expense were as follows: For the Operating lease $ 1,506,090 Interest on lease liabilities 148,039 Total net lease cost $ 1,654,129 |
Schedule of Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases was as follows: May 31, 2021 May 31, 2020 Operating leases: Operating lease ROU assets – net $ 3,797,527 $ 4,770,280 Current operating lease liabilities, included in current liabilities $ 1,466,409 $ 1,288,216 Noncurrent operating lease liabilities, included in long-term liabilities 2,431,144 3,482,064 Total operating lease liabilities $ 3,897,553 $ 4,770,280 |
Schedule of Supplemental Cash Flow and Other Information | Supplemental cash flow and other information related to leases was as follows: For the For the Period from Inception, October 28, 2019 Through ROU assets obtained in exchange for lease liabilities: Operating leases $ 223,242 $ 4,770,280 Weighted average remaining lease term (in years): Operating leases 4.04 4.48 Weighted average discount rate: Operating leases 4.25 % 4.25 % |
Schedule of Minimum Lease Payments | As of May 31, 2021, future minimum lease payments under noncancelable operating leases are as follows: Future Minimum Payments for the Twelve Months Ending May 31, 2022 $ 1,598,287 2023 958,942 2024 528,755 2025 455,771 2026 256,978 Thereafter 467,008 Total lease payments 4,265,740 Less: imputed interest (368,187 ) Total lease obligations $ 3,897,553 |
Income Tax Provision (Tables)
Income Tax Provision (Tables) | 12 Months Ended |
May 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provision | The income tax provision consists of the following: May 31, 2021 May 31, 2020 Federal Current $ 521,293 - Deferred (208,560 ) - State and Local Current 262,576 - Deferred (55,440 ) - Income tax benefit $ 519,869 $ - |
Schedule of Deferred Tax Assets (Liabilities) | The Company’s deferred tax assets (liabilities) consisted of the effects of temporary differences attributable to the following: Deferred Tax Assets Year Ended For the Period October 28, 2019 (Inception) through May 31, 2020 Net Operating Loss $ - $ 40,000 Debt discount liability 288,555 Allowance for doubtful accounts 39,414 Goodwill 19,513 Total deferred tax assets 347,482 40,000 Valuation allowance - (40,000 ) Deferred tax asset, net of valuation allowance 347,482 - Deferred Tax Liabilities Fixed assets (84,261 ) Net deferred tax asset (liability) $ 263,221 $ - |
Schedule of Expected Tax Expense (Benefit) | The expected tax expense (benefit) based on the statutory rate is reconciled with actual tax expense benefit as follows: Year Ended For the Period October 28, 2019 (Inception) through May 31, 2020 US Federal statutory rate (%) 21.0 21.0 State income tax, net of federal benefit 8.4 9.0 Change in valuation allowance (1.7 ) (30.0 ) Other permanent differences, net (4.5 ) Income tax provision (benefit) (%) 23.2 - |
Nature of Business and Summar_4
Nature of Business and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 7 Months Ended | 12 Months Ended | ||||
May 31, 2020 | May 31, 2021 | Aug. 04, 2021 | Jan. 11, 2021 | Jan. 10, 2021 | May 29, 2020 | |
Common stock issued | 0 | 393,742,663 | 800,000,000 | 500,000,000 | ||
Cash | $ 1,349,363 | $ 252,615 | ||||
Working capital | (3,500,000) | |||||
Cash used in operations | 1,562,052 | (161,906) | ||||
Allowance for doubtful accounts | 0 | 240,000 | ||||
Accounts receivable outstanding | 4,785,000 | 233,896,000 | ||||
Factoring expenses | 4,472,000 | |||||
Deferred tax asset | 0 | 264,000 | ||||
Share-based compensation | $ 91,666 | |||||
Tradenames and Non-Compete Agreements [Member] | Minimum [Member] | ||||||
Finite lived assets amortization period | 3 years | |||||
Tradenames and Non-Compete Agreements [Member] | Maximum [Member] | ||||||
Finite lived assets amortization period | 10 years | |||||
Customer Relationships [Member] | Minimum [Member] | ||||||
Finite lived assets amortization period | 12 years | |||||
Customer Relationships [Member] | Maximum [Member] | ||||||
Finite lived assets amortization period | 15 years | |||||
Secured Accounts Receivables [Member] | Minimum [Member] | ||||||
Line of credit | $ 12,000,000 | |||||
Secured Accounts Receivables [Member] | Maximum [Member] | ||||||
Line of credit | $ 25,000,000 | |||||
Secured Accounts Receivables [Member] | Customer Concentration Risk [Member] | Two Customers [Member] | ||||||
Concentration risk percentage | 25.00% | |||||
Secured Accounts Receivables [Member] | Customer Concentration Risk [Member] | Customers [Member] | ||||||
Concentration risk percentage | 10.00% | |||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customers One [Member] | ||||||
Concentration risk percentage | 28.40% | 24.60% | ||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customers Two [Member] | ||||||
Concentration risk percentage | 20.80% | 18.90% | ||||
TBK Agreement [Member] | ||||||
Line of credit | $ 30,000,000 | |||||
TBK Agreement [Member] | Subsequent Event [Member] | ||||||
Line of credit | $ 40,000,000 | |||||
TBK Agreement [Member] | Subsequent Event [Member] | Minimum [Member] | ||||||
Line of credit | 30,000,000 | |||||
TBK Agreement [Member] | Subsequent Event [Member] | Maximum [Member] | ||||||
Line of credit | $ 40,000,000 | |||||
Factoring Agreement [Member] | ||||||
Accounts receivable outstanding | $ 3,900,000 | $ 31,750,000 |
Nature of Business and Summar_5
Nature of Business and Summary of Significant Accounting Policies - Schedule of Estimated Useful Lives of Property And Equipment (Details) | 12 Months Ended |
May 31, 2021 | |
Software [Member] | |
Estimated useful lives of property and equipment | P3Y |
Computer Equipment [Member] | Minimum [Member] | |
Estimated useful lives of property and equipment | P3Y |
Computer Equipment [Member] | Maximum [Member] | |
Estimated useful lives of property and equipment | P5Y |
Furniture and Fixtures [Member] | Minimum [Member] | |
Estimated useful lives of property and equipment | P3Y |
Furniture and Fixtures [Member] | Maximum [Member] | |
Estimated useful lives of property and equipment | P5Y |
Leasehold Improvements [Member] | |
Estimated useful lives of property and equipment | Shorter of estimated useful life or remaining term of the lease |
