Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this annual report. Some of the information contained in this discussion and analysis or set forth elsewhere in this annual report, 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, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
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 303 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.
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 annual 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 annual report, Cheetah BVI has not commenced operations.
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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). On November 7, 2025, the Company’s stockholders approved the Company’s Fifth Amended and Restated Articles of Incorporation to affect a reverse stock split of the issued shares of the Company’s common stock at a ratio within a range from 1-for-5 to 1-for-20, as determined by the board of directors in its sole discretion. As of the date of this report, the board of directors has not yet determined the specific ratio or the timing of the implementation of such reverse stock split.
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.
Recent Development
On February 2, 2026, the Company completed its reincorporation from the State of North Carolina to the State of Delaware, and the rights of the Company’s stockholders became governed by Delaware law and the Company’s Delaware Certificate of Incorporation and Bylaws.
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;
● Any adverse change in political relations between the PRC and the U.S., including the ongoing trade conflicts between the U.S. and the PRC, may negatively affect its business; and
● 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.
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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 discussion analyzes our results of operations for the year ended December 31, 2025, compared to the year ended December 31, 2024. In 2025, as we fully exited our parallel-import vehicle business, all financial results related to this segment have been reclassified as discontinued operations in accordance with ASC 205-20, Presentation of Financial Statements — Discontinued Operations. For further details, please refer to NOTE 5 — Discontinued Operations. Logistics and warehousing services business now represents our sole operating segment reported under continuing operations. The following table provides a summary of our consolidated results of operations for the years ended December 31, 2025 and 2024, highlighting the financial impact of both continuing and discontinued operations:
Years Ended December 31,
Change
2025
2024
Amount
%
Revenue
$
1,288,536
$
455,805
$
832,731
182.7
%
Cost of Revenue
1,121,761
277,293
844,468
304.5
%
Gross Profit
166,775
178,512
(11,737)
(6.6)
%
General and administration expenses
3,627,426
3,641,713
(14,287)
(0.4)
%
Impairment loss expenses
731,307
—
731,307
N/A
Share-based compensation expenses
387,618
277,345
110,273
39.8
%
Interest income, net
891,026
284,521
606,505
213.2
%
Other income, net
54,763
8,009
46,754
583.8
%
(Loss) from continuing operations before tax provision
(3,633,787)
(3,448,016)
(185,771)
5.4
%
Income tax (benefits)
15,916
(215,822)
231,738
(107.4)
%
(Loss) from continuing operations
(3,649,703)
(3,232,194)
(417,509)
12.9
%
(Loss) income from discontinued operations, net of tax
—
(1,956,658)
1,956,658
(100.0)
%
Net (Loss) income
$
(3,649,703)
$
(5,188,852)
$
1,539,149
(29.7)
%
Our total revenue from continuing operations was $1,288,536 in 2025, reflecting our transition into the logistics and warehousing business. Meanwhile, the parallel-import vehicle business was discontinued during the year ended December 31, 2024, and its financial results are presented separately as discontinued operations in accordance with ASC 205-20. For further details, please refer to NOTE 5 – Discontinued Operations.
Logistics and Warehousing Services
Revenues
In 2025, our logistics and warehousing revenue came from the two acquired businesses, Edward and TWEW. The following table provides a breakdown of revenues from each entity:
For the Years Ended December 31,
Change
2025
2024
Amount
%
USD
%
USD
%
Revenues
Revenues from Edward
$
214,810
16.7
%
$
316,852
69.5
%
$
(102,042)
(32.2)
%
Revenues from TWEW
1,073,726
83.3
%
138,953
30.5
%
934,773
672.7
%
Total revenues
$
1,288,536
100.0
%
$
455,805
100.0
%
$
832,731
182.7
%
For the year ended December 31, 2025, we reported revenue of $1,288,536 from logistics and warehousing services segment, including $214,810, or 16.7% of our total revenue from Edward, which we acquired in February 2024, and $1,073,726, or 83.3% of our total revenue, from TWEW, which we acquired in November 2024 (See also NOTE 8).
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Revenue from Edward decreased by 32.2% to $214,810 for the year ended December 31, 2025, compared to $316,852 for the year 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 second half of 2025. Although trade flows stabilized following the resumption of trade negotiations between the two countries, shipment volume in 2025 did not return to the prior-year level 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 year 2025.
