What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-09-05 · 187 added, 232 removed, 384 unchanged (52% of the section changed)

1 unchanged sentence

CHEETAH NET SUPPLY CHAIN SERVICE INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

September 30,

CURRENT ASSETS:

Accounts receivable

Inventories, net

Other receivables

5 unchanged sentences

CURRENT LIABILITIES:

Short-term borrowings

Accounts payable

Current portion of long-term borrowings

2 unchanged sentences

Loans payable from dealers finance

Loans payable from revolving line of credit

Loans payable from line of credit

Loans payable from premium finance

Due to a related party

Operating lease liabilities, current

Accrued expenses

Other payables and other current liabilities

TOTAL CURRENT LIABILITIES

Long-term borrowings, non-current

Long-term borrowings

Operating lease liabilities, non-current

4 unchanged sentences

17,916,000 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

Class A common stock, $ 0.0001 par value - 91,750,000 shares authorized, 9,666,000 and 8,416,000 shares issued and outstanding

Class B common stock, $ 0.0001 par value - 8,250,000 shares authorized, 8,250,000 shares issued and outstanding

2 unchanged sentences

( 1,800,000 )

Retained earnings

4 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

COST OF REVENUE

7 unchanged sentences

INCOME FROM OPERATIONS

OTHER INCOME (EXPENSES)

OTHER (EXPENSE) INCOME, NET

Interest expense, net

( 1,058,111 )

( 2,141,206 )

Other income, net

Total other expenses, net

Subsidy income from Business Recovery Grant Program

Total other (expense) income, net

( 1,054,102 )

INCOME (LOSS) BEFORE INCOME TAX PROVISION

INCOME BEFORE INCOME TAX PROVISION

Income Tax Provision

NET INCOME (LOSS)

Earning (loss) per share - basic and diluted

Earnings per common share - basic and diluted

Weighted average shares - basic and diluted

8 unchanged sentences

Net loss for the period

Balance, March 31, 2023

( 1,100,000 )

Net income for the period

Balance, June 30, 2023

( 1,100,000 )

Initial public offering, net of issuance cost

Stock Issuance

Net income for the period

Balance, September 30, 2023

Common Stock*

Retained Earnings

Stockholders’

Equity (Deficit)

Balance, December 31, 2021

Net loss for the period

Balance, March 31, 2022

Net income for the period

Balance, June 30, 2022

Stock Issuance

( 2,398,800 )

Net income for the period

Balance, September 30, 2022

( 2,398,800 )

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.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

CHEETAH NET SUPPLY CHAIN SERVICE INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Amortization of operating lease right-of-use assets

7 unchanged sentences

Prepaid expenses and other current assets

( 1,683,696 )

Deferred revenue

2 unchanged sentences

Operating lease liabilities

Net cash provided by (used in) operating activities

( 1,668,223 )

Net cash provided by operating activities

Cash flows from financing activities:

Proceeds from initial public offering, net

Proceeds from issuance of common stock under private placement transaction

9 unchanged sentences

Repayments of loans from dealers finance

Proceeds from revolving Line of Credit

Repayment of revolving Line of Credit

Proceeds from line of credit

Repayment of line of credit

( 2,375,197 )

Proceeds from premium finance

Proceeds from long-term borrowings

2 unchanged sentences

Repayments made to a related party

Net cash (used in) provided by financing activities

( 1,140,584 )

Net increase (decrease) in cash

Cash, beginning of period

Cash, end of period

Net cash used in financing activities

( 2,225,246 )

( 2,346,634 )

Net increase in cash

Cash, beginning of year

Cash, end of year

Supplemental cash flow information

22 unchanged sentences

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.

Details of the subsidiaries of the Company as of the June 30, 2023 are set out below:

The Company purchases automobiles from the U.S.

market through its large team of professional purchasing agents and resells the automobiles to parallel-import car dealers in the U.S.

Details of the subsidiaries of the Company as of September 30, 2023 are set out below:

Name of Entity

28 unchanged sentences

vehicle dealership

On August 3, 2023, the Company completed its initial public offering (“IPO”) of 1,250,000 shares of Class A common stock, par value $ 0.0001 per share, at a price to the public of $ 4.00 per share.