Nature of Business and Summar_6
Nature of Business and Summary of Significant Accounting Policies - Schedule of Disaggregation of Revenue (Details) - USD ($) | 7 Months Ended | 12 Months Ended |
May 31, 2020 | May 31, 2021 | |
Total revenue | $ 1,070,324 | $ 371,887,272 |
China, Hong Kong & Taiwan [Member] | ||
Total revenue | 186,932,382 | |
South East Asia [Member] | ||
Total revenue | 104,475,697 | |
United States [Member] | ||
Total revenue | 31,452,041 | |
India Sub-continent [Member] | ||
Total revenue | 28,164,102 | |
Other [Member] | ||
Total revenue | $ 1,070,324 | $ 20,863,050 |
Nature of Business and Summar_7
Nature of Business and Summary of Significant Accounting Policies - Schedule of Earning Per Share (Details) - USD ($) | 7 Months Ended | 12 Months Ended |
May 31, 2020 | May 31, 2021 | |
Accounting Policies [Abstract] | ||
Net income | $ (408,510) | $ 1,725,497 |
Effect of dilutive securities | 1,350,389 | |
Diluted net income | $ 3,075,886 | |
Weighted average common shares outstanding - basic | 10,000,000 | 1,408,941,722 |
Series A Preferred | $ 1,316,157,000 | |
Series B Preferred | 5,499,034,800 | |
Convertible notes | $ 1,806,230,539 | |
Weighted average common shares outstanding and assumed conversion - diluted | 10,000,000 | 10,030,364,061 |
Basic net income per common share | $ (0.04) | |
Diluted net income per common share | $ (0.04) | |
(a) - Anti-dilutive securities excluded: |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) - USD ($) | Oct. 08, 2020 | May 29, 2020 | May 29, 2020 | May 31, 2020 | May 31, 2021 |
Preferred stock, par value | $ .001 | $ .001 | |||
Consideration paid | $ 12,237,886 | ||||
Cash | $ 1,994,000 | ||||
Payment of closing costs | $ 239,350 | ||||
Series A Preferred Stock [Member] | |||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||
Series B Preferred Stock [Member] | |||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||
Common Stock [Member] | |||||
Shares issued | |||||
Acquisition Agreement and Plan of Merger [Member] | Preferred Stock [Member] | Inno Acquisition Corp [Member] | |||||
Business acquisition shares issued | 1,000,000 | ||||
Acquisition Agreement [Member] | Inno Acquisition Corp [Member] | Series A Preferred Stock [Member] | |||||
Business acquisition shares issued | 130,000 | ||||
Preferred stock, par value | $ 0.001 | ||||
Acquisition Agreement [Member] | Inno Acquisition Corp [Member] | Series B Preferred Stock [Member] | |||||
Business acquisition shares issued | 870,000 | ||||
Preferred stock, par value | $ 0.001 | ||||
Acquisition Agreement [Member] | Preferred Stock [Member] | Inno Acquisition Corp [Member] | |||||
Number of shares cancelled | 1,000,000 | ||||
Acquisition Agreement [Member] | Common Stock [Member] | Inno Acquisition Corp [Member] | |||||
Number of shares cancelled | 45,606,489 | ||||
Split-Off Agreement [Member] | |||||
Market price per share | $ 0.008 | ||||
Split-Off Agreement [Member] | Inno Acquisition Corp [Member] | |||||
Sale of liabilities | $ 46,000 | ||||
Split-Off Agreement [Member] | Inno Acquisition Corp [Member] | Paul Tidwell [Member] | |||||
Sale of liabilities | $ 797,000 | ||||
Split-Off Agreement [Member] | UL US Entities [Member] | |||||
Business acquisition shares issued | 172,000,000 | ||||
Percentage of fully diluted capital structure | 2.00% | ||||
Market capitalization | $ 1,200,000 | ||||
Securities Purchase Agreement [Member] | |||||
Promissory note | $ 5,000,000 | $ 5,000,000 | |||
Securities Purchase Agreement [Member] | Unique Logistics International (ATL) LLC [Member] | |||||
Consideration paid | 2,819,000 | ||||
Cash | 994,000 | ||||
Minority interest amount | 500,000 | ||||
Securities Purchase Agreement [Member] | Unique Logistics International (BOS) Inc [Member] | |||||
Purchase price of common stock | 290,000 | ||||
Monthly cash payments | 90,000 | ||||
Debt principal payment | 2,500 | ||||
Securities Purchase Agreement [Member] | Unique Logistics International (ATL) LLC [Member] | |||||
Promissory note | $ 1,825,000 | $ 1,825,000 | |||
Minority interest percentage | 40.00% | 40.00% | |||
Securities Purchase Agreement [Member] | Unique Logistics International (BOS) Inc [Member] | |||||
Promissory note | $ 200,000 | $ 200,000 | |||
Minority interest percentage | 20.00% | 20.00% | |||
Securities Purchase Agreement [Member] | Unique Logistics International (USA) Inc [Member] | |||||
Minority interest percentage | 35.00% | 35.00% | |||
Securities Purchase Agreement [Member] | UL US Entities [Member] | |||||
Acquisition description | The Company purchased from UL HK (i) sixty percent (60%) of the membership interests of (“UL ATL Membership Interests”) of Unique Logistics International (ATL) LLC, a Georgia limited liability company (“UL ATL”); (ii) eighty percent (80%) of the common stock of Unique Logistics International (BOS) Inc., a Massachusetts corporation (“UL BOS”); and (iii) sixty-five percent (65%) of the Unique Logistics International (USA) Inc., a New York corporation (“UL NY”) | ||||
Consideration paid | $ 6,000,000 | ||||
Cash | $ 1,000,000 | ||||
Number of shares issued in acquisition | 1,500,000 |
Acquisitions - Schedule of Pro-
Acquisitions - Schedule of Pro-forma Information (Details) | 7 Months Ended |
May 31, 2020USD ($)$ / sharesshares | |
Business Combination and Asset Acquisition [Abstract] | |
Revenues | $ 115,148,267 |
Net income (loss) | $ (2,126,697) |
Net income (loss) per share - basic | $ / shares | $ (0.21) |
Weighted average number of shares outstanding | shares | 10,000,000 |
Acquisitions - Schedule of Purc
Acquisitions - Schedule of Purchase Price Consideration (Details) | 12 Months Ended |
May 31, 2021USD ($) | |
Business Combination and Asset Acquisition [Abstract] | |
Cash consideration | $ 1,994,000 |
Notes payable | 6,706,439 |
Consulting service contract liability | 848,010 |
Non-compete payable | 481,211 |
Assumption of seller debt | 200,000 |
Assumed long term liabilities | 1,394,533 |
Rollover equity | 613,693 |
Total purchase price consideration | $ 12,237,886 |
Acquisitions - Schedule of Asse
Acquisitions - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) | May 31, 2021 | May 31, 2020 | May 29, 2020 | |
Goodwill | $ 4,463,129 | $ 4,773,584 | ||