Revenue from TWEW increased substantially to $1,073,726 for the year ended December 31, 2025, compared to $138,953 for the year ended December 31, 2024. The increase was primarily attributable to a full year of logistics and warehousing services provided by TWEW in 2025. As TWEW was acquired in November 2024, only a limited amount of revenue was recognized in 2024 following the acquisition date.
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 Year Ended December 31,
Change
2025
2024
Amount
%
USD
%
USD
%
Cost of Revenues
Cost of Revenues from Edward
$
125,099
11.2
%
$
148,588
53.6
%
$
(23,489)
(15.8)
%
Cost of Revenues from TWEW
996,662
88.8
%
128,705
46.4
%
$
867,957
674.4
%
Total cost of revenues
$
1,121,761
100.0
%
$
277,293
100.0
%
$
844,468
304.5
%
For the year ended December 31, 2025, total cost of revenues increased to $1,121,761 from $277,293 for the year ended December 31, 2024, representing an increase of $844,468, or 304.5%, primarily due to the contribution from TWEW. Cost of revenues attributable to TWEW was $996,662, representing 88.8% of total cost of revenues in year 2025.
Cost of revenues from Edward was $125,099, or 11.2% of total cost of revenues for the year ended December 31, 2025, compared to $148,588 for the same period in 2024, representing a decrease of $23,489, or 15.8%, 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
Years Ended December 31,
Change
2025
2024
Amount
%
General and Administrative Expenses
Payroll and Benefits
$
1,240,571
$
1,209,633
$
30,938
2.6
%
Rental and Leases
746,816
545,441
201,375
36.9
%
Travel and Entertainment
108,416
123,073
(14,657)
(11.9)
%
Legal and Accounting Fees
730,631
796,921
(66,290)
(8.3)
%
Recruiting Fees
11,871
150,190
(138,319)
(92.1)
%
Bank charges and fees
3,526
8,659
(5,133)
(59.3)
%
Insurance Expenses
240,285
318,636
(78,351)
(24.6)
%
Depreciation and Amortization Expenses
147,254
80,328
66,926
83.3
%
Others
398,056
408,832
(10,776)
(2.6)
%
Total General and Administrative Expenses
$
3,627,426
$
3,641,713
$
(14,287)
(0.4)
%
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General and administrative expenses for our continuing operations decreased by $14,287, or 0.4%, for the year ended December 31, 2025, primarily due to (i) a decrease of $138,319 in recruiting expenses as the prior-year period included significant hiring expenses associated with the launch of our logistics and warehousing segment, (ii) a decrease of $78,351 in insurance expenses resulting from a less expensive insurance provider, (iii) a decrease of $66,290 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 year ended December 31, 2024, (iv) a decrease of $14,657 in travel and entertainment expenses related to business development efforts and client engagement, and (v) a decrease of $10,776 in other miscellaneous general and administration expenses during the year ended December 31, 2025, partially offset by (vi) an increase of $201,375 in rental and leases, which was primarily due to the relocation of our headquarters to California in July 2024, (vii) an increase of $66,926 in depreciation and amortization expenses, primarily due to the acquisition of new fixed assets and additional intangible assets, as detailed in NOTES 6 & 8, and (ⅷ) an increase of $30,938 in payroll and benefits expense, which was reflecting the full-year impact in 2025 of personnel hired during mid-2024 to support the Company’s newly launched logistics and warehousing and labor services segments.
Impairment loss expenses
The Year Ended December 31,
Change
2025
2024
Amount
%
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.
For the year ended December 31, 2025, impairment loss expenses related to customer relationships, trade names, and goodwill amounted to $135,346, $27,429, and $568,532, respectively, resulting in total impairment losses of $731,307. No impairment losses were recorded for the year ended December 31, 2024. See NOTE 8 – Intangible Asset and Goodwill for more details.
Share-based compensation expenses
Years Ended December 31,
2025
2024
Amount
%
Share-based compensation expenses
$
387,618
$
277,345
$
110,273
39.8
%
Share-based compensation expenses were $387,618 and $277,345 for the years ended December 31, 2025 and 2024, respectively, representing an increase of $110,273, or 39.8%.
