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 20, 2026.
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 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 6 – 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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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.
On January 27, 2026, the Company entered into stock purchase agreements with certain investors for the sale of an aggregate of 167,250 shares of Class A common stock for gross proceeds of approximately $40.14 million in a private placement pursuant to Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). The private placement closed on February 12, 2026.
On February 2, 2026, we effected a change in our state of incorporation from the State of North Carolina to the State of Delaware by filing with the Secretary of State of the State of North Carolina the applicable Article of Conversion and by filing with the Secretary of State of the State of Delaware the Delaware Certificate of Conversion and the Delaware Certificate of Incorporation.
On March 25, 2026, we entered into a Stock Purchase Agreement with Bing Shao, a non-U.S. individual, and Edward, pursuant to which we agreed to sell, assign, transfer, and deliver to Bing Shao 100% of the shares of common stock of Edward for an aggregate purchase price of $20,000. On April 1, 2026, the transaction was closed.
On April 16, 2026, we entered into a Share Transfer Agreement with Leyan Yang, a non-U.S. individual, pursuant to which we agreed to acquire 100% of the issued shares of Super International Trading Limited, a limited liability company incorporated under the laws of Hong Kong, for an aggregate cash consideration of $4,980,000. As of the date of this quarterly report, the share transfer has not been closed yet.
April 2026 Reverse Stock Split
On February 3, 2026, our board of directors approved and adopted one or more potential amendments to the Certificate of Incorporation of the Company to effect one or more reverse stock splits of the Company’s issued and outstanding shares of common stock, par value $0.0001 per share, consisting of Class A common stock, par value $0.0001 per share and Class B common stock, par value $0.0001 per share, at such ratio or ratios as shall be determined by the board of directors in its sole discretion, provided that the aggregate ratio of all such reverse stock splits shall not exceed 1-for-500, to be effected at such time or times within 12 months following the approval of the Company’s stockholders.
On February 3, 2026, FAIRVIEW EASTERN INTERNATIONAL HOLDINGS LIMITED and Huan Liu, collectively holding shares of Class B common stock representing approximately 79.16% of the voting power of the issued and outstanding capital stock of the Company as of that date, approved and adopted the potential amendments and the reverse stock splits through a written consent in lieu of a special meeting of stockholders. Such corporate actions became effective on March 10, 2026, which was 20 calendar days after the Company mailed the definitive information statement on Schedule 14C filed with the SEC on February 13, 2026.
Following the approval of our stockholders, on March 23, 2026, our board of directors approved a reverse stock split of the common stock at a ratio of 1-for-200. To implement the reverse stock split, the Company filed its Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of Delaware on March 24, 2026. The Certificate of Amendment to the Certificate of Incorporation became effect at 8:00 a.m., Eastern Time, on April 20, 2026.
Following such reverse stock split, every 200 shares of common stock outstanding were automatically combined into one new share of common stock. No fractional shares were issued in connection with the reverse stock split; any fractional shares resulting from the Reverse Stock Split were rounded up to the nearest whole share. The par value per share of the common stock remained unchanged. Our Class A common stock started trading on a post-split basis on April 29, 2026, at which time the Class A common stock was assigned a new CUSIP number (16307X301). Additionally, at the Effective Time, proportionate adjustments were made to the Company’s Amended and Restated 2024 Stock Incentive Plan based on the Reverse Stock Split Ratio, including adjustments to the number of shares available for awards and the exercise price of outstanding awards.
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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 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.