Secured Accounts Receivables [Member] | ||||
Current assets | $ 16,571,270 | |||
Property and equipment | 206,873 | |||
Security deposits | 292,404 | |||
Other intangibles | 8,752,000 | |||
Goodwill | [1] | 4,773,585 | ||
Total identified assets acquired | 30,596,132 | |||
Current liabilities | 16,115,703 | |||
Consulting service contract liability | 848,010 | |||
Long-term assumed liabilities | 1,394,533 | |||
Total liabilities assumed | 18,358,246 | |||
Total net assets assumed | $ 12,237,886 | |||
[1] | The goodwill acquired is primarily attributable to the workforce of the acquired business and significant synergies expected to arise after ULHI's acquisition of UL US Entities. ULHI is assessing the amount of goodwill that will be deductible for income tax purposes. For the year ended May 31, 2021, the amount of goodwill deductible for income tax purposes was immaterial. The Company will continue to analyze the goodwill for deductibility over the 15-year life. See Note 4. |
Acquisitions - Schedule of Othe
Acquisitions - Schedule of Other Intangible Assets and Amortization (Details) | May 29, 2020USD ($) |
Secured Accounts Receivables [Member] | |
Cost Basis | $ 8,752,000 |
Tradenames/Trademarks [Member] | |
Cost Basis | $ 806,000 |
Useful Life | 10 years |
Customer Relationships - ATL [Member] | |
Cost Basis | $ 5,605,000 |
Useful Life | 15 years |
Customer Relationships - BOS [Member] | |
Cost Basis | $ 310,000 |
Useful Life | 12 years |
Customer Relationships - NYC [Member] | |
Cost Basis | $ 1,718,000 |
Useful Life | 14 years |
Non-compete Agreements [Member] | |
Cost Basis | $ 313,000 |
Useful Life | 3 years |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 7 Months Ended | 12 Months Ended |
May 31, 2020 | May 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 58,384 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | May 31, 2021 | May 31, 2020 |
Property and equipment, gross | $ 247,490 | $ 198,988 |
Less: accumulated depreciation | (55,398) | |
Property and equipment, net | 192,092 | 198,988 |
Furniture and Fixtures [Member] | ||
Property and equipment, gross | 84,085 | 68,685 |
Computer Equipment [Member] | ||
Property and equipment, gross | 108,479 | 78,743 |
Software [Member] | ||
Property and equipment, gross | 27,780 | 24,414 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | $ 27,146 | $ 27,146 |
Goodwill (Details Narrative)
Goodwill (Details Narrative) - USD ($) | Feb. 19, 2021 | May 31, 2021 | May 31, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 4,463,129 | $ 4,773,584 | |
Existing note reduced value, assumed | $ 325,000 | ||
Reduction of goodwill | $ 310,452 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 7 Months Ended | 12 Months Ended |
May 31, 2020 | May 31, 2021 | |
Amortization of intangible assets | $ 707,147 | |
Finite-lived intangible assets, weighted average useful life | 8 years 3 months 29 days | |
Trade Names and Non-Compete Agreements [Member] | Minimum [Member] | ||
Finite-lived intangible asset, useful life | 3 years | |
Trade Names and Non-Compete Agreements [Member] | Maximum [Member] | ||
Finite-lived intangible asset, useful life | 10 years | |
Customer Relationships [Member] | Minimum [Member] | ||
Finite-lived intangible asset, useful life | 12 years | |
Customer Relationships [Member] | Maximum [Member] | ||
Finite-lived intangible asset, useful life | 15 years |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) | May 31, 2021 | May 31, 2020 |
Intangible assets, gross | $ 8,752,000 | $ 8,752,000 |
Less: Accumulated amortization | (707,147) | |
Intangible assets, net | 8,044,853 | 8,752,000 |
Trademarks and Trade Names [Member] | ||
Intangible assets, gross | 806,000 | 806,000 |
Customer Relationships [Member] | ||
Intangible assets, gross | 7,633,000 | 7,633,000 |
Noncompete Agreements [Member] | ||
Intangible assets, gross | $ 313,000 | $ 313,000 |
Intangible Assets - Schedule _2
Intangible Assets - Schedule of Estimated Amortization Expense (Details) - USD ($) | May 31, 2021 | May 31, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 | $ 707,143 | |
2023 | 707,143 | |
2024 | 693,800 | |
2025 | 693,800 | |
2026 | 693,800 | |
Thereafter | 4,549,167 | |
Intangible assets, net | $ 8,044,853 | $ 8,752,000 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) | May 31, 2021 | May 31, 2020 |
Payables and Accruals [Abstract] | ||
Accrued salaries and related expenses | $ 672,455 | $ 145,165 |
Accrued sales and marketing expense | 539,810 | 116,500 |
Accrued professional fees | 75,000 | 117,040 |
Accrued income tax | 256,286 | |
Accrued overdraft liabilities | 790,364 | 97,519 |
Other accrued expenses and current liabilities | 50,000 | 3,142,992 |
Accrued expenses and other current liabilities | $ 2,383,915 | $ 3,619,216 |
Financing Arrangements (Details
Financing Arrangements (Details Narrative) - USD ($) | Apr. 12, 2021 | Apr. 07, 2021 | Mar. 19, 2021 | Mar. 09, 2021 | Jan. 28, 2021 | Oct. 14, 2020 | Oct. 08, 2020 | May 29, 2020 | Jun. 30, 2020 | Jan. 31, 2020 | May 31, 2020 | May 31, 2020 | May 31, 2021 |
Proceeds from notes payable | $ 5,174,902 | ||||||||||||
Debt, original issue discount | 1,350,389 | ||||||||||||
Loss on extinguishment of debt | (1,147,856) | ||||||||||||
UL ATL [Member] | Notes Payable [Member] | |||||||||||||
Debt, maturity date | May 29, 2023 | ||||||||||||
Debt, periodic payments | $ 304,167 | ||||||||||||
Debt, periodic payment description | The agreement calls for six semi-annual payments of $304,166.67, for which the first payment was due on November 29, 2020. | ||||||||||||
Notes payable | $ 1,825,000 | $ 1,825,000 | 1,825,000 | 1,216,667 | |||||||||
Unique Logistics International, Inc.[Member] | Promissory Note [Member] | |||||||||||||
Debt, interest rate | 10.00% | ||||||||||||
Notes payable | $ 1,000,000 | 0 | 0 | 1,062,215 | |||||||||
Proceeds from notes payable | $ 1,000,000 | ||||||||||||
