Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this quarterly report on Form 10-Q.
Forward-Looking Statements
This quarterly report on Form 10-Q contains “forward-looking statements.” All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to: any projections of earnings, revenue, or other financial items; any statements regarding the adequacy, availability, and sources of capital, any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan,” “project,” or “anticipate,” and other similar words. In addition to any assumptions and other factors and matters referred to specifically in connection with such forward-looking statements, factors that could cause actual results or outcomes to differ materially from those contained in the forward-looking statements include those factors set forth in “Item 1A. Risk Factors” included in our annual report on Form 10-K (File No. 001-41761) (the “Annual Report”), which was filed with the SEC on March 12, 2025.
Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed in this quarterly report. We do not intend, and undertake no obligation, to update any forward-looking statement, except as required by law.
The information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes included in this quarterly report on Form 10-Q, and the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Annual Report.
Business Overview and Recent Developing Trends
We are a provider of logistics and warehousing services, historically in connection with the sale of parallel-import vehicles sourced in the U.S. to be sold in the PRC market, and more recently for the transportation of other goods between the U.S. and the PRC. Parallel-import vehicles in the PRC refer to automobiles purchased directly from overseas markets and imported for sale outside of the brand manufacturers’ official distribution networks.
Between 2016 and the first half of 2022, the Company experienced growth in sales volume and gross profit due to favorable market conditions. Beginning in the second half of 2023, the business was negatively affected by a decline in customer demand due to weakening macroeconomic conditions, price competition from luxury automakers in the PRC, and a shift in consumer preference toward domestic EVs. These market challenges led to a decline in parallel-import vehicle sales by 30.5% in 2023, and 95.7% in 2024, with vehicle sales declining to 14 units in 2024 from 2023 units in 2023. In addition, the Company recorded a credit loss of $1.6 million for the year ended December 31, 2024, due to the increasing difficulty in collecting outstanding receivables.
On March 3, 2025, the Company’s board of directors approved the discontinuation of the Company’s parallel-import vehicle business. In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, all financial results associated with this business have been reclassified as discontinued operations in the accompanying consolidated financial statements for all periods presented. For additional financial details regarding discontinued operations, refer to Note 5 – Discontinued Operations.
The Company shifted its business focus since February 2024 by acquiring Edward to provide services related to international trades between the PRC and the U.S., and relocating its headquarter in July 2024 to Irvine, California, to utilize the ports of Los Angeles and Long Beach. The Company further expanded into labor and logistics service by acquiring TWEW in December 2024.
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The Company completed its test of goodwill related to acquisition of Edward as of September 30, 2025. Due to the qualitative assessment on the market conditions on logistic and warehousing business and the quantitative analysis on the five-year discounted cash flow, the Company concluded the estimated fair value of Edward as a single reporting unit of logistics and warehousing business was smaller than its carrying amount. As a result, impairment of $731,307 was recognized for the three-month period ended September 30, 2025.
Additionally, on December 19, 2024, we acquired 100% membership interest of NexTrade, a Delaware limited liability company for the consideration of $1. As of the date of this quarterly report, NexTrade has not been engaged in any business operations.
Further, on March 28, 2025, we incorporated a wholly owned subsidiary, Cheetah BVI, in the British Virgin Islands. The incorporation of Cheetah BVI is intended to support our future international business development and facilitate potential global partnerships. As of the date of this quarterly report, Cheetah BVI has not commenced operations.
Reverse Stock Split
On September 30, 2024, our stockholders approved our fourth amended and restated articles of incorporation, which authorizes a reverse stock split of the issued shares of our common stock, par value $0.0001 per share, at a ratio ranging from 1-for-10 to 1-for-30, as determined at the discretion of our board of directors. On October 7, 2024, our board of directors approved a reverse stock split of our common stock at a ratio of 1-for-16. On October 21, 2024, we effectuated a reverse stock split of our common stock at a ratio of 1-for-16. Following such reverse split, each 16 shares of our common stock outstanding were automatically combined into one new share of common stock. No fractional shares were issued in connection with the reverse split; any fractional shares resulting from the reverse split were rounded up to the nearest whole share. The par value per share of our common stock remained unchanged. Our Class A common stock started trading on a post-split basis on October 24, 2024, at which time the Class A common stock was assigned a new CUSIP number (16307X202).
