CHEETAH NET SUPPLY CHAIN SERVICE INC. 10-K

Item 8. Financial Statements and Supplementary Data. CHEETAH NET SUPPLY CHAIN SERVICE INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS TABLE OF CONTENTS ​ Page Index to Consolidated Financial Statements ​ Report of Independent Registered Public Accounting Firm (PCAOB ID: 6783 ) ​ F-2 Report of Independent Registered Public Accounting Firm (PCAOB ID: 5395 ) ​ F-3 Consolidated Balance Sheets as of December 31, 2023 and 2022 ​ F-4 Consolidated Statements of Income for the Years Ended December 31, 2023 and 2022 ​ F-5 Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2023 and 2022 ​ F-6 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022 ​ F-7 Notes to the Consolidated Financial Statements ​ F-8 – F-24 ​ ​ ​ ​ F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the shareholders and the board of directors of Cheetah Net Supply Chain Service Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Cheetah Net Supply Chain Service Inc. and its subsidiaries (collectively the “Company”) as of December 31, 2023, the related consolidated statements of income, changes in stockholders’ equity (deficit), and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023, and the consolidated results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and are required to be independent with respect to the Company in accordance with the United States federal securities laws. and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Assentsure PAC Singapore March 18, 2024 PCAOB ID number: 6783 We have served as the Company’s auditor since 2023. ​ F-2 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and shareholders of Cheetah Net Supply Chain Service Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Cheetah Net Supply Chain Service Inc. and its subsidiaries (collectively, the “Company”) as of December 31, 2022, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Marcum Asia CPAs LLP We have served as the Company’s auditor from 2022 (such date takes into account the acquisition of certain assets of Friedman LLP by Marcum Asia CPAs LLP effective September 1, 2022) through October 5, 2023. New York, New York April 7, 2023 ​ F-3 Table of Contents CHEETAH NET SUPPLY CHAIN SERVICE INC. CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2023 ​ 2022 ASSETS ​ ​ CURRENT ASSETS: ​ ​ Cash ​ $ 432,998 ​ $ 58,381 Accounts receivable ​ 6,494,695 ​ 7,086,651 Loans receivable ​ ​ 672,500 ​ ​ — Inventory ​ 1,515,270 ​ 5,965,935 Other receivables ​ 410,920 ​ 900,730 Prepaid expenses and other current assets ​ 294,154 ​ 480,828 TOTAL CURRENT ASSETS ​ 9,820,537 ​ 14,492,525 NONCURRENT ASSETS: ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets ​ 190,823 ​ 140,145 Deferred tax assets ​ 47,905 ​ 86,734 TOTAL ASSETS ​ $ 10,059,265 ​ $ 14,719,404 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ CURRENT LIABILITIES: ​ ​ ​ ​ Accounts payable ​ $ 40,430 ​ $ 86,285 Current portion of long-term debt ​ 32,887 ​ 31,281 Loans payable from inventory financing ​ — ​ 4,164,100 Loans payable from letter of credit financing ​ 1,004,565 ​ 7,105,873 Loans payable from dealers finance ​ — ​ 41,747 Loans payable from line of credit ​ ​ 688,711 ​ ​ — Loans payable from premium finance ​ 148,621 ​ — Due to a related party ​ 13,423 ​ — Operating lease liabilities, current ​ 39,703 ​ 149,458 Accrued liabilities and other current liabilities ​ ​ 390,451 ​ ​ 616,863 TOTAL CURRENT LIABILITIES ​ ​ 2,358,791 ​ ​ 12,195,607 NONCURRENT LIABILITIES: ​ ​ ​ ​ ​ ​ Long-term debt, net of current portion ​ ​ 644,725 ​ ​ 678,442 Operating lease liabilities, net of current portion ​ ​ 151,121 ​ ​ — TOTAL LIABILITIES ​ 3,154,637 ​ 12,874,049 ​ ​ ​ ​ ​ ​ ​ COMMITMENTS AND CONTINGENCIES ​ — ​ — ​ ​ ​ ​ ​ ​ ​ STOCKHOLDERS’ EQUITY ​ ​ ​ ​ Common stock, $ 0.0001 par value, 100,000,000 shares authorized; 17,916,000 and 16,666,000 shares issued and outstanding , including: ​ ​ ​ ​ Class A common stock, $ 0.0001 par value, 91,750,000 shares authorized, 9,666,000 and 8,416,000 shares issued and outstanding ​ 967 ​ 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 ​ 6,994,595 ​ 3,269,317 Subscription receivable ​ ( 600,000 ) ​ ( 1,800,000 ) Retained earnings ​ 508,241 ​ 374,371 TOTAL STOCKHOLDERS’ EQUITY ​ 6,904,628 ​ 1,845,355 ​ ​ ​ ​ ​ ​ ​ TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY ​ $ 10,059,265 ​ $ 