Share-based compensation expenses of $387,618 were recognized during the year ended December 31, 2025, consisting of (i) $77,875 resulting from 43,750 shares granted and vested immediately on September 30, 2025, (ii) $39,023 related to the employee incentive plan shares granted on September 30, 2024, and (iii) $270,720 resulting from the newly issued 144,000 shares granted and vested immediately on October 15, 2025.
For the year ended December 31, 2024, share-based compensation expenses were $277,345, consisting of $261,666 from (i) the 150,000 shares granted and vested immediately on September 30, 2024, and (ii) $15,679 related to the employee incentive plan shares granted on September 30, 2024.
See NOTE 11 – Stock Based Compensation for more details.
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Other Income (Expenses), net
Years Ended December 31,
2025
2024
Amount
%
Interest income
$
924,224
$
320,472
$
603,752
188.4
%
Interest expenses:
Loan Interest expense
(26,436)
(29,462)
(3,026)
(10.3)
%
Credit Card Interest
(847)
(694)
150
21.5
%
Interest expense on Tax
—
(3)
3
(100.0)
%
Premium Finance Interest
(5,915)
(5,792)
123
2.1
%
Total Interest expenses
(33,198)
(35,951)
(2,753)
(7.7)
%
Other income, net
54,763
8,009
46,754
583.8
%
Total other income(expense), net
$
945,789
$
292,530
$
653,259
223.3
%
Interest income from continuing operations was $924,224 for the year ended December 31, 2025, compared to $320,472 for the year ended December 31, 2024, representing an increase of $603,752, or 188.4%. The significant increase was primarily driven by interest earned on short-term loan receivable 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 $33,198 for the year ended December 31, 2025, a decrease of $2,753, or 7.7%, from $35,951 in 2024, mainly due to decreased loan interest expense.
Other income, net was $54,763 for the year ended December 31, 2025, compared to $8,009 for the year ended December 31, 2024, representing an increase of $46,754, or 583.8%. The increase was primarily attributable to higher rental income recognized during the year ended December 31, 2025.
Income Tax (Benefits)
Our income tax provision for continuing operations was $15,916 for the year ended December 31, 2025, compared with income tax benefits of $215,822 for the same period in 2024.
Net Loss
As a result of the above factors, we had a net loss of $3.6 million from our continuing operations for the year ended December 31, 2025, compared to a net loss of $3.2 million for the same period of 2024.
Parallel- Import vehicle Business (Discontinued Operations)
As disclosed in NOTE 5 – Discontinued Operations, we fully exited our parallel-import vehicle business in 2024, and its financial results have been classified as discontinued operations in our accompanying consolidated financial statements. The following discussion provides an overview of the financial impact of discontinued operations and related expense items.
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Financial Impact of Discontinued Operations
The following table summarizes the financial results of our discontinued operations for the year ended December 31, 2024:
For the Year Ended December 31,
2024
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) profit
$
(24,820)
Revenue from discontinued operations was $1.6 million for the year ended December 31, 2024 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 year ended December 31, 2024.
Selling, General, and Administrative Expenses for Discontinued Operations
The following table presents selling, general, and administrative expenses (“SGA Expenses”) for the discontinued operations:
For the Year Ended December 31,
2024
SGA Expenses
Selling expenses
$
117,819
Allowance of credit loss of accounts receivables
1,589,546
Forfeited vehicle deposit expense
100,800
Credit Loss on vehicle sale tax receivable
34,885
Total SGA Expenses
$
1,843,050
Total SGA Expenses for the discontinued parallel-import vehicle business were approximately $1.8 million for the year ended December 31, 2024.
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Allowance of credit loss of accounts receivables
Total allowance of credit loss of accounts receivable for the discontinued parallel-import vehicle business was $1,589,546 for the year ended December 31, 2024.
Interest Expenses
The table below presents interest expenses for the year ended December 31, 2024:
December 31,
2024
Interest Expenses
LC Financing
23,123
Line of Credit
65,665
Total interest expenses
$
88,788
Total interest expenses for the discontinued operations were $88,788 for the year ended December 31, 2024.