Dissolution of Subsidiaries
During the quarter ended June 30, 2025, the Company dissolved two wholly owned subsidiaries, Cheetah Net Logistics LLC and Pacific Consulting LLC, as part of an internal corporate restructuring. Both entities were previously organized under the laws of the State of New York and were formally dissolved on June 24, 2025.
Risks and Uncertainties
The Company is undergoing a business transformation of our business model. As a company located in the U.S. and doing business with the PRC, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the U.S. and the PRC, as well as by the general state of the U.S. and the PRC economies. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in the U.S. and the PRC.
Risks and uncertainties related to the Company’s business include, but are not limited to, the following:
● The business shift from parallel-import vehicle sales to logistics and warehousing services may depend on factors from the business environment to operation management and market expansion;
● The government policies on ocean freight business and tariff policy may reduce the market demand for the freight, logistics, and warehousing business, and thus negatively affect our business and growth prospects;
● Our logistics and warehousing business depend highly on the limited customers and third-party transportation and labor providers;
● The competition of logistics and warehousing industry dependent on factors such as service quality, speed reliability, and pricing may limit our expanding non-vehicle logistics warehousing revenue, and our success in these areas will depend on our ability to develop and scale an effective salesforce to market these services to international trading companies in the U.S. and the PRC; and
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● Recent changes in U.S. and international trade policies and tariffs on imports and exports, particularly the trade tensions between China and the United States have been intensified and may become worse in the future, resulting in the imposition of more tariffs or other trade restrictions, and may adversely impact our business and operating results.
The Company’s business, financial condition, and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics, and other catastrophic incidents, which could significantly disrupt the Company’s operations.
Results of Operations
The following table provides a summary of our consolidated results of operations for the three and nine months ended September 30, 2025 and 2024, highlighting the financial impact of both continuing and discontinued operations:
Three Months Ended September 30,
Change
Nine Months Ended September 30,
Change
2025
2024
Amount
%
2025
2024
Amount
%
USD
%
USD
%
USD
%
USD
%
Revenues
$
361,935
100.0
%
$
61,208
100.0
%
$
300,727
491.3
%
$
1,195,860
100.0
%
$
231,605
100.0
%
$
964,255
416.3
%
Cost of Revenues
317,757
87.8
%
31,339
51.2
%
286,418
913.9
%
1,060,526
88.7
%
119,437
51.6
%
941,089
787.9
%
Gross Profit
44,178
12.2
%
29,869
48.8
%
14,309
47.9
%
135,334
11.3
%
112,168
48.4
%
23,166
20.7
%
General and administration expenses
801,263
221.4
%
1,102,454
1,801.2
%
(301,191)
(27.3)
%
2,607,087
218.0
%
2,735,450
1,181.1
%
(128,363)
(4.7)
%
Impairment loss expenses
731,307
202.1
%
—
—
%
731,307
N/A
%
731,307
61.2
%
—
—
%
731,307
N/A
%
Share-based compensation expenses
76,087
21.0
%
261,666
427.5
%
(185,579)
(70.9)
%
102,716
8.6
%
261,666
113.0
%
(158,950)
(60.7)
%
Interest income, net
236,927
65.5
%
80,025
130.7
%
156,902
196.1
%
700,373
58.6
%
120,589
52.1
%
579,784
480.8
%
Other income, net
12,902
3.6
%
35
0.1
%
12,867
36,762.9
%
42,658
3.6
%
809
0.3
%
41,849
5,172.9
%
(Loss) from continuing operations before tax provision
(1,314,650)
(363.2)
%
(1,254,191)
(2,049.1)
%
(60,459)
(4.8)
%
(2,562,745)
(214.3)
%
(2,763,550)
(1,193.2)
%
200,805
(7.3)
%
Income tax (benefits)
—
—
%
(559,980)
(914.9)
%
559,980
(100.0)
%
18,342
1.5
%
(1,052,969)
(454.6)
%
1,071,311
(101.7)
%
Loss from continuing operations
(1,314,650)
(363.2)
%
(694,211)
(1,134.2)
%
(620,439)
89.4
%
(2,581,087)
(215.8)
%
(1,710,581)
(738.6)
%
(870,506)
50.9
%
Loss from discontinued operations, net of tax
—
—
%
(1,121,081)
(1,831.6)
%
1,121,081
(100.0)
%
—
—
%
(1,326,521)
(572.8)
%
1,326,521
(100.0)
%
Net Loss
$
(1,314,650)
(363.2)
%
$
(1,815,292)
(2,965.8)
%
$
500,642
(27.6)
%
$
(2,581,087)
(215.8)
%
$
(3,037,102)
(1,311.3)
%
$
456,015
(15.0)
%
Comparison of the Three Months Ended September 30, 2025 and 2024
Continuing Operations-Logistics and Warehousing Services
Revenues
For the Three Months Ended September 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
USD
%
USD
%
Revenues
Revenues from Edward
$
41,935
11.6
%
$
61,208
100.0
%
$
(19,273)
(31.5)
%
Revenues from TWEW
320,000
88.4
%
—
—
%
$
320,000
N/A
Total revenues
$
361,935
100.0
%
$
61,208
100.0
%
$
300,727
491.3
%
For the three months ended September 30, 2025, we reported revenue of $361,935 from logistics and warehousing services segment, including $41,935, or 11.6%, of our total revenue from Edward, which we acquired in February 2024, and $320,000, or 88.4%, of our total revenue from TWEW, which we acquired in December 2024.
