| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Uses
of estimates In
preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date
of the consolidated financial statements Significant accounting estimates required to be made by management include, but are not limited
to revenue recognition, the allowance for credit losses of accounts receivable, useful lives and assessment for impairment of long-lived
assets, fair value of the convertible notes and warrants well as share-based compensation. Actual results could differ from those estimates. Cash
and cash equivalents Cash
and cash equivalents comprise cash at banks and on hand, which includes deposits with original maturities of three months or less with
commercial banks. Accounts
receivable Accounts
receivable are recognized and carried at original invoiced amount less an estimated allowance for credit losses. Most accounts receivable
are collected within one month. On November 1, 2022, the Group adopted ASU 2016-13, “Financial Instruments — Credit Losses
(Accounting Standards Codification (“ASC” Topic 326): Measurement on Credit Losses on Financial Instruments”, including
certain subsequent amendments, transitional guidance and other interpretive guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU
2019-11, ASU 2020-02 and ASU 2020-03 (collectively, including ASU 2016-13, “ASC 326”). ASC 326 introduces an approach based
on expected losses to estimate the allowance for doubtful accounts, which replaces the previous incurred loss impairment model. The adoption
of this guidance did not have a material impact on the Group’s consolidated financial statements. The Company’s estimation
of allowance for credit losses considers factors such as historical credit loss experience, age of receivable balances, current market
conditions, reasonable and supportable forecasts of future economic conditions, as well as an assessment of receivables due from specific
identifiable counterparties to determine whether these receivables are considered at risk or uncollectible. The Company evaluates its
accounts receivable for expected credit losses on a regular basis. The Group maintains an estimated allowance for credit losses to reduce
its accounts receivable to the amount that it believes will be collected. The Company considers factors in assessing the collectability
of its receivables, such as the age of the amounts due, the customer’s payment history, credit-worthiness and other specific circumstances
related to the accounts. The Group adjusts the allowance percentage periodically when there are significant differences between estimated
bad debts and actual bad debts. If there is strong evidence indicating that the accounts receivable is likely to be unrecoverable, the
Company also makes specific allowance in the period in which a loss is determined to be probable. No credit losses was recorded for the
years ended and as of October 31, 2024 and 2023, respectively. Prepayments
, prepaid expenses and other assets Prepayments,
prepaid expenses and other assets primarily consist of prepayments for fuel and other costs, prepayments for keyman insurance, prepaid
expenses for consulting service fees and advances to employees, which are presented net of allowance for credit losses. These balances
are unsecured and are reviewed periodically to determine whether their carrying value has become impaired. Property
and equipment, net Property
and equipment are recorded at cost less accumulated depreciation. Depreciation is provided in amounts sufficient to amortize the cost
of the related assets over their useful lives using the straight-line method, as follows: Useful life Machinery equipment 10-33 years Transportation equipment 5 years Office and electronic equipment 3-5 years Leasehold improvements Over the shorter of the lease term or estimated useful lives Expenditures
for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures
for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated
depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated
statements of operations and other comprehensive income (loss) in other income (expenses), net. Impairment
of long-lived assets The
Group reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. If the estimated undiscounted cash flows from the use of the asset and its eventual disposition are below the
asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no impairments of
these assets for the years ended and as of October 31, 2024 and 2023, respectively. Fair
value of financial instruments ASC
825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined 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. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize
the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as
follows:
● Level 1 — inputs
to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
● Level 2 — inputs
to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for
identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived
from or corroborated by observable market data.
