CHEETAH NET SUPPLY CHAIN SERVICE INC. 10-Q

Item 1. Financial Statements CHEETAH NET SUPPLY CHAIN SERVICE INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2023 ​ 2022 ASSETS ​ ​ CURRENT ASSETS: ​ ​ Cash ​ $ 592,126 ​ $ 58,381 Accounts receivable ​ 2,146,882 ​ 7,086,651 Inventories, net ​ 6,962,926 ​ 5,965,935 Other receivables ​ 813,355 ​ 900,730 Prepaid expenses and other current assets ​ 318,313 ​ 480,828 TOTAL CURRENT ASSETS ​ 10,833,602 ​ 14,492,525 ​ ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets ​ 235,249 ​ 140,145 Deferred tax assets ​ 75,345 ​ 86,734 TOTAL ASSETS ​ $ 11,144,196 ​ $ 14,719,404 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ CURRENT LIABILITIES: ​ ​ Short-term borrowings ​ $ 86,285 ​ $ 86,285 Current portion of long-term borrowings ​ 32,074 ​ 31,281 Loans payable from inventory financing ​ — ​ 4,164,100 Loans payable from letter of credit financing ​ 4,945,617 ​ 7,105,873 Loans payable from dealers finance ​ 170,732 ​ 41,747 Loans payable from revolving line of credit ​ 1,871,154 ​ — Due to a related party ​ 28,875 ​ — Operating lease liabilities, current ​ 62,354 ​ 149,458 Other payables and other current liabilities ​ 515,355 ​ 616,863 TOTAL CURRENT LIABILITIES ​ 7,712,446 ​ 12,195,607 ​ ​ ​ ​ ​ ​ ​ Long-term borrowings, non-current ​ 661,375 ​ 678,442 Operating Lease Liabilities, non-current ​ 177,208 ​ — TOTAL LIABILITIES ​ 8,551,029 ​ 12,874,049 ​ ​ ​ ​ ​ ​ ​ COMMITMENTS AND CONTINGENCIES ​ ​ ​ ​ ​ ​ ​ ​ ​ STOCKHOLDERS’ EQUITY ​ ​ Common stock, $ 0.0001 par value, 100,000,000 shares authorized; 16,666,000 shares issued and outstanding, including: ​ ​ Class A common stock, $ 0.0001 par value - 91,750,000 shares authorized, 8,416,000 shares issued and outstanding ​ 842 ​ 842 Class B common stock, $ 0.0001 par value - 8,250,000 shares authorized, 8,250,000 shares issued and outstanding ​ 825 ​ 825 Additional paid-in capital ​ 3,269,317 ​ 3,269,317 Subscription receivable ​ ( 1,100,000 ) ​ ( 1,800,000 ) Retained earnings ​ 422,183 ​ 374,371 TOTAL STOCKHOLDERS’ EQUITY ​ 2,593,167 ​ 1,845,355 ​ ​ ​ ​ ​ ​ ​ TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY ​ $ 11,144,196 ​ $ 14,719,404 ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 Table of Contents CHEETAH NET SUPPLY CHAIN SERVICE INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, Six Months Ended June 30, ​ 2023 2022 2023 2022 REVENUE ​ $ 12,223,026 ​ $ 20,788,964 ​ $ 22,437,468 ​ $ 33,607,035 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ COST OF REVENUE ​ ​ ​ ​ Cost of vehicles ​ 10,319,991 ​ 18,977,349 ​ 18,824,494 ​ 30,736,345 Fulfillment expenses ​ 650,666 ​ 503,452 ​ 1,217,548 ​ 1,096,004 Total cost of revenue ​ 10,970,657 ​ 19,480,801 ​ 20,042,042 ​ 31,832,349 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ GROSS PROFIT ​ 1,252,369 ​ 1,308,163 ​ 2,395,426 ​ 1,774,686 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING EXPENSES ​ ​ ​ ​ Selling expenses ​ 141,340 ​ 36,720 ​ 419,123 ​ 289,107 General and administrative expenses ​ 565,400 ​ 347,302 ​ 1,146,470 ​ 582,850 Total operating expenses ​ 706,740 ​ 384,022 ​ 1,565,593 ​ 871,957 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INCOME FROM OPERATIONS ​ 545,629 ​ 924,141 ​ 829,833 ​ 902,729 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OTHER INCOME (EXPENSES) ​ ​ ​ ​ Interest expense, net ​ ( 334,855 ) ​ ( 819,921 ) ​ ( 771,914 ) ​ ( 1,533,109 ) Other income, net ​ 1,968 ​ 2,134 ​ 3,902 ​ 4,246 Total other expenses, net ​ ( 332,887 ) ​ ( 817,787 ) ​ ( 768,012 ) ​ ( 1,528,863 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INCOME (LOSS) BEFORE INCOME TAX PROVISION ​ 212,742 ​ 106,354 ​ 61,821 ​ ( 626,134 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax provision ​ 56,997 ​ 24,549 ​ 14,009 ​ ( 153,242 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME (LOSS) ​ $ 155,745 ​ $ 81,805 ​ $ 47,812 ​ $ ( 472,892 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earning (loss) per share - basic and diluted ​ $ 0.01 ​ $ 0.01 ​ $ 0.00 ​ $ ( 0.03 ) Weighted average shares - basic and diluted ​ 16,666,000 ​ 15,000,000 ​ 16,666,000 ​ 15,000,000 ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ ​ 2 Table of Contents CHEETAH NET SUPPLY CHAIN SERVICE INC. UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock* ​ ​ ​ ​ ​ ​ Class A ​ ​ ​ ​ Class B ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common ​ ​ ​ ​ Common ​ ​ ​ ​ paid-in ​ Subscription ​ Retained ​ Stockholders’ ​ stock Amount stock Amount capital Receivable Earnings Equity Balance, December 31, 2022 8,416,000 ​ $ 842 8,250,000 ​ $ 825 ​ $ 3,269,317 ​ $ ( 1,800,000 ) ​ $ 374,371 ​ $ 1,845,355 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock issuance — ​ — — ​ — ​ — ​ 700,000 ​ — ​ 700,000 Net loss for the period — ​ — — ​ — ​ — ​ — ​ ( 107,933 ) ​ ( 107,933 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, March 31, 2023 ​ 8,416,000 ​ $ 842 ​ 8,250,000 ​ $ 825 ​ $ 3,269,317 ​ $ ( 1,100,000 ) ​ $ 266,438 ​ $ 2,437,422 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income for the period ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 155,745 ​ ​ 155,745 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, June 30, 2023 8,416,000 ​ $ 842 8,250,000 ​ $ 825 ​ $ 3,269,317 ​ $ ( 1,100,000 ) ​ $ 422,183 ​ $ 2,593,167 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock* ​ ​ ​ ​ ​ ​ Class A ​ ​ ​ ​ Class B ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common ​ ​ ​ ​ Common ​ ​ ​ ​ paid-in ​ Subscription ​ Accumulated ​ Stockholders’ ​ stock Amount stock Amount capital Receivable Deficit Deficit Balance, December 31, 2021 6,750,000 ​ $ 675 8,250,000 ​ $ 825 ​ $ 270,684 ​ — ​ $ ( 442,609 ) ​ $ ( 170,425 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss for the period — ​ — — ​ — ​ — ​ — ​ ​ ( 554,697 ) ​ ​ ( 554,697 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, March 31, 2022 ​ 6,750,000 ​ $ 675 ​ 8,250,000 ​ $ 825 ​ $ 270,684 ​ ​ — ​ $ ( 997,306 ) ​ $ ( 725,122 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income for the period ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 81,805 ​ ​ 81,805 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, June 30, 2022 6,750,000 ​ $ 675 8,250,000 ​ $ 825 ​ $ 270,684 ​ — ​ $ ( 915,501 ) ​ $ ( 643,317 ) * Retrospectively restated for effect of the Company’s amended and restated articles of incorporation and bylaws and share issuances on July 11, 2022. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ ​ 3 Table of Contents CHEETAH NET SUPPLY CHAIN SERVICE INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended ​ ​ June 30, ​ 2023 2022 Cash flows from operating activities: ​ ​ Net income (loss) ​ $ 47,812 ​ $ ( 472,892 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: ​ ​ Amortization of operating lease right-of-use assets ​ 95,718 ​ 81,391 Inventory reserve recovery ​ — ​ ( 92,811 ) Deferred tax provision ​ 11,389 ​ ( 153,242 ) Changes in operating assets and liabilities: ​ ​ Accounts receivable ​ 4,939,770 ​ ( 8,037,635 ) Inventories ​ ( 996,990 ) ​ 8,938,100 Other receivables ​ 87,375 ​ 41,044 Due from a related party ​ — ​ 10,000 Prepaid expenses and other current assets ​ 162,515 ​ ( 341,907 ) Deferred revenue ​ — ​ ( 1,544,073 ) Other payables and other current liabilities ​ ( 101,508 ) ​ ( 24,468 ) Operating lease liabilities ​ ( 100,718 ) ​ ( 71,730 ) Net cash provided by (used in) operating activities ​ 4,145,363 ​ ( 1,668,223 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ Proceeds from issuance of common stock under private placement transaction ​ 700,000 ​ — Proceeds from inventory financing ​ — ​ 15,030,700 Repayments of inventory financing ​ ( 4,164,100 ) ​ ( 15,009,600 ) Proceeds from letter of credit financing ​ 12,705,140 ​ 20,192,971 Repayments of letter of credit financing ​ ( 14,865,396 ) ​ ( 19,471,200 ) Proceeds from loans from dealer finance ​ 340,729 ​ 20,063 Repayments of loans from dealers finance ​ ( 211,745 ) ​ ( 20,063 ) Proceeds from revolving Line of Credit ​ 2,536,154 ​ — Repayment of revolving Line of Credit ​ ( 665,000 ) ​ — Proceeds from long-term borrowings ​ — ​ 350,000 Repayments of long-term borrowings ​ ( 16,275 ) ​ ( 3,748 ) Borrowing from a related party ​ 28,875 ​ 313,913 Repayments made to a related party ​ — ​ ( 30,584 ) Net cash (used in) provided by financing activities ​ ( 3,611,618 ) ​ 1,372,452 ​ ​ ​ ​ ​ ​ ​ Net increase (decrease) in cash ​ 533,745 ​ ( 295,771 ) Cash, beginning of period ​ 58,381 ​ 500,977 Cash, end of period ​ $ 592,126 ​ $ 205,206 ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow information ​ ​ Cash paid for income taxes ​ $ 74,533 ​ $ 31,225 Cash paid for interest ​ $ 205,042 ​ $ 559,712 ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ ​ 4 Table of Contents CHEETAH NET SUPPLY CHAIN SERVICE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ​ NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION Cheetah Net Supply Chain Service Inc. (“Cheetah Net” or the “Company”), formerly known as Yuan Qiu Business Group LLC, was established under the laws of the State of North Carolina on August 9, 2016 as a limited liability company (“LLC”). On March 1, 2022, the Company filed articles of incorporation including articles of conversion with the Secretary of State of the State of North Carolina to convert from an LLC to a corporation, and changed its name to Cheetah Net Supply Chain Service Inc. The Company holds 100 % of the equity interests in the following entities: · (i) Allen-Boy International LLC (“Allen-Boy”), an LLC organized on August 31, 2016 under the laws of the State of Delaware, which was acquired by Cheetah Net from Yingchang Yuan, the previous owner of Allen-Boy who beneficially owns 1,200,000 shares of Class A common stock of Cheetah Net, for a total consideration of $ 100 on January 1, 2017. Allen-Boy did not have any business activities until acquired by Cheetah Net; · (ii) Canaan International LLC (“Fairview”), an LLC organized on December 5, 2018 under the laws of the State of North Carolina, known as Fairview International Business Group, LLC before changing its name by filing articles of amendment on July 21, 2020, which was acquired by Cheetah Net from Yiming Wang, the previous owner of Fairview, for a total consideration of $ 100 on January 1, 2019. Fairview did not have any business activities until acquired by Cheetah Net; · (iii) Pacific Consulting LLC (“Pacific”), an LLC organized on January 17, 2019 under the laws of the State of New York, which was acquired by Cheetah Net from Yingchang Yuan, the previous owner of Pacific who beneficially owns 1,200,000 shares of Class A common stock of Cheetah Net, for a total consideration of $ 100 on February 15, 2019. Pacific did not have any business activities until acquired by Cheetah Net; · (iv) Canaan Limousine LLC (“Limousine”), an LLC organized on February 10, 2021 under the laws of the State of South Carolina, which was acquired by Cheetah Net from Yingchang Yuan, the previous owner of Limousine who beneficially owns 1,200,000 shares of Class A common stock of Cheetah Net, for a total consideration of $ 100 on February 19, 2021. Limousine did not have any business activities until acquired by Cheetah Net; · (v) Entour Solutions LLC (“Entour”), an LLC organized on April 8, 2021 under the laws of the State of New York, which was acquired by Cheetah Net from Daihan Ding, the previous owner of Entour, and a current employee of Cheetah Net, for a total consideration of $ 100 on April 9, 2021. Entour did not have any business activities until acquired by Cheetah Net; and · (vi) Cheetah Net Logistics LLC (“Logistics”), an LLC organized on October 12, 2022 under the laws of the State of New York, whose previous sole member and owner, Hanzhang Li, the previous owner of Logistics, and a current employee of Cheetah Net, for a total consideration of $ 100 , assigned all his membership interests in Logistics to Cheetah Net on October 19, 2022. The Company and its wholly-owned subsidiaries are primarily engaged in the parallel-import vehicle dealership business. In the People’s Republic of China (the “PRC”), parallel-import vehicles refer to those purchased by dealers directly from overseas markets and imported for sale through channels other than brand manufacturers’ official distribution systems. Cheetah Net purchases automobiles from the U.S. market through its large team of professional purchasing agents, and resells them to parallel-import car dealers in the U.S. and the PRC. 5 Table of Contents Details of the subsidiaries of the Company as of the June 30, 2023 are set out below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Name of Entity Date of Incorporation State of Incorporation % of Ownership Principal Activities Cheetah Net ​ August 9, 2016 ​ North Carolina ​ Parent, 100 % ​ Parallel-import vehicle dealership business ​ Subsidiaries of the parent: ​ ​ ​ ​ ​ ​ ​ ​ ​ Allen-Boy ​ August 31, 2016 ​ Delaware ​ 100 % ​ Parallel-import vehicle dealership business ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fairview ​ December 5, 2018 ​ North Carolina ​ 100 % ​ Parallel-import vehicle dealership business ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pacific ​ January 17, 2019 ​ New York ​ 100 % ​ Parallel-import vehicle dealership business ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Limousine ​ February 10, 2021 ​ South Carolina ​ 100 % ​ Parallel-import vehicle dealership business ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Entour ​ April 8, 2021 ​ New York ​ 100 % ​ Parallel-import vehicle dealership business ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Logistics ​ October 12, 2022 ​ New York ​ 100 % ​ Parallel-import vehicle dealership business ​ ​ NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and noted thereto for the years ended December 31, 2022 and 2021, included in the Company’s Registration Statement on Form S-1. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the unaudited condensed consolidated financial statements not misleading have been included. Operating results for the interim period ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ended December 31, 2023. The accompanying unaudited condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All inter-company balances and transactions are eliminated upon consolidation. 6 Table of Contents Uses of estimates In preparing the unaudited condensed consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates are based on information as of the date of the unaudited condensed consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivables, inventory valuations, revenue recognition, and realization of deferred tax assets. Actual results could differ from those estimates. Risks and uncertainties The operations of the Company are located in the U.S. and the Company’s primary market is in the PRC. Accordingly, 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: · Changes in consumer demand in the Chinese market towards fuel-efficient vehicles and electric vehicles could adversely affect the Company’s vehicle sales volumes and results of operations; · The PRC government policies on the purchase and ownership of automobiles and stricter emissions standards may reduce the market demand for the automobiles the Company sells and thus negatively affect its business and growth prospects; · Any adverse change in political relations between the PRC and the U.S. or any other country where those brands originate, including the ongoing trade conflicts between the U.S. and the PRC, may negatively affect its business; · The ongoing military conflict between Russia and Ukraine could materially and adversely affect the global economy and capital markets, including significant volatility in commodity prices, especially energy prices, credit and capital markets, as well as supply chain interruptions; · The inflation in the economy may result in higher interest rates and capital costs, shipping costs, supply shortages, and increased costs of labor, and may adversely affect the Company’s liquidity, business, financial condition, and results of operations, particularly if the Company is unable to achieve commensurate increases in the prices the Company charges its customers. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations, including its organization and structure disclosed in Note 1, such experience may not be indicative of future 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. The Company’s operations have been affected by the COVID-19 pandemic. First, the COVID-19 pandemic has restricted the Company’s purchasing agents in the United States from freely purchasing designated automobiles at U.S. automobile dealerships, either because of the short supply of vehicles or because of store closings or limited opening hours due to the pandemic. Second, the COVID-19 pandemic adversely affected the market demand for its products. Due to the implementation of significant governmental measures in the PRC, including lockdowns, closures, quarantines, and travel bans, intended to control the spread of the virus, parallel-import vehicle consumers are less willing to spend and their purchasing power has declined. Consequently, the market demand for luxury cars, which make up the vast majority of the Company’s inventory, has decreased dramatically. However, in early December 2022, the Chinese government announced a nationwide loosening of its zero-COVID policy, and the PRC faced a wave in infections after the lifting of these restrictions. Although the spread of COVID-19 appears to be under control currently, the extent to which the COVID-19 pandemic may impact the Company’s future financial results will depend on future developments, 7 Table of Contents such as new information on the effectiveness of the mitigation strategies, the duration, spread, severity, and recurrence of COVID-19 and any COVID-19 variants, the related travel advisories and restrictions, the overall impact of the COVID-19 pandemic on the global economy and capital markets, and the efficacy of COVID-19 vaccines, which may also take extended time to be widely and adequately distributed, all of which remain highly uncertain and unpredictable. Given this uncertainty, the Company is currently unable to quantify the expected impact of the COVID-19 pandemic on its future operations, financial condition, liquidity, and results of operations if the current situation continues. Cash Cash includes deposits held by banks that can be added or withdrawn without limitation. The Company considers all highly liquid investments purchased with a maturity of three or fewer months to be cash equivalents. As of June 30, 2023 and December 31, 2022, the Company did not have any cash equivalents. Accounts receivable Accounts receivable represent the amounts that the Company has an unconditional right to consideration, which are stated at the original amount less an allowance for doubtful accounts. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. The Company usually determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivable balances, with a corresponding charge recorded in the unaudited condensed consolidated statements of operations. Delinquent account balances are written off against the allowance for doubtful accounts after management has determined that the likelihood of collection is remote. In circumstances in which the Company receives payments for accounts receivable that have previously been written off, the Company reverses the allowance and bad debt expenses. As of June 30, 2023 and December 31, 2022, there was no allowance for doubtful accounts recorded as the Company considers all of the outstanding accounts receivable fully collectible. Inventories, net Inventories consist of new vehicles held for sale, and are stated at the lower of cost or net realizable value using the specific identification method. The value of inventory mainly includes the cost of auto vehicles purchased from U.S. automobile dealers, non-refundable sales tax, and dealership service fees. The Company reviews its inventory periodically if any reserves are necessary for potential shrinkage. The Company recorded no inventory reserve as of June 30, 2023 and December 31, 2022. Fair value of financial instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. ● Level 3 — inputs to the valuation methodology are unobservable. ​ Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, inventories, prepaid expenses and other current assets, loans payable, deferred revenue and other payables and other current liabilities, approximated the fair value of the respective assets and liabilities as of June 30, 2023 and December 31, 2022 based upon the short-term nature of the assets and liabilities. 