14,719,404 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ F-4 Table of Contents CHEETAH NET SUPPLY CHAIN SERVICE INC. CONSOLIDATED STATEMENTS OF INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ 2023 2022 REVENUE ​ $ 38,315,974 ​ $ 55,153,335 ​ ​ ​ ​ ​ ​ ​ COST OF REVENUE ​ ​ ​ ​ Cost of vehicles ​ 32,183,676 ​ 48,534,282 Fulfillment expenses ​ 1,885,382 ​ 2,149,672 Total cost of revenue ​ 34,069,058 ​ 50,683,954 ​ ​ ​ ​ ​ ​ ​ GROSS PROFIT ​ 4,246,916 ​ 4,469,381 ​ ​ ​ ​ ​ ​ ​ OPERATING EXPENSES ​ ​ ​ ​ Selling expenses ​ 668,172 ​ 898,852 General and administrative expenses ​ 2,190,513 ​ 1,430,917 Total operating expenses ​ 2,858,685 ​ 2,329,769 ​ ​ ​ ​ ​ ​ ​ INCOME FROM OPERATIONS ​ 1,388,231 ​ 2,139,612 ​ ​ ​ ​ ​ ​ ​ OTHER INCOME (EXPENSES) ​ ​ ​ ​ Interest expense, net ​ ( 1,239,297 ) ​ ( 2,441,443 ) Other income, net ​ 31,593 ​ 12,974 Subsidy income from Business Recovery Grant Program ​ — ​ 1,340,316 Total other (expenses), net ​ ​ ( 1,207,704 ) ​ ​ ( 1,088,153 ) ​ ​ ​ ​ ​ ​ ​ INCOME BEFORE PROVISION FOR INCOME TAXES ​ 180,527 ​ 1,051,459 ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ 46,657 ​ 234,479 ​ ​ ​ ​ ​ ​ ​ NET INCOME ​ $ 133,870 ​ $ 816,980 ​ ​ ​ ​ ​ ​ ​ Earnings per share - basic and diluted ​ $ 0.01 ​ $ 0.05 Weighted average shares - basic and diluted ​ 17,183,123 ​ 15,794,203 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ F-5 Table of Contents CHEETAH NET SUPPLY CHAIN SERVICE INC. 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Initial public offering, net of issuance costs ​ 1,250,000 ​ ​ 125 ​ — ​ ​ — ​ ​ 3,725,278 ​ ​ — ​ ​ — ​ ​ 3,725,403 Stock issuance — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ 1,200,000 ​ ​ — ​ ​ 1,200,000 Net income — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 133,870 ​ ​ 133,870 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, December 31, 2023 ​ 9,666,000 ​ $ 967 ​ 8,250,000 ​ $ 825 ​ $ 6,994,595 ​ $ ( 600,000 ) ​ $ 508,241 ​ $ 6,904,628 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock* ​ ​ ​ ​ ​ ​ Class A ​ ​ ​ ​ Class B ​ ​ ​ ​ Additional ​ ​ ​ ​ Retained Earnings ​ Total ​ ​ Common ​ ​ ​ ​ Common ​ ​ ​ ​ paid-in ​ Subscription ​ (Accumulated ​ Stockholders’ ​ stock Amount stock Amount capital Receivable Deficit) Equity (Deficit) Balance, December 31, 2021 6,750,000 ​ $ 675 8,250,000 ​ $ 825 ​ $ 270,684 $ — ​ $ ( 442,609 ) ​ $ ( 170,425 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock issuance ​ 1,666,000 ​ ​ 167 ​ — ​ ​ — ​ ​ 2,998,633 ​ ​ ( 1,800,000 ) ​ ​ — ​ ​ 1,198,800 Net income ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 816,980 ​ ​ 816,980 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, December 31, 2022 8,416,000 ​ $ 842 8,250,000 ​ $ 825 ​ $ 3,269,317 $ ( 1,800,000 ) ​ $ 374,371 ​ $ 1,845,355 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ F-6 Table of Contents CHEETAH NET SUPPLY CHAIN SERVICE INC. CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ December 31, ​ 2023 2022 Cash flows from operating activities: ​ ​ Net income ​ $ 133,870 ​ $ 816,980 Adjustments to reconcile net income to net cash provided by (used in) operating activities: ​ ​ ​ ​ ​ ​ Amortization of operating lease right-of-use assets ​ ​ 140,145 ​ ​ 169,503 Inventory reserve recovery ​ ​ — ​ ​ ( 92,811 ) Deferred tax provision ​ ​ 38,829 ​ ​ 158,060 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable ​ ​ 591,956 ​ ​ ( 7,066,535 ) Inventory ​ ​ 4,450,665 ​ ​ 10,452,396 Other receivables ​ ​ 489,810 ​ ​ 220,029 Due from a related party ​ ​ — ​ ​ 10,000 Prepaid expenses and other current assets ​ ​ 186,674 ​ ​ ( 478,828 ) Deferred revenue ​ ​ — ​ ​ ( 1,805,073 ) Other payables and other current liabilities ​ ​ ( 272,266 ) ​ ​ ( 30,566 ) Operating lease liabilities ​ ​ ( 149,458 ) ​ ​ ( 163,550 ) Net cash provided by operating activities ​ ​ 5,610,225 ​ ​ 2,189,605 ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ ​ ​ ​ Loans made to third parties ​ ​ ( 672,500 ) ​ ​ — Net cash (used in) investing activities ​ ​ ( 672,500 ) ​ ​ — ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ ​ ​ ​ Proceeds from initial public offering, net of expenses ​ ​ 3,725,403 ​ ​ — Proceeds from issuance of common stock under private placement transaction ​ ​ 1,200,000 ​ ​ 1,198,800 Proceeds from inventory financing ​ ​ — ​ ​ 24,257,900 Repayments of inventory financing ​ ​ ( 4,164,100 ) ​ ​ ( 