● Level 3 — inputs
to the valuation methodology are unobservable. The
carrying amounts of financial assets and liabilities, such as cash and cash equivalents, prepayments and other current assets, accounts
payable, balances with related parties, and other current liabilities, approximate their fair values because of the short-term maturity
of these instruments. The carrying amounts of long-term loans approximate fair values as the related interest rates currently offered
by financial institutions for similar debt instruments of comparable maturities. Assets
and Liabilities Measured or Disclosed at Fair Value on a recurring basis The
following tables represent the fair value hierarchy of the Group’s financial assets and liabilities measured at fair value on a
recurring basis as of October 31, 2024 and 2023: (i) Contingent
consideration – earn-out liability Pursuant
to the Merger Agreement, eligible shareholders of the Company were to receive up to 35,000,000 Ordinary Shares of the Company
(the “Earnout Shares”) if the Group’s consolidated revenue exceeded certain targets. Upon the closing of the SPAC Transaction,
the Group recorded the fair value of the contingent consideration, which resulted from the earn-out liability and classified as Level
3 in the fair value hierarchy. The Company records the changes in fair value in earnings. Since the Company determined that the probability
of achieving the revenue earnout targets were nil nil (ii)
The
Company elected the fair value option to account for its convertible notes (excluding freestanding warrants if applicable, refer to Note
8 for detailed information). The Company engaged an independent valuation firm to perform the valuation. The fair value of the convertible
notes was calculated using the binomial tree model. The convertible notes were classified as Level 3 instruments as the valuation was
determined based on unobservable inputs which are supported by little or no market activity and reflect the Company’s own assumptions
in measuring fair value. Significant estimates used in developing the fair value of the convertible notes included time to maturity,
risk-free interest rate, straight debt discount rate, probability to convert and expected timing of conversion. As
the inputs used in developing the fair value for Level 3 instruments were unobservable and required significant management estimates,
a change in these inputs could result in a significant change in the fair value measurement. The
following is a reconciliation of the beginning and ending balances for all convertible notes measured at fair value on a recurring basis
using significant unobservable inputs (Level 3) as of October 31, 2024:
October 31,
2024
Opening balance $ -
Issuance of convertible notes 5,307,000
Change in fair value of convertible notes 23,213,031
Loss on settlement of convertible notes 306,793
Cash repaid (1,445,015 )
Ordinary share issued for settlement of convertible
notes (149,453 )
Ordinary shares issued
for conversion of convertible notes (27,232,356 )
Total $ - Revenue
recognition The
Group is an international operator of comprehensive ocean transportation services. On November 1, 2019, the Group adopted ASU 2014-09,
Revenue from Contracts with Customers (Topic 606) and all subsequent ASUs that modified ASC 606 using the modified retrospective approach.
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
To achieve that core principle, the Group applies the following steps: Step
1: Identify the contract(s) with a customer Step
2: Identify the performance obligations in the contract Step
3: Determine the transaction price Step
4: Allocate the transaction price to the performance obligations in the contract Step
5: Recognize revenue when (or as) the entity satisfies a performance obligation The
Group primarily derives its freight revenue from voyage contracts and provides vessel services. In
accordance with ASC 606, the Group evaluates whether we promise to transfer services to the customer (as the principal) or to arrange
for services to be provided by another party (as the agent) using a control model. Based on the evaluation of the control model, the
Group determined that the Group is the principal to transactions for voyage contracts and the related revenue from voyage contracts is
recognized on a gross basis based on the transfer of control to the customer. The Group’s vessel service contracts engage in certain
transactions wherein the Group act as an agent for ship owners. Revenue from these transactions is recorded on a net basis. Net
revenue includes billings to customers less third-party charges, including transportation or handling costs, fees, commissions, taxes
and duties. Revenue
from voyage contracts Under
a voyage contract, the Group is engaged to provide the transportation of cargo between specific ports in return for an ocean freight
payment at an agreed upon freight per ton of cargo. The Group’s voyage contracts generally do not contain cancellation provisions.