Debt instrument, description | Unique Logistics International, Inc. (the “Company”) entered into an Amended and Restated Promissory Note (the “Amended and Restated Note”) with an accredited investor (the “Investor”), pursuant to which the Company and the Investor agreed to amend and restate in its entirety that certain promissory note, issued to the Investor on March 19, 2020 (the “ Original Note”). The Amended and Restated Note supersedes and replaces the Original Note. The Amended and Restated Note is in the principal aggregate amount of $1,000,000 and bears interest at a rate of a guaranteed 7.5% or Seventy-Five Thousand dollars ($75,000) at maturity. The Amended and Restated Note matures on June 15, 2021 (the “Maturity Date”). The Company may prepay the Amended and Restated Note without penalty. The Amended and Restated Note contains certain events of default. In the event of a default, at its’ option and sole discretion, the Investor may consider the Amended and Restated Note immediately due and payable. Upon such an event of default, the interest rate increases to eighteen percent (18%) per annum. | ||||||||||||
Paycheck Protection Program Loans [Member] | UL US Entities [Member] | |||||||||||||
Proceeds from loan | $ 1,646,062 | ||||||||||||
Debt maturity description | The promissory notes mature for dates ranging from April 2022 through May 2022. | ||||||||||||
Debt, outstanding balance | $ 1,646,062 | $ 1,646,062 | 358,236 | ||||||||||
Debt, interest rate | 1.00% | 1.00% | |||||||||||
Debt, forgiven value | $ 1,646,062 | ||||||||||||
SBA Loans [Member] | |||||||||||||
Proceeds from loan | $ 358,236 | ||||||||||||
Debt, outstanding balance | $ 0 | $ 0 | 358,236 | ||||||||||
Debt, interest rate | 1.00% | ||||||||||||
Debt, maturity date | Mar. 5, 2026 | ||||||||||||
Economic Injury Disaster Loan [Member] | |||||||||||||
Proceeds from loan | $ 150,000 | ||||||||||||
Debt, outstanding balance | 0 | 0 | 150,000 | ||||||||||
Debt, interest rate | 3.75% | ||||||||||||
Non-Compete, Non-Solicitation and Non-Disclosure Agreement [Member] | UL ATL [Member] | Notes Payable [Member] | |||||||||||||
Debt, periodic payments | $ 20,833 | ||||||||||||
Debt, periodic payment description | The agreement calls for twenty-four monthly non-interest bearing payments of $20,833.33 with the first payment on June 29, 2020. | ||||||||||||
Notes payable | $ 500,000 | $ 500,000 | $ 500,000 | 250,004 | |||||||||
Trillium SPA [Member] | Convertible Notes Payable [Member] | |||||||||||||
Debt, interest rate | 10.00% | ||||||||||||
Debt, maturity date | Oct. 6, 2021 | ||||||||||||
Notes payable | $ 1,111,000 | 1,104,500 | |||||||||||
Proceeds from notes payable | $ 1,000,000 | ||||||||||||
Number of warrants to purchase common stock | 570,478,452 | ||||||||||||
Warrants exercise price, per share | $ 0.001946 | ||||||||||||
Debt, conversion price per share | $ 0.00179638 | $ 0.00179638 | |||||||||||
Debt, conversion price per share, description | The Trillium Note matures on October 6, 2021 (the “Maturity Date”) and is convertible at any time. The conversion price of the Trillium Note shall be equal to $0.00179638 (the “Conversion Price”); provided, however, that in no instance shall the investor be entitled to convert at a price lower than $0.00119759 (the “Trillium Note Floor Price”) and in no instance shall Trillium be entitled to convert into such an amount of common stock that, together with all shares of common stock which have been previously converted, would equal greater than 13.8875% of the total issued and outstanding shares of common stock of the Company, subject to adjustment as provided herein, including, but not limited to, adjustments for any stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the common stock during such measuring period. The Conversion Price shall be rounded down to the nearest $0.0001 and in no event lower than $0.00119759. Provided that the Company has satisfied all of the Equity Conditions (as defined in the Trillium Note) the Company may deliver a notice to Trillium an “Optional Redemption Notice”, of its irrevocable election to redeem some or all of the then outstanding principal or interest amount of the Trillium Note for cash in an amount equal to the Optional Redemption Amount as further described in the Trillium Note (the “Optional Redemption Amount”) on the 20th Trading Day following the Optional Redemption Notice. The Trillium Warrant has a term of five years and may only be exercised on a cash basis at an “Exercise Price” equal to $0.001946, subject to adjustment (the “Exercise Price”); provided, however, that in no instance shall Trillium be entitled to at a price lower than $0.001946 (the “Floor Price”) and in no instance shall Trillium be entitled to exercise the Trillium Warrant into such an amount of common stock that, together with all shares of Common Stock which have been previously exercised by Trillium, would equal greater than 8.546% of the total issued and outstanding shares of common stock of the Company, subject to adjustment, including, but not limited to, adjustments for any stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the common stock during such measuring period. The Exercise Price shall be rounded down to the nearest $0.0001 and in no event lower than $0.001946. | ||||||||||||
Debt, original issue discount | $ 111,000 | ||||||||||||
Debt issuance, legal fees | 50,000 | ||||||||||||
Warrants, value | 563,341 | ||||||||||||
Debt, beneficial conversion feature | 65,453 | ||||||||||||
Loss on extinguishment of debt | 1,147,856 | ||||||||||||
Debt, unamortized debt discount | 0 | ||||||||||||
Debt, conversion of notes into shares, value | $ 63,692 | ||||||||||||
Debt, conversion of notes into shares | 35,455,872 | ||||||||||||
Trillium SPA [Member] | Convertible Notes Payable [Member] | Additional Paid-in Capital [Member] | |||||||||||||
Debt, original issue discount | 13,054 | ||||||||||||
Debt, beneficial conversion feature | $ 436,844 | ||||||||||||
3a SPA [Member] | Convertible Notes Payable [Member] | |||||||||||||
Debt, interest rate | 10.00% | ||||||||||||
Notes payable | $ 1,111,000 | $ 1,111,000 | |||||||||||
Proceeds from notes payable | $ 1,000,000 | ||||||||||||
Number of warrants to purchase common stock | 570,478,452 | ||||||||||||
Warrants exercise price, per share | $ 0.001946 | ||||||||||||