26,131,700 ) Proceeds from letter of credit financing ​ ​ 19,424,370 ​ ​ 33,341,191 Repayments of letter of credit financing ​ ​ ( 25,525,678 ) ​ ​ ( 34,267,549 ) Proceeds from loans from dealers finance ​ ​ 389,296 ​ ​ — Repayments of loans from dealers finance ​ ​ ( 431,043 ) ​ ​ ( 235,690 ) Proceeds from line of credit ​ ​ 3,244,488 ​ ​ — Repayment of line of credit ​ ​ ( 2,555,777 ) ​ ​ — Proceeds from premium finance ​ ​ 148,621 ​ ​ — Proceeds from long-term borrowings ​ ​ — ​ ​ 350,000 Repayments of long-term borrowings ​ ​ ( 32,111 ) ​ ​ ( 9,563 ) Borrowing from a related party ​ ​ 45,798 ​ ​ 313,464 Repayments made to a related party ​ ​ ( 32,375 ) ​ ​ ( 1,449,054 ) Net cash (used in) financing activities ​ ​ ( 4,563,108 ) ​ ​ ( 2,632,201 ) ​ ​ ​ ​ ​ ​ ​ Net increase (decrease) in cash ​ ​ 374,617 ​ ​ ( 442,596 ) Cash, beginning of year ​ ​ 58,381 ​ ​ 500,977 Cash, end of year ​ $ 432,998 ​ $ 58,381 ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow information ​ ​ ​ ​ ​ ​ Cash paid for income taxes ​ $ 74,533 ​ $ 46,196 Cash paid for interest ​ $ 262,661 ​ $ 842,228 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ F-7 Table of Contents CHEETAH NET SUPPLY CHAIN SERVICE INC. NOTES TO 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. 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. and the PRC. F-8 Table of Contents Details of the subsidiaries of the Company as of December 31, 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 ​ ​ 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 17). ​ NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the U.S. (the “U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). The accompanying 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. As a U.S.-based company operating exclusively within the domestic market and transacting solely in United States Dollars (USD), both the Company’s presentation and functional currencies are the USD. This uniformity simplifies the Company’s financial reporting process and ensures clarity in its financial transactions. The Company’s financial statements, therefore, are presented in USD, in compliance with U.S. GAAP requirements, and provide transparent and straightforward financial information to the Company’s stakeholders. F-9 Table of Contents Uses of estimates In preparing the 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 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 consolidated financial statements. 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. 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, or a general declining purchasing power of PRC consumers, 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; and ● 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 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. Cash Cash includes deposits held by banks that can be added or withdrawn without limitation. 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 consolidated statements of income. 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 December 31, 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. F-10 Table of Contents Loans receivable The Company’s loans receivable are recognized at the point of loan disbursement, initially measured at fair value, primarily reflecting the disbursed amount and associated transaction costs. Both secured and unsecured lending are encompassed in these receivables, with terms including varying interest rates and maturity dates. Subsequently, these receivables are measured at amortized cost using the effective interest method, which ensures the accurate recognition of interest income over the loan period. The interest rates for these loans may be subject to change based on the terms of loan agreements. Periodic reviews of the loan portfolio are conducted to assess for impairment, utilizing the expected credit loss model. This approach considers historical credit loss experience, current conditions, and reasonable forecasts in estimating potential credit losses. As of the end of the reporting periods, no impairment allowance was recorded for these loans receivable. Inventory Inventory consists of new vehicles held for sale and is 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 December 31, 2023 and 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, loans receivable, and other current assets, loans payable, deferred