Liquidity and Capital Resources
Historically, our primary uses of cash have been to finance 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 December 31, 2025, we had current assets of $9.1 million, consisting of cash and cash equivalents of $0.2 million, $7.4 million in loan receivable, $1.2 million of other receivables, $0.2 million in prepaid expenses and other current assets from continuing operations. As of December 31, 2025, our current liabilities, all of which related to continuing operations, totaled approximately $1.3 million, consisting of $0.6 million of operating lease liabilities, $0.6 million of other payables, and $0.1 million of loans payable, including the current portion of long-term borrowings.
The following table summarizes our cash flows for the years ended December 31, 2025 and 2024, with continuing operations and discontinued operations presented separately:
Years ended December 31,
2025
2024
Net cash provided by (used in) operating activities
$
(2,075)
$
242,220
Cash outflows from operations-continuing operations
(2,489,676)
(3,455,918)
Cash inflows from operations-discontinued operations
2,487,601
3,698,138
Net cash used in investing activities
(1,341,816)
(6,130,932)
Cash outflows from operations-continuing operations
(1,341,816)
(6,130,932)
Net cash provided by (used in) financing activities
(73,854)
7,106,676
Cash inflows (outflows) from operations-continuing operations
(73,854)
8,799,952
Cash outflows from operations-discontinued operations
—
(1,693,276)
Net increase (decrease) in cash
$
(1,417,745)
$
1,217,964
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Operating Activities
Net cash used in operating activities from continuing operations was $2.5 million for the year ended December 31, 2025. The negative cash flow was primarily due to (i) a net loss of $3.6 million during the year ended December 31, 2025, (ii) an increase of $0.8 million in other receivables, and (iii) a decrease of $0.3 million in operating lease liabilities, partially offset by (iv) an increase of $0.7 million in allowance of impairment loss of goodwill and intangible assets, (v) an increase of $0.5 million in amortization of operating lease right-of-use assets, (vi) $0.4 million in share-based compensation expenses; and (vii) an increase of $0.4 million in other payables and other current liabilities.
Net cash used in operating activities from continuing operations was $3.5 million for the year ended December 31, 2024. The negative cash flow was primarily due to (i) a net loss of $3.2 million during the year ended December 31, 2024; (ii) an increase of $0.3 million in deferred income tax benefits; and (iii) an increase of $0.3 million in other receivables and a decrease of $0.2 million in operating lease liabilities, partially offset by (iv) an increase of $0.3 million in amortization of operating lease right-of-use assets, and $0.3 million in share-based compensation expenses.
Net cash provided by operating activities from discontinued operations was $2.5 million in 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 $3.7 million in 2024. The decline was primarily attributable to (i) a decrease of $1.5 million in inventory; (ii) a decrease of $3.9 million in accounts receivable; offset by a decrease of $1.7 million in loans payable.
Investing Activities
Net cash used in investing activities from continuing operations was approximately $1.3 million for the year ended December 31, 2025, including (i) $3.4 million in short-term loans lent to third parties, and offset by (ii) $2.1 million proceeds of repayment from short-term loans lent to third parties.
Net cash used in investing activities from continuing operations was approximately $6.1 million for the year ended December 31, 2024, including (i) approximately $0.3 million in cash paid for the Edward and TWEW acquisitions, net of cash acquired, (ii) purchase of fixed assets of $0.4 million, (iii) $6.3 million in short-term loans lent to third parties, and offset by (iv) $0.9 million proceeds of repayment from short-term loans lent to third parties.
There were no investing activities related to discontinued operations for the years ended December 31, 2025 and 2024.
Financing Activities
Net cash used in financing activities from continuing operations was $73,854 for the year ended December 31, 2025, which consisted of (i) net proceeds from premium finance of $196,300, partially offset by (ii) net repayments of premium finance of approximately $234,111, and (iii) repayments of long-term borrowings of $36,043.
Net cash provided by financing activities from continuing operations was $8.8 million for the year ended December 31, 2024, which consisted of (i) net proceeds from the July Offering of approximately $1.1 million, (ii) net proceeds from the May Offering of approximately $7.3 million, (iii) proceeds of $0.6 million from the issuance of shares of common stock in private placements; partially offset by (iv) net repayments of premium finance of approximately $0.3 million.
There were no financing activities related to discontinued operations for the years ended December 31, 2025.