Debt, conversion price per share, description | The 3a Note matures on October 6, 2021 (the “Maturity Date”) and is convertible at any time. The conversion price of the 3a Note shall be equal to $0.00179638 (the “Conversion Price”); provided, however, that in no instance shall the investor be entitled to convert at a price lower than $0.00119759 (the “3a Note Floor Price”) and in no instance shall 3a be entitled to convert into such an amount of common stock that, together with all shares of common stock which have been previously converted, would equal greater than 13.8875% of the total issued and outstanding shares of common stock of the Company, subject to adjustment as provided herein, including, but not limited to, adjustments for any stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the common stock during such measuring period. The Conversion Price shall be rounded down to the nearest $0.0001 and in no event lower than $0.00119759. Provided that the Company has satisfied all of the Equity Conditions (as defined in the 3a Note) the Company may deliver a notice to 3a an “Optional Redemption Notice”, of its irrevocable election to redeem some or all of the then outstanding principal or interest amount of the 3a Note for cash in an amount equal to the Optional Redemption Amount as further described in the 3a Note (the “Optional Redemption Amount”) on the 20th Trading Day following the Optional Redemption Notice. The 3a Warrant has a term of five years and may only be exercised on a cash basis at an “Exercise Price” equal to $0.001946, subject to adjustment (the “Exercise Price”); provided, however, that in no instance shall 3a be entitled to at a price lower than $0.001946 (the “Floor Price”) and in no instance shall 3a be entitled to exercise the 3a Warrant into such an amount of common stock that, together with all shares of Common Stock which have been previously exercised by 3a, would equal greater than 8.546 % of the total issued and outstanding shares of common stock of the Company, subject to adjustment, including, but not limited to, adjustments for any stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the common stock during such measuring period. The Exercise Price shall be rounded down to the nearest $0.0001 and in no event lower than $0.001946. | 617,808 | |||||||||||
Debt, original issue discount | $ 111,000 | ||||||||||||
Warrants, value | 563,156 | ||||||||||||
Debt, beneficial conversion feature | 436,844 | ||||||||||||
Debt, unamortized debt discount | $ 391,757 | $ 1,215,526 | |||||||||||
Trillium and 3a SPA [Member] | Convertible Notes Payable [Member] | |||||||||||||
Debt, interest rate | 10.00% | ||||||||||||
Notes payable | $ 916,666 | ||||||||||||
Proceeds from notes payable | $ 1,666,666 | ||||||||||||
Debt, conversion price per share | $ 0.0032 | ||||||||||||
Debt, conversion price per share, description | 166,667 | ||||||||||||
Debt, beneficial conversion feature | $ 1,666,666 |
Financing Arrangements - Schedu
Financing Arrangements - Schedule of Financing Arrangement (Details) - USD ($) | May 31, 2021 | May 31, 2020 |
Notes payable, gross | $ 5,478,673 | $ 3,971,062 |
Less: current portion | (2,285,367) | (1,476,642) |
Long term, notes payable | 3,193,306 | 2,494,420 |
Promissory Notes (PPP Program) [Member] | ||
Notes payable, gross | 358,236 | 1,646,062 |
Promissory Notes (EIDL) [Member] | ||
Notes payable, gross | 150,000 | |
Notes Payable [Member] | ||
Notes payable, gross | 2,528,886 | 2,325,000 |
Convertible Notes - Net of Discount [Member] | ||
Notes payable, gross | $ 2,441,551 |
Financing Arrangements - Sche_2
Financing Arrangements - Schedule of Financing Arrangement (Details) (Parenthetical) - USD ($) | 7 Months Ended | 12 Months Ended | |
May 31, 2020 | May 31, 2021 | May 31, 2020 | |
Debt, original issue discount | $ 1,350,389 | ||
Convertible Notes - Net of Discount [Member] | |||
Debt, original issue discount | $ 1,607,283 | $ 1,607,283 |
Financing Arrangements - Sche_3
Financing Arrangements - Schedule of Fair Value Assumptions of Warrants (Details) | May 31, 2021 |
Warrants term | 5 years |
Estimated Dividends [Member] | |
Warrants measurement input | 0 |
Expected Volatility [Member] | |
Warrants measurement input | 38.5 |
Risk Free Interest Rate [Member] | Minimum [Member] | |
Warrants measurement input | 0.30 |
Risk Free Interest Rate [Member] | Maximum [Member] | |
Warrants measurement input | 0.33 |
Financing Arrangements - Sche_4
Financing Arrangements - Schedule of Future maturities of Promissory Notes (Details) - USD ($) | May 31, 2021 | May 31, 2020 |
Debt Disclosure [Abstract] | ||
2022 | $ 2,285,367 | |
2023 | 4,665,938 | |
2024 | 8,772 | |
2025 | 8,772 | |
2026 | 8,772 | |
Thereafter | 108,335 | |
Long-term Debt, Gross | 7,085,956 | |
Less: current portion | (2,285,367) | $ (1,476,642) |
Less: unamortized discount | (1,607,283) | |
Long term, notes payable | $ 3,193,306 | $ 2,494,420 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | May 29, 2020 | May 31, 2020 | May 31, 2021 |
Amortized balances | $ 1,350,389 | ||
Security deposit | 175,000 | 175,000 | |
Accounts receivable, trade related parties | 1,321,473 | 1,274,250 | |
Accounts payable, trade related parties | 4,171,839 | 10,839,224 | |
Revenue from related party transactions | 2,355,214 | ||
Total direct costs | 54,898,109 | ||
Consulting Services Agreement [Member] | |||
Payment for consulting agreement | $ 500,000 | 250,000 | |
Amortized balances | 848,010 | 565,338 | |
Service fees | 60,000 | ||
Consulting Services Agreement [Member] | David Briones [Member] | |||
Service fees | $ 5,000 |
Related Party Transactions - Sc
Related Party Transactions - Schedule of Related Party Transactions (Details) - USD ($) | May 31, 2021 | May 31, 2020 | |
Due to related parties, gross | $ 1,113,923 | $ 6,574,303 | |
Less: current portion | (397,975) | (6,380,975) | |
Long term, due to related parties | 715,948 | 193,328 | |
Due To Frangipani Trade Services [Member] | |||
Due to related parties, gross | [1] | 903,927 | 959,303 |
Due To Unique Logistics Hong Kong [Member] | |||
Due to related parties, gross | [2] | 325,000 | |
Note Payable UL HK [Member] | |||
Due to related parties, gross | [3] | 5,000,000 | |
Due To Employee [Member] | |||
Due to related parties, gross | [4] | 60,000 | 90,000 |
Due To Employee [Member] | |||