Revenue from Edward decreased by 31.5% to $41,935 for the three months ended September 30, 2025, compared to $61,208 for the same period in 2024. The decrease was primarily due to the lingering impact of trade war between China and the U.S., which resulted in reduced customer demand and shipment volume during the third quarter of 2025. Although trade flows stabilized following the resumption of trade negotiations between the two countries, shipment volume in the third quarter of 2025 did not return to prior-year levels due to continued uncertainty surrounding U.S.-China trade policy and more conservative ordering patterns by customers.
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We will continue to focus on improving operational efficiencies and expanding our market presence of the two acquired businesses in the California area.
Cost of Revenues
For the Three Months Ended September 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
USD
%
USD
%
Cost of Revenues
Cost of Revenues from Edward
$
27,757
8.7
%
$
31,339
100.0
%
$
(3,582)
(11.4)
%
Cost of Revenues from TWEW
290,000
91.3
%
—
—
$
290,000
N/A
Total cost of revenues
$
317,757
100.0
%
$
31,339
100.0
%
$
286,418
467.9
%
For the three months ended September 30, 2025, total cost of revenues increased to $317,757 from $31,339 for the same period in 2024, representing an increase of $286,418, or 467.9%, primarily due to the contribution from TWEW. Cost of revenues attributable to TWEW was $290,000, representing 91.3% of total cost of revenues in the third quarter of 2025.
Cost of revenues from Edward was $27,757, or 8.7% of total cost of revenues for the three months ended September 30, 2025, compared to $31,339 for the same period in 2024, representing a decrease of $3,582, or 11.4%, consistent with the corresponding decline in revenue from Edward.
Cost of revenues is mainly labor costs for TWEW and ocean freight service costs for Edward.
Operating Expenses
General and Administrative Expenses
Three Months Ended September 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
General and Administrative Expenses
Payroll and Benefits
$
292,174
$
399,389
$
(107,215)
(26.8)
%
Rental and Leases
202,478
168,739
33,739
20.0
%
Travel and Entertainment
24,712
57,717
(33,005)
(57.2)
%
Legal and Accounting Fees
110,941
152,828
(41,887)
(27.4)
%
Insurance Expenses
49,858
74,180
(24,322)
(32.8)
%
Depreciation and Amortization Expenses
37,953
22,954
14,999
65.3
%
Recruiting Expenses
2,509
60,497
(57,988)
(95.9)
%
Others
80,638
166,150
(85,512)
(51.5)
%
Total General and Administrative Expenses
$
801,263
$
1,102,454
$
(301,191)
(27.3)
%
General and administrative expenses for the Company’s continuing operations decreased by $301,191, or 27.3%, to $801,263 for the three months ended September 30, 2025 from $1,102,454 for the three months ended September 30, 2024. The decrease was mainly due to (i) a decrease of $107,215 in payroll and benefits expense due to staff optimization and cost-saving measures, (ii) a decrease of $57,988 in recruiting expenses during the three months ended September 30, 2025, as the prior-year period included significant hiring expenses associated with the launch of our logistics and warehousing segment, (iii) a decrease of $41,887 in legal and accounting fees as we incurred additional professional fees for preparing registration statements on Form S-3 and Form S-8 during the quarter ended September 30, 2024, (iv) a decrease of $33,005 in travel and entertainment expenses related to business development efforts and client engagement, (v) a decrease of $24,322 in insurance expenses resulting from a change in our insurance provider, and (vi) a decrease of $85,512 in other miscellaneous general and administration expenses during the three months ended September 30, 2025, partially offset by (vii) an increase of 33,739 in rental and leases, which was primarily due to the relocation of our headquarters to California in July 2024, and (ⅷ) an increase of $14,999 in depreciation and amortization expenses, primarily due to the acquisition of new fixed assets and recorded intangible assets from Edward and TWEW acquisitions.