revenue and other payables and other current liabilities, approximate the fair value of the respective assets and liabilities as of December 31, 2023 and 2022 based upon the short-term nature of the assets and liabilities. The Company believes that the carrying amount of long-term loans approximates fair value at December 31, 2023 and 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 December 31, 2023 and 2022. F-11 Table of Contents Revenue recognition 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 terms, and revenue is recognized when a vehicle is loaded on a cargo ship and its title has been transferred to the dealers. The Company accounts for the revenue generated from sales of vehicles on a gross basis as the Company is acting as a principal in these transactions, is subject to inventory risk, has latitude in establishing prices, and is responsible for fulfilling the promise to provide customers the specified goods, which the Company has control of the goods and has the ability to direct the use of goods to obtain substantially all the benefits. All of the Company’s contracts have one single performance obligation as the promise is to transfer the individual vehicle to parallel-import 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 as of December 31,2023 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 December 31, 2023 and 2022. The Company did not have contact liabilities as of December 31, 2023 and 2022. F-12 Table of Contents 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 years ended December 31, 2023 and 2022 were as follows: Geographic information The summary of the Company’s total revenue by geographic area for the years ended December 31, 2023 and 2022 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ December 31, ​ 2023 2022 U.S. domestic market ​ $ 8,160,395 ​ $ 3,821,261 Overseas market ​ 30,155,579 ​ 51,332,073 Total revenue ​ $ 38,315,974 ​ $ 55,153,335 ​ Cost of revenue 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. 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 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 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 consolidated statements of income. The Company does not believe that there were any uncertain tax positions as of December 31, 2023 and 2022. The Company and its U.S. operating subsidiaries are subject to the U.S. tax law. 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. As of December 31, 2023, the Company’s consolidated income tax returns for the tax years ended December 31, 2020 through December 31, 2023, remain open for statutory examination by U.S. tax authorities. F-13 Table of Contents 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 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 years ended December 31, 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. 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 consolidated statements of income. Total shipping and handling expenses were $ 498,022 and $ 710,265 for the years ended December 31, 2023 and 2022, respectively. 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 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 and the adoption of this ASU did not have a material impact on its consolidated financial statements. F-14 Table of Contents In August 2018, the FASB 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 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 and the adoption of this ASU did not have a material impact on its consolidated financial statements. NOTE 3 — ACCOUNTS RECEIVABLE Accounts receivable consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2023 ​ 2022 Accounts receivable ​ $ 6,494,695 ​ $ 7,086,651 Less: allowance for doubtful accounts ​ — ​ — Total accounts receivable ​ $ 6,494,695 ​ $ 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 Company identified two accounts with deferred payments overdue for over 150 days, totaling approximately $ 2.6 million of the $ 5.6 million total deferred payment balances as of December 31, 2023, which were backed by third-party guarantees. After a thorough assessment, these accounts were classified as fully collectible despite the delay. As of December 31, 2023, the following table summarizes the Company’s accounts receivable aging: ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 Accounts receivable