The Company’s Class A common stock began trading on the Nasdaq Capital Market under the ticker symbol “CTNT” on August 1, 2023.

Total net proceeds of approximately $ 3.7 million were raised from the IPO after deducting the underwriting discounts and the offering expenses, in an aggregate amount of $ 1.3 million.

(see Note 16)

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.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the 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.

Accordingly, the unaudited condensed consolidated financial statements 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.

These statements should be read in conjunction with the Company’s consolidated financial statements and noted thereto for the year ended December 31, 2022, included in the Company’s Registration Statement on Form S-1 (File No.

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.

Operating results for the interim period ended September 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.

4 unchanged sentences

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.

Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivables, the valuation of inventory, the revenue recognition, and the 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.

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,

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 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

7 unchanged sentences

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

As of September 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 consist of new vehicles held for sale and are stated at the lower of cost or net realizable value using the specific identification method.

2 unchanged sentences

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.

The Company recorded no inventory reserve as of September 30, 2023 and December 31, 2022.

Fair value of financial instruments

6 unchanged sentences

● 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.

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.

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 September 30, 2023 and December 31, 2022 based upon the short-term nature of the assets and liabilities.

The Company believes that the carrying amount of long-term loans approximated fair value as of September 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.

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No.

7 unchanged sentences

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.

There was no impairment for ROU lease assets as of September 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.

11 unchanged sentences

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.

For overseas sales, the Company sells vehicles under Cost and Freight (“CFR”) shipping point terms, and revenue is recognized when a vehicle is loaded on a cargo ship and its title has been transferred to the dealers.

The Company accounts for the revenue generated from sales of vehicles on a gross basis as the Company is acting as a principal in these transactions, is subject to inventory risk, has latitude in establishing prices, and is responsible for fulfilling the promise to provide customers the specified goods, which the Company has control of the goods and has the ability to direct the use of goods to obtain substantially all the benefits.

2 unchanged sentences

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.

Therefore, the Company did not provide any sales return allowances for the three and nine months ended September 30, 2023 and 2022.

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.

The Company did not have contract assets as of September 30, 2023 and December 31, 2022.

The Company did not have contract liabilities as of September 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:

The Company’s disaggregation of revenue for the three and nine months ended September 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:

The summary of the Company’s total revenue by geographic area for the three and nine months ended September 30, 2023 and 2022 was as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

domestic market

2 unchanged sentences

Cost of revenue

Cost of revenue mainly includes the cost of auto vehicles purchased from U.S.

Cost of revenue mainly includes the cost of vehicles purchased from U.S.

automobile dealers, non-refundable sales tax, dealership service fees, and other expenses.

1 unchanged sentence

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.

Under this method, the Company determines deferred tax assets and liabilities on the basis of differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized as income in the period that includes the enactment date.

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 has not assessed a valuation allowance as it determines 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.

The Company and its operating subsidiaries in the United States are subject to the tax law of the United States.

The Company does not believe that there were any uncertain tax positions as of September 30, 2023 and December 31, 2022.

The Company and its U.S.

operating subsidiaries are subject to the U.S.

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.

As of September 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”).

Earnings per share

The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”).

ASC 260 requires companies with complex capital structures to present basic and diluted EPS.

Basic EPS is measured as net earnings (loss) divided by the weighted average common shares outstanding for the period.

Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period.

Diluted EPS presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later.

Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

For the three and six months ended June 30, 2023 and 2022, there were no dilutive shares.

For the nine months ended September 30, 2023 and 2022, there were no dilutive shares outstanding.

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.

Parties, which can be a corporation or individual, are considered related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions.

Corporations are also considered to be related if they are subject to common control or common significant influence.

Transactions between related parties commonly occurring in the normal course of business are considered to be related party transactions.

2 unchanged sentences

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.