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Impairment loss expenses
Three Months Ended September 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
Impairment loss expenses
Edward-Customer Relationships
$
135,346
$
—
$
135,346
N/A
Edward-Trade Names
27,429
—
27,429
N/A
Edward-Goodwill
568,532
—
568,532
N/A
Total impairment loss expenses
$
731,307
$
—
$
731,307
N/A
Management conducted an impairment assessment of goodwill and intangible assets associated with the Edward acquisition in accordance with ASC 350, Intangibles—Goodwill and Other. The Company utilized a DCF model to estimate the fair value of the reporting unit, taking into consideration projected revenues, operating margins, terminal value assumptions, and a discount rate reflecting the risks of the underlying cash flows.
Impairment loss expenses were $731,307 and nil for the three months ended September 30, 2025 and 2024, respectively.
Share-based compensation expenses
Three Months Ended September 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
Share-based compensation expenses
$
76,087
$
261,666
$
(185,579)
(70.9)
Share-based compensation expenses were $76,087 and $261,666 for the three months ended September 30, 2025 and 2024, respectively, representing a decrease of $185,579, or 70.9%.
For the three months ended September 30, 2025, share-based compensation expenses were $76,087, consisting of (i) $77,875 resulting from the newly issued 43,750 shares granted and vested immediately on September 30, 2025, and (ii) a decrease of $1,788 related to forfeited shares and adjustments during the quarter ended September 30, 2025.
For the three months ended September 30, 2024, share-based compensation expenses consisted of $261,666 from the 150,000 shares granted and vested immediately on September 30, 2024, which led to a higher one-time expense during the third quarter of 2024.
See Note 11 – Stock Based Compensation for more details.
Other Income (Expenses), net
Three Months Ended September 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
Interest income
$
244,776
$
88,460
$
156,316
176.7
%
Interest expenses:
Loan Interest expense
(6,594)
(7,028)
434
(6.2)
%
Credit Card Interest
(385)
(3)
(382)
12,733.3
%
Premium Finance Interest
(870)
(1,404)
534
(38.0)
%
Total Interest expenses
(7,849)
(8,435)
586
(6.9)
%
Other income, net
12,902
35
12,867
36,762.9
%
Total other income, net
$
249,829
$
80,060
$
169,769
212.1
%
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Interest income from continuing operations was $244,776 for the three months ended September 30, 2025, compared to $88,460 for the three months ended September 30, 2024, representing an increase of $156,316, or 176.7%. The significant increase was primarily driven by interest earned on short-term loan receivables and certificates of deposit, funded by the net proceeds from the Company’s public offerings closed in May and July 2024.
Interest expense incurred from our continuing operations was $7,849 for the three months ended September 30, 2025, which slightly decreased by $586, or 6.9%, from $8,435 for the three months ended September 30, 2024, mainly due to decreased loan interest expenses.
Income Tax (Benefits)
Our income tax provision for continuing operations was nil for the three months ended September 30, 2025, compared with income tax benefits of approximately $559,980 for the same period in 2024.
Net Loss
As a result of the above factors, we had a net loss of $1,314,650 from our continuing operations for the three months ended September 30, 2025, compared to a net loss of $694,211 for the same period of 2024.
Discontinued Operations -Parallel- Import vehicle Business
As disclosed in Note 5 – Discontinued Operations, our Board approved the discontinuation of our parallel-import vehicle business on March 3, 2025. The Company fully exited its parallel-import vehicle business during the year ended December 31, 2024. In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, the following discussion provides an overview of the operating results of discontinued operations during the third quarter of 2024.
Discontinued Operations- Parallel -Import Vehicles Business
For the three months ended September 30, 2025 and 2024, the Company generated no revenue, cost of revenue or selling expenses from this discontinued business.
