Supply Chain Council of European Union | Scceu.org
Freight

NOVAGANT CORP MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

You should read the following discussion and analysis of our financial condition
and results of operations together with our consolidated financial statements
and the related notes and the other financial information included elsewhere in
this Form 10-K. Some of the information contained in this discussion and
analysis or set forth elsewhere in this Form 10-K, including information with
respect to our plans and strategy for our business and related financing,
includes forward-looking statements that involve risks and uncertainties. As a
result of many factors, including those factors set forth in the “Risk Factors”
section of this Form 10-K, our actual results could differ materially from the
results described in or implied by these forward-looking statements. See
“Special Note Regarding Forward Looking Statements” above for certain
information concerning those forward-looking statements. Our financial
statements are prepared in U.S. dollars and in accordance with U.S. GAAP.

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Safe Harbor for Forward-Looking Statements

Certain statements included in this MD&A constitute forward-looking statements,
including those identified by the expressions anticipate, believe, plan,
estimate, expect, intend, and similar expressions to the extent they relate to
NVGT or its management. These forward-looking statements are not facts,
promises, or guarantees; rather, they reflect current expectations regarding
future results or events. These forward-looking statements are subject to risks
and uncertainties that could cause actual results, activities, performance, or
events to differ materially from current expectations. These include risks
related to revenue growth, operating results, industry, products, and
litigation, as well as the matters discussed in NVGT’s MD&A under Risk Factors.
Readers should not place undue reliance on any such forward-looking statements.
NVGT disclaims any obligation to publicly update or to revise any such
statements to reflect any change in the Company’s expectations or in events,
conditions, or circumstances on which any such statements may be based, or that
may affect the likelihood that actual results will differ from those set forth
in the forward-looking statements.


Overview


The consolidated statements of profit or loss and other comprehensive income,
consolidated statements of changes in equity and consolidated statements of cash
flows for each of two years ended 31 March 2022 and 2021 include the results,
changes in equity and cash flows of the companies now comprising EFLL for the
relevant years, as if our Company had always been the holding company of EFLL
and the current group structure had been in existence throughout the relevant
years.

The consolidated statement of financial position at 31 March 2020 has been
prepared to present the assets and liabilities of the companies now comprising
EFLL as if the current group structure had been in existence at that date.

Results of Operations and Financial Condition


Business Acquired


On September 21, 2021, the Company entered into a Share Exchange Agreement (the
“Exchange Agreement”) with Ever Full Logistics Limited (“EFLL”) and WeiQun Chen (“Chen”), the sole shareholder of EFLL. Upon the closing of the share exchange
transaction contemplated under the Exchange Agreement, Chen transferred all of
his share capital in EFLL to the Company, thus causing EFLL to become a direct
wholly-owned subsidiary of the Company. The Company now operates all of its
business through EFLL. EFLL is engaged in provision of logistic services.

Management’s Discussion and Analysis and Results of Operations

The following management’s discussion and analysis (“MD&A”) should be read in
conjunction with financial statements of EFLL for the years ended March 31, 2021
and 2020, for the years ended March 31, 2022 and 2021 and for the period from
April 1, 2021 to September 21, 2021 and for the nine months ended December 31,
2020
and the notes thereto.

Results Of Operations During The Year Ended March 31, 2021 As Compared To The
Year Ended March 31, 2020


Revenue


For the year ended March 31, 2021 and 2020, our total revenue amounted to
$160,351 and $270,380. The following table sets out the breakdown of our revenue
by the type of logistics service during the year ended March 31, 2021 and 2020:


                              Year ended 31 March 2021    Year ended 31 March 2020

                                    USD           %             USD           %
Transportation - Air Freight       43,295         27           95,012         35

Transportation - Ocean            117,056         73          175,368         65
Freight

                                  160,351        100          270,380        100



We provide logistics services for Hong Kong customers and arrange the goods to
be sent out from Hong Kong, Korea, Taiwan to Intra-Asia region, Europe and The
US. During the year ended March 31, 2021, our air freight revenue in
transportation has sharply declined to $43,295 comparing from $95,012 for the
year ended March 31, 2020. During the year ended March 31, 2021, our ocean
freight revenue in transportation has sharply declined to $117,056 comparing
from $175,368 for the year ended March 31, 2020. Both decreases in revenue were
due to the outbreak of the COVID-19, where orders from EFLL’s local customers
has been decreased by the result of the less demand for the logistics services.