8 Table of Contents The Company believes that the carrying amount of long-term loans approximated fair value as of June 30, 2023 and December 31, 2022 based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rates. 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 June 30, 2023 and December 31, 2022. Revenue recognition On January 1, 2020, the Company adopted ASC 606 using the modified retrospective approach. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements. Therefore, no adjustments to opening retained earnings were necessary. 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. The Company is primarily engaged in the parallel-import vehicle dealership business and generates its revenue 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 large team of professional purchasing agents, and mainly resells them to parallel-import car 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 car 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 (“CFR”) shipping point term, 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 car dealers, and there is no separately identifiable other promise in the contracts. The Company’s vehicles are sold with no right of 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 three and six months ended June 30, 2023 and 2022. 9 Table of Contents Contract balances and remaining performance obligations Contract balances typically arise when a difference in timing between the transfer of control to the parallel-import car dealers and receipt of consideration occurs. The Company did not have contract assets as of June 30, 2023 and December 31, 2022. The Company did not have contact liabilities as of June 30, 2023 and December 31, 2022. Disaggregation of Revenue The Company disaggregates its revenue by geographic areas, as the Company believes it best depicts how the nature, amount, timing, and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenue for the three and six months ended June 30, 2023 and 2022 were as follows: Geographic information The summary of the Company’s total revenue by geographic area for the three and six months ended June 30, 2023 and 2022 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Six Months Ended ​ ​ June 30, ​ June 30, ​ 2023 2022 2023 2022 ​ ​ (Unaudited) ​ (Unaudited) ​ (Unaudited) ​ (Unaudited) U.S. domestic market ​ $ 5,257,545 ​ $ 1,320,876 ​ $ 6,915,780 ​ $ 3,431,478 Overseas market ​ 6,965,481 ​ 19,468,088 ​ 15,521,688 ​ 30,175,557 Total revenue ​ $ 12,223,026 ​ $ 20,788,964 ​ $ 22,437,468 ​ $ 33,607,035 ​ Cost of revenue Cost of revenue mainly includes the cost of auto vehicles purchased from U.S. automobile dealers, non-refundable sales tax, dealership service fees, and other expenses. It also includes fulfillment expenses, which consist primarily of (i) vehicle warehousing and towing fees, (ii) vehicle insurance expenses, (iii) commissions paid to purchasing agents incurred in vehicle pick-up and the vehicle title transfer process, (iv) broker consulting fees incurred to acquire new vehicles, and (v) purchase department labor costs. 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 the 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 in income in the period that includes the enactment date. 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 has not assessed a valuation allowance as it has determined it is more likely than not that all deferred tax assets will be realized before expiration. 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, is and when required, as part of income tax expenses in the unaudited condensed consolidated statements of operations. The Company does not believe that there were any uncertain tax positions as of June 30, 2023 and December 31, 2022. 10 Table of Contents The Company and its operating subsidiaries in the United States are subject to the tax law of the United States. The Company elected to file income taxes as a corporation instead of an LLC for the tax years ended December 31, 2020 through December 31, 2021. As of June 30, 2023, the Company’s consolidated income tax returns for the tax years ended December 31, 2020 through December 31, 2022, remained open for statutory examination by U.S. tax authorities. Earnings (Loss) per share The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net earnings (loss) 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. For the three and six months ended June 30, 2023 and 2022, there were no dilutive shares. 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 to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies 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. Shipping and handling costs Shipping and handling costs, which are associated with shipping and delivery of vehicles to automobile dealers, are expensed as incurred and are included in selling expenses in the unaudited condensed consolidated statements of operations. Total shipping and handling expenses were $ 78,252 and $ 291,712 for the three and six months ended June 30, 2023, respectively, and negative $ 7,160 and $ 200,765 for the three and six months ended June 30, 2022, respectively. The negative shipping and handling expenses were a result of receiving a credit of $ 270,000 from one of the Company’s vendors. 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. Management has determined that the Company has one operating segment. Recent accounting pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 was subsequently amended by ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and ASU 2019-05, Targeted Transition 11 Table of Contents Relief. In November 2019, the FASB issued ASU 2019-10, which extends the effective date for the adoption of ASU 2016-13. In November 2019, the FASB issued ASU 2019-11 to clarify its new credit impairment guidance in ASU 326. Accordingly, for public entities that are not smaller reporting entities, ASU 2016-13 and its amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For all other entities, this guidance and its amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As an emerging growth company, the Company adopted this guidance on January 1, 2023, which adoption of this ASU did not have a material impact on its unaudited condensed consolidated financial statements. In August 2018, the FASB Accounting Standards Board issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for all entities for fiscal years and interim periods within those fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The removed and modified disclosures were adopted on a retrospective basis and the new disclosures were adopted on a prospective basis. The Company adopted this guidance on January 1, 2020 and the adoption of this ASU did not have a material impact on its unaudited condensed consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, with early adoption permitted. The Company adopted this guidance on January 1, 2021, which adoption of this ASU did not have a material impact on its unaudited condensed consolidated financial statements. NOTE 3 — ACCOUNTS RECEIVABLE Accounts receivable consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2023 ​ 2022 ​ ​ (Unaudited) ​ Accounts receivable ​ $ 2,146,882 ​ $ 7,086,651 Less: allowance for doubtful accounts ​ — ​ — Total accounts receivable ​ $ 2,146,882 ​ $ 7,086,651 ​ The Company’s accounts receivable primarily include balances generated from selling parallel-import vehicles to both domestic and overseas parallel-import car dealers, which have not been collected as of the balance sheet dates. The accounts receivable transactions in connection with letters of credit with book values $ 5,097,778 and $ 7,502,291 were pledged as collateral to guarantee the Company’s borrowings from four third-party lending companies as of June 30, 2023 and December 31, 2022, respectively (see Note 8). NOTE 4 — INVENTORIES Inventories consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 December 31, 2022 ​ ​ (Unaudited) ​ ​ ​ Vehicles ​ $ 6,962,926 ​ $ 5,965,935 Subtotal ​ 6,962,926 ​ 5,965,935 Less: inventory valuation allowance ​ — ​ — Total inventories ​ $ 6,962,926 ​ $ 5,965,935 ​ Allowance for changes in inventory valuation allowance was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 December 31, 2022 ​ ​ (Unaudited) ​ ​ Beginning balance ​ $ — ​ $ 92,811 12 Table of Contents Inventory reserve charged to costs of sales ​ — ​ — Sale of previously reserved inventory ​ — ​ ( 92,811 ) Ending balance ​ $ — ​ $ — ​ The following table summarizes the Company’s inventory aging: ​ ​ ​ ​ ​ ​ June 30, 2023 ​ ​ (Unaudited) Inventories aged less than 3 months ​ $ 6,654,303 Inventories aged from 4‑6 months ​ 308,623 Less: inventory valuation allowance ​ — Total inventories ​ $ 6,962,926 ​ In connection with the Company’s inventory financing from loans payable, amounting to nil and $ 4,164,100 as of June 30, 2023 and December 31, 2022, respectively, the Company pledged its inventory with book values of nil and $ 4,095,132 as collateral for these loans, respectively (see Note 7). The Company’s vehicles in inventory with book values of $ 275,957 and $ 141,557 were pledged as collateral to guarantee the loans payable from dealers finance as of June 30, 2023 and December 31, 2022, respectively (see Note 9). NOTE 5 — OTHER RECEIVABLES Other receivables consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 December 31, 2022 ​ ​ (Unaudited) ​ ​ Vehicle Deposit (1) ​ $ 256,859 ​ $ 400,659 Rent Deposit ​ 51,540 ​ 41,845 Sales tax refundable (2) ​ 486,242 ​ 419,886 Others ​ 18,714 ​ 38,340 Subtotal ​ 813,355 ​ 900,730 Less: allowance for doubtful accounts ​ — ​ — Total other receivables ​ $ 813,355 ​ $ 900,730 ​ (1) Vehicle deposits represent security deposits paid to U.S. automobile dealers to reserve vehicles. (2) Sales tax refundable represents vehicles sales tax exempted in some states and to be refunded by the tax authorities. ​ NOTE 6 — LEASES The Company leases office spaces from various third parties under non-cancelable operating leases, with terms ranging from 12 to 37 months . The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of ROU assets and lease liabilities. Lease expenses are recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company determines whether a contract is or contains a lease at the inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. On April 28, 2023, the Company entered a First Amendment to Lease Agreement (the “ Amended Lease ”) with one of its landlords, which amended a previous lease agreement between the two parties, whereby the Company leases office space from the landlord with an initial lease term from December 1, 2020, to December 31, 2023. Pursuant to the Amended Lease, the initial lease term is extended for a period commencing January 1, 2024 and expiring February 28, 2027, unless sooner terminated as provided in the Amended Lease. 13 Table of Contents The Company is also granted the option to extend the lease term for another three years starting from March 1, 2027 and ending February 28, 2030. The table below presents the operating lease related assets and liabilities recorded on the balance sheets. ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 December 31, 2022 Right-of-use assets ​ $ 235,249 ​ $ 140,145 ​ ​ ​ ​ ​ ​ ​ Operating lease liabilities – current ​ $ 62,354 ​ $ 149,458 Operating lease liabilities – non-current ​ 177,208 ​ — Total operating lease liabilities ​ $ 239,562 ​ $ 149,458 ​ The weighted average remaining lease terms and discount rates for all operating leases were as follows as of June 30, 2023 and December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 December 31, 2022 ​ ​ (Unaudited) ​ Remaining lease term and discount rate: ​ ​ Weighted average remaining lease term (years) 2.64 0.77 ​ Weighted average discount rate * 17.8 % 17.1 % * The Company used weighted average incremental borrowing rate of 17.8 % per annum for its lease contracts based on the Company’s current borrowings from various financial institutions. ​ During the three months ended June 30, 2023 and 2022, the Company incurred total operating lease expenses of $ 74,674 and $ 54,191 , respectively. During the six months ended June 30, 2023 and 2022, the Company incurred total operating lease expenses of $ 130,280 and $ 107,653 , respectively. The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2023: ​ ​ ​ ​ ​ Twelve months ending June 30, Amount 2024 ​ $ 77,196 2025 ​ 80,864 2026 ​ 83,290 2027 ​ 56,770 Total lease payments ​ 298,120 Less: imputed interest ​ ( 58,558 ) Present value of lease liabilities ​ $ 239,562 ​ ​ NOTE 7 — INVENTORY FINANCING There were no inventory financing loan agreements executed during the three and six months ended June 30, 2023. No inventory was being held as collateral, and the balance of inventory financing was nil , as of June 30, 2023. The Company entered into a series of inventory financing loan agreements with a third party for working capital purposes during the three and six months ended June 30, 2022, pursuant to which the Company pledged a portion of its vehicle inventory as collateral for each of the loan agreements. Interest expenses are calculated based on the actual number of days the loan was outstanding and payable upon settlement of the loan. For loan amount outstanding no more than 90 days, the Company is charged an interest rate ranging between 16.2 % and 21.6 %, per annum, and if the amount is outstanding for more than 90 days, the Company is charged an interest rate ranging between 20.7 % and 27.6 %, per annum. The loans are guaranteed by the controlling stockholder Huan Liu and one other stockholder of the Company. The inventory