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 months ended March 31, 2026 and 2025, highlighting the financial impact of both continuing and discontinued operations:
Three Months Ended March 31,
Change
2026
2025
Amount
%
USD
%
USD
%
Revenues
$
92,700
100.0
%
$
479,799
100.0
%
$
(387,099)
(80.7)
%
Cost of Revenues
72,833
78.6
%
423,543
88.3
%
(350,710)
(82.8)
%
Gross Profit
19,867
21.4
%
56,256
11.7
%
(36,389)
(64.7)
%
General and administration expenses
770,004
830.6
%
1,000,519
208.5
%
(230,515)
(23.0)
%
Share-based compensation expenses
14,182
15.3
%
16,185
3.4
%
(2,003)
(12.4)
%
Interest income, net
143,442
154.7
%
199,278
41.5
%
(55,836)
(28.0)
%
Other income, net
9,012
9.7
%
12,616
2.6
%
(3,604)
(28.6)
%
(Loss) from continuing operations before tax provision
(611,865)
(660.0)
%
(748,554)
(156.0)
%
136,689
(18.3)
%
Income tax (benefits)
4,400
4.7
%
5,355
1.1
%
(955)
(17.8)
%
Net Loss
(616,265)
(664.8)
%
(753,909)
(157.1)
%
137,644
(18.3)
%
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Comparison of the Three Months Ended March 31, 2026 and 2025
Continuing Operations-Logistics and Warehousing Services
Revenues
For the Three Months Ended March 31,
Change
2026
2025
Amount
%
(Unaudited)
(Unaudited)
USD
%
USD
%
Revenues
Revenues from Edward
$
39,700
42.8
%
$
62,515
13.0
%
$
(22,815)
(36.5)
%
Revenues from TWEW
53,000
57.2
%
417,284
87.0
%
$
(364,284)
(87.3)
%
Total revenues
$
92,700
100.0
%
$
479,799
100.0
%
$
(387,099)
(80.7)
%
For the three months ended March 31, 2026, we reported revenue of $92,700 from logistics and warehousing services segment, including $39,700, or 42.8%, of our total revenue from Edward, which we acquired in February 2024, and $53,000, or 57.2%, of our total revenue from TWEW, which we acquired in December 2024.
Revenue from Edward decreased by 36.5% to $39,700 for the three months ended March 31, 2026, compared to $62,515 for the same period in 2025. The decrease was primarily due to reduced business activities and customer volume at Edward in anticipation of the planned sale of the entity.
On March 25, 2026, we entered into a Stock Purchase Agreement with Bing Shao, a non-U.S. individual, and Edward, pursuant to which we agreed to sell, assign, transfer, and deliver to Bing Shao 100% of the shares of common stock of Edward for an aggregate purchase price of $20,000. On April 1, 2026, the transaction was closed. We will continue to focus on improving operational efficiencies and expanding our market presence of TWEW in the California area.
Revenue from TWEW decreased by 87.3% to $53,000 for the three months ended March 31, 2026, compared to $417,284 for the same period in 2025, primarily due to reduced customer demand following changes in tariff policies in 2025.
Cost of Revenues
For the Three Months Ended March 31,
Change
2026
2025
Amount
%
(Unaudited)
(Unaudited)
USD
%
USD
%
Cost of Revenues
Cost of Revenues from Edward
$
19,833
27.2
%
$
41,810
9.9
%
$
(21,977)
(52.6)
%
Cost of Revenues from TWEW
53,000
72.8
%
381,733
90.1
%
$
(328,733)
(86.1)
%
Total cost of revenues
$
72,833
100.0
%
$
423,543
100.0
%
$
(350,710)
(82.8)
%
For the three months ended March 31, 2026, total cost of revenues decreased to $72,833 from $423,543 for the same period in 2025, representing a decrease of $350,710, or 82.8%. Cost of revenues attributable to TWEW was $53,000, representing 72.8% of total cost of revenues in the first quarter of 2026, compared to $381,733 for the same period in 2025, representing a decrease of $328,733, or 86.1%, consistent with the corresponding decline in revenue from TWEW.
Cost of revenues from Edward was $19,833, or 27.2% of total cost of revenues for the three months ended March 31, 2026, compared to $41,810 for the same period in 2025, representing a decrease of $21,977, or 52.6%, 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.