Total shipping and handling expenses were $ 113,470 and $ 405,182 for the three and nine months ended September 30, 2023, respectively, and $ 266,160 and $ 466,926 for the three and nine months ended September 30, 2022, respectively.

Segment reporting

2 unchanged sentences

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

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:

Accounts receivable

allowance for doubtful accounts

Total accounts receivable

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).

The accounts receivable transactions in connection with letters of credit with book values $ 3,229,854 and $ 7,502,291 were pledged as collateral to guarantee the Company’s borrowings from four third-party lending companies as of September 30, 2023 and December 31, 2022, respectively (see Note 8).

NOTE 4 — INVENTORIES

Inventories consisted of the following:

June 30, 2023

December 31, 2022

inventory valuation allowance

Total inventories

Allowance for changes in inventory valuation allowance was as follows:

June 30, 2023

December 31, 2022

Beginning balance

Inventory reserve charged to costs of sales

Sale of previously reserved inventory

Ending balance

The following table summarizes the Company’s inventory aging:

June 30, 2023

Inventories aged less than 3 months

Inventories aged from 4‑6 months

inventory valuation allowance

Total inventories

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).

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.

No inventory reserve was recorded as of September 30, 2023 and December 31, 2022.

In connection with the Company’s inventory financing from loans payable as of September 30, 2023 and December 31, 2022, 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 nil and $ 141,557 were pledged as collateral to guarantee the loans payable from dealers finance as of September 30, 2023 and December 31, 2022, respectively (see Note 9).

NOTE 5 — OTHER RECEIVABLES

Other receivables consisted of the following:

June 30, 2023

September 30, 2023

December 31, 2022

8 unchanged sentences

The Company leases office spaces from various third parties under non-cancelable operating leases, with terms ranging from 12 to 38 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.

The Company considers the 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.

6 unchanged sentences

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.

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.

Pursuant to the Amended Lease, the initial lease term was extended for a period commencing January 1, 2024 and expiring February 28, 2027, unless sooner terminated as provided in the Amended Lease.

The Company was 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

September 30, 2023

December 31, 2022

3 unchanged sentences

Total operating lease liabilities

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

The weighted average remaining lease terms and discount rates for all operating leases were as follows as of September 30, 2023 and December 31, 2022:

September 30, 2023

December 31, 2022

3 unchanged sentences

* 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,

During the three months ended September 30, 2023 and 2022, the Company incurred total operating lease expenses of $ 85,369 and $ 53,462 , respectively.

During the nine months ended September 30, 2023 and 2022, the Company incurred total operating lease expenses of $ 215,649 and $ 161,115 , respectively.

The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2023:

Twelve months ending September 30,

Total lease payments

2 unchanged sentences

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

$ 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).

There were no inventory financing loan agreements executed during the three and nine months ended September 30, 2023.

No inventory was being held as collateral, and the balance of inventory financing was nil as of September 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 nine months ended September 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 upon settlement of the loan.

For the loan amount outstanding for no more than 90 days, the Company is charged an interest rate ranging between 16.2 % and 21.6 %, per annum, and for the amount 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 Huan Liu, the Company’s controlling stockholder, and another stockholder of the Company.

The inventory financing amounted to nil and $ 4,164,100 as of September 30, 2023 and December 31, 2022, respectively.

The interest expenses for inventory financing were nil and $ 112,769 for the three and nine months ended September 30, 2023, respectively, and $ 222,750 and $ 768,055 for the three and nine months ended September 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 September 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.

The Company entered into a series of loan agreements with three third-party companies for working capital funding purposes during the three and nine months ended September 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).

Interest expenses are calculated based on the actual number of days the loan was outstanding and payable upon settlement, and the Company is charged an interest rate ranging between 15.0 % and 27.6 % per annum.

The LC financing amounted to $ 3,077,861 and $ 7,105,873 as of September 30, 2023 and December 31, 2022, respectively.

The interest expenses for LC financing were $ 207,648 and $ 789,104 for the three and nine months ended September 30, 2023, respectively, and $ 379,336 and $ 1,356,135 for the three and nine months ended September 30,2022, respectively.