Interest Expenses
The table below presents interest expenses for the three months ended September 30, 2024:
September 30,
2024
(Unaudited)
Interest Expenses
Line of Credit
6,430
Total interest expenses
$
6,430
Total interest expenses on line of credit charges were $6,430 for the three months ended September 30, 2024.
Net loss for the discontinued operations was approximately $1,121,081 for the three months ended September 30, 2024.
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Comparison of the Nine Months Ended September 30, 2025 and 2024
Revenues
For the Nine Months Ended September 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
USD
%
USD
%
Revenues
Revenues from Edward
$
157,134
13.1
%
$
231,605
100.0
%
$
(74,471)
(32.2)
%
Revenues from TWEW
1,038,726
86.9
%
—
—
$
1,038,726
N/A
Total revenues
$
1,195,860
100.0
%
$
231,605
100.0
%
$
964,255
416.3
%
For the nine months ended September 30, 2025, we reported revenue of $1,195,860 from logistics and warehousing services segment, including $157,134, or 13.1%, of our total revenue from Edward, which we acquired in February 2024, and $1,038,726, or 86.9%, of our total revenue from TWEW, which we acquired in December 2024.
Revenue from Edward decreased by 32.2%, primarily due to the lingering impact of trade war between China and the United State, which resulted in reduced customer demand and shipment volumes during the third quarter of 2025. Although trade flows stabilized following the resumption of trade negotiations between the two countries, shipment volumes in the third quarter of 2025 did not return to prior-year levels due to continued uncertainty surrounding U.S.-China trade policy and more conservative ordering patterns by customers.
The Company has taken proactive measures to navigate the business by increasing labor and logistics service business during the nine months ended September 30, 2025.
We will continue to focus on improving operational efficiencies and expanding our market presence of the two acquired businesses in the California area.
Cost of Revenues
For the Nine Months Ended September 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
USD
%
USD
%
Cost of Revenues
Cost of Revenues from Edward
$
95,364
9.0
%
$
119,437
100.0
%
$
(24,073)
(20.2)
%
Cost of Revenues from TWEW
965,162
91.0
%
—
—
$
965,162
N/A
Total cost of revenues
$
1,060,526
100.0
%
$
119,437
100.0
%
$
941,089
787.9
%
For the nine months ended September 30, 2025, total cost of revenues increased to $1,060,526 from $119,437 for the same period in 2024, representing an increase of $941,089, or 787.9%, primarily due to the contribution from TWEW. Cost of revenues attributable to TWEW was $965,162, representing 91.0% of total cost of revenues during the nine months ended September 30, 2025.
Cost of revenues from Edward was $95,364, or 9.0% of total cost of revenues for the nine months ended September 30, 2025, compared to $119,437 for the same period in 2024, representing a decrease of $24,073, or 20.2%, consistent with the corresponding decline in revenue from Edward.
Cost of revenues is mainly labor costs for TWEW and ocean freight service cost for Edward.
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Operating Expenses
General and Administrative Expenses
Nine Months Ended September 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
General and Administrative Expenses
Payroll and Benefits
$
908,448
$
931,679
$
(23,231)
(2.5)
%
Rental and Leases
618,736
336,291
282,445
84.0
%
Travel and Entertainment
86,759
85,162
1,597
1.9
%
Legal and Accounting Fees
453,904
658,890
(204,986)
(31.1)
%
Insurance Expenses
187,398
248,619
(61,221)
(24.6)
%
Depreciation and Amortization Expenses
113,860
52,376
61,484
117.4
%
Recruiting Expenses
8,983
145,581
(136,598)
(93.8)
%
Others
228,999
276,852
(47,853)
(17.3)
%
Total General and Administrative Expenses
$
2,607,087
$
2,735,450
$
(128,363)
(4.7)
%
General and administrative expenses for the Company’s continuing operations decreased by $128,363, or 4.7%, to $2.6 million for the nine months ended September 30, 2025 from $2.7 million for the nine months ended September 30, 2024, primarily due to (i) a decrease of $204,986 in legal and accounting fees, primarily because the prior period included additional professional fees related to the preparation of registration statements on Form S-1, Form S-3, and Form S-8 during the first three quarters of 2024, which did not recur in the current period, (ii) a decrease of $136,598 in the recruiting expenses during the nine months ended September 30, 2025, as the prior-year period included significant hiring efforts associated with the launch of the Company’s logistics and warehousing segment, (iii) a decrease of $61,221 in insurance expenses resulting from a change in our insurance provider, (iv) a decrease of $47,853 in other miscellaneous general and administration expenses during the nine months ended September 30, 2025, and (v) a decrease of $23,231 in personnel-related expenses due to staff optimization and cost-saving measures, partially offset by (vi) an increase of $282,445 in rental and leases following the acquisition of Edward and the relocation of the Company’s headquarters to California in July 2024, (vii) an increase of $61,484 in depreciation and amortization expenses, primarily due to the acquisition of fixed assets and recorded intangible assets from Edward and TWEW acquisitions, and (viii) an increase of $1,597 in travel and entertainment expenses as part of business development efforts and client engagement.