aging: ​ ​ ​ Less than 150 days ​ $ 3,508,729 151-180 days ​ ​ 861,197 181-210 days ​ ​ 886,845 Over 210 days ​ ​ 1,237,924 Less: allowance for doubtful accounts ​ ​ — Total accounts receivable ​ $ 6,494,695 ​ The accounts receivable transactions in connection with letters of credit with book value of $ 1,084,775 and $ 7,502,291 were pledged as collateral to guarantee the Company’s borrowings from four third-party lending companies as of December 31, 2023 and December 31, 2022, respectively (see Note 9). F-15 Table of Contents NOTE 4 — LOANS RECEIVABLE Loans receivable consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2023 ​ 2022 Vehicle pledge loan receivable ​ $ 172,500 ​ $ — Short-term loan ​ $ 500,000 ​ — Total loans receivable ​ $ 672,500 ​ $ — ​ On December 6, 2023, the Company entered into two separate vehicle pledge loan agreements with one customer, securing the loans with the customer’s vehicle inventory. The aggregate principal for these loans was set at $ 172,500 , determined as 90 % of each pledged vehicles’ MSRP. The initial term of each agreement is 90 days . The loans carry an interest rate of 14.4 % annually for the first 90 days, and for any duration beyond that, the rate is 18 % annually. As of December 31, 2023, no impairment is required as the loans have been assessed as collectible. On December 11, 2023, the Company provided an unsecured short-term loan to one of its customers. The principal amount of the loan was $ 500,000 . This loan carried an annual interest rate of 12.0 % and was originally set to mature on February 12, 2024. However, on the maturity date, the Company and the borrower agreed to amend the terms of the loan. The amendment extended the maturity date to June 12, 2024, and increased the annual interest rate to 18.0 % for the extension period. No impairment is required as the loan has been assessed as collectible. Interest accrued through February 12, 2024, remains at the original rate of 12.0 % per annum, and any interest accruing after this date is subject to the new rate of 18.0 % per annum. Interest income for the years ended December 31, 2023 and 2022 was $ 5,423 and nil , respectively, which was accrued and recorded as interest receivable (see Note 6). NOTE 5 — INVENTORY Inventory consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2023 ​ 2022 Vehicles ​ $ 1,515,270 ​ $ 5,965,935 Less: inventory valuation allowance ​ — ​ — Total inventory ​ $ 1,515,270 ​ $ 5,965,935 ​ Changes in inventory valuation allowance were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2023 ​ 2022 Beginning balance ​ $ — ​ $ 92,811 Sale of previously reserved inventory ​ — ​ ( 92,811 ) Ending balance ​ $ — ​ $ — ​ In connection with the Company’s $ 4,164,100 inventory financing from loans payable as of December 31, 2022, the Company pledged its inventory with book value of $ 4,095,132 as collateral for these loans, respectively (see Note 8). The Company’s vehicles in inventory with book value totaling $ 141,557 were pledged as collateral to secure loans payable from dealers finance as of December 31, 2022 (see Note 10). F-16 Table of Contents NOTE 6 — OTHER RECEIVABLES Other receivables consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 December 31, 2022 Vehicle deposit (1) ​ $ 162,159 ​ $ 400,659 Rent deposit ​ 22,095 ​ 41,845 Sales tax refundable (2) ​ 217,892 ​ 419,886 Interest receivable ​ ​ 5,423 ​ ​ — Others ​ 3,351 ​ 38,340 Subtotal ​ 410,920 ​ 900,730 Less: allowance for doubtful accounts ​ — ​ — Total other receivables ​ $ 410,920 ​ $ 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 7 — LEASES The Company leases office space from various third parties under non-cancelable operating leases, with terms ranging from 12 to 38 months . 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. 