The accounts receivable transactions in connection with letters of credit with book values $ 3,229,854 and $ 7,502,291 were pledged as collateral to guarantee the Company’s borrowings from these three third-party lending companies as of September 30, 2023 and December 31, 2022, respectively (see Note 3).

NOTE 9 — DEALERS FINANCE

3 unchanged sentences

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 dealers finance amounted to nil and $ 41,747 as of September 30, 2023 and December 31, 2022, respectively.

The interest expenses for dealers finance were $ 959 and $ 3,975 for the three and nine months ended September 30, 2023, respectively, and $ 1,013 and $ 1,122 for the three and nine months ended September 30, 2022, respectively.

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.

On October 5, 2022, the Company entered into two Revolving Line of Credit Agreements (the “Revolving Line of Credit Agreements”) with two third-party companies that have been providing financial support to the Company since 2021.

Pursuant to the Revolving Line of Credit 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 Revolving Line of Credit Agreements to extend the maturity date to April 2024.

During the three and nine months ended September 30, 2023, the Company borrowed a total of $ 708,334 and $ 3,244,488 , respectively, and repaid $ 1,710,197 and $ 2,375,197 , respectively.

As of September 30, 2023 and December 31, 2022, the revolving line of credit balance was $ 869,291 and nil , respectively.

Interest expenses for revolving lines of credit were $ 63,277 and $ 120,675 for the three and nine months ended September 30, 2023 and nil for the three and nine months ended September 30, 2022.

NOTE 11 — PREMIUM FINANCE

On July 31, 2023, the Company entered into a Premium Finance Agreement (the "Premium Finance Agreement") with National Partners PFco, LLC.

Pursuant to the Premium Finance Agreement, the Company borrowed $ 221,139 for the purchase of its directors and officers insurance, at an annual interest rate of 7.75 %.

The premium finance amounted to $ 221,139 and nil as of September 30, 2023 and December 31, 2022, respectively.

The interest expenses for premium finance were $ 3,584 for the three and nine months ended September 30, 2023, and nil for the three and nine months ended September 30, 2022.

NOTE 12 — LONG-TERM BORROWINGS

Long-term borrowings consisted of the following:

September 30,

Small Business Administration (1)

5 unchanged sentences

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.

Government, to borrow $ 150,000 for 30 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.

5 unchanged sentences

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,

The future maturities of the loan from SBA as of September 30, 2023 were as follows:

12 months ending September 30,

Future repayment

6 unchanged sentences

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.

The future maturities of the loan from Thread Capital as of June 30, 2023 were as follows:

Twelve months ending June 30,

The future maturities of the loan from Thread Capital as of September 30, 2023 were as follows:

12 months ending September 30,

Future repayment

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.

For the above-mentioned long-term borrowings, the Company recorded interest expenses of $ 7,751 and $ 23,545 for the three and nine months ended September 30, 2023, respectively, and $ 4,998 and $ 12,652 for the three and nine months ended September 30, 2022, respectively.

NOTE 13 — RELATED PARTY TRANSACTIONS

3 unchanged sentences

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.

Amount due to a related party represents amounts due to the Company’s CEO and Chairman of the Board of Directors, Mr.

Huan Liu, for funds borrowed 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.

During the three months ended September 30, 2023 and 2022, the Company borrowed a total of $ 16,923 and $ 6,000 , respectively, from Mr.

Huan Liu directly for working capital purposes, and used these funds to purchase vehicles.

During the nine months ended September 30, 2023 and 2022, the Company borrowed an aggregate of $ 45,798 and$ 319,913 , respectively, from Mr.

Huan Liu, applying such funds similarly as working capital for purchasing 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.

Huan Liu in the amounts of $ 28,875 and $ 1,110,000 during the three months ended September 30, 2023 and 2022, respectively, and in the amounts of $ 28,875 and $ 1,130,584 during the nine months ended September 30, 2023 and 2022, respectively.

NOTE 14 — INCOME TAXES

The Company and its operating subsidiaries in United States are subject to the tax law of the United States.