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Operating Expenses
General and Administrative Expenses
Three Months Ended March 31,
Change
2026
2025
Amount
%
(Unaudited)
(Unaudited)
General and Administrative Expenses
Payroll and Benefits
$
238,284
$
314,192
$
(75,908)
(24.2)
%
Rental and Leases
179,849
208,129
(28,280)
(13.6)
%
Travel and Entertainment
31,660
42,030
(10,370)
(24.7)
%
Legal and Accounting Fees
92,967
258,005
(165,038)
(64.0)
%
Insurance Expenses
53,164
68,736
(15,572)
(22.7)
%
Depreciation and Amortization Expenses
33,393
37,953
(4,560)
(12.0)
%
Recruiting Expenses
1,862
—
1,862
N/A
%
Others
138,825
71,474
67,351
94.2
%
Total General and Administrative Expenses
$
770,004
$
1,000,519
$
(230,515)
(23.0)
%
General and administrative expenses for the Company’s continuing operations decreased by $230,515, or 23.0%, to $770,004 for the three months ended March 31, 2026 from $1,000,519 for the three months ended March 31, 2025. The decrease was mainly due to (i) a decrease of $165,038 in legal and accounting fees as we recorded the accounting fee for annual audit for Fiscal Year 2024 in the first quarter of 2025, (ii) a decrease of $75,908 in payroll and benefits expense due to staff optimization and cost-saving measures, (iii) a decrease of 28,280 in rental and leases, primarily due to the termination of one of the Company’s office leases, (iv) a decrease of $15,572 in insurance expenses resulting from a change in our insurance provider, (v) a decrease of $10,370 in travel and entertainment expenses during the three months ended March 31, 2026, as the Company reduced discretionary spending and maintained tighter controls over non-essential expenses, (vii) a decrease of $4,560 in depreciation and amortization expenses, as we did an impairment loss on intangible assets in 2025, partially offset by (vi) an increase of $1,862 in recruiting expenses, and (ⅷ) an increase of $67,351 of other miscellaneous general and administration expenses during the three months ended March 31, 2026, primarily due to the increase of other profession fee for TWEW.
Share-based compensation expenses
Three Months Ended March 31,
Change
2026
2025
Amount
%
(Unaudited)
(Unaudited)
Share-based compensation expenses
$
14,182
$
16,185
$
(2,003)
(12.4)
%
Share-based compensation expenses were $14,182 and $16,185 for the three months ended March 31, 2026 and 2025, respectively, representing a decrease of $2,003, or 12.4%.
See also Note 11 – Stock Based Compensation for more details in our Consolidated Financial Statements include in this quarterly report.
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Other Income (Expenses), net
Three Months Ended March 31,
Change
2026
2025
Amount
%
(Unaudited)
(Unaudited)
Interest income
$
151,142
$
208,090
$
(56,948)
(27.4)
%
Interest expenses:
Loan Interest expense
6,278
6,670
(392)
(5.9)
%
Credit Card Interest
246
—
246
N/A
%
Premium Finance Interest
1,176
2,142
(966)
(45.1)
%
Total Interest expenses
7,700
8,812
(1,112)
(12.6)
%
Other income, net
9,012
12,616
(3,604)
(28.6)
%
Total other income, net
$
152,454
$
211,894
$
(59,440)
(28.1)
%
Interest income from continuing operations was $151,142 for the three months ended March 31, 2026, compared to $208,090 for the three months ended March 31, 2025, representing a decrease of 56,948, or 27.4%. The decrease was primarily due to a reduction in average outstanding loan balances as certain borrowers repaid a portion of their loans, resulting in lower interest income.
Interest expense incurred from our continuing operations was $7,700 for the three months ended March 31, 2026, which slightly decreased by $1,112, or 12.6%, from $8,812 for the three months ended March 31, 2025, mainly due to primarily due to lower interest incurred on premium finance arrangements.
Income Tax (Benefits)
Our income tax provision for continuing operations was 4,400 for the three months ended March 31, 2026, compared with income tax benefits of approximately $5,355 for the same period in 2025.
Net Loss
As a result of the above factors, we had a net loss of $616,265 from our continuing operations for the three months ended March 31, 2026, compared to a net loss of $753,909 for the same period of 2025.
