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Item 1. Business

2025-03-12 compared with 2024-03-18 · 252 added, 421 removed, 74 unchanged (90% of the section changed)

We are a supplier of parallel-import vehicles sourced in the U.S.

to be sold in the PRC market.

For the year ended December 31, 2024, we generated revenues from two sources:

parallel-import vehicles sales and logistics and warehousing services, while parallel-import vehicles segment was our only source of revenue in 2023.

We began our operations in 2016 as a seller of parallel-import vehicles, sourcing vehicles in the U.S.

and selling them in the PRC market.

In 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.

Parallel-import cars have been popular in the PRC because they are generally priced 10% to 15% cheaper than vehicles sold through distribution systems authorized by brand manufacturers and generally offer a wider variety of models and versions with more customization.

Parallel-import vehicles used to be popular in the PRC because they were generally priced 10% to 15% cheaper than vehicles sold through distribution systems authorized by brand manufacturers.

In addition, some overseas models can only be obtained through this channel rather than through the brand manufacturers’ authorized distribution systems as a result of certain regulations that prohibit their production and sale in the PRC due to environmental protection and emission standards.

Customers demand our parallel-import vehicles largely because our selling prices are lower than those offered by other suppliers of parallel-import vehicles to the PRC market, driven by our scalable operations and a systematic approach to procurement.

We have available a large number of professional purchasing agents that we believe can supply stable and large quantities of cars at reasonable prices to Chinese parallel-import car dealers and maintain a long-term relationship with them.

See “—Our Competitive Strengths—In-depth Industry Insight and Strong Overseas Procurement Capability Enabled by a Large Team of Professional Purchasing Agents.”

In China, sales of parallel-import vehicles have been facilitated by a series of related regulations and policies that have been promulgated by the PRC government since 2016, including “Several Opinions on Promoting Pilot Parallel Import of Automobiles,” “Opinions on Further Promoting the Development of Parallel Import of Automobiles,” and the “Circular on Several Measures for Invigorating Automobile Circulation and Promoting Automobile Consumption.” Such regulations and policies are in compliance with U.S.

laws on trade and export.

See “—Our Industry and Business Model.” To our knowledge, there are currently no U.S.

federal or state laws, regulation, or rules on trade or export that prohibit the export of vehicles that will be parallel imported into foreign countries.

We purchase automobiles, primarily luxury brands, such as Mercedes, BMW, Land Rover, Lexus, and Bentley, from the U.S.

market and resell them to our customers, including both U.S.

and PRC parallel-import car dealers, for sale to the ultimate users.

We derive profits primarily from the price difference between our buying and selling prices for parallel-import vehicles.

The primary driver for our industry is the continued growth of high-net-worth individuals in China.

The core of our business is the ability to identify the type of parallel-import vehicles that are in high demand and to procure them in a timely manner.

We procure our automobiles from U.S.

automobile dealers via a network of independent contractors acting as purchasing agents on our behalf.

As of December 31, 2023 and 2022, we actively worked with 389 and 342 purchasing agents, respectively.

We believe that our corporate focus and dedication to the market, manifested in the size and sophistication of our purchasing agent team, provides us with a significant marketing advantage and sets us apart from our competitors.

Although we compete directly with many other companies that sell parallel-import vehicles to the PRC, most of our competitors are small family businesses that obtain U.S.

cars through their family members or friends in the U.S.

and therefore cannot guarantee a steady supply.

We have developed a standardized system of recruiting, training, and managing a large number of professional purchasing agents, enabling us to sell on a recurring basis a large number of automobiles to the PRC market.

We have been currently able to maintain sufficient purchasing agents to meet our purchasing demand, and as a result, we have become a reliable source of parallel-import vehicles and have built long-term relationships with multiple U.S.

and PRC parallel-import car dealers.

During the years ended December 31, 2023 and 2022, we sold 230 and 434 parallel-import vehicles to Chinese parallel-import car dealers, respectively.