Impairment loss expenses
Nine Months Ended September 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
Impairment loss expenses
Edward-Customer Relationships
$
135,346
$
—
$
135,346
N/A
Edward-Trade Names
27,429
—
27,429
N/A
Edward-Goodwill
568,532
—
568,532
N/A
Total impairment loss expenses
$
731,307
$
—
$
731,307
N/A
Management conducted an impairment assessment of goodwill and intangible assets associated with the Edward acquisition in accordance with ASC 350, Intangibles—Goodwill and Other. The Company utilized a DCF model to estimate the fair value of the reporting unit, taking into consideration projected revenues, operating margins, terminal value assumptions, and a discount rate reflecting the risks of the underlying cash flows.
Impairment loss expenses were $731,307 and nil for the nine months ended September 30, 2025 and 2024, respectively.
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Share-based compensation expenses
Nine Months Ended September 30,
2025
2024
Amount
%
(Unaudited)
(Unaudited)
Share-based compensation expenses
$
102,716
$
261,666
$
(158,950)
(60.7)
%
Share-based compensation expenses were $102,716 and $261,666 for the nine months ended September 30, 2025 and 2024, respectively, representing a decrease of $158,950, or 60.7%.
For the nine months ended September 30, 2025, share-based compensation expenses were $102,716, consisting of (i) $77,875 resulting from the newly issued 43,750 shares granted and vested immediately on September 30, 2025, and (ii) $24,841 related to the non-vested shares granted on September 30, 2025.
For the nine months ended September 30, 2024, share-based compensation expenses consisted of $261,666 from the 150,000 shares granted and vested immediately on September 30, 2024, which led to a higher one-time expense during the third quarter of 2024.
See Note 11 – Stock Based Compensation for more details.
Other Income (Expenses), net
Nine Months Ended September 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
Interest income
$
725,094
$
145,631
$
579,463
397.9
%
Interest expenses:
Loan Interest expense
(20,000)
(22,590)
2,590
(11.5)
%
Credit Card Interest
(847)
(52)
(795)
1,528.8
%
Premium Finance Interest
(3,874)
(2,400)
(1,474)
64.4
%
Total Interest expenses
(24,721)
(25,042)
321
(1.3)
%
Other income, net
42,658
809
41,849
5,172.9
%
Total other income net
$
743,031
$
121,398
$
621,633
512.1
%
Interest income from continuing operations was $725,094 for the nine months ended September 30, 2025, compared to $145,631 for the nine months ended September 30, 2024, representing an increase of $579,463, or 397.9%. The significant increase was primarily driven by interest earned on short-term loan receivables and certificates of deposit, funded by the net proceeds from the Company’s public offerings closed in May and July 2024.
Interest expense incurred from our continuing operations was $24,721 for the nine months ended September 30, 2025, which slightly increased by $321, or 1.3%, from $25,042 for the nine months ended September 30, 2024, mainly due to an increased Premium Finance interest for D&O Insurance, partially offset by the decreased interest for long-term loans.
Income Tax (Benefits)
Our income tax provision for continuing operations was $5,200 for the nine months ended September 30, 2025, compared with income tax benefits of approximately $1,052,969 for the same period in 2024.
The consolidated statement of operations reflects income tax expense of approximately $18,342 for the nine months ended September 30, 2025, which includes the current quarter provision of $5,200, and approximately $13,142 of tax payments related to prior periods and acquisition-related tax filings upon the filing of 2024 tax returns in April 2025. These additional amounts primarily consist of: (i) $2,155 of tax obligations owed by the Company for the 2024 tax year, (ii) $1,101 of pre-acquisition tax obligations of Edward, and (iii) $9,886 of pre-acquisition tax obligations of TWEW. These payments do not impact the Company’s estimated annual effective tax rate for 2025.
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Net Loss
As a result of the above factors, we had a net loss of $2,581,087 from our continuing operations for the nine months ended September 30, 2025, compared to a net loss of $1,710,581 for the same period of 2024.
Discontinued Operations- Parallel -Import vehicle Business
As disclosed in Note 5 – Discontinued Operations, our Board approved the discontinuation of our parallel-import vehicle business on March 3, 2025. The Company fully exited its parallel-import vehicle business during the year ended December 31, 2024. In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, the following discussion provides an overview of the operating results of discontinued operations during the nine months ended September 30, 2024.
The following table summarizes the operating results of our discontinued operations for the nine months ended September 30, 2024:
Nine Months Ended September 30,
2024
(Unaudited)
Revenue
U.S. domestic market
$
200,297
Overseas market
1,430,951
Total Revenue
$
1,631,248
Cost of Revenue
Cost of vehicle
$
1,515,270
Fulfilment expense
140,798
Total Cost of Revenue
$
1,656,068
Gross loss
$
(24,820)
During the nine months ended September 30, 2024, we generated revenue of $1.6 million from the parallel-vehicle business. Only 14 units of vehicles were sold following the significant downturn of parallel-import vehicle business as described in “—Business Overview and Recent Developing Trends.”
We also reported cost of revenue of 1.7 million, mainly the fulfillment expenses, and a gross loss of $24,820 of the discontinued business for the nine months ended September 30, 2024.
Selling Expenses for Discontinued Operations
The following table presents selling expenses for the discontinued operations:
Nine Months Ended September 30,
2024
(Unaudited)
Selling Expenses
Payroll and benefits
$
77,652
Ocean freight
20,610
Other selling expenses
19,557
Total selling expenses
$
117,819
Total selling expenses for the discontinued parallel-import vehicle business was $117,819 for the nine months ended September 30, 2024.
Allowance of credit loss of accounts receivables
Total allowance of credit loss of accounts receivable for the discontinued parallel-import vehicle business was $1,095,094 for the nine months ended September 30, 2024.
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Interest Expenses
The table below presents interest expenses for the nine months ended September 30, 2024:
September 30,
2024
(Unaudited)
Interest Expenses
LC Financing
23,123
Line of Credit
65,665
Total interest expenses
$
88,788
Total interest expenses on LC financing and line of credit charges were $88,788 for the nine months ended September 30, 2024.
Net loss for the discontinued operations was approximately $1,326,521 for the nine months ended September 30, 2024.
Liquidity and Capital Resources
Historically, our primary uses of cash have been to finance the working capital needs. We believe that we will be able to fund current operations and other commitments for at least the next 12 months from operating cash flow and proceeds from the capital infusion which were held in our cash and cash equivalents.
We may, however, require additional cash resources due to changes in business conditions or other future developments. If these sources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked securities could result in additional dilution to stockholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financial covenants that would restrict operations. Financing may not be available in amounts or on terms acceptable to us, or at all.
As of September 30, 2025, we had current assets of $9.7 million, consisting of cash and cash equivalents of $0.2 million, $8.3 million in loan receivables, $1.0 million of other receivables, and $0.3 million in prepaid expenses and other current assets from continuing operations. Our current liabilities, all of which related to continuing operations, totaled approximately $1.3 million, consisting of $0.6 million of operating lease liabilities, $0.5 million of other payables, $35,902 of the current portion of long-term borrowings, and $131,083 of loan payable from Premium Finance. The Company also had $581,836 of long-term borrowings payable, and $778,642 of operating lease liabilities, long-term portion.