Net cash used in financing activities from discontinued operations was $1.7 million for the year ended December 31, 2024, primarily reflecting (i) net repayments of LC financing of $1.0 million; and (ii) net repayments of revolving lines of credit of $0.7 million.
As of December 31, 2025, the Company had cash and cash equivalents of approximately $0.2 million and a working capital balance of $7.7 million. In addition, the Company had loan receivable from third parties of approximately $7.4 million, which can be sufficient for the Company to support its ongoing business operations and meet the obligations in the future.
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Management has evaluated the Company’s ability to continue as a going concern in accordance with ASC 205-40, Presentation of Financial Statements – Going Concern. This evaluation considered the Company’s current financial condition, expected cash flows, obligations due within the next 12 months, and available sources of liquidity.
While management understands that the ability of the Company to continue as a going concern is dependent upon its ability to successfully execute its new business strategy and eventually attain profitable operations, management has concluded that there are no conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the issuance date of these consolidated financial statements. Accordingly, the Company’s consolidated financial statements as of December 31, 2025 have been prepared on a going concern basis.
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 in Part II, Item 8 of this annual report on Form 10-K describe the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements.
Revenues
ASC 606 establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. Under the new guidance, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the new guidance requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.
In 2024, the Company generated revenue from the parallel-import vehicle dealership and logistics and warehousing services. Revenue from the parallel-import vehicle dealership business is generated from the sales of parallel-import vehicles to both domestic and overseas parallel-import car dealers. It purchases automobiles from the U.S. market through its team of professional purchasing agents, and mainly resells them to parallel-import vehicle dealers in the U.S. and the PRC. In accordance with ASC 606, the Company recognizes revenue at the point in time when the performance obligation has been satisfied and control of the vehicles has been transferred to the dealers. For sales to U.S. domestic parallel-import vehicle dealers, revenue is recognized when a vehicle is delivered, and its title has been transferred to the dealers. For overseas sales, the Company sells vehicles under Cost and Freight shipping point terms, and revenue is recognized when a vehicle is loaded on a cargo ship and its title has been transferred to the dealers. The Company accounts for the revenue generated from sales of vehicles on a gross basis as the Company is acting as a principal in these transactions, is subject to inventory risk, has latitude in establishing prices, and is responsible for fulfilling the promise to provide customers the specified goods, which the Company has control of the goods and has the ability to direct the use of goods to obtain substantially all the benefits. All of the Company’s contracts have one single performance obligation as the promise is to transfer the individual vehicle to parallel-import vehicle dealers, and there is no separately identifiable other promise in the contracts. The Company’s vehicles are sold with no right of
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return and the Company does not provide other credits or sales incentives to parallel-import car dealers. Historically, no customer returns have occurred. Therefore, the Company did not provide any sales return allowances for the years ended December 31, 2025 and 2024.
In 2025, the Company generates revenues from freight forwarding services provided by Edward and general labor and logistics provided by TWEW to corporate and retail clients, including transportation, cargo warehousing, freight forwarding, labor service, and cargo loading and unloading. Revenue for freight forwarding services, both export and import, is recognized when the services are provided. The Company’s role as the principal in these services involves managing the process up to the point where control is transferred based on contractual terms, allowing revenue recognition on a gross basis throughout the transit period. For warehousing services, revenue is primarily derived from storage fees, which are recognized based on the actual number of days the goods are stored in the warehouse while awaiting further transportation. Across all operations, the Company maintains a principal position, controlling the goods and services, bearing inventory and pricing risks, and fulfilling performance obligations directly. Each contract is typically structured with a single performance obligation without allowances for returns or sales incentives. There were no provisions for sales return allowances based on historical experiences of no returns.
Revenue from general labor and logistics services, provided through TWEW, is recognized upon services rendered, based on verified labor hours or project milestones outlined in client agreements, with billing tied to predefined service rates (e.g., per-hour fees or fixed-scope pricing). The Company recognizes revenue on a gross basis as the principal service provider, reflecting its contractual obligation to deliver labor solutions to clients, despite outsourcing workforce operations to third parties. Contracts generally consist of a single performance obligation (supplying labor resources), with revenue measured at the transaction price agreed upon in service agreements. No provisions for returns or sales incentives are included, as historical experience indicates no material rights of return or refunds.
General and Administration Expenses
The Company’s general and administrative expenses primarily include employee salaries and benefits, depreciation, office lease expenses, travelling and entertainment expenses, legal and consulting fees, insurance and other miscellaneous administrative expenses. For the years ended December 31, 2025 and 2024, general and administration expenses for the continuing expenses of $3,627,426 and $3,641,713, respectively.
Share-based compensation
The Company has adopted the Plan for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Company’s operations. Shareholders, directors, and employees of the Company receive remuneration in the form of share-based awards including option, restricted stock, restricted stock unit, dividend equivalent, or other awards that are permitted under the Plan, whereby the recipients render services as consideration for such share-based compensation.
The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the cost over the period during which the employee is required to provide service in exchange for the award, which generally is the vesting period. The amount of cost recognized is adjusted to reflect any expected forfeitures prior to vesting. The fair value of stock award is measured at grant date’s per share closing price of the Company’s common stock, and the fair value of option is measured at grant date using the Black-Scholes pricing model, taking into account the terms and conditions upon which the share-based awards are granted. Where the employees have to meet vesting conditions before becoming unconditionally entitled to the share-based awards, the total estimated fair value of the share-based awards is spread over the vesting period, taking into account the probability that the share-based awards will vest, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date.
Income taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized as income in the period that includes the enactment date.
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The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.
The Company assesses deferred tax assets to determine whether they are realizable. As of December 31, 2025, the Company recorded a full valuation allowance against deferred tax assets, as it has generated a three-year cumulative pretax book loss and is forecasting a loss for 2026. Based on this evidence, realization of deferred tax assets is not considered more-likely-than-not at this time.
The Company records uncertain tax positions in accordance with ASC 740, Income Taxes, on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company records interest and penalties related to an uncertain tax position, if and when required, as part of income tax expenses in the consolidated statements of operations. The Company does not believe that there were any uncertain tax positions as of December 31, 2025 and 2024.
The Company and its U.S. operating subsidiaries are subject to U.S. federal and state income tax laws. Prior to the corporate conversion in 2022, the Company was organized as a limited liability company (“LLC”) and elected to be treated as a corporation for U.S. federal income tax purposes for the tax years ended December 31, 2020 and 2021.
As of December 31, 2025, the Company’s consolidated U.S. federal income tax returns for the tax years ended December 31, 2021 through December 31, 2024 remained open to examination by the Internal Revenue Service and applicable state tax authorities.
(Loss) Earnings per share
The Company computes (loss) earnings 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 EPS 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 common 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.
Related parties and transactions
The Company identifies related parties, and accounts for and discloses related party transactions in accordance with ASC 850, “Related Party Disclosures” and other relevant ASC standards.
Parties, which can be a corporation or individual, are considered 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 operational decisions. Corporations are also considered to be related if they are subject to common control or common significant influence.
Transactions between related parties commonly occurring in the normal course of business are considered to be related party transactions. Transactions between related parties are also considered to be related party transactions even though they may not be given accounting recognition.
Segment reporting
The Company uses the management approach in determining reportable operating segments. The management approach considers the internal reporting used by the Company’s chief operating decision maker for making operating decisions about the allocation of resources of the segment and the assessment of its performance in determining the Company’s reportable operating segments. As of December 31, 2023, the Company operated as a single reportable segment, focused solely on the parallel-import vehicle business. In 2024, the Company expanded its operations and reported two operating segments: the parallel-import vehicle business and logistics and warehousing services. However, following the discontinuation of the parallel-import vehicles business, as of December 31, 2025, the Company transitioned back to a single reportable segment, now focused exclusively on logistics and warehousing services.
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Loan receivable
The Company’s loan receivable, which consist of loans to third parties, are recognized at the point of loan disbursement, initially measured at fair value, primarily reflecting the disbursed amount and associated transaction costs. Both secured and unsecured lending are encompassed in these receivables, with terms including varying interest rates and maturity dates. Subsequently, these receivables are measured at amortized cost using the effective interest method, which ensures the accurate recognition of interest income over the loan period. The interest rates for these loans may be subject to change based on the terms of loan agreements.