During the same years, we sold 73 and 29 parallel-import vehicles to our U.S.

customers, respectively.

We experienced significant growth in sales volume, revenue, and gross profit from 2016, when we commenced our operations, to the first half of 2022 due to our core strengths and a favorable economic climate.

Our financial results in 2022 were impacted by the COVID-19 pandemic and our financial results continue to be impacted by weak economic conditions in the PRC.

We have responded to this weakness by focusing less on unit sales and concentrating more on the sales of those luxury vehicles that provide us with the highest profitability per transaction.

Our financial results during 2023 demonstrate the impact of this strategy shift.

We sold 303 and 463 vehicles during the years ended December 31, 2023 and 2022, respectively.

For the years ended December 31, 2023 and 2022, we had total revenue of $38.3 million and $55.2 million, respectively, representing a decrease of 30.5% from 2022 to 2023.

We earned net income of $0.1 million for the year ended December 31, 2023, compared to net income of $0.8 million for the year ended December 31, 2022.

Sales to the PRC market represent a significant part of our revenue.

During the years ended December 31, 2023 and 2022, sales to the China market accounted for approximately 78.7% and 93.1% of our revenue, respectively.

Recent Developments

To diversify our revenue and further leverage our in-depth expertise in the parallel-import vehicle industry, we launched our financial services to small- and medium-sized traders in the global supply chain industry (primarily other parallel-import vehicle suppliers) in October 2022.

Our financial services are provided in the form of inventory financing, for which customers can use their cars as collateral, which will be stored in our warehouse or other locations designated by us, in exchange for a loan from us.

In December 2023, we further advanced such financial services strategy by introducing our vehicle pledge loans, primarily aimed at parallel-import car dealers.

We provided $0.7 million in loans to third parties in the fourth quarter of 2023, all of which was outstanding as of December 31, 2023.

See “Note 4—Loans Receivable” in the notes to our consolidated financial statements for more details.

Beginning in the second half of 2023, the market for new luxury vehicles in the PRC has been negatively impacted by weak economic conditions and a shift in consumer demand towards electric vehicles (“EVs”), mainly those produced domestically by PRC manufacturers.

Luxury import brand manufacturers have responded to these threats by discounting the sale price of their vehicles, which has resulted in a significant challenge to our ability to generate a profit from the sale of parallel-import vehicles generally.

Consistent with our strategy to focus only on profitable parallel-import vehicle transactions, our unit sales during the fourth quarter of 2023 fell to 49 vehicles, a 36.4% decrease from the fourth quarter of 2022 and a 38.0% drop from unit sales in the third quarter of 2023, which resulted in our recognition of a net loss during the fourth quarter of 2023.

This market dynamic has continued into 2024 and we are unable at this time to predict when the market for luxury vehicles will firm and the price spread between vehicles sourced from brand manufacturers’ official distribution systems and those sourced via the parallel-import market will return.

To diversify our revenue and further leverage our in-depth expertise in the parallel-import vehicle industry, we have embarked on a plan to acquire warehousing and logistics businesses with the goals of reducing our costs of transporting purchased vehicles from the dealer lot to the ultimate point of sale and to more efficiently manage the transaction cycle.

We completed the first of such acquisitions in early 2024.

On January 24, 2024, we entered into a stock purchase agreement with Edward Transit Express Group Inc.

(“Edward”), a California-based common carrier specializing in ocean and air transportation services, and the sole shareholder of Edward.

On January 29, 2024, we entered into an amendment to the stock purchase agreement with Edward and the sole shareholder of Edward, modifying certain terms of such agreement.

Pursuant to the stock purchase agreement, as amended, we agreed to acquire 100% of the equity interests in Edward from the sole shareholder of Edward, for a cash payment of $300,000 and 1,272,329 shares of our Class A common stock.

On February 2, 2024, we closed the acquisition and Edward became a wholly-owned subsidiary of our Company.

The acquisition of these capabilities can be further leveraged by offering warehousing and logistics services to third-party parallel-import vehicle and other wholesalers and enhanced by offering financial services that we launched in October 2022.

Our long-term ambition is to move beyond the parallel-import vehicle business and become an integrated provider of international trade services for small- and medium-sized traders.

Our Competitive Strengths

We believe the following competitive strengths are essential for our success and differentiate us from our competitors:

In-depth Industry Insight and Strong Overseas Procurement Capability Enabled by a Large Team of Professional Purchasing Agents

We are capable of providing a large and stable source of parallel-import vehicles.

With in-depth knowledge of the Chinese luxury car market, we have built a large team of independent contractors, who serve as professional purchasing agents, to facilitate our procurement of vehicles, enabling us to become a growing supplier of parallel-import vehicles.

As of December 31, 2023, we had 389 professional purchasing agents who are experts in both luxury cars and negotiation skills.

Due to our in-depth industry insight and strong procurement capability enabled by our sizable team of purchasing agents, we have built long-term relationships with five Chinese parallel-import car dealers.

We rely on the business relationships we have built over the years while working with those PRC customers, many of which have cooperated with us for over three years.

Since our inception in 2016, we have developed a standardized system of recruiting, training, and managing a large number of professional purchasing agents, enabling us to sell on a recurring basis a large number of automobiles to the PRC market.

We believe that our corporate focus and dedication to the market, manifested in the size and sophistication of our purchasing agent team and our ability to source and train new purchasing agents, sets us apart from our competitors.

Although we compete directly with many other companies that sell parallel-import vehicles to the PRC, most of our competitors are

small family businesses that obtain U.S.

cars through their family members or friends in the U.S.

and therefore cannot guarantee a steady supply.

See “—Our Professional Purchasing Agents.” The standardized system has been tested during the past years and has propelled us into a strong market position in parallel-import car sales.

As a result, Chinese parallel-import car dealers with whom we work proactively choose to source luxury vehicles from us.

Scalable Operation with Systematic Approach to Procurement Which Drives Better Pricing for Customers

We acquired automobiles from U.S.

automobile dealers via our purchasing agents.

See “—Sales of Parallel-Import Vehicles—Services and Operational Flow—Procurement.” Since we have a large number of professional purchasing agents with excellent negotiation skills, we believe we are able to supply stable and large quantities of cars at reasonable prices to Chinese parallel-import car dealers and maintain a long-term relationship with them.

See “—In-depth Industry Insight and Strong Overseas Procurement Capability Enabled by a Large Team of Professional Purchasing Agents.” We purchased and sold 258 and 303 vehicles, respectively, during the year ended December 31, 2023.

We purchased and sold 356 and 463 vehicles, respectively, during the year ended December 31, 2022.

As a stable parallel-import vehicle supplier, we are able to offer our customers a lower price than our competitors, which in turn increases our customers’ demand for our automobiles.

A Visionary and Experienced Management Team with Strong Financial and Operational Expertise

Our senior management team has extensive experience in finance and imports and exports of automobiles.

Huan Liu, our Chief Executive Officer, has extensive experience in real estate, private equity, and car imports and exports.

As the founder and CEO of Cheetah Net, Mr.

Huan Liu has been responsible for the management of day-to-day operations and high-level strategizing and business planning, as well as implementing proposed plans and evaluating the success of our Company in achieving its goals.

From 2014 to 2015, Mr.

Huan Liu served as the chief executive officer at Beijing Xinyongjia Technology Co., where he was responsible for identifying opportunities for expansion and analyzing operations to identify areas in need of reorganization.

From 2012 to 2013, Mr.

Huan Liu served as the senior investment manager at Beijing Wanze Investment Management Co.

and was responsible for developing and implementing risk-based asset allocation models and performance analytics.

He received his master’s degree in Finance from the International Business School at Brandeis University in 2012.