A voyage is deemed to commence when a vessel is available for loading and is deemed to end upon the completion of the discharge of the
cargo. For the voyage contracts, the customer simultaneously receives and consumes the benefits provided by the Group’s performance
over the voyage period because of the continuous service to the customer. Customers receive the benefit of our services as the goods
are transported from one location to another. If the Group is unable to complete delivery to the final location, another entity would
not need to reperform the transportation service already performed. As control transfers over time, the Group recognizes revenue ratably
from port of loading to when the charterer’s cargo is discharged based on the relative transit time completed in each reporting
period. For the unfinished voyages, the Group estimates the percentage of completion based on voyage days completed and total estimated
voyage days. Estimated losses on voyages are provided for in full at the time such losses become evident. Voyage expense and other ocean
transportation operating costs are charged to operating costs as incurred. Revenue
from vessel services The
Group contracts with various customers to carry out vessel services for vessels as agents for and on behalf of ship owners. These services
include lease of vessels on behalf of the ship owners and commercial management. As the operator of the vessels, the Group undertakes
to use its best endeavors to provide the agreed vessel services as agents for and on behalf of the ship owners and to protect and promote
the interest of the ship owners in all matters relating to the provision of services. Most of the vessel service agreements have a term
of less than one year and are typically billed on a monthly basis. The vessel service revenue is recorded on a net basis. Net revenue
includes billings to customers, net of voyage operating expenses incurred. The Group transfers control of the service to the customer
and satisfies its performance obligation over the term of the contract, and therefore recognized revenue over the term of the contract. Contract
balances Timing
of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represent amounts invoiced and revenues
recognized prior to invoicing when the Group has satisfied the Group’s performance obligation and has the unconditional rights
to payment. The balances of accounts receivable were $7,582,530 and $983,784 as of October 31, 2024 and 2023, respectively. Contract
liabilities are reflected as advances from customers on the consolidated balance sheet. Contract liabilities relate to payments received
in advance of completion of performance obligations under a contract. Contract liabilities are recognized as revenue upon the fulfillment
of performance obligations. As of October 31, 2024 and 2023, the advances from customers amounted to $5,784,425 and $3,463,413, respectively.
The entire contract liabilities of $3,463,413 as of October 31, 2023 has been recognized as revenue for the year ended October 31, 2024.
The Company expected to recognize the entire contract liabilities as of October 31, 2024 as revenue within the next 12 months. For the years
ended October 31, 2024, 2023 and 2022, the disaggregation of revenue is as follows:
For the For the For the
2024 2023 2022
Ocean freight revenue $ 105,387,225 $ 94,523,562 $ 178,126,765
Vessel services revenue 2,789,458 733,976 7,222,865
Total $ 108,176,683 $ 95,257,538 $ 185,349,630
Voyage
expenses Voyage
expenses include port and canal charges, bunker (fuel) expenses, charter cost and others costs directly associated with voyages. These
amounts are recognized as cost of revenues over the voyage period. Operating
leases The
Group adopted Topic 842 on November 1, 2022 using the modified retrospective transition approach. The Group has lease contracts for shipping
and office space under operating leases. The Group determines whether an arrangement constitutes a lease and records lease liabilities
and right-of-use assets on its consolidated balance sheets at lease commencement. The Group measures its lease liabilities based on the
present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the
lease or its incremental borrowing rate, which is the estimated rate the Group would be required to pay for a collateralized borrowing
equal to the total lease payments over the term of the lease. The Group estimates its incremental borrowing rate based on an analysis
of weighted average interest rate. The Group measures right-of-use assets based on the corresponding lease liability adjusted for payments
made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Group begins recognizing
lease expense when the lessor makes the underlying asset available to the Group. For
leases with lease term less than one year (short-term leases), the Group records operating lease expense in its consolidated statements
of operations on a straight-line basis over the lease term and records variable lease payments as incurred. Government
subsidies The
Group received government subsidies according to related policy from the Singapore government. The Group receives government subsidies
that the Singaporean government has not specified its purpose for and are not tied to future trends or performance of the Group. Receipt
of such subsidy income is not contingent upon any further actions or performance of the Group and the amounts do not have to be refunded
under any circumstances. The unspecific purpose subsidies are recognized as other income (expenses), net upon receipt as further performance
by the Group is not required. For the years ended October 31, 2024, 2023 and 2022, the government subsidies nil Employee
benefits The
full-time employees of the Company’s subsidiary are entitled to staff welfare benefits including medical care, unemployment insurance
and pension benefits, which are government mandated defined contribution plans. These entities are required to accrue for these benefits
based on certain percentages of the employees’ respective salaries, subject to certain ceilings, in accordance with the relevant
regulations, and make cash contributions to the state-sponsored plans out of the amounts accrued. The total amounts for such employee