financing amounted to nil and $ 4,164,100 as of June 30, 2023 and December 31, 2022, respectively. The interest expenses for inventory financing were $ 14,246 and $ 112,769 for the three and six months ended June 30, 2023, respectively, and $ 301,868 and 14 Table of Contents $ 545,306 for the three and six months ended June 30, 2022, respectively. The Company’s vehicles inventory with book values of nil and $ 4,095,132 were pledged as collateral to guarantee the Company’s borrowings from this third party as of June 30, 2023 and December 31, 2022, respectively (see Note 4). NOTE 8 — LETTER OF CREDIT FINANCING (“LC FINANCING”) The Company entered into a series of loan agreements with three third-party companies for working capital funding purposes during the three and six months ended June 30, 2023 and 2022. Pursuant to the agreements, loans payable from LC financing were collateralized by letters of credit from overseas sales of parallel-import vehicles. Interest expenses are calculated based on the actual number of days the loan was outstanding and payable upon settlement, and the Company is charged at an interest rate ranging between 15.0 % and 27.6 % per annum. The LC financing amounted to $ 4,945,617 and $ 7,105,873 as of June 30, 2023 and December 31, 2022, respectively. The interest expenses for LC financing were $ 251,031 and $ 581,456 for the three and six months ended June 30, 2023, respectively, and $ 512,509 and $ 976,780 for the three and six months ended June 30,2022, respectively. The accounts receivable transactions in connection with letters of credit with book values $ 5,097,778 and $ 7,502,291 were pledged as collateral to guarantee the Company’s borrowings from these three third-party lending companies as of June 30, 2023 and December 31, 2022, respectively (see Note 3). NOTE 9 — DEALERS FINANCE Loans payable from dealers finance reflect amounts borrowed from various automobile dealers to finance the purchased vehicles. The original term of these loans is between five to six years ; however, the Company repaid these loans within two months . The Company is charged an interest rate ranging between 5.09 % and 9.84 %, per annum. The dealers finance amounted to $ 170,732 and $ 41,747 as of June 30, 2023 and December 31, 2022, respectively. The interest expenses for dealers finance were $ 2,850 and $ 3,016 for the three and six months ended June 30, 2023, respectively, and $ 109 for the three and six months ended June 30, 2022. The Company’s vehicles in inventory with book values of $ 275,957 and $ 141,557 were pledged as collateral to guarantee the loans payable from dealers finance as of June 30, 2023 and December 31, 2022, respectively (see Note 4). NOTE 10 — REVOLVING LINE OF CREDIT On October 5, 2022, the Company entered into two Revolving Line of Credit Agreements (the “Agreements”) with two third-party companies that have been providing financial support to the Company since 2021. Pursuant to the Agreements, the Company can borrow under revolving lines of credit of up to $ 10.0 million and $ 5.0 million, respectively, from these two third-party companies with a total of $ 15.0 million for a period of 12 months at a fixed interest rate of 1.5 % per month. On December 12, 2022, the Company amended the Agreements to extend the maturity date to April 2024. During the three and six months ended June 30, 2023, the Company borrowed a total of nil and $ 2,536,154 , respectively, and paid back nil and $ 665,000 , respectively. As of June 30, 2023 and December 31, 2022, the revolving line of credit balance was $ 1,871,154 and nil , respectively. The interest expenses for revolving lines of credit were $ 57,398 for the three and six months ended June 30, 2023 and nil for the three and six months ended June 30, 2022. 15 Table of Contents NOTE 11 — LONG-TERM BORROWINGS Long-term borrowings consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2023 ​ 2022 ​ ​ (Unaudited) ​ ​ ​ Small Business Administration (1) ​ $ 484,263 ​ $ 490,130 Thread Capital Inc. (2) ​ 209,186 ​ 219,593 Total long-term borrowings ​ $ 693,449 ​ $ 709,723 ​ ​ ​ ​ ​ ​ ​ Current portion of long-term borrowings ​ $ 32,074 ​ $ 31,281 ​ ​ ​ ​ ​ ​ ​ Non-current portion of long-term borrowings ​ $ 661,375 ​ $ 678,442 (1) On May 24, 2020, the Company entered into a loan agreement with the U.S. Small Business Administration (the “SBA”), an agency of the U.S. Government, to borrow $ 150,000 for thirty years , with a maturity date of May 23, 2050. Under the terms of the SBA loan, the loan proceeds are used as working capital to alleviate economic injury caused by the COVID-19 pandemic. The loan bears a fixed interest rate of 3.75 % per annum. Beginning 12 months from the date of this loan agreement, the Company is required to make a monthly installment payment of $ 731 within the term of loan, with last installment to be paid in May 2050. ​ On March 16, 2022, the Company entered into an amended agreement with SBA to borrow an additional $ 350,000 for 30 years as working capital to alleviate economic injury caused by the COVID-19 pandemic. In aggregate, the Company’s borrowings amounted to $ 500,000 with a maturity date of May 23, 2050. The amended loan bears a fixed interest rate of 3.75 % per annum. Beginning from March 2022, 24 months from the date of the original loan agreement, the Company is required to make a new monthly installment payment of $ 2,485 within the remaining term of loan, with the last installment to be paid in May 2050. ​ The future maturities of the loan from SBA as of June 30, 2023 were as follows: ​ ​ ​ ​ Twelve months ending June 30, Future repayment 2024 ​ $ 10,382 2025 ​ 10,805 2026 ​ 11,247 2027 ​ 11,706 2028 ​ 12,183 Thereafter ​ 427,940 Total ​ $ 484,263 (2) On May 15, 2020, the Company entered into a loan agreement with Thread Capital Inc. (“Thread Capital”) to borrow $ 50,000 as working capital with a maturity date of November 1, 2024. The loan bore a fixed interest rate of 5.50 % per annum. This loan agreement was subsequently terminated on May 17, 2021, and the Company entered into a new loan agreement with Thread Capital to borrow an additional $ 171,300 as working capital. In aggregate, the Company’s borrowings from Thread Capital amounted to $ 221,300 with a maturity date of May 1, 2031. The interest was charged at a fixed annual interest rate of 0.25 % between June 1, 2021 and November 30, 2022. Beginning from December 1, 2022, the loan bears a fixed annual interest rate of 5.5 %, and the Company is required to make a monthly installment payment of $ 2,721 within the remaining term of loan, with the last installment to be paid in May 2031. ​ 16 Table of Contents The future maturities of the loan from Thread Capital as of June 30, 2023 were as follows: ​ ​ ​ ​ Twelve months ending June 30, Future repayment 2024 ​ $ 21,692 2025 ​ 22,916 2026 ​ 24,208 2027 ​ 25,574 2028 ​ 27,016 Thereafter ​ 87,780 Total ​ $ 209,186 ​ For the above-mentioned long-term borrowings, the Company recorded interest expense of $ 7,894 and $ 15,794 for the three and six months ended June 30, 2023, respectively, and $ 5,023 and $ 7,654 for the six months ended June 30, 2022, respectively. NOTE 12 — RELATED PARTY TRANSACTIONS a. Nature of relationship with a related party ​ ​ ​ ​ ​ Name Relationship with Our Company Mr. Huan Liu ​ Chief Executive Officer (“CEO”) and Chairman of the Board of Directors ​ ​ b . Due to a related party Amount due to a related party represented amounts due to the Company’s CEO, Mr. Huan Liu, for working capital purposes during the Company’s normal course of business. These payables are unsecured, non-interest bearing, and due on demand. During the three months ended June 30, 2023 and 2022, the Company borrowed an aggregate of $ 28,875 and nil , respectively. During the six months ended June 30, 2023 and 2022, the Company borrowed an aggregate of $ 28,875 and $ 313,913 , respectively, from Mr. Huan Liu directly as working capital and used such funds to purchase vehicles. The Company made repayments to Mr. Huan Liu in the amount of nil during the three months ended June 30, 2023 and 2022 and $ 20,584 during the six months ended June 30, 2023 and 2022. NOTE 13 — INCOME TAXES The Company and its operating subsidiaries in United States are subject to the tax law of the United States. The Company elected to file income taxes as a corporation instead of an LLC for the tax years ended December 31, 2020 through December 31, 2021. (i) The components of the income tax provision were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, ​ June 30, ​ ​ 2023 ​ 2022 ​ 2023 ​ 2022 Current: ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ $ ( 9,517 ) ​ $ — ​ $ 2,400 ​ $ — State ​ ​ ( 1,283 ) ​ ​ — ​ 220 ​ — Total current income tax provision ​ ​ ( 10,800 ) ​ ​ — ​ 2,620 ​ — Deferred: ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ ​ 50,633 ​ ​ 21,928 ​ 16,466 ​ ( 127,612 ) State ​ ​ 17,164 ​ ​ 2,621 ​ ( 5,077 ) ​ ( 25,630 ) Total deferred income tax expenses (benefit) ​ ​ 67,797 ​ ​ 24,549 ​ 11,389 ​ ( 153,242 ) Total income tax benefit ​ $ 56,997 ​ $ 24,549 ​ $ 14,009 ​ $ ( 153,242 ) ​ 17 Table of Contents (ii) Reconciliations of the statutory income tax rate to the effective income tax rate were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended For the Six Months Ended ​ ​ June 30, ​ June 30, ​ ​ ​ 2023 2022 2023 2022 Federal statutory tax rate ​ $ 21.0 % $ 21.0 % $ 21.0 % $ 21.0 % State statutory tax rate ​ 5.8 % ​ 2.0 % ​ ( 6.2 ) % ​ 0.2 % Non-deductible expenses ​ 0.0 % ​ 0.1 % ​ 0.2 % ​ ( 0.0 ) % Non-taxable income ​ 0.0 % ​ 0.0 % ​ 7.7 % ​ 3.3 % Effective tax rate ​ $ 26.8 % $ 23.1 % $ 22.7 % $ 24.5 % ​ (iii) Deferred tax assets were composed of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2023 ​ 2022 ​ ​ (Unaudited) ​ ​ ​ Deferred tax assets: ​ ​ ​ Net operating loss carry-forwards ​ $ 74,309 ​ $ 84,496 Others ​ 1,036 ​ 2,238 Total deferred tax assets ​ $ 75,345 ​ $ 86,734 ​ As of December 31, 2022, the Company had a cumulative U.S. federal net operating loss (“NOL”) of $ 327,648 , which may reduce future federal taxable income. During the six months ended June 30, 2023, the Company’s operations utilized NOL of $ 68,334 , resulting in a cumulative U.S. federal NOL of $ 259,314 as of June 30, 2023, which is carried forward indefinitely. As of June 30, 2023, the Company also had a cumulative state NOL of $ 209,285 , which may reduce future state taxable income, and the NOL balance as of June 30, 2023 will expire beginning in 2041. The Company was not previously subject to the interest expense limitation under §163(j) of the U.S. Internal Revenue Code, due to a small business exemption. Its average annual gross receipts for the three tax years preceding 2022 do not exceed the relevant threshold amount ($ 27 million for 2022). The Company will no longer meet the small business exception in 2023, but it meets one of the other exceptions to the §163(j) limitation, “floor plan financing indebtedness” (indebtedness used to finance the acquisition of motor vehicles held for sale or lease or secured by such inventory), and will therefore be exempt from the §163(j) interest expense limitation in 2023. The Company periodically evaluates the likelihood of the realization of deferred tax assets and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that could affect the Company’s future realization of deferred tax assets including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant factors. The Company believes that it is more likely than not that its deferred tax assets will be realized before expiration. NOTE 14 — CONCENTRATIONS Political and economic risk The operations of the Company are located in the U.S. and the Company’s primary market is in the PRC. Accordingly, 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 economy. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in the U.S. and the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations, including its organization and structure disclosed in Note 1, such experience may not be indicative of future results. 18 Table of Contents Credit risk As of June 30, 2023 and December 31, 2022, $ 592,126 and $ 58,381 of the Company’s cash was on deposit at financial institutions in the U.S., respectively, which were insured by the Federal Deposit Insurance Corporation subject to certain limitations. The Company has not experienced any losses in such accounts. Accounts receivable are typically unsecured and derived from revenue earned from parallel-import car dealers, thereby exposing the Company to credit risk. This risk is mitigated by the Company’s assessment of its parallel-import car dealers’ creditworthiness and its ongoing monitoring of outstanding balances. Concentrations The Company’s major customers are parallel-import automobile dealers. For the six months ended June 30, 2023, three parallel-import car dealers accounted in total for 100.0 % ( 41.5 %, 30.8 %, and 27.7 %, respectively) of the Company’s total revenue. For the six months ended June 30, 2022, three parallel-import car dealers accounted for approximately 60.6 % ( 33.2 %, 15.8 %, and 11.6 %, respectively) of the Company’s total revenue. As of June 30, 2023, two parallel-import car dealers accounted for 97.7 % ( 48.9 % and 48.8 %, respectively) of the accounts receivable balance. As of December 31, 2022, two parallel-import car dealers accounted for approximately 88.7 % ( 77.0 % and 11.7 %, respectively) of the accounts receivable balance. For the three and six months ended June 30, 2023, one U.S.-based automobile dealership accounted for approximately 5.5 % and 9.9 %, respectively, of the Company’s total purchases. For the three and six months ended June 30, 2022, one U.S.