Discontinued Operations -Parallel- Import vehicle Business
As disclosed in Note 6 – 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. The Company did not generate any income or incur any expenses from discontinued operations for the three months ended March 31, 2026.
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 March 31, 2026, we had current assets of $48.4 million, consisting of cash and cash equivalents of $0.7 million, $4.4 million in loan receivables, $0.7 million of other receivables, $2.4 million in prepaid expenses and other current assets, and $40.1 million in deposit
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on long-term investment from continuing operations. Our current liabilities, all of which related to continuing operations, totaled approximately $1.1 million, consisting of $0.6 million of operating lease liabilities, $0.4 million of other payables, $0.1 million of the current portion of long-term borrowings and loan payable from Premium Finance. The Company also had $0.6 million of long-term borrowings payable, and $0.4 million of operating lease liabilities, long-term portion.
The following table summarizes our cash flows for the three months ended March 31, 2026 and 2025, with continuing operations and discontinued operations presented separately:
Three Months ended March 31,
2026
2025
(Unaudited)
(Unaudited)
Net cash provided by (used in) operating activities
$
(2,457,939)
$
1,768,126
Cash used in operations-continuing operations
(2,457,939)
(772,374)
Cash provided by operations-discontinued operations
—
2,540,500
Net cash used in investing activities
(37,142,689)
(3,026,400)
Cash used in investing activities-continuing operations
(37,142,689)
(3,026,400)
Net cash provided by (used in) financing activities
40,081,359
(68,539)
Cash provided by (used in) financing activities-continuing operations
40,081,359
(68,539)
Net (decrease) increase in cash
$
480,731
$
(1,326,813)
Operating Activities
Net cash used in operating activities from continuing operations was $2.5 million for the three months ended March 31, 2026. The negative cash flow was primarily due to (i) a net loss of $0.6 million during the three months ended March 31, 2026, and (ii) an increase of $2.2 million in prepaid expenses and other current assets, (iii) a decrease of $0.2 million in other payables and other current liabilities, and (iv) a decrease of $0.1 million in operating lease liabilities, partially offset by (v) a decrease of $0.5 million in other receivables, and (vi) $0.2 million in amortization of operating lease right-of-use assets and intangible assets.
Net cash used in operating activities from continuing operations was $0.8 million for the three months ended March 31, 2025. This was primarily attributable to (i) a net loss of $0.8 million, and (ii) an increase of $0.2 million in other receivables, partially offset by (iii) 0.1 million in amortization of operating lease right-of-use assets and intangible assets, and (iv) a decrease of $0.1 million in prepaid expenses.
Net cash provided by operating activities from discontinued operations was $nil million for the three months ended March 31, 2026.
Net cash provided by operating activities from discontinued operations was $2.5 million for the three months ended March 31, 2025, primarily due to the collection of $2.5 million in accounts receivable resulting from vehicle sales.
Investing Activities
Net cash used in investing activities from continuing operations was approximately $37.1 million for the three months ended March 31, 2026, including (i) $40.1 million in deposit on long-term investment, (ii) $1.0 million short-term loans receivable from third parties, and offset by (ii) $4.0 million in proceeds of repayment from these loans.
For the three months ended March 31, 2025, net cash used in investing activities was $3.0 million, including (i) $3.0 million in short-term loans receivable from third parties, and offset by (ii) $49,000 proceeds of repayment from these loans.
There were no investing activities related to discontinued operations for the three months ended March 31, 2026 and 2025.
Financing Activities
Net cash used in financing activities from continuing operations was $40.1 for the three months ended March 31, 2026, which consisted of (i) net proceeds from PIPE of $40.1 million, offset by (ii) net repayment of premium finance of $49,297, and (iii) net repayment of long-term borrowings of $9,344.
Net cash used in financing activities from continuing operations was $68,539 for the three months ended March 31, 2025, which consisted of (i) net repayment of premium finance of $59,590, and (ii) net repayment of long-term borrowings of $8,949.
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There were no financing activities related to discontinued operations for the three months ended March 31, 2026 and 2025.
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.