benefits were $50,842, $54,551 and $56,802 for the years ended October 31, 2024, 2023 and 2022, respectively. Income
taxes The
Group accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized
when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial
statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized. An
uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained
in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on
examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest
incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties
or interest relating to income taxes were incurred for the years ended October 31, 2024, 2023 and 2022. All of the tax returns of the
Company’s subsidiaries in Singapore remain subject to examination by the tax authorities for four years from the date of filing. Earnings
(Loss) per Share The
Group computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC
260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net
income divided by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on a per share
basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning
of the periods presented, or issuance date, if later. Potential Ordinary Shares that have an anti-dilutive effect (i.e., those that increase
income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the years ended October 31, 2024, 2023
and 2022, there were no dilutive shares . Related
parties Related
parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly,
to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies
are also considered to be related if they are subject to common control or common significant influence, such as a family member or relative,
shareholder, or a related corporation. Concentrations
of risks
a. Significant customers For
the year ended October 31, 2024, no customer accounted for more than 10% of the Group’s total revenues. For the year ended October
31, 2023, one customer accounted for approximately 15% of the Group’s total revenues. For the year ended October 31, 2022, no customer
accounted for more than 10% of the Group’s total revenues. As of October 31, 2024, two customers accounted for approximately 23%
and 11% of the Group’s accounts receivable. As of October 31, 2023, three customers accounted for approximately 23%, 17% and 10%
of the Group’s accounts receivable.
b. Significant suppliers For
the years ended October 31, 2024, 2023 and 2022, one related party supplier accounted for approximately 32%, 24% and 42.5% of the Group’s
total purchases, respectively. As of October 31, 2024, two suppliers accounted for approximately 69% and 24% of the Group’s total
accounts payable. As of October 31, 2023, two suppliers accounted for approximately 50% and 46% of the Group’s total accounts payable.
c. Cash and cash equivalents The
Group maintains cash and cash equivalents with various financial institutions in Singapore and management believes these financial institutions
are high credit quality. As of October 31, 2024 and 2023, the aggregate amount of cash and cash equivalents of $6,862,970 and $2,219,973,
respectively, was held at major financial institutions in Singapore, where there is a Singapore Dollar 100,000 (approximately $75,586)
deposit insurance limit for a legal entity’s aggregated balance at each bank. As of October 31, 2024 the total insured balance
was approximately $470,518. Recent
accounting pronouncements The
Group considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews
new accounting standards that are issued. In
October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract
Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize
and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business
combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business
combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Group beginning
November 1, 2024, and are applied prospectively to business combinations that occur after the effective date. The Group does not expect
the adoption of ASU 2021-04 will have a material effect on the consolidated financial statements. In
November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Improvements to Reportable Segment Disclosures
(Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses
that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a
segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM
and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and
deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2024, and interim periods within
fiscal years beginning after December 15, 2024. Early adoption is also permitted. This ASU will result in additional required disclosures
when adopted, where applicable. The Group is currently evaluating the potential impact of adopting this guidance on its financial-statements
and does not expect the adoption of ASU-2023-07 will have a material effect on the consolidated financial statements. In
December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information
about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is
effective on a prospective basis for annual periods beginning after December 15, 2025. Early adoption is also permitted for annual financial
statements that have not yet been issued or made available for issuance. Once adopted, this ASU will result in additional disclosures. In
March 2024, the FASB issued ASU 2024-01, “Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest
and Similar Awards” (“ASU 2024-01”), which intends to improve clarity and operability without changing the existing
guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar
awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the
guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar
awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15,
2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that
have not yet been issued or made available for issuance. The Group is currently evaluating the potential impact of adopting this guidance
on its financial statements. The
Group does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material
effect on the Group’s consolidated balance sheets, statements of operations and comprehensive income (loss) and statements of cash
flows. |