The following table summarizes our cash flows for the nine months ended September 30, 2025 and 2024, with continuing operations and discontinued operations presented separately:
Nine Months ended September 30,
2025
2024
(Unaudited)
(Unaudited)
Net cash provided by operating activities
$
733,783
$
601,526
Cash used in operations-continuing operations
(1,806,718)
(2,921,549)
Cash provided by operations-discontinued operations
2,540,501
3,523,075
Net cash used in investing activities
(2,214,816)
(2,970,912)
Cash used in operations-continuing operations
(2,214,816)
(2,970,912)
Net cash (used in) provided by financing activities
(16,237)
7,223,764
Cash (used in) provided by operations-continuing operations
(16,237)
8,917,040
Cash used in operations-discontinued operations
—
(1,693,276)
Net (decrease) increase in cash
$
(1,497,270)
$
4,854,378
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Operating Activities
Net cash used in operating activities from continuing operations was $1.8 million for the nine months ended September 30, 2025. The negative cash flow was primarily due to (i) a net loss of $2.6 million during the nine months ended September 30, 2025, and (ii) an increase of $0.6 million in other receivables, partially offset by (iii) an increase of $0.7 million in allowance of credit loss of goodwill and intangible assets, (iv) an increase of $0.2 million in other payables and other current liabilities, and (v) an increase of $0.4 million in amortization of operating lease right-of-use assets and intangible assets.
Net cash used in operating activities from continuing operations was $2.9 million for the nine months ended September 30, 2024. This was primarily attributable to (i) a net loss of $3.0 million, (ii) a deferred tax benefit of $1.1 million, (iii) an increase of $0.1 million in other receivables, partially offset by non-cash adjustments including, (iv) $182,862 in amortization of operating lease right-of-use assets, and (v) $34,858 in amortization of intangible assets.
Net cash provided by operating activities from discontinued operations was $2.5 million for the nine months ended September 30, 2025, primarily due to the collection of $2.5 million in accounts receivable resulting from vehicle sales.
Net cash provided by operating activities from discontinued operations was $3.5 million for the nine months ended September 30, 2024. This was primarily attributable to (i) the collection of $2.1 million in accounts receivable resulting from vehicle sales, (ii) a $1.5 million decrease in vehicle inventory, (iii) a $0.2 million decrease in other receivables from vehicle deposit and sales tax return, and (iv) a $1.1 million increase in other payables.
Investing Activities
Net cash used in investing activities from continuing operations was approximately $2.2 million for the nine months ended September 30, 2025, including (i) $3.5 million in short-term loans receivable from third parties, and offset by (ii) $1.2 in proceeds of repayment from these loans.
For the nine months ended September 30, 2024, net cash used in investing activities was $2.9 million, including (i) $0.2 million in cash paid in the Edward acquisition, (ii) $0.4 million in cash paid in the purchase of property and equipment, (iii) $3.0 million in cash in short-term loans receivable from third parties, offset by (iii) $0.7 million in proceeds of repayment from pledged loans and short-term loans made to third parties.
There were no investing activities related to discontinued operations for the nine months ended September 30, 2025 and 2024.
Financing Activities
Net cash used in financing activities from continuing operations was $16,237 for the nine months ended September 30, 2025, which consisted of (i) net proceeds from premium finance of $196,300, offset by (ii) net repayment of premium finance of $185,678, and (iii) net repayment of long-term borrowings of $26,859.
Net cash provided by financing activities from continuing operation of $8.9 million for the nine months ended September 30, 2024, consisted of (i) cash received from public offering proceeds of $8.4 million, (ii) proceeds from issuance of common stock under a private placement agreement of $0.6 million, (iii) proceeds from premium finance of $252,718, offset by (iv) cash paid for warrant termination of $78,125, (ⅴ) repayments of premium finance of $222,538, (ⅵ) repayments of long-term borrowing of $24,268, and (ⅶ) repayment of $13,423 to a related party.
There were no financing activities related to discontinued operations for the nine months ended September 30, 2025.
Net cash used in financing activities from discontinued operations was $1.6 million for the nine months ended September 30, 2024, which was the repayment of LC financing.
Subsequent Events
On September 19, 2025, the compensation committee of the Company’s Board approved the grant of the Award to Mr. Huan Liu, chief executive officer of the Company, pursuant to the Plan, which grant became effective on October 15, 2025. The Award was vested immediately upon grant. On October 15, 2025, the Company issued the shares to Mr. Liu.
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Off-Balance Sheet Arrangements
We do not currently have any off-balance sheet financing arrangements as defined under the rules and regulations of the SEC, or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions, and estimates that affect the amounts reported. Note 2, “Summary of Significant Accounting Policies” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of the Annual Report describe the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since the Annual Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk .
As a smaller reporting company, we are not required to provide this information.