-based automobile dealership accounted for approximately 11.9 % and 14.8 %, respectively, of the Company’s total purchases. NOTE 15 — STOCKHOLDERS’ EQUITY Common Stock Cheetah Net was established under the laws of the State of North Carolina on August 9, 2016. Under the Company’s amended and restated articles of incorporation on July 11, 2022, the total authorized number of common stocks is 100,000,000 with par value of $ 0.0001 per common stock, which consists of 91,750,000 shares of Class A common stock and 8,250,000 shares of Class B common stock. The total number of shares of common stock outstanding is 15,000,000 , which consists of 6,750,000 shares of Class A common stock and 8,250,000 shares of Class B common stock. Holders of Class A common stock and Class B common stock have the same rights except for voting and conversion rights. In respect of matters requiring the votes of stockholders, each share of Class A common stock is entitled to one vote, and each share of Class B common stock is entitled to 15 votes. Class B common stock is convertible into Class A common stock at any time after issuance at the option of the holder on a one-to-one basis. Class A common stock is not convertible into shares of any other class. The numbers of authorized and outstanding common stock were retroactively applied as if the transaction occurred at the beginning of the period presented. On June 27, 2022, the Company entered into a subscription agreement with a group of investors (the “Investors”), whereby the Company agreed to sell, and the Investors agreed to purchase, up to 1,666,000 shares of Class A common stock at a purchase price of $ 1.80 per share. These Investors are unrelated parties to the Company. The gross proceeds were approximately $ 3.0 million, before deducting offering expenses of approximately $ 0.3 million. The net proceeds were approximately $ 2.7 million, of which approximately $ 1.2 million was received in 2022 and $ 1.2 million in 2023, for a total receipt of approximately $ 2.4 million. The remaining proceeds are expected to be received in full before the end of the third quarter of 2023. As a result, 16,666,000 shares were issued and outstanding as of June 30, 2023 and December 31, 2022, among which the Company had 8,416,000 shares of Class A common stock issued and outstanding as of June 30, 2023 and December 31, 2022, and 8,250,000 shares of Class B common stock issued and outstanding as of June 30, 2023 and December 31, 2022. 19 Table of Contents NOTE 16 — COMMITMENTS AND CONTINGENCIES On February 8, 2023, ISY1 LLC (the “Plaintiff”) commenced a lawsuit against the Company in the Superior Court of New Jersey. The Plaintiff alleged that the Company offered to pay the Plaintiff to arrange for the transport of certain automobiles for the benefit of the Company, the Plaintiff accepted the Company’s offer and rendered its services by contracting with and paying third parties who transported these automobiles. However, after the Plaintiff submitted the invoices, the Company refused to make the payment on the grounds that the Plaintiff’s services had not meet the Company’s expectation. Therefore, the Plaintiff is seeking $ 86,355 in monetary damages, reimbursement of all costs and attorneys’ fees, and other relief as the Court may deem just and proper. The Company accrued a payable total of $ 86,285 , which was recorded in accounts payable on the unaudited condensed consolidated balance sheet as of June 30, 2023. On February 23, 2023, the Company filed a complaint in the Supreme Court of the State of New York County against Stefanie A. Rehfeld (the “Defendant”), alleging breach of contract as the Defendant had misappropriated an automobile belonging to the assets of the Company. Pursuant to an independent contractor agreement dated June 30, 2022 (the “Agreement”), the Company retained the Defendant as an independent contractor to locate and acquire certain new model luxury vehicles. The Company was obligated to fully fund the purchase of each vehicle, and the Defendant was required to locate and acquire the vehicle and turn over title and possession to the Company in exchange for a commission fee. In February 2023, after the Company fully funded the purchase of a 2023 Mercedes Benz GLS 450 (the “Mercedes”) for a total amount of $ 102,593.50 , the Defendant obtained the possession of the Mercedes from a Mercedes Benz dealership and signed a bill of sale with the Company, whereby she agreed to sell, transfer, and convey the title to the Mercedes to the Company. However, the Defendant drove the Mercedes away, and failed to transfer the title of the Mercedes to the Company as scheduled. Therefore, the Company is seeking to require the Defendant to transfer title and deliver possession of the Mercedes to the Company and recover the costs incurred in retrieving the car, or alternatively, the monetary damages resulting from the Defendant’s misappropriation of the Mercedes, including the court costs and attorneys’ fees and expenses reasonably incurred. On April 25, 2023, the Supreme Court of the State of New York County granted the Company’s motion for summary judgment on its second and fourth causes of action, ruling in favor of the Company. Subsequently, an inquest will be conducted to determine the precise amount owed to the Company. The Company is required to file a note of issue for the inquest by May 17, 2023, and serve the Defendant with a copy of the court’s order and notice of entry via email by May 12, 2023. On July 6, 2023, the Company filed a note of issue for a damages inquest to recover fees and expenses for reclaiming the Mercedes. On August 8, 2023, the Company received the Mercedes title. As of the date of this quarterly report, the date for the inquest remains pending. Based on the outcome of the court’s motion dated April 25, 2023 and the Company’s overall assessment, the Company believes that it is highly likely to succeed in its claims against the Defendant and recover fees and expenses for reclaiming the Mercedes. NOTE 17 — SUBSEQUENT EVENT On August 3, 2023, the Company closed its initial public offering of 1,250,000 shares of Class A common stock at a public offering price of $ 4.00 per share, for aggregate gross proceeds of $ 5.0 million before deducting underwriting discounts, commissions, and other offering expenses. The Company’s Class A common stock began trading on the Nasdaq stock exchange under the ticker symbol “CTNT” on August 1, 2023. As of August 3, 2023, there were 9,666,000 shares of Class A common stock issued and outstanding. These unaudited condensed consolidated financial statements were approved by management and available for issuance on September 5, 2023, and the Company has evaluated subsequent events through this date. No subsequent events required adjustments to or disclosure in these unaudited condensed consolidated financial statements. ​ 20 Table of Contents