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, 2022.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Total current income tax provision

Total deferred income tax expenses (benefit)

Total deferred income tax expenses

Total income tax benefit

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Federal statutory tax rate

1 unchanged sentence

Non-deductible expenses

Non-taxable income

Deferred true-up

Effective tax rate

Deferred tax assets were composed of the following:

September 30,

Deferred tax assets:

3 unchanged sentences

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.

During the nine months ended September 30, 2023, the Company’s operations utilized NOLs of $ 202,101 , resulting in a cumulative U.S.

federal NOL of $ 125,547 as of September 30, 2023, which is carried forward indefinitely.

As of September 30, 2023, the Company also had a cumulative state NOL of $ 175,252 , which may reduce future state taxable income, and the NOL balance as of September 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.

Internal Revenue Code, due to the 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 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 continue to be exempt from the §163(j) interest expenses 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.

3 unchanged sentences

Political and economic risk

The operations of the Company are located in the U.S.

The operations of the Company are in the U.S.

and the Company’s primary market is in the PRC.

4 unchanged sentences

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.

As of September 30, 2023 and December 31, 2022, $ 704,869 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.

Accounts receivable are typically unsecured and derived from revenue earned from parallel-import car dealers, thereby exposing the Company to a 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.

1 unchanged sentence

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.

For the nine months ended September 30, 2023, three parallel-import car dealers accounted in total for 98.7 % ( 45.2 %, 29.7 %, and 23.8 %, respectively) of the Company’s total revenue.

For the nine months ended September 30, 2022, three parallel-import car dealers accounted for approximately 59.5 % ( 29.1 %, 18.7 %, and 11.7 %, respectively) of the Company’s total revenue.

As of September 30, 2023, three parallel-import car dealers accounted for 97.7 % ( 50.9 %, 32.2 %, and 14.6 %, 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.

For the three and nine months ended September 30, 2023, one U.S.-based automobile dealership accounted for approximately 7.2 % and 8.3 %, respectively, of the Company’s total purchases.

For the three and nine months ended September 30, 2022, one U.S.-based automobile dealership accounted for approximately 6.2 % and 10.3 %, respectively, of the Company’s total purchases.

NOTE 16 — STOCKHOLDERS’ EQUITY

3 unchanged sentences

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.

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.

5 unchanged sentences

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.

After negotiations between the Investors and the Company regarding the fund’s release terms, an agreement was reached on November 2, 2023, stipulating that the outstanding $ 600,000 would be paid by the Investors within six months following the Company’s IPO.

On August 3, 2023, the Company closed its IPO 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 and other offering expenses, including a grant to the underwriter of warrants to purchase 62,500 shares of common stock (the “Warrants”), with an exercise price of $ 5.00 per share.

The Company’s Class A common stock began trading on the Nasdaq Capital Market under the ticker symbol “CTNT” on August 1, 2023.

As of September 30, 2023, there were 9,666,000 shares of Class A common stock issued and outstanding.

The Company accounts for stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement.

The Warrants are equity-classified as a result of being indexed to the Company’s Class A common stock and meeting certain equity classification criteria, and the instruments will not be remeasured in subsequent periods as long as the instruments continue to meet these accounting criteria.

The fair value of the Warrants was recorded to additional paid-in capital within stockholders’ equity.

Shares Issuable as of

September 30,

Title of Warrant

Equity-classified warrants

August 2023 – underwriter warrants

NOTE 17 — COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

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.

However, after the Plaintiff submitted the invoices, the Company refused to make the payment on the grounds that the Plaintiff’s services had not met the Company’s expectations.

Therefore, the Plaintiff is seeking $ 86,355 in monetary damages, reimbursement for all costs and attorney fees, and any other relief 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 September 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.

Pursuant to an independent contractor agreement dated June 30, 2022 between the Company and the Defendant, the Company hired the Defendant 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.

2 unchanged sentences

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.

Based on the outcome of the current motion and the Company’s overall assessment of the case, the Company is optimistic about its chances of success in this litigation.

As of the date of this quarterly report, the Mercedes has been found by the police and turned over to the Company.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements