What changed in this filing

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Item 1. Financial Statements

2024-08-13 compared with 2024-05-13 · 261 added, 165 removed, 485 unchanged (47% of the section changed)

3 unchanged sentences

CURRENT ASSETS:

Cash and cash equivalents

Accounts receivable

4 unchanged sentences

OTHER NONCURRENT ASSETS:

Property, net

Property, plant, and equipment, net

Operating lease right-of-use assets

Deferred tax assets

Deferred tax assets, net

Intangibles, net

28 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31,

Parallel-import Vehicle

Three Months Ended June 30,

Six Months Ended June 30,

Parallel-import Vehicles

Logistics and Warehousing

9 unchanged sentences

Total operating expenses

INCOME (LOSS) FROM OPERATIONS

OTHER INCOME (EXPENSE)

Interest expenses, net

(LOSS) INCOME FROM OPERATIONS

( 1,673,779 )

OTHER (EXPENSE) INCOME

Interest expense, net

Other income, net

Total other expense, net

LOSS BEFORE PROVISION FOR INCOME TAXES

Income tax benefit

Loss per share - basic and diluted

(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES

( 1,714,799 )

Income tax (benefit) provision

NET (LOSS) INCOME

( 1,221,810 )

(Loss) Earnings per share - basic and diluted

Weighted average shares - basic and diluted

9 unchanged sentences

Balance, March 31, 2024

Issuance of follow-on public offering

Net loss for the period

Balance, June 30, 2024

Stockholders’

5 unchanged sentences

( 1,100,000 )

Net income for the period

Balance, June 30, 2023

( 1,100,000 )

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

1 unchanged sentence

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

For the Six Months Ended

Cash flows from operating activities:

Net (loss) income

( 1,221,810 )

Adjustments to reconcile net income to net cash provided by operating activities:

4 unchanged sentences

Accounts receivable

( 1,676,792 )

Other receivables

6 unchanged sentences

Acquisition of business, net of cash acquired

Purchase of property, plant, and equipment

Loans made to third parties

( 1,000,000 )

Loans repayments from third parties

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from follow-on public offering, net of expenses

Cash paid for warrant termination

6 unchanged sentences

( 14,865,396 )

Proceeds from loans from dealer finance

Repayments of loans from dealers finance

Proceeds from Line of Credit

Repayment of Line of Credit

Repayments of premium finance

Repayments of long-term borrowings

Borrowing from a related party

Repayments made to a related party

Net cash used in financing activities

( 1,177,894 )

Net cash provided by (used in) financing activities

( 3,611,618 )

16 unchanged sentences

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.

Currently, Allen-Boy is engaged in parallel-import vehicle dealership business.

● (ii) 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, for a total consideration of $ 100 on April 9, 2021.

Currently, Pacific is engaged in parallel-import vehicle dealership business.

● (iii) 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, for a total consideration of $ 100 on April 9, 2021.

Entour did not have any business activities until acquired by Cheetah Net.

● (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;

● (vii) Edward Transit Express Group Inc.

Currently, Entour is engaged in parallel-import vehicle dealership business.

● (iv) 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, for a total consideration of $ 100 , assigned all his membership interests in Logistics to Cheetah Net on October 19, 2022 .

Currently, Logistics is engaged in parallel-import vehicle dealership business.

● (v) Edward Transit Express Group Inc.

(“Edward”), a corporation incorporated on July 14, 2010 under the laws of the State of California, whose previous sole shareholder and owner, Juguang Zhang, transferred all his right, title, and interest in and to all of the issued and outstanding shares of Edward to Cheetah Net for a total consideration of $ 1,500,000 in cash and Cheetah Net’s Class A common stock through a stock purchase agreement dated January 24, 2024, as amended.

Currently, Edward is engaged in ocean and air transportation services.

The Company and its wholly owned subsidiaries are engaged in two sectors:

On May 23, 2024, the Company dissolved two wholly owned subsidiaries, Canaan International LLC, an LLC organized on December 5, 2018 under the laws of the State of North Carolina, and Canaan Limousine LLC, an LLC organized on February 10, 2021 under the laws of the State of South Carolina.

The Company and its wholly owned subsidiaries are engaged in two primary sectors:

the parallel-import vehicle dealership business and comprehensive logistics and warehousing business.

The parallel-import vehicle

Parallel-import Vehicles

In the People’s Republic of China (the “PRC”), parallel-import vehicles refer to vehicles 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 vehicle dealers in the U.S.

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

Logistics and Warehousing

2 unchanged sentences

Edward also provides warehousing services encompassing fulfillment, storage, and inventory management, crucial for supporting both the Company’s operations and its clients’ logistics needs.

Details of the subsidiaries of the Company as of March 31, 2024 are set out below:

Name of Entity

Incorporation

Principal Activities

August 9, 2016

North Carolina

Parent, 100 %

Parallel-import

vehicle dealership

Subsidiaries of the parent:

August 31, 2016

Parallel-import

vehicle dealership

December 5, 2018

North Carolina

Parallel-import

vehicle dealership

January 17, 2019

Parallel-import

vehicle dealership

February 10, 2021

South Carolina

Parallel-import

vehicle dealership

April 8, 2021

Parallel-import

vehicle dealership

October 12, 2022

Parallel-import

vehicle dealership

July 14, 2010

Logistics and warehousing

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

8 unchanged sentences

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 March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

accompanying unaudited condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries.

Operating results for the interim period ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

The accompanying unaudited condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries.

All inter-company balances and transactions are eliminated upon consolidation.

5 unchanged sentences

Actual results could differ from those estimates.

Cash includes deposits held by banks that can be added or withdrawn without limitation.

Cash and cash equivalents

Cash and cash equivalents consist of cash in bank and interest-bearing certificates of deposit with an initial term of three months when purchased.

Cash held in Current Accounts

Certificate of Deposit

Total cash and cash equivalents shown in the statements of cash flows

Accounts receivable

6 unchanged sentences

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 March 31, 2024 and December 31, 2023, there was no allowance for doubtful accounts recorded as the Company considers all of the outstanding accounts receivable fully collectible.

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, 2024 and December 31, 2023, there was no allowance for doubtful accounts recorded as the Company considers all of the outstanding accounts receivable fully collectible.

Loans receivable

10 unchanged sentences

The Company reviews its inventory periodically if any reserves are necessary for potential shrinkage.

The Company recorded no inventory reserve as of March 31, 2024 and December 31, 2023.

Depreciation on property, plant, and equipment is recognized on a straight-line basis, based on the respective estimated useful life of the assets.

The Company recorded no inventory reserve as of June 30, 2024 and December 31, 2023.

Additionally, the Company did not hold any inventory within the logistics and warehousing business segment as of June 30, 2024.

Property, plant, and equipment, net

Property, plant, and equipment are stated at cost less accumulated depreciation and impairment charges.

Depreciation is calculated primarily based on the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the assets:

Property, plant, and equipment

E stimated useful li fe

Motor vehicles

Leasehold improvements

Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred.

Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized.

Intangible assets, net

The Company’s intangible assets consist of developed technology, customer relationships, and trade names, which are amortized on a straight-line basis or over their respective useful lives using patterns that reflect the economic benefits the assets are expected to realize.

The Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

Amortization of intangible assets is computed using the straight-line method over the estimated useful lives as below:

I ntangible assets

E stimated useful li fe

Developed Technology

Customer relationships

The estimated useful lives of intangible assets with finite lives are reassessed if circumstances occur that indicate the original estimated useful lives have changed.

The Company did no t recognize any indefinite-lived intangible assets for the six months ended June 30, 2024.

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, loans receivable, loans payable, deferred revenue, and other payables and other current liabilities, approximated the fair value of the respective assets and liabilities as of March 31, 2024 and December 31, 2023 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 March 31, 2024 and December 31, 2023 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, loans receivable, 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, 2024 and December 31, 2023 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, 2024 and December 31, 2023 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 March 31, 2024 and December 31, 2023.

Goodwill and Intangible Assets

There was no impairment for ROU lease assets as of June 30, 2024 and December 31, 2023.

The Company records goodwill as the excess of the consideration transferred over the fair value of net assets acquired in business combinations.

7 unchanged sentences

If the carrying value of a reporting unit is greater than its fair value, a goodwill impairment charge will be recorded for the difference (up to the carrying value of goodwill).

The Company uses the income approach and/or a market-based approach to determine the reporting units’ fair values, which are based on discounted cash

The determination of discounted cash flows of the reporting units and assets and liabilities within the reporting units requires significant estimates and assumptions.

The Company uses the income approach and/or a market-based approach to determine the reporting units’ fair values, which are based on discounted cash flows.

The determination of discounted cash flows of the reporting units and assets and liabilities within the reporting units requires

significant estimates and assumptions.

Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates.

The Company’s intangible assets consist of developed technology, customer relationships, and trade name, which are amortized on a straight-line basis or over their respective useful life using patterns that reflect the economic benefits of the assets are expected to be realized.

The Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

Impairment of Long-lived assets

15 unchanged sentences

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.

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

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.

6 unchanged sentences

Historically, no customer returns have occurred.

Therefore, the Company did not provide any sales return allowances for the three months ended March 31, 2024 and 2023.

Therefore, the Company did not provide any sales return allowances for the three months ended June 30, 2024 and 2023.

In the logistics and warehousing services segment, revenue from freight forwarding services, both export and import, is recognized when the services are provided, based on the relative transit time.

The Company’s role as the principal in these services involves managing the entire shipping process from origin to destination, allowing revenue recognition on a gross basis throughout the transit period.

For warehousing services, revenue is primarily derived from storage fees, which are recognized based on the actual number of

days the goods are stored in the warehouse while awaiting further transportation.

For warehousing services, revenue is primarily derived from storage fees, which are recognized based on the actual number of days the goods are stored in the warehouse while awaiting further transportation.

Across all operations, the Company maintains a principal position, controlling the goods and services, bearing inventory and pricing risks, and fulfilling performance obligations directly.

1 unchanged sentence

Contract balances and remaining performance obligations

The Company did not have any contract assets or liabilities as of March 31, 2024 and December 31, 2023.

The Company did not have any contract assets or liabilities as of June 30, 2024 and December 31, 2023.

Disaggregation of Revenue

The Company disaggregates its revenue by type and 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 months ended March 31, 2024 and 2023 were as follows:

The Company’s disaggregation of revenue for the three and six months ended June 30, 2024 and 2023 was as follows:

Three Months Ended

Six Months Ended

Revenue from Parallel-Import Vehicles

6 unchanged sentences

Geographic information

The summary of the Company’s total revenue by geographic area for the three months ended March 31, 2024 and 2023 was as follows:

The Company’s total revenue by geographic area for the three and six months ended June 30, 2024 and 2023 was as follows:

Three Months Ended

Six Months Ended

domestic market

2 unchanged sentences

Cost of revenues

Parallel-import Vehicle Segment

Parallel-import Vehicles Segment

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

11 unchanged sentences

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 March 31, 2024 and December 31, 2023.

The Company does not believe that there were any uncertain tax positions as of June 30, 2024 and December 31, 2023.

The Company and its U.S.

1 unchanged sentence

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 March 31, 2024, the Company’s consolidated income tax returns for the tax years ended December 31, 2020 through December 31, 2023 remained open for statutory examination by U.S.

As of June 30, 2024, the Company’s consolidated income tax returns for the tax years ended December 31, 2020 through December 31, 2023 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”).

(Loss) Earnings per share

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

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

2 unchanged sentences

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 months ended March 31, 2024 and 2023, there were no dilutive shares outstanding.

For the six months ended June 30, 2024 and 2023, there were no dilutive shares outstanding.

Related parties and transactions

6 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 $ 20,610 and $ 213,460 for the three months ended March 31, 2024 and 2023, respectively.

Total shipping and handling expenses were nil and $ 20,610 for the three and six months ended June 30, 2024, respectively, and $ 78,252 and $ 291,712 for the three and six months ended June 30, 2023, respectively.

Segment reporting

2 unchanged sentences

Management has determined that the Company has two operating segments—the parallel-import vehicle segment and the logistics and warehousing segment.

Recent accounting pronouncements

In November 2023, the FASB issued Accounting Standards Update No.

2023-07 (the “Update”), which applies to all public entities that are required to report segment information in accordance with Topic 280, Segment Reporting.

Currently, Topic 280 requires that a public entity disclose certain information about its reportable segments.

For example, a public entity is required to report a measure of segment profit or loss that the chief operating decision maker uses to assess segment performance and make decisions about allocating resources.

Topic 280 also requires other specified segment items and amounts, such as depreciation, amortization, and depletion expense, to be disclosed under certain circumstances.

The amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company will adopt this Update within its annual reporting period beginning on January 1, 2024 and is evaluating the impact of the adoption on the Company’s consolidated financial statements.

NOTE 3 — ACCOUNTS RECEIVABLE

6 unchanged sentences

The Company’s accounts receivable primarily include balances generated from (i) selling parallel-import vehicles to both domestic and overseas parallel-import car dealers and (ii) providing logistics and warehousing services to both domestic and overseas customers, which have not been collected as of the balance sheet dates.

Parallel-import Vehicle Segment

The Company identified four accounts with deferred payments overdue for over 150 days, totaling approximately $ 3.2 million of the $ 4.1 million total deferred payment balances as of March 31, 2024, which were backed by third-party guarantees.

During the first quarter of 2024, the Company successfully collected approximately $ 1.8 million of the December 31, 2023, overdue balance.

Parallel-import Vehicles Segment

The Company identified four accounts with deferred payments overdue for over 150 days, totaling approximately $ 3.9 million of the $ 4.8 million total deferred payment balances as of June 30, 2024, which were backed by third-party guarantees.

During the first half of 2024, the Company successfully collected approximately $ 1.8 million of the December 31, 2023 overdue balance.

After a thorough assessment, these accounts were classified as fully collectible despite the delay.

As of March 31, 2024, the following table summarizes the Company’s accounts receivable aging:

As of June 30, 2024, the following table summarizes the Company’s accounts receivable aging:

Accounts receivable aging:

4 unchanged sentences

The accounts receivable transactions in connection with letters of credit with book value of $ 1,084,775 were pledged as collateral to guarantee the Company’s borrowings from two third-party lending companies as of December 31, 2023 (see Note 9).

There were none pledged as collateral as of March 31, 2024.

Logistics and Warehousing Segment

All accounts receivable were aged 90 days or less.

NOTE 4 — INVENTORIES

Inventories consist of new vehicles and are stated at the lower of cost or net realizable value using the specific identification method.

No inventory reserve was recorded as of March 31, 2024 and December 31, 2023.

There were none pledged as collateral as of June 30, 2024.

As of the date of this report, the Company has collected approximately $ 0.5 million in accounts receivable.

The Company continuously monitors the collection of accounts receivable and will make adjustments as necessary based on the ongoing assessment of credit risk and payment performance.

NOTE 4 — LOANS RECEIVABLE

Loans receivable consisted of the following:

Vehicle pledge loan receivable

Short-term loan

Total loans receivable

On December 6, 2023, the Company entered into two vehicle pledge loan agreements with a 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’ manufacturer’s suggested retail price.

The initial term of each agreement was 90 days .

The loans had an annual interest rate of 14.4 % for the first 90 days and 18.0 % for any duration beyond that.

As of June 30, 2024, both vehicle pledge loans were repaid.

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 to extend the maturity date to June 12, 2024 , and increase the annual interest rate to 18.0 % for the extension period.

No impairment is required as the loan had been assessed as collectible.

Interest accrued through February 12, 2024, remained at the original rate of 12.0 % per annum, and any interest accruing after this date was subject to the new rate of 18.0 % per annum.

As of June 30, 2024, the customer had fully repaid the principal of the loan.

On June 20, 2024, the Company entered into an unsecured short-term loan agreement with Hongkong Sanyou Petroleum Co Limited.

The principal amount of the loan was $ 1,000,000 .

This loan carried an annual interest rate of 12.0 % and was set to mature in 12 months.

Interest income for the three and six months ended June 30, 2024 was $ 22,326 and $ 49,072 , respectively.

These amounts were accrued and recognized as interest receivable.

The balance as of June 30, 2024 has been fully collected as of the date of this quarterly report.

NOTE 5 — OTHER RECEIVABLES

Other receivables consisted of the following:

March 31, 2024

June 30, 2024

December 31, 2023

13 unchanged sentences

customs on behalf of customers.

NOTE 6- PROPERTY, NET

NOTE 6 — PROPERTY, PLANT, AND EQUIPMENT, NET

Property consisted of the following:

Estimated Useful Life

March 31, 2024

June 30, 2024

December 31, 2023

Motor Vehicles

Leasehold improvements

Total property

Less accumulated depreciation

Property, net

Property, plant, and equipment, net

NOTE 7 — LEASES

14 unchanged sentences

The second amendment further extended the lease to August 31, 2028.

The table below presents the operating lease related assets and liabilities recorded on the balance sheets.

March 31, 2024

The short-term lease runs month-to-month from January 1, 2024 to August 31, 2024.

Both operating lease expense and short-term lease expense are recognized in general and administrative expenses.

The components of lease expense for the six months ended June 30, 2024 and 2023 were as follows:

For the Six Months Ended

Leases expense

Operating lease expense

Short-term lease expense

Total leases expense

June 30, 2024

December 31, 2023

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 March 31, 2024 and December 31, 2023:

March 31, 2024

The weighted average remaining lease terms and discount rates for all operating leases were as follows as of June 30, 2024 and December 31, 2023:

June 30, 2024

December 31, 2023

3 unchanged sentences

* The Company used weighted average incremental borrowing rate of 12.2 % per annum for its lease contracts based on the Company’s current borrowings from various financial institutions.

During the three months ended March 31, 2024 and 2023, the Company incurred total operating lease expenses of $ 86,205 and $ 55,605 , respectively.

As of March 31, 2024, future maturities of lease liabilities are as follows:

2024 (excluding the three months ended March 31, 2024)

During the three months ended June 30, 2024 and 2023, the Company incurred total operating lease expenses of $ 81,347 and $ 74,675 , respectively.

During the six months ended June 30, 2024 and 2023, the Company incurred total operating lease expenses of $ 167,552 and $ 130,280 , respectively.

As of June 30, 2024, future maturities of lease liabilities were as follows:

2024 (excluding the six months ended June 30, 2024)

Total lease payments

1 unchanged sentence

Present value of lease liabilities

NOTE 8 — ACQUISITION

NOTE 8 — Intangible Asset and Goodwill

On January 24, 2024, Cheetah Net entered into a Stock Purchase Agreement to acquire 100 % of Edward.

1 unchanged sentence

The gross purchase price was $ 1.5 million.

Consideration transferred consisted of $ 0.3 million of cash and the issuance of 1,272,329 shares of Cheetah Net’s Class A common stock with a fair value of $ 1.2 million.

In accordance with ASC 805, Business Combinations (“ASC 805”), it was determined that the fair value of the stock consideration was $ 9 million at the time of the transaction, reflecting a comprehensive evaluation of the stock’s market conditions and liquidity impacted by lock-up period restrictions.

The purchase price was on a preliminary basis as of February 2, 2024.

Assets acquired and liabilities assumed were recorded at estimated fair values based on management’s estimates, available information, and supportable assumptions that management considered reasonable.

Certain estimated values for the acquisition, including goodwill and deferred taxes, are not yet finalized, and the preliminary purchase price allocations are subject to change as the Company completes its analysis.

The final valuation of assets acquired and liabilities assumed may be different from the estimated values shown below.

Acquired assets acquired and (liabilities) assumed:

Consideration paid consisted of $ 0.3 million of cash and the issuance of 1,272,329 shares of Cheetah Net’s Class A common stock with a market value of $ 1.2 million.

In accordance with ASC 805, Business Combinations (“ASC 805”), the fair value of the stock consideration was $ 0.9 million at the time of the transaction, reflecting a 25 % discount to the market value as determined by a third-party appraisal firm after performing a comprehensive evaluation of the impact of the lock up period on the stock’s market ability and liquidity.

The purchase price was initially recorded on a preliminary basis as of February 2, 2024.

The assets acquired and liabilities assumed were estimated based on management’s estimates, available information, and supportable assumptions that management considered reasonable.

During the second quarter, the Company finalized the purchase price allocation.

As a result, adjustments were made, particularly concerning the deferred tax liability related to intangible assets, which led to a corresponding adjustment in the value of goodwill.

The final valuation of assets acquired and liabilities assumed was reflected in the financial statements as of June 30, 2024 and shown below.

As of June 30, 2024

As of March 31, 2024

Finalized value

Preliminary value

Acquired assets acquired and (liabilities):

Accounts Receivable

6 unchanged sentences

Accrued Expenses Payable

Deferred Tax Liability

Operating Lease Liability, Current

4 unchanged sentences

The fair values of intangible assets, including developed technology, customer relationships, and trade names were determined using assumptions that are representative of those a market participant would use in estimating fair value.

Amortization of intangible assets with finite lives are computed using the straight-line method over the estimated useful lives as below:

Intangible Assets

Estimated Useful Lives (month)

Developed Technology

Customer Relationships

During the three months ended June 30, 2024 and 2023, the Company incurred accumulated amortization expenses of $ 13,071 and nil , respectively.

During the six months ended June 30, 2024 and 2023, the Company incurred accumulated amortization expenses of $ 21,786 and nil , respectively.

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 three months ended March 31, 2024 and 2023.

The Company entered into a series of loan agreements with three third-party companies for working capital funding purposes during the six months ended June 30, 2024 and 2023.

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 an interest rate of 18.0 % per annum.

Interest expense is calculated based on the actual number of days elapsed at an interest rate of 18.0 % per annum.

The LC financing amounted to $ 1,004,565 as of December 31, 2023.

There was no balance as of March 31, 2024.

The interest expense for LC financing was $ 23,123 and $ 330,424 for the three months ended March 31, 2024 and 2023, respectively.

There was no balance as of June 30, 2024.

Interest expense for LC financing was nil and $ 23,123 for the three and six months ended June 30, 2024, respectively, and $ 251,031 and $ 581,456 for the three and six months ended June 30, 2023, respectively.

The accounts receivable transactions in connection with letters of credit having book values of $ 1,084,775 were pledged as collateral to guarantee the Company’s borrowings from these two third-party lending companies as of December 31, 2023.

There were none pledged as collateral as of March 31, 2024.

There were no accounts receivable pledged as collateral as of June 30, 2024.

(see Note 3).

4 unchanged sentences

The Company has not entered into any new agreements to modify the terms or extend the duration of these facilities.

During the three months ended March 31, 2024 and 2023, the Company did not borrow or repay any amounts under the revolving lines of credit.

As of March 31, 2024 and December 31, 2023, the revolving line of credit balance was $ 688,711 .

Interest expense incurred under the revolving lines of credit was $ 31,336 and nil for the three months ended March 31, 2024 and 2023, respectively.

During the three and six months ended June 30, 2024, the Company did not borrow under the revolving lines of credit.

The Company repaid $ 104,170 during the three months ended June 30, 2024.

As of June 30, 2024 and December 31, 2023, the revolving lines of credit balance was $ 584,541 and $ 688,711 .

Interest expense incurred under the revolving lines of credit was $ 27,899 and $ 59,235 for the three and six months ended June 30, 2024, respectively, and $ 57,398 for the three and six months ended June 30, 2023, respectively.

NOTE 11 — PREMIUM FINANCE

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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 $ 74,908 and $ 148,621 as of March 31, 2024 and December 31, 2023, respectively.

Interest expense incurred related to the Premium Finance Agreement was $ 996 for the three months ended March 31, 2024.

No interest expense was incurred related to the Premium Finance Agreement during the three months ended March 31, 2023.

The premium finance amounted to nil and $ 148,621 as of June 30, 2024 and December 31, 2023, respectively.

Interest expense incurred related to the Premium Finance Agreement was $ 996 for the three and six months ended June 30, 2024, respectively.

No interest expense was incurred related to the Premium Finance Agreement during the three and six months ended June 30, 2023.

NOTE 12 — LONG-TERM BORROWINGS

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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.

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 the last installment to be paid in May 2050.

3 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 March 31, 2024 were as follows:

The future maturities of the SBA loan as of June 30, 2024 were as follows:

Future repayment

2024 (excluding the three months ended March 31, 2024)

2024 (excluding the six months ended June 30, 2024)

On May 15, 2020, the Company entered into a loan agreement with Thread Capital Inc.

1 unchanged sentence

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.

This loan agreement was subsequently terminated on May 17, 2021, at which time the Company entered into a new loan agreement with Thread Capital to borrow an additional $ 171,300 as working capital.

In the 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.

Interest is payable 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 March 31, 2024 were as follows:

The future maturities of the loan from Thread Capital as of June 30, 2024 were as follows:

Future repayment

2024 (excluding the three months ended March 31, 2024)

For the above-mentioned long-term borrowings, the Company recorded interest expenses of $ 7,552 and $ 7,945 for the three months ended March 31, 2024 and 2023, respectively.

2024 (excluding the six months ended June 30, 2024)

For the above-mentioned long-term borrowings, the Company recorded interest expense of $ 8,011 and $ 15,563 for the three and six months ended June 30, 2024, respectively, and $ 7,849 and $ 15,794 for the three and six months ended June 30, 2023, respectively.

NOTE 13 — RELATED PARTY TRANSACTIONS

6 unchanged sentences

These payables are unsecured, non-interest bearing, and due on demand.

During the three months ended March 31, 2024 and 2023, the Company did not engage in any borrowing activities with Mr.

The Company made repayments to Mr.

Huan Liu in the amounts of $ 13,423 during the three months ended March 31, 2024.

During the three and six months ended June 30, 2024, the Company did not borrow any amounts from Mr.

Repayments made to Mr.

Huan Liu totaled $ 13,423 for the six months ended June 30, 2024, all of which occurred in the first quarter.

No payments were made to Mr.

Huan Liu during the three months ended March 31, 2023.

Huan Liu during the three and six months ended June 30, 2023.

There was no balance due to Mr.

Huan Liu as of March 31, 2024.

Huan Liu as of June 30, 2024.

NOTE 14 — INCOME TAXES

The Company and its operating subsidiaries in the 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 federal and various state income taxes.

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, 2023.

1 unchanged sentence

Three Months Ended

Six Months Ended

Total current income tax provision

Total deferred income tax expenses

Total deferred income tax expenses (benefits)

Total income tax benefit

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

Federal statutory tax rate

1 unchanged sentence

Non-deductible expenses

Deferred true-up

Non-taxable income

Effective tax rate

Deferred tax assets were composed of the following:

Deferred tax assets, net were composed of the following:

Deferred tax assets:

Net operating loss carry forwards

Lease Liability

Total deferred tax assets

Deferred tax liabilities:

Intangible assets

Right of use assets

Total deferred tax liabilities

Total deferred tax assets, net

As of December 31, 2023, the Company had a cumulative U.S.

federal net operating loss (“NOL”) of $ 47,905 , which may reduce future federal taxable income.

During the three months ended March 31, 2024, the Company’s operations accumulated a NOL of $ 819,468 , resulting in a cumulative U.S.

federal NOL of $ 1,008,541 , as of March 31, 2024, which is carried forward indefinitely.

As of March 31, 2024, the Company also had a cumulative State NOL of $ 1,138,074 , which may reduce future State taxable income, and the State NOL balance as of March 31, 2024 will expire beginning in 2041.

The Company was not previously subject to the interest expenses limitation under §163(j) of the U.S.

During the six months ended June 30, 2024, the Company’s operations accumulated a NOL of $ 1,666,246 , resulting in a cumulative U.S.

federal NOL of $ 1,877,582 , as of June 30, 2024, which is carried forward indefinitely.

As of June 30, 2024, the Company also had a cumulative State NOL of $ 1,984,852 , which may reduce future State taxable income, and the State NOL balance as of June 30, 2024 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 the small business exemption.

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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, as well as by the general states of the U.S.

and the PRC economy.

1 unchanged sentence

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.

As of March 31, 2024 and December 31, 2023, $ 903,204 and $ 432,998 , respectively, of the Company’s cash was on deposit at financial institutions in the U.S., which are insured by the Federal Deposit Insurance Corporation subject to certain limitations.

As of June 30, 2024 and December 31, 2023, all of the Company’s cash was on deposit at financial institutions in the U.S., which are 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 in our parallel - import vehicle business 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.

1 unchanged sentence

The Company’s major customers are parallel-import automobile dealers.

For the three months ended March 31, 2024, one parallel-import car dealer accounted for 100 % of the Company’s revenue from parallel-import vehicles.

For the three months ended March 31, 2023, three parallel-import car dealers accounted for 100 % ( 55.2 %, 28.6 %, and 16.2 %, respectively) of the Company’s total revenue.

As of March 31, 2024, three parallel-import car dealers in our parallel-import vehicle segment accounted for 97.4 % ( 54.5 %, 27.3 %, and 15.6 %, respectively) of the accounts receivable balance.

For the six months ended June 30, 2024, two parallel-import car dealer accounted for 100 % ( 87.7 % and 12.3 %, respectively) of the Company’s revenue from parallel-import vehicles.

For the six months ended June 30, 2023, three parallel-import car dealers accounted for 100 % ( 41.5 %, 30.8 %, and 27.7 %, respectively) of the Company’s total revenue.

As of June 30, 2024, three parallel-import car dealers in our parallel-import vehicles segment accounted for 93.5 % ( 52.4 %, 26.2 %, and 14.9 %, respectively) of the accounts receivable balance.

As of December 31, 2023, three parallel-import car dealers accounted for approximately 98.0 % ( 58.1 %, 28.2 %, and 11.7 %, respectively) of the accounts receivable balance.

During the three months ended March 31, 2024, the Company did not purchase any vehicles.

During the three months ended March 31, 2023, one U.S.-based automobile dealership accounted for approximately 10.2 % of the Company’s total purchases.

During the three and six months ended June 30, 2024, the Company did not purchase any vehicles.

During 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.

NOTE 16 — STOCKHOLDERS’ EQUITY

20 unchanged sentences

As of March 31, 2024, there were 10,938,329 shares of Class A common stock issued and outstanding .

As of March 31, 2024, there were 10,938,329 shares of Class A common stock and 8,250,000 shares of Class B common stock issued and outstanding .

On May 14, 2024, the Company entered into a placement agency agreement with AC Sunshine Securities LLC on a best efforts basis, relating to the Company’s public offering (the “May Offering”) of 13,210,000 shares of Class A common stock for a price of $ 0.62 per share, less certain placement agent fees.

On the same day, the Company entered into a securities purchase agreement with purchasers identified therein.

On May 15, 2024, the Company closed the May Offering pursuant to the prospectus included in its registration statement on Form S – 1, as amended (File No.

333 – 276300), which was initially filed with the SEC on December 28, 2023, and declared effective by the SEC on April 26, 2024, and a registration statement on Form S – 1 (File No.

333 – 279388) filed on May 13, 2024, pursuant to Rule 462 (b) of the Securities Act of 1933, as amended.

The May Offering resulted in gross proceeds to the Company of approximately $ 8.19 million, before deducting placement agent fees and other offering expenses and fees.

As of June 30, 2024, there were 24,148,329 shares of Class A common stock and 8,250,000 shares of Class B 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.

9 unchanged sentences

NOTE 17 — 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 attorney fees, and any other relief the Court may deem just and proper.

On October 2, 2023, the Company entered into a settlement agreement with the Plaintiff, pursuant to which the Company committed to a total payment of $ 55,000 .

An initial payment of $ 27,500 was made on December 26, 2023, followed by the final payment of $ 27,500 on March 15, 2024.

On February 23, 2023, the Company filed a complaint in the Supreme Court of the State of New York County against Stefanie A.

6 unchanged sentences

On April 25, 2023, the Supreme Court of the State of New York County granted the Company’s motion for summary judgment on its second and fourth causes of action, ruling in favor of the Company.

Subsequently, an inquest will be conducted to determine the precise amount owed to the Company.

On August 7, 2024, an inquest was 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 date of this quarterly report, the Mercedes has been found by the police and returned to the Company.

NOTE 18 — SUBSEQUENT EVENTS

On July 2, 2024, the Company’s stockholders approved its third amended and restated articles of incorporation, which specifies that the Company is authorized to issue 891,750,000 shares of Class A common stock, par value $ 0.0001 per share, and 108,250,000 shares of Class B common stock, par value $ 0.0001 per share.

The Company also has the authority to issue 500,000 shares of preferred stock as deemed necessary with a par value per share equal to the par value per share of the Class A common stock.

On July 11, 2024, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC, notifying the Company that, for the last 30 consecutive business days, the closing bid price for the Company’s Class A common stock was below $ 1.00 per share, which is the minimum closing bid price required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2).

The letter also specifies that the Company is provided a compliance period of 180 calendar days (under certain circumstances, an additional 180 calendar days period may be provided) to regain compliance with the minimum closing bid price requirement.

If the Company fails to regain compliance during the specified compliance period(s), the Class A common stock will be subject to delisting.

On July 19, 2024, the Company entered into a lease agreement (the “Lease”) with Zina Development, LLC, a California LLC (the “Lessor”), for office space of approximately 15,000 square feet located at 8707 Research Drive, Irvine, CA 92618 (the “Property”).

The Company plans to use the Property for general office purposes.

The Lease commenced on July 23, 2024 and will expire on July 31, 2027.

The monthly base rent ranges from $ 42,000 to $ 45,427 , adjusted gradually over the Lease’s term.

The Company posted a security deposit of $ 100,000 , which is subject to use by the Lessor under certain circumstances, per the terms of the Lease.

The Lease also contains customary termination, renewal, and expense arrangement provisions.

On July 22, 2024, the Company entered into a short-term loan agreement with Hongkong Sanyou Petroleum Co Limited.

The principal amount of the loan was $ 1,500,000 .

This loan carried an annual interest rate of 12.0 % and was set to mature in 12 months.

On July 25, 2024, the Company entered into a securities purchase agreement with certain institutional investors for a follow-on offering of 6,479,663 shares of its Class A common stock, par value $ 0.0001 per share, at a price of $ 0.23 per share.

On the same day, the Company entered into a placement agency with FT Global Capital, Inc., who acted as the exclusive placement agent on a best efforts basis in connection with such offering.

Pursuant to the placement agency agreement, the Company agreed to pay the FT Global Capital, Inc.

a cash fee of 7.25 % of the aggregate purchase price for the shares of Class A common stock sold in the offering, and to reimburse FT Global Capital, Inc.

for its expenses up to $ 90,000 in the aggregate.

The Company closed the offering on July 26, 2024.

The Company intends to use the net proceeds received from the offering for working capital and general corporate purposes.

On August 1, 2024, the Company entered into a premium finance agreement (the “Premium Finance Agreement”) with ETI Financial Corporation to finance the purchase of its directors and officers’ insurance.

Pursuant to the Premium Finance Agreement, the Company borrowed $ 205,774.80 at an annual interest rate of 8.51 %.

The loan is structured to be repaid in 10 monthly installments, starting with the first payment on September 1, 2024.

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