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 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 December 31, 2022 Right-of-use assets ​ $ 190,823 ​ $ 140,145 ​ ​ ​ ​ ​ ​ ​ Operating lease liabilities – current ​ $ 39,703 ​ $ 149,458 Operating lease liabilities – non-current ​ 151,121 ​ — Total operating lease liabilities ​ $ 190,824 ​ $ 149,458 ​ F-17 Table of Contents The weighted average remaining lease terms and discount rates for all operating leases were as follows as of December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 December 31, 2022 Remaining lease term and discount rate: ​ ​ Weighted average remaining lease term (years) 3.17 0.77 ​ Weighted average discount rate * 17.8 % 17.1 % * The Company used a weighted average incremental borrowing rate of 17.8 % per annum for its lease contracts based on the Company’s current borrowing rates from various financial institutions. ​ During the years ended December 31, 2023 and 2022, the Company incurred total operating lease expenses of $ 268,801 and $ 218,305 , respectively. The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2023: ​ ​ ​ ​ ​ 12 months ending December 31, Amount 2024 ​ $ 66,391 2025 ​ 82,059 2026 ​ 84,520 2027 ​ 14,509 Total lease payments ​ $ 247,479 Less: imputed interest ​ ( 56,655 ) Present value of lease liabilities ​ $ 190,824 ​ ​ NOTE 8 — INVENTORY FINANCING There were no inventory financing loan agreements executed during the year ended December 31, 2023. No inventory was being held as collateral, and the balance of inventory financing was nil , as of December 31, 2023. The Company entered into a series of inventory financing loan agreements with a third party for working capital purposes during the year ended December 31, 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. Inventory financing amounted to $ 4,164,100 as of December 31, 2022. Interest expense for inventory financing was $ 747,298 for the year ended December 31, 2022. The Company’s vehicles in inventory with book value of $ 4,095,132 were pledged as collateral to secure the Company’s borrowings from a third party as of December 31, 2022 (see Note 5). NOTE 9 — 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 years ended December 31, 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 expense is 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 $ 1,004,565 and $ 7,105,873 as of December 31, 2023 and 2022, respectively. Interest expense for LC financing was $ 925,426 and $ 1,669,931 for the years ended December 31, 2023 and 2022, respectively. Accounts receivable transactions in connection with letters of credit having book value of $ 1,084,775 and $ 7,502,291 were pledged as collateral to guarantee the Company’s borrowings from these three third-party lending companies as of December 31, 2023 and 2022, respectively (see Note 3). F-18 Table of Contents NOTE 10 — 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 typically repays 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 nil and $ 41,747 as of December 31, 2023 and 2022, respectively. Interest expense for dealers finance was $ 4,123 and $ 2,332 for the years ended December 31, 2023 and 2022, respectively. The Company’s vehicles in inventory with book value of nil and $ 141,557 were pledged as collateral to secure the loans payable from dealers finance as of December 31, 2023 and 2022, respectively (see Note 5). NOTE 11 — REVOLVING LINE OF CREDIT 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 year ended December 31, 2023, the Company borrowed a total of $ 3,244,488 , and paid back $ 2,555,777 . As of December 31, 2023 and 2022, the revolving line of credit balance was $ 688,711 and nil , respectively. Interest expense for the revolving lines of credit was $ 155,245 and nil for the years ended December 31, 2023 and 2022, respectively. NOTE 12 — 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 loan amounted to $ 148,621 and nil as of December 31, 2023 and 2022, respectively. Interest expense for premium finance loan was $ 5,974 and nil for the years ended December 31, 2023 and 2022, respectively. NOTE 13 — LONG-TERM DEBT Long-term debt consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2023 ​ 2022 Small Business Administration (1) ​ $ 479,124 ​ $ 490,130 Thread Capital Inc. (2) ​ 198,488 ​ 219,593 Total long-term debt ​ $ 677,612 ​ $ 709,723 ​ ​ ​ ​ ​ ​ ​ Current portion of long-term debt ​ $ 32,887 ​ $ 31,281 ​ ​ ​ ​ ​ ​ ​ Non-current portion of long-term debt ​ $ 644,725 ​ $ 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. ​ F-19 Table of Contents 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, twenty - four 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 December 31, 2023 are as follows: ​ ​ ​ ​ 12 months ending December 31, Future repayment 2024 ​ $ 10,592 2025 ​ 11,024 2026 ​ 11,474 2027 ​ 11,942 2028 ​ 12,429 Thereafter ​ 421,663 Total ​ $ 479,124 (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. ​ The future maturities of the loan from Thread Capital as of December 31, 2023 are as follows: ​ ​ ​ ​ 12 months ending December 31, Future repayment 2024 ​ $ 22,295 2025 ​ 23,553 2026 ​ 24,881 2027 ​ 26,285 2028 ​ 27,768 Thereafter ​ 73,706 Total ​ $ 198,488 ​ For the above-mentioned long-term borrowings, the Company recorded interest expense of $ 31,197 and $ 18,641 for the years ended December 31, 2023 and 2022, respectively. NOTE 14 — 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 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. F-20 Table of Contents During the years ended December 31, 2023 and 2022, the Company borrowed an aggregate of $ 45,798 and $ 313,464 , 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 $ 32,375 and $ 1,449,054 during the years ended December 31, 2023 and 2022, respectively. As a result of these transactions, the balance due to Mr. Huan Liu was $ 13,423 as of December 31, 2023. NOTE 15 — 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, 2022. (i) The components of the income tax provision were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ December 31, ​ ​ 2023 2022 Current: ​ ​ ​ ​ ​ Federal ​ $ 7,385 ​ $ 42,881 State ​ ​ 443 ​ ​ 33,538 Total current income tax provision ​ ​ 7,828 ​ ​ 76,419 Deferred: ​ ​ 　 ​ ​ ​ 　 ​ Federal ​ ​ 35,561 ​ ​ 178,279 State ​ ​ 3,268 ​ ​ ( 20,219 ) Total deferred income tax provision ​ ​ 38,829 ​ ​ 158,060 Total income tax provision ​ $ 46,657 ​ $ 234,479 ​ (ii) Reconciliations of the statutory income tax rate to the effective income tax rate were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ December 31, ​ ​ ​ 2023 2022 Federal statutory tax rate ​ $ 21.0 % $ 21.0 % State statutory tax rate ​ 1.6 % ​ 3.7 % Non-deductible expenses ​ 0.6 % ​ 0.2 % Deferred true-up ​ 2.6 % ​ ( 2.6 ) % Effective tax rate ​ $ 25.8 % $ 22.3 % ​ (iii) Deferred tax assets were composed of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2023 ​ 2022 Deferred tax assets: ​ ​ ​ Net operating loss carry-forwards ​ $ 47,905 ​ $ 84,496 Others ​ — ​ 2,238 Total deferred tax assets ​ $ 47,905 ​ $ 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 year ended December 31, 2023, the Company’s operations utilized NOLs of $ 163,295 , resulting in a cumulative U.S. federal NOL of $ 164,353 as of December 31, 2023, which is carried forward indefinitely. As of December 31, 2023, the Company also had a cumulative state NOL of $ 191,759 , which may reduce future state taxable income, and the NOL balance as of December 31, 2023 will expire beginning in 2041. F-21 Table of Contents The Company was not previously subject to the interest expense limitation under §163(j) of the U.S. Internal Revenue Code, due to the small business exemption. Its average annual gross receipts for the three tax years preceding 2022 did not exceed the relevant threshold amount ($ 27 million for 2022). The Company no longer met the small business exception in 2023, but it met 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 therefore continued 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. 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 16 — 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. Credit risk As of December 31, 2023 and 2022, $ 432,998 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. Loans receivable may be secured by the vehicles being financed or unsecured based on the creditworthiness of the borrower, thereby exposing the Company to credit risk. This risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances. 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 year ended December 31, 2023, three parallel-import car dealers accounted in total for 98.9 % ( 53.2 %, 25.5 %, and 20.2 %, respectively) of the Company’s total revenue. For the year ended December 31, 2022, three parallel-import car dealers accounted for approximately 65.0 % ( 28.4 %, 25.7 %, and 10.9 %, respectively) of the Company’s total revenue. As of December 31, 2023, three parallel-import car dealers accounted for 98.0 % ( 58.1 %, 28.2 %, and 11.7 %, 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 years ended December 31, 2023 and 2022, one U.S.