Due to related parties, gross | [5] | $ 149,996 | $ 200,000 |
[1] | Due to Frangipani Trade Services ("FTS"), an entity owned by the Company's CEO, is due on demand and is non-interest bearing. The principal amount of this Promissory Note 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 first payment due on November 30, 2021, with each succeeding payment to be made six months after the preceding payment. | ||
[2] | Due to Unique Logistics Holding Limited ("ULHK") is non-interest bearing and due within 12 months from the date of acquisition. On February 19, 2021, the Company and UL HK agreed to reduce an existing $325,000 note assumed by the Company in the May 29, 2020 acquisition (Note 2). The settlement amount of $310,452 was accounted for as a measurement period adjustment and resulted in a reduction to goodwill. See Note 4. | ||
[3] | On May 29, 2020, the Company entered into a $5,000,000 note payable with UL HK as part of the ULUS acquisition. The loan bears a zero percent interest rate and has a maturity of 180 days from the date of the note. On November 12, 2020, the Company amended the note with UL HK in order to (i) extend the maturity date from November 25, 2020 to May 18, 2021, (ii) begin monthly payments of $833,333 commencing on December 18, 2020, (iii) change the interest rate to one-half percent (0.5%) per month and (iv) provide the Company the right to prepay the outstanding liability in whole or in part. Pursuant to the amendment, if the Company should default on the note, UL HK has the option to convert the outstanding principal and interest into shares of common stock of the Company. Upon the earlier of (i) a default in the monthly payment of principal or interest due and owing under the loan or, (ii) in the event that any outstanding balance of the loan remains outstanding as of May 31, 2021, UL HK at its option may convert the principal and interest then outstanding into an amount of shares of common stock of the Company equal to 0.2125% of the then outstanding common stock of the Company on a fully diluted basis for every $25,000 of the outstanding principal balance plus accrued but unpaid interest of this loan outstanding on the date of such conversion, provided, however, that the UL HK shall not be permitted to convert the loan in the event that such conversion would provide the UL HK more than 34% of the Company's issued and outstanding common stock when including and aggregating all prior conversions of the loan. As of May 31, 2021 the note was paid in full. | ||
[4] | 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. | ||
[5] | On May 29, 2020, the Company entered into a $200,000 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 $5,556 from the date of closing. |
Related Party Transactions - _2
Related Party Transactions - Schedule of Related Party Transactions (Details) (Parenthetical) - USD ($) | May 29, 2020 | Feb. 19, 2020 | May 31, 2021 |
Due To Frangipani Trade Services [Member] | |||
Debt, interest rate | 6.00% | ||
Debt, periodic payments | $ 150,655 | ||
Note Payable UL HK [Member] | |||
Debt, interest rate | 0.00% | ||
Notes payable | $ 500,000 | ||
Debt instrument, description | The loan bears a zero percent interest rate and has a maturity of 180 days from the date of the note. On November 12, 2020, the Company amended the note with UL HKin order to (i) extend the maturity date from November 25, 2020 to May 18, 2021, (ii) begin monthly payments of $833,333 commencing on December 18, 2020, (iii) change the interest rate to one-half percent (0.5%) per month and (iv) provide the Company the right to prepay the outstanding liability in whole or in part. Pursuant to the amendment, if the Company should default on the note, UL HKhas the option to convert the outstanding principal and interest into shares of common stock of the Company. Upon the earlier of (i) a default in the monthly payment of principal or interest due and owing under the loan or, (ii) in the event that any outstanding balance of the loan remains outstanding as of May 31, 2021, UL HKat its option may convert the principal and interest then outstanding into an amount of shares of common stock of the Company equal to 0.2125% of the then outstanding common stock of the Company on a fully diluted basis for every $25,000 of the outstanding principal balance plus accrued but unpaid interest of this loan outstanding on the date of such conversion, provided, however, that the UL HKshall not be permitted to convert the loan in the event that such conversion would provide the UL HKmore than 34% of the Company’s issued and outstanding common stock when including and aggregating all prior conversions of the loan. As of May 31, 2021 the note was paid in full. | On February 19, 2021, the Company and UL HK agreed to reduce an existing $325,000 note assumed by the Company in the May 29, 2020 acquisition (Note 2). The settlement amount of $310,452 was accounted for as a measurement period adjustment and resulted in a reduction to goodwill. See Note 4. | |
Due To Employee [Member] | |||
Debt, periodic payments | $ 2,500 | ||
Notes payable | 90,000 | ||
Due To Employee [Member] | |||
Debt, periodic payments | 5,556 | ||
Notes payable | $ 200,000 |
Retirement Plan (Details Narrat
Retirement Plan (Details Narrative) - USD ($) | Aug. 02, 2020 | May 31, 2020 | May 31, 2021 |
Retirement Benefits [Abstract] | |||
Retirment plan, description | The Company consolidated its 401(k) plans into two plans, in one of which the Company has the discretionary option of matching employee contributions and in the other the Company matches 20% on the first 100% contribution. In either Plan, employees can contribute 1% to 98% of gross salary up to a maximum permitted by law. | In each Plan employees could contribute up to a maximum permitted by law. For one of the plans, the Company had the discretionary option of matching employee contributions. The second plan was a Safe Harbor Plan where up to first 3% contribution was matched at 100% and additional 2% contribution at 50% match. The third plan allowed for maximum of 100% match. | |
Retirement expense | $ 0 | $ 45,867 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Apr. 12, 2021 | Feb. 16, 2021 | Nov. 30, 2020 | Oct. 09, 2020 | May 31, 2020 | May 31, 2021 | Jan. 11, 2021 | Jan. 10, 2021 |