Our Growth Strategies

Taking the niche market of parallel-import vehicle trade as an entry point, we intend to continuously consolidate our upstream and downstream customer resources.

By leveraging these resources and our industry expertise, we are launching and developing our warehousing and logistics services and providing financial services to the upstream and downstream dealers across the entire parallel-import vehicle trade value chain.

Ultimately, we aim to become a global supply chain platform that offers an integrated package of warehousing, logistics, and financial services to small- and medium-sized import and export companies.

Specifically, we intend to develop our business and strengthen our brand loyalty by implementing the following strategies:

Launch Additional Warehousing and Logistics Services

We plan to acquire two warehouses, either on the east or west coasts of the United States.

As of the date of this annual report, we have already acquired one warehouse through the acquisition of Edward.

We have retained Edward’s current manager, who possesses extensive experience in the freight industry, as the CEO of our new wholly-owned subsidiary following the acquisition of Edward, to lead our warehousing and logistics business.

Lately, we have transported a majority of the vehicles to the west coast, and while this decision increased our procurement costs, it was offset by a decrease in selling expenses.

Additionally, the new strategy also streamlines shipping time and expedites receipt of payment through letters of credit, since it only takes approximately two to three weeks to deliver a purchased vehicle to a customer overseas through the west coast ports (compared with 40 to 60 days if through the east coast ports), resulting in significantly shorter payment cycles.

The Edward acquisition provides us with our own warehousing and logistics systems.

Thereafter, we expect to build economies of scale by providing these services to small- and medium-sized traders in the global supply chain industry.

We expect our first customers will be parallel-import vehicle businesses with whom we have established relationships.

Not only can we use our self-operated warehousing and logistics systems to deliver vehicles to the customers of our parallel-import vehicle business, we can also offer such services to other small- and medium-sized suppliers of parallel-import vehicles or those engaged in the import or export of other products between the U.S.

and the PRC or other destinations around the world who lack such systems.

In the longer term, we plan to develop an online Service-as-a-Service (“SaaS”) platform to facilitate our warehousing services, logistics services, and financial services, enabling us to automate and digitalize key steps of the supply chain for our customers.

The SaaS platform will include a warehouse management system, which monitors the entire flow of inventory, labor force, and information in and out of our warehouse network, resulting in improved operational efficiency by providing real-time inventory visibility.

Our warehousing and logistics systems and SaaS platform will enable us to warehouse, manage, and deliver the goods of our customers.

In addition, since we hold our customers’ goods in our own warehouses and monitor their inventory, we will be able to access real-time data related to customer’s inventory, purchases, and financial information with their prior consent, allowing us to make efficient decisions as to whether to approve customers’ application for our financial services.

See “—Our Growth Strategies—Launch Financial Services to Small- and Medium-Sized Traders in the Global Supply Chain Industry.” Once we have established a relatively mature warehouse and logistical services in the parallel-import vehicle industry, we may expand our SaaS platform to other industries, such as textiles, medical products, and tires.

Moreover, after we obtain access to our warehouses, we plan to provide warehousing and order fulfillment services to small businesses, such as e-commerce merchants, who can send their products/merchandise to our warehouses in advance, and when their customers make a purchase, we will be responsible for picking, packing, and shipping the specific products to the customers based on their order information.

By outsourcing their warehousing and order fulfillment functions to us, these small businesses may be relieved of their logistics burdens and have greater flexibility and agility when it comes to marketing and selling practices.

We expect to generate revenue and profits by charging those small businesses storage, packing, and shipping service fees.

We expect to further develop our SaaS platform with respect to the warehousing and order fulfillment services we plan to launch.

Specifically, we plan to utilize our SaaS platform for marketing purposes by advertising small business sellers’ merchandise on our platform to help them promote and gain more exposure to potential or target customers.

We expect to generate profits by charging small businesses services fees for our marketing efforts.

Manage the Growth of our Purchasing Agent Team and Maintain an Adequate Customer Base for the Parallel-Import Vehicle Business

We endeavor to continue to expand our parallel-import vehicle business.