Credit Loss
Periodic reviews of the loan portfolio are conducted to assess impairment, utilizing the expected credit loss model. The Company estimates expected credit losses on its loan receivable based on an evaluation of the borrower’s financial condition and operating performance, the contractual terms and remaining maturity of the loan, historical credit loss experience, current economic conditions, and reasonable and supportable forward-looking information.
As of December 31, 2025, no allowance for credit losses were recorded related to its loan receivable.
Intangible assets, net
The Company recorded intangible assets with the acquisitions of Edward and TWEW during the year ended December 31, 2024. Intangible assets consist of developed technology, customer relationships, and trade names, which are amortized on a straight-line basis or over their respective useful lives using patterns that reflect the economic benefits the assets are expected to realize. The Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
The Company recognized impairment to intangible assets of $162,775 and nil for the years ended December 31, 2025 and 2024, respectively.
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 input 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.
Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, loan receivable, loans payable, and other payables and other current liabilities, approximated the fair value of the respective assets and liabilities as of December 31, 2025 and 2024 based upon the short-term nature of the assets and liabilities.
The Company applied level 3 to obtain the fair value of intangible assets and goodwill. See NOTE 8 — Intangible Asset and Goodwill.
The Company applied level 3 to obtain the fair value of loan receivable. The Company believes that the carrying amount of long-term loans approximated fair value as of December 31, 2025 and 2024 reflected amortized cost net of an allowance for credit losses, based on expected credit loss analyses that consider borrower-specific risks, current conditions, and reasonable and supportable forward-looking information. See NOTE 4 — Loan Receivable.
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Leases
The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 842, Leases (“Topic 842”). The Company leases office space, which is classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases, usually with an initial term of 12 months or less) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.
At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The ROU asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All ROU assets are reviewed for impairment annually. There was no impairment for ROU lease assets as of December 31, 2025 and 2024.
Goodwill
The Company records goodwill as the excess of the consideration transferred over the fair value of net assets acquired in business combinations. Goodwill is tested for impairment at the reporting unit level, which is an operating segment, or one level below. The Company has one reporting unit. The Company measures goodwill impairment, if any, as the amount by which the carrying amount of the reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill.
The review of goodwill impairment consists of either using a qualitative approach to determine whether it is more likely than not that the fair value of the assets is less than their respective carrying values or a one-step quantitative impairment test. In performing the qualitative assessment, the Company considers many factors in evaluating whether the carrying value of goodwill may not be recoverable, including declines in the Company’s stock price and market capitalization of the Company and macroeconomic conditions. If, based on the results of the qualitative assessment, it is concluded that it is not more likely than not that the fair value of a reporting unit exceeds its carrying value, additional quantitative impairment testing is performed. The quantitative test requires that the carrying value of each reporting unit be compared with its estimated fair value. If the carrying value of a reporting unit is greater than its fair value, a goodwill impairment charge will be recorded for the difference (up to the carrying value of goodwill). The Company uses the income approach and/or a market-based approach to determine the reporting units’ fair values, which are based on discounted cash flows. The determination of discounted cash flows of the reporting units and assets and liabilities within the reporting units requires significant estimates and assumptions. Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates.
For the year ended December 31, 2025, the Company recorded a goodwill impairment charge of $568,532. See NOTE 8 – Intangible assets and Goodwill.
Impairment of long-lived assets
The Company reviews long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If an impairment indicator is present, the Company evaluates recoverability by comparing the carrying amount of the asset group to the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset group. If the assets are impaired, an impairment loss is measured as the amount by which the carrying amount of the asset group exceeds the fair value of the asset. The Company estimates fair value using the expected future cash flows discounted at a rate consistent with the risks associated with the recovery of the asset.
For the years ended December 31, 2025 and 2024, the Company did not record any impairment.
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Recent accounting pronouncements
Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , requires disclosures about significant segment expenses and additional interim disclosure requirements. This standard also requires a single reportable segment to provide all disclosures required by Accounting Standards Codification Topic 280. This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The amendments should be applied retrospectively for all prior periods presented in the consolidated financial statements. We adopted this standard in our Annual Report on Form 10-K for the year ended December 31, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements.
ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , establishes incremental disaggregation of income tax disclosures pertaining to the effective tax rate reconciliation and income taxes paid. This standard is effective for fiscal years beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively. The Company adopted ASU 2023-09 beginning January 1, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company, we are not required to provide the information required by this item.
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