Common stock, shares authorized | 800,000,000 | 800,000,000 | ||||||
Common stock, par value | $ 0.001 | $ 0.001 | ||||||
Number of shares issued, value | $ 130 | |||||||
Common stock, shares issued | 0 | 393,742,663 | 800,000,000 | 500,000,000 | ||||
Common stock, shares outstanding | 0 | 393,742,663 | ||||||
Preferred stock, par value | $ .001 | $ .001 | ||||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||||||
Intrinsic value of warrants outstanding and exercisable | $ 111,875,388 | |||||||
Series B Preferred Stock [Member] | ||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||||||
Preferred stock, shares issued | 870,000 | 840,000 | ||||||
Preferred stock, shares outstanding | 870,000 | 840,000 | ||||||
Series A Preferred Stock [Member] | ||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||||||
Preferred stock, shares issued | 130,000 | 130,000 | ||||||
Preferred stock, shares outstanding | 130,000 | 130,000 | ||||||
Common Stock [Member] | ||||||||
Number of shares issued | ||||||||
Number of shares issued, value | ||||||||
Common Stock [Member] | Series B Preferred Stock [Member] | ||||||||
Number of shares converted | 6,546 | |||||||
Common Stock [Member] | Series A Preferred Stock [Member] | ||||||||
Number of shares converted | 6,546 | |||||||
Consultant [Member] | Common Stock [Member] | ||||||||
Number of shares issued | 457,426 | 27,833,754 | 28,291,180 | |||||
Number of shares issued, value | $ 41,666 | $ 50,000 | $ 91,666 | |||||
Chief Executive Officer [Member] | Series B Preferred Stock [Member] | ||||||||
Number of shares converted | 30,000 | |||||||
Chief Executive Officer [Member] | Common Stock [Member] | ||||||||
Number of shares converted | 196,394,100 | |||||||
Noteholder [Member] | ||||||||
Debt, conversion of shares, value | $ 63,692 | |||||||
Debt, conversion of shares | 35,455,872 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Warrants Activity (Details) - Warrant [Member] | 12 Months Ended |
May 31, 2021$ / sharesshares | |
Number of warrants outstanding, beginning | shares | |
Number of warrants exercisable , beginning | shares | |
Number of warrants, granted | shares | 1,140,956,904 |
Number of warrants outstanding, ending | shares | 1,140,956,904 |
Number of warrants exercisable, ending | shares | 1,140,956,904 |
Warrants, weighted average exercise price, beginning | $ / shares | |
Warrants, weighted average exercise price exercisable, beginning | $ / shares | |
Warrants, weighted average exercise price, granted | $ / shares | 0.002 |
Warrants, weighted average exercise price, ending | $ / shares | 0.002 |
Warrants, weighted average exercise price exercisable, ending | $ / shares | $ 0.002 |
Stockholders' Equity - Schedu_2
Stockholders' Equity - Schedule of Warrants Outstanding and Exercisable (Details) - Warrant [Member] | 12 Months Ended |
May 31, 2021$ / sharesshares | |
Warrants Outstanding, Exercise Price | $ / shares | $ 0.002 |
Warrants Outstanding, Number Outstanding | shares | 1,140,956,904 |
Warrants Outstanding, Weighted Average Remaining Contractual Life (in years) | 4 years 4 months 9 days |
Warrants Exercisable, Weighted Average Exercise Price | $ / shares | $ 0.002 |
Warrants Exercisable, Number Exercisable | shares | 1,140,956,904 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | May 29, 2020 | May 31, 2021 | Jun. 17, 2021 | May 31, 2020 |
Factoring fees | $ 4,472,000 | |||
Trade accounts receivables | 233,896,000 | $ 4,785,000 | ||
Factoring Agreement [Member] | ||||
Trade accounts receivables | $ 31,750,000 | $ 3,900,000 | ||
Agreement [Member] | Subsequent Event [Member] | ||||
Line of credit | $ 2,000,000 | |||
Maximum [Member] | Secured Accounts Receivables [Member] | ||||
Line of credit | $ 25,000,000 | |||
Minimum [Member] | Secured Accounts Receivables [Member] | ||||
Line of credit | $ 12,000,000 | |||
Corefund Capital, LLC [Member] | ||||
Fees payable discriptions | The Facility includes fees payable to Core based on the number of days between the date on which an account was purchased by Core and the date on which the Company repurchased the account or the customer paid, as follows: (i) Less than or equal to 30 days, a 1.5% fee; (ii) more than 30 days but less than or equal to 40 days, a 1.75% fee; (iii) more than 40 days but less than or equal to 50 days, a 2.0% fee; (iv) more than 50 days but less than or equal to 60 days, a 2.25% fee; (v) more than 60 days but less than or equal to 90 days, a 2.50% fee; (vi) if more than 90 days, a 2.50% fee for each additional week or portion thereof. | |||
Corefund Capital, LLC [Member] | Maximum [Member] | ||||
Accounts receivable | $ 12,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Components of Lease Expenses (Details) | 12 Months Ended |
May 31, 2021USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease | $ 1,506,090 |
Interest on lease liabilities | 148,039 |
Total net lease cost | $ 1,654,129 |
Commitments and Contingencies_3
Commitments and Contingencies - Schedule of Supplemental Balance Sheet Information (Details) - USD ($) | May 31, 2021 | May 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease ROU assets – net | $ 3,797,527 | $ 4,770,280 |
Current operating lease liabilities, included in current liabilities | 1,466,409 | 1,288,216 |
Noncurrent operating lease liabilities, included in long-term liabilities | 2,431,144 | 3,482,064 |
Total operating lease liabilities | $ 3,897,553 | $ 4,770,280 |
Commitments and Contingencies_4
Commitments and Contingencies - Schedule of Supplemental Cash Flow and Other Information (Details) - USD ($) | 7 Months Ended | 12 Months Ended |
May 31, 2020 | May 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
ROU assets obtained in exchange for lease liabilities | $ 4,770,280 | $ 223,242 |
Weighted average remaining lease term (in years): | 4 years 5 months 23 days | 4 years 15 days |
Weighted average discount rate | 4.25% | 4.25% |
Commitments and Contingencies_5
Commitments and Contingencies - Schedule of Minimum Lease Payments (Details) - USD ($) | May 31, 2021 | May 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