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Air Freight

For air freight, we will send the booking details and draft airway bill to the
customers for confirmation. Then we will arrange pick of the goods and measure
the correct kilograms for customers confirmation. At last, we will arrange the
goods to the airline for upload to the cargo plane at the airport.


Ocean Freight


Customers will first provide us a booking form and information of the bill of
lading, which includes the shipping details, like details of the products,
destination, carrier and details of the consignee. We will then arrange a pick
up of the goods at the customers’ warehouse by a third party local
transportation provider. We will store the goods at the public warehouse where
we will measure the accurate cubic metres (“CBM”) for final determination of the
correct ocean freight. Upon receipt of the confirmation of the final CBM with
the customers, we will arrange upload of goods to the container at the port and
make sure the shipment arrive the destination port on time. This for Loose
Cargo Load service (“LCL”).

For Full Container Load service, it is more or less the same as LCL, the only
different procedure is that we will arrange the container directly to the
customers’ warehouse for the upload of the goods. We need not measure the CBM as
the customers pay the fee of using the whole container.


Cost of services


Our direct cost of services was mainly in the air/ocean freight service
provision, it has decreased from $168,288 for the year ended March 31, 2020 to
$91,396 for the year ended March 31, 2021. The decrease was due to fewer
business activities, as a result in lower cost of services.


Expenses


For the year ended March 31, 2021, the Company incurred $63,554 of operating
expenses which consisted of general and administrative expenses. The finance
costs was $217. For the year ended March 31, 2020, we incurred operating
expenses in the amount of $89,979 which consisted of general and administrative
expenses. The decrease was due to a decrease in activity, also the rental
expenses has decreased to $883 for the year ended March 31, 2021 and from $6,511
for the year ended March 31, 2020. The decrease was mainly due to a lower cost
policy from the company. Hence, the entertainment has decreased from $12,363 to
$6,464 for the year ended March 31, 2020 and March 31, 2021 respectively. This
was decreased due to fewer business entertainment required.


Net Profit


We reported a net profit of $5.184 and a net income of $12,113 for the years
ended March 31, 2021 and 2020, respectively.

Due to the outbreak of the COVID-19, the import orders from the customers in the
US and in the Europe decreased and the export orders to Southeast Asia also
decreased. Thus, the income decreased significantly during the year March 31,
2021
when compare to the same period of 2020. The cost of services was also
deceased in line with the decrease in the income. However, the gross profits
were slightly increased. The major reason is that the company appointed a new
forwarder and carrier who provided such services at a lower freight rate.

We recorded gross profit margins of approximately 37.76% and 43% for FY2020 and
FY2021, respectively.

Such business is largely affected by factors such as market competition, global
and local economic conditions, market demands for our services, the fuel prices
and other costs of services. Given the logistics industry is highly sensitive to
these factors, it is probable that we may suffer a low or even negative profit
margin due to a decrease in revenue and/or gross profit should the global
economy be adversely affected. As such, there is no assurance that we will be
profitable or be able to maintain positive gross profit margins in the future.
If we are unable to effectively manage our operations and costs, our business,
financial condition and results of operations could be adversely affected.


Liquidity


As of March 31, 2021, we had $36,100 bank balances and cash on hand, $1,341 in
deposits, and current liabilities of $20,203. As of Mar 31, 2020, we had $27,823
bank balances and cash on hand, and current liabilities of $17,955.

To the extent that our capital resources are insufficient to meet planned
operating requirements, we will seek additional funds through equity or debt
financing, collaborative or other arrangements with corporate partners,
licensees or others, and from other

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sources, which may have the effect of diluting the holdings of existing
shareholders. The Company has no current arrangements with respect to, or
sources of, such additional financing and we do not anticipate that existing
shareholders will provide any portion of our future financing requirements.

No assurance can be given that additional financing will be available when
needed or that such financing will be available on terms acceptable to the
Company. If adequate funds are not available, we may be required to delay or
terminate expenditures for certain of its programs that it would otherwise seek
to develop and commercialize. This would have a material adverse effect on the
Company.

Off-Balance Sheet Arrangements

As of March 31, 2021 and 2020, we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated
under the Securities Act of 1934.