Retaining quality purchasing agents with excellent negotiation skills is an essential part of our business.

To maintain or grow our team of professional purchasing agents, we will devote the necessary resources to personnel recruitment and training.

In addition, we will maintain and grow our customer base by identifying and engaging more parallel-import car dealers in China to further increase our sales.

Moreover, we will continue to monitor the constantly changing PRC market demand for vehicle models and expand our brand coverage as applicable to strengthen our strong market position as a supplier of luxury automobiles to the parallel-import car dealers in China.

Pursue Additional Strategic and Financially Attractive Acquisitions

We endeavor to identify, acquire, and integrate businesses that will expand our parallel-import vehicle business, warehousing services, and financial services while achieving synergies and generating attractive returns.

Using our disciplined approach to screening and evaluating potential opportunities, we intend to seek strategically and financially attractive acquisition targets that provide us with new capabilities.

We have significant internal resources dedicated to tracking potential acquisition prospects which are formally reviewed by senior management on a regular basis.

Since we are a stable parallel-import vehicle supplier with a wide network of contacts and have been involved in the industry for more than eight years, we believe we will be an acquirer of choice in our industry at attractive valuations.

Edward is the first such business that we integrated into our operations.

For the years ended December 31, 2024 and 2023, parallel-import vehicles contributed 78.2% and 100.0% of our total revenue, respectively.

However, due to the COVID-19 pandemic, lockdowns in the PRC, and weaker customer demand in the PRC caused by deteriorating macroeconomic conditions and a growing preference for domestically produced electric vehicles (“EVs”), our parallel-import vehicle sales volume has been significantly reduced.

We sold 14 and 303 vehicles during the years ended December 31, 2024 and 2023, respectively, generating total revenue of $1.6 million and $38.3 million, respectively, representing a decrease of 95.7% from 2023 to 2024.

To offset the negative impact brought by the decline in the parallel-import vehicle market and to diversify our revenue sources, in February 2024, we acquired Edward Transit Express Group Inc.

(“Edward”), a California-based common carrier specializing in ocean transportation services, to start our logistics and warehousing operations.

Beginning in the second quarter of 2024, we increased our marketing staff to pursue new business opportunities and focus on international trade flows between the PRC and the U.S.

Additionally, in July 2024, we relocated our headquarters from Charlotte, North Carolina, to Irvine, California, which we believe will enable stronger management focus on our logistics and warehousing business due to Irvine’s proximity to the key ports of Los Angeles and Long Beach.

In December 2024, we acquired TW & EW Services Inc (“TWEW”), a California-based provider of general labor and logistics services.

Through TWEW, we provide general labor services including loading, unloading, and other labor-related activities.

Organizational Structure

1 unchanged sentence

On March 1, 2022, we 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 our name to Cheetah Net Supply Chain Service Inc.

Cheetah Net also conducts business under the marketing name of “Elite Motor Group.” As of the date of this annual report, Cheetah Net holds 100% of the equity interests in the following entities:

Cheetah Net also conducts business under the trade name of “Elite Motor Group.” As of the date of this annual report, Cheetah Net holds 100% of the equity interests in the following entities:

● (i) Allen-Boy International LLC (“Allen-Boy”), a limited liability company 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.

1 unchanged sentence

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

● (ii) Canaan International LLC (“Fairview”), a limited liability company 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.

Fairview was acquired by Cheetah Net from Yiming Wang, a former employee of Cheetah Net, for a total consideration of $100 on January 1, 2019.

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

Currently, Fairview is engaged in the parallel-import vehicle business.

● (iii) Canaan Limousine LLC (“Limousine”), a limited liability company 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.

Currently, Limousine is engaged in the parallel-import vehicle business.

● (iv) Pacific Consulting LLC (“Pacific”), a limited liability company 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.