2022 | $ 1,598,287 | |
2023 | 958,942 | |
2024 | 528,755 | |
2025 | 455,771 | |
2026 | 256,978 | |
Thereafter | 467,008 | |
Total lease payments | 4,265,740 | |
Less: imputed interest | (368,187) | |
Total lease obligations | $ 3,897,553 | $ 4,770,280 |
Income Tax Provision (Details N
Income Tax Provision (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Operating loss carryforwards | $ 66,087 | $ 40,000 |
Income tax description | greater than 50% | |
Valuation allowance | ||
Interest or penalties related to unrecognized tax benefits | ||
California State [Member] | ||
Operating loss carryforwards | $ 262,678 |
Income Tax Provision - Schedule
Income Tax Provision - Schedule of Income Tax Provisions (Details) - USD ($) | 7 Months Ended | 12 Months Ended | |
May 31, 2020 | May 31, 2021 | May 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Federal: Current | $ 521,293 | ||
Federal: Deferred | (208,560) | ||
State and Local: Current | 262,576 | ||
State and Local: Deferred | (55,440) | ||
Income tax benefit | $ 519,869 |
Income Tax Provision - Schedu_2
Income Tax Provision - Schedule of Deferred Tax Assets (Liabilities) (Details) - USD ($) | May 31, 2021 | May 31, 2020 |
Income Tax Disclosure [Abstract] | ||
Net Operating Loss | $ 66,087 | $ 40,000 |
Debt discount liability | 288,555 | |
Allowance for doubtful accounts | 39,414 | |
Goodwill | 19,513 | |
Total deferred tax assets | 347,482 | 40,000 |
Valuation allowance | (40,000) | |
Deferred tax asset, net of valuation allowance | 347,482 | |
Fixed assets | (84,261) | |
Total deferred tax liabilities | (84,241) | |
Net deferred tax asset (liability) | $ 263,221 |
Income Tax Provision - Schedu_3
Income Tax Provision - Schedule of Expected Tax Expense (Benefit) (Details) | 7 Months Ended | 12 Months Ended |
May 31, 2020 | May 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
US Federal statutory rate | 21.00% | 21.00% |
State income tax, net of federal benefit | 9.00% | 8.40% |
Change in valuation allowance | (30.00%) | (1.70%) |
Other permanent differences, net | (0.00%) | (4.50%) |
Income tax provision (benefit) | 0.00% | 23.20% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Aug. 19, 2021 | Aug. 13, 2021 | Aug. 09, 2021 | Aug. 03, 2021 | Jul. 22, 2021 | Jul. 08, 2021 | Jun. 28, 2021 | Jun. 02, 2021 | Jun. 01, 2021 | Jan. 28, 2023 | Oct. 06, 2022 | Aug. 04, 2021 | Jun. 17, 2021 | May 31, 2021 | May 31, 2020 | May 29, 2020 |
Accounts receivables net | $ 20,369,747 | $ 7,932,310 | ||||||||||||||
TBK Agreement [Member] | ||||||||||||||||
Line of credit | $ 30,000,000 | |||||||||||||||
TBK Agreement [Member] | Corefund Capital, LLC [Member] | Maximum [Member] | ||||||||||||||||
Accounts receivables net | $ 25,000,000 | |||||||||||||||
Subsequent Event [Member] | ||||||||||||||||
Number of shares issued | 125,692,224 | |||||||||||||||
Common stock held in shares | 25,000,000 | |||||||||||||||
Number of common shares description | The Qualified Financing Registration Statement shall include Registrable Securities only on behalf of 3a Capital Establishment, comprised of 25,000,000 shares of Common Stock currently held by 3a Capital Establishment, which, if such 25,000,000 shares is not equal to $1,000,000 of value valued at the lowest price at which shares of Common Stock are issued in the Qualified Financing, shall be increased or decreased to a number of shares of Common Stock equal to $1,000,000 valued at the lowest price at which shares of Common Stock are issued in the Qualified Financing. | |||||||||||||||
Subsequent Event [Member] | Series B Convertible Preferred Stock [Member] | ||||||||||||||||
Number of shares issued | 19,200 | |||||||||||||||
Subsequent Event [Member] | 10% Secured Subordinated Convertible Promissory Note [Member] | ||||||||||||||||
Debt instrument extend maturity date | Jan. 28, 2021 | |||||||||||||||
Subsequent Event [Member] | Trillium Note and 3a Note [Member] | ||||||||||||||||
Debt instrument face amount | $ 916,666 | |||||||||||||||
Subsequent Event [Member] | Noteholder [Member] | ||||||||||||||||
Debt instrument convertible value | $ 71,855 | |||||||||||||||
Debt instrument convertible share amount | 40,000,000 | |||||||||||||||
Conversion price per share | $ 0.00179638 | |||||||||||||||
Subsequent Event [Member] | Convertible Notes [Member] | ||||||||||||||||
Debt instrument convertible value | $ 12,821 | $ 24,419 | $ 15,621 | |||||||||||||
Debt instrument convertible share amount | 7,137,037 | 13,593,388 | 8,695,727 | |||||||||||||
Conversion price per share | $ 0.00179638 | $ 0.00179638 | $ 0.00179638 | |||||||||||||
Subsequent Event [Member] | 10% Promissory Note [Member] | Trillium Partners L.P [Member] | ||||||||||||||||
Debt instrument extend maturity date | Oct. 31, 2021 | |||||||||||||||
Debt instrument face amount | $ 1,000,000 | |||||||||||||||
Debt instrument, maturity date | Jun. 15, 2021 | |||||||||||||||
Subsequent Event [Member] | Paycheck Protection Program [Member] | ||||||||||||||||
Debt instrument face amount | $ 358,236 | |||||||||||||||
Subsequent Event [Member] | Investors [Member] | Trillium Note [Member] | ||||||||||||||||
Debt instrument extend maturity date | Oct. 8, 2020 | |||||||||||||||
Debt instrument face amount | $ 1,111,000 | |||||||||||||||
Subsequent Event [Member] | Investors [Member] | 10% Secured Subordinated Convertible Promissory Note [Member] | ||||||||||||||||
Debt instrument face amount | $ 1,111,000 | |||||||||||||||
Subsequent Event [Member] | Chief Executive Officer [Member] | Series B Convertible Preferred Stock [Member] | ||||||||||||||||
Ownership percentage | 100.00% | |||||||||||||||
Subsequent Event [Member] | TBK Agreement [Member] | ||||||||||||||||
Lesser received from amount | $ 30,000,000 | |||||||||||||||
Line of credit | $ 40,000,000 | |||||||||||||||
Subsequent Event [Member] | TBK Agreement [Member] | Maximum [Member] | ||||||||||||||||
Line of credit | 40,000,000 | |||||||||||||||
Subsequent Event [Member] | TBK Agreement [Member] | Minimum [Member] | ||||||||||||||||
Line of credit | $ 30,000,000 | |||||||||||||||
Subsequent Event [Member] | Prior Agreement [Member] | Corefund Capital, LLC [Member] | ||||||||||||||||
Line of credit | $ 2,000,000 |