-based automobile dealership accounted for approximately 8.8 % and 8.4 %, respectively, of the Company’s total purchases. F-22 Table of Contents NOTE 17 — 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. After negotiations between Rapid Proceed Limited (“Rapid”), one of 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 Rapid within six months following the Company’s IPO. On March 13, 2024, considering the impact of market volatility and the long-term benefits of continued cooperation, Rapid requested and the Company agreed to extend the payment due date of the outstanding $ 600,000 to September 30, 2024. 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 a warrant to purchase 62,500 shares of Class A common stock (the “Warrant”), 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 December 31, 2023, there were 9,666,000 shares of Class A common stock issued and outstanding. Warrants The Company accounts for stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement. The Warrant is 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 Warrant was recorded to additional paid-in capital within stockholders’ equity. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Common ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares Issuable as of ​ ​ ​ ​ ​ ​ Exercise ​ December 31, Title of Warrant ​ Date Issued ​ Expiry Date ​ Price ​ 2023 Equity-classified warrants ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ August 2023 – underwriter warrant 8/3/2023 07/31/2026 ​ $ 5.00 62,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ F-23 Table of Contents NOTE 18 — 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 met the Company’s expectations. Therefore, the Plaintiff is seeking $ 86,355 in monetary damages, reimbursement for all costs and attorneys’ fees, and other relief as the Court may deem just and proper. On October 2, 2023, the Company entered into a settlement agreement with the Plaintiff. The Company agreed to deliver payments totaling $ 55,000 , half of which was delivered on December 26, 2023. Pursuant to the terms of the settlement agreement, the remaining $ 27,500 is scheduled for payment six months following the effective date, with a due date at the end of March 2024. 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 Company. 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 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 of the Mercedes to the Company. However, the Defendant 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 court costs and attorneys’ fees and expenses. 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. Subsequently, an inquest will be conducted to determine the precise amount owed to the Company. Based on the outcome of the current motion and the Company’s overall assessment of the case, the Company believes it will be successful in this litigation. As of the filing date of this report, the Mercedes has been found by the police and returned to the Company. NOTE 19 — SUBSEQUENT EVENT On January 24, 2024, the Company entered into a stock purchase agreement with Edward Transit Express Group Inc., a California corporation (“Edward”), and Juguang Zhang, Edward’s sole stockholder (the “Seller”). Pursuant to the Agreement, the Company agreed to acquire 100 % of the equity interest in Edward from the Seller (the “Acquisition”). On February 2, 2024, the Corporation closed the Acquisition for a total purchase price that included a cash payment of $ 300,000 and the issuance of 1,272,329 shares of the Company’s unregistered Class A common stock, valued at $ 1,200,000 . On March 4, 2024, the Company entered into a warrant termination agreement (the “Agreement”) with Maxim Group LLC (“Maxim”). Pursuant to the terms of the Agreement, the Company agreed to pay Maxim a cash consideration of $ 78,125 in full settlement for the termination of the Warrant, previously issued to Maxim in connection with the Company’s IPO. The Warrant, originally issued on August 3, 2023, provided Maxim the right to purchase 62,500 shares of the Company’s Class A common stock. According to the Agreement, the Warrant was fully terminated and rendered null and void as of the effective date of the Agreement. This termination extinguishes all past, present, or future obligations of the parties under the Warrant, except as otherwise expressly provided for in the Agreement. The effective date of the Agreement is acknowledged as the date on which the cash consideration of $ 78,125 was received by Maxim. ​ ​ F-24 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.