● (ii) Pacific Consulting LLC (“Pacific”), a limited liability company organized on January 17, 2019 under the laws of the State of New York, which was acquired by Cheetah Net from Yingchang Yuan for a total consideration of $100 on February 15, 2019.

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

Currently, Pacific is engaged in the parallel-import vehicle business and financial services.

● (v) Entour Solutions LLC (“Entour”), a limited liability company 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.

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

● (iii) Entour Solutions LLC (“Entour”), a limited liability company 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.

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

● (vi) Cheetah Net Logistics LLC (“Logistics”), a limited liability company organized on October 12, 2022 under the laws of the State of New York, whose previous sole member and owner, Hanzhang Li, a current employee of Cheetah Net, assigned all his membership interests in Logistics to Cheetah Net for a total consideration of $100 through a membership interest assignment agreement dated October 19, 2022.

● (iv) Cheetah Net Logistics LLC (“Logistics”), a limited liability company organized on October 12, 2022 under the laws of the State of New York, whose previous sole member and owner, Hanzhang Li, assigned all his membership interests in Logistics to Cheetah Net for a total consideration of $100 through a membership interest assignment agreement dated October 19, 2022.

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

● (vii) 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 equity interests of Edward to Cheetah Net for a total consideration of $1,200,000 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.

● (v) 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 equity interests of Edward to Cheetah Net for a total consideration of $1,500,000, consisting of a $300,000 cash payment and Cheetah Net’s Class A common stock initially valued at $1.2 million through a stock purchase agreement dated January 24, 2024, as amended.

The fair value of the stock consideration was determined to be $900,000.

(See Note 8 of our audited financial statements as of December 31, 2024.) Currently, Edward is engaged in ocean transportation services.

● (vi) TWEW, a corporation incorporated on February 27, 2020 under the laws of the State of California, whose previous shareholders and owners transferred all their rights, titles, and interests in and to all of the issued and outstanding equity interests of TWEW to Cheetah Net for a total consideration of $1.0 million, consisting of a $200,000 cash payment and Cheetah Net’s Class A common stock valued at $800,000 through a stock purchase agreement dated November 27, 2024.

The TWEW acquisition was closed on December 19, 2024.

Currently, TWEW is engaged in logistics and labor services to strengthen Cheetah Net’s position in the logistics sector.

● (vii) NexTrade International LLC (“NexTrade”), a limited liability company organized on September 13, 2024 under the laws of the State of Delaware.

On December 19, 2024, the sole member of NexTrade transferred all his membership interests in NexTrade to Cheetah Net for a total consideration of $1 in cash.

NexTrade currently holds 100% of the ownership interests in Naiside (Shenzhen) International Trading Co., Ltd., a limited liability company organized on December 3, 2024, under the laws of the PRC.

As of the date of this annual report, NexTrade is not engaged in any business operations.

On August 3, 2023, we closed our IPO of 78,125 shares of Class A common stock at a price of $64.00 per share.

In connection with the IPO, the shares of Class A common stock began trading on the Nasdaq Capital Market under the symbol “CTNT” on August 1, 2023.

On May 15, 2024, we closed a public offering of 825,625 shares of our Class A common stock at a price of $9.92 per share, for gross proceeds of approximately $8.19 million, before deducting placement agent fees and other offering fees and expenses.

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.

On July 26, 2024, we closed a public offering of 404,979 shares of our Class A common stock at a price of $3.68 per share, for gross proceeds of approximately $1.49 million, before deducting placement agent fees and other offering fees and expenses.

On September 30, 2024, our stockholders approved our Fourth Amended and Restated Articles of Incorporation, which authorizes a reverse stock split of the issued shares of our common stock, par value $0.0001 per share, at a ratio ranging from 1-for-10 to 1-for-30, as determined at the discretion of our board of directors.

On October 7, 2024, our board of directors approved a reverse stock split of our common stock at a ratio of 1-for-16.

On October 21, 2024, we effectuated a reverse stock split of our common stock at