We do not have any interest in any unconsolidated entity that provides
financing, liquidity, market risk or credit support to us or engages in leasing
or hedging or research and development or other services with us.


Critical Accounting Policies


Our significant accounting policies are described in the notes to our financial
statements for the year ended March 31, 2021 and 2020, and are included
elsewhere in this Form 10-K.

Results Of Operations During The Years Ended March 31, 2022 As Compared To The
Years Ended March 31, 2021


Revenue


For the years ended March 31, 2022 and 2021, our total revenue amounted to
$104,512 and $160,351. During the years ended March 31, 2022 and 2021, our
revenue in transportation has decreased to $104,512 from $160,351. The decrease
was because of fewer orders in transportation. The following table sets out the
breakdown of our revenue by the type of logistics service during the years ended
March 31, 2022 and 2021:


                              Year ended March 31 2022    Year ended March 31 2021

                                    USD           %             USD           %
Transportation - Air Freight       16,722         16           43,295         27

Transportation - Ocean             87,790         84          117,056         73
Freight

                                  104,512        100          160,351        100



We provide logistics services for Hong Kong customers and arrange the goods to
be sent out from Hong Kong, Korea, Taiwan to Intra-Asia region, Europe and The
US. During the year ended March 31, 2022, our air freight revenue in
transportation has decreased to $16,722 comparing from $43,295 for the year
ended March 31, 2021. The decreases in revenue were mainly due to less demand
for Air Freight services from our customers. In addition, during the year ended
March 31, 2022, our ocean freight revenue in transportation has declined to
$87,790 comparing from $117,056 for the year ended March 31, 2021. The decreases
in revenue were due to the outbreak of the COVID-19, where orders from EFLL’s
local customers have been decreased by the result of the less demand for the
logistics services.


Air Freight


For air freight, we will send the booking details and draft airway bill to the
customers for confirmation. Then we will arrange pick of the goods and measure
the correct kilograms for customers confirmation. At last, we will arrange the
goods to the airline for upload to the cargo plane at the airport.


Ocean Freight


Customers will first provide us a booking form and information of the bill of
lading, which includes the shipping details, like details of the products,
destination, carrier and details of the consignee. We will then arrange a pick
up of the goods at the customers’ warehouse by a third party local
transportation provider. We will store the goods at the public warehouse where
we will measure the accurate cubic metres (“CBM”) for final determination of the
correct ocean freight. Upon receipt of the confirmation of the final CBM with
the customers, we will arrange upload of goods to the container at the port and
make sure the shipment arrive the destination port on time. This for Loose
Cargo Load service (“LCL”).

——————————————————————————–

                                       36

——————————————————————————–

——————————————————————————–

For Full Container Load service, it is more or less the same as LCL, the only
different procedure is that we will arrange the container directly to the
customers’ warehouse for the upload of the goods. We need not measure the CBM as
the customers pay the fee of using the whole container.


Cost of services


Our direct cost of services was mainly in the air/ocean freight service
provision, it has decreased from $91,396 for the year ended March 31, 2021 to
$75,789 for the year ended March 31, 2022. The decrease was mainly attributed to
lower demand for services provided by the air and ocean freight service
providers due to the outbreak of the COVID-19.


Expenses


For the year ended March 31, 2022, the Company incurred $3,673,361 of operating
expenses which consisted of general and administrative expenses of $3,241,048
and marketing expenses of $432,313. For the year ended March 31, 2021, we
incurred operating expenses in the amount of $63,554 which consisted of general
and administrative expenses of $63,554 and zero marketing expenses. The rapid
increase was primarily caused by the share based payment for some of our
employees during the period. Novagant, the public entity, had no operations from
April 2021 through December 31, 2021. All business activity occurred within
EFLL, which was acquired on September 21, 2021.


Net Loss


For the year ended March 31, 2022 we had a net loss of $3,644,752. By contrast,
we had a net income of $5,184 for the year ended March 31, 2021. The result of
loss was due to some restricted shares issued to 6 service providers and 15
employees as compensation in lieu of cash for services during the period.


Liquidity


As of March 31, 2022, we had $51,056 in deposits, accounts receivable and cash
and cash equivalents, and current liabilities of $277,673. As of March 31, 2021,
we had $37,441 in deposits, accounts receivables and cash and cash equivalents,
and current liabilities of $57,644.

To the extent that our capital resources are insufficient to meet planned
operating requirements, we will seek additional funds through equity or debt
financing, collaborative or other arrangements with corporate partners,
licensees or others, and from other sources, which may have the effect of
diluting the holdings of existing shareholders. The Company has no current
arrangements with respect to, or sources of, such additional financing and we do
not anticipate that existing shareholders will provide any portion of our future
financing requirements.

No assurance can be given that additional financing will be available when
needed or that such financing will be available on terms acceptable to the
Company. If adequate funds are not available, we may be required to delay or
terminate expenditures for certain of its programs that it would otherwise seek
to develop and commercialize. This would have a material adverse effect on the
Company.

Off-Balance Sheet Arrangements

As of March 31, 2022 and 2021, we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated
under the Securities Act of 1934.

We do not have any interest in any unconsolidated entity that provides
financing, liquidity, market risk or credit support to us or engages in leasing
or hedging or research and development or other services with us.


Critical Accounting Policies


Our significant accounting policies are described in the notes to our financial
statements for the year ended March 31, 2022 and 2021, and are included
elsewhere in this Form 10-K.

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Results Of Operations For the period from April 1, 2021 to September 21, 2021 As
Compared To The Nine Months Ended December 31, 2020


Revenue


For the period from April 1, 2021 to September 21, 2021 and nine months ended
December 31, 2020, our total revenue amounted to $34,115 and $81,582. During the
period from April 1, 2021 to September 21, 2021 and nine months ended December
31, 2020
, our revenue in transportation has decreased to $34,115 from $81,582.
The decrease was because of less orders in transportation.


Cost of services


Our direct cost of services was mainly in the air/ocean freight service
provision, it has decreased from $45,363 for the nine months ended December 31,
2020
to $24,642 for the period from April 1, 2021 to September 21, 2021. The
decrease was in line with the decrease in revenue.


Expenses


For the period from April 1, 2021 to September 21, 2021, the Company incurred
$24,640 of operating expenses which consisted of general and administrative
expenses of $24,563 and finance costs of $77. For the nine months ended December
31, 2020
, we incurred operating expenses in the amount of $49,281 which
consisted of general and administrative expenses of $49,118 and finance costs of
$163. The decrease is due to the decrease in activity. Novagant, the public
entity, had no operations from April 2021 through September 30, 2021. All
business activity occurred within EFLL, which was acquired on September 21,
2021
.



Net Loss



For the period from April 1, 2021 to September 21, 2021 we had a net loss of
$15,167. We had net loss of $13,062 for the nine months ended December 31, 2020.
The decrease is due to the decrease in business activity during the period.


Liquidity


As of September 30, 2021, we had $38,223 in deposits, accounts receivable and
cash and cash equivalents, and current liabilities of $70,408. As of December
31, 2020
, we had $37,168 in deposits, accounts receivables and cash and cash
equivalents, and current liabilities of $77,210.

To the extent that our capital resources are insufficient to meet planned
operating requirements, we will seek additional funds through equity or debt
financing, collaborative or other arrangements with corporate partners,
licensees or others, and from other sources, which may have the effect of
diluting the holdings of existing shareholders. The Company has no current
arrangements with respect to, or sources of, such additional financing and we do
not anticipate that existing shareholders will provide any portion of our future
financing requirements.

No assurance can be given that additional financing will be available when
needed or that such financing will be available on terms acceptable to the
Company. If adequate funds are not available, we may be required to delay or
terminate expenditures for certain of its programs that it would otherwise seek
to develop and commercialize. This would have a material adverse effect on the
Company.

Off-Balance Sheet Arrangements

As of September 30, 2021 and December 31, 2020, we did not have any off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K
promulgated under the Securities Act of 1934.

We do not have any interest in any unconsolidated entity that provides
financing, liquidity, market risk or credit support to us or engages in leasing
or hedging or research and development or other services with us.


Critical Accounting Policies


Our significant accounting policies are described in the notes to our financial
statements for the period from April 1, 2021 to September 21, 2021 and for the
nine months ended December 31, 2020, and are included elsewhere in this Form
10-K.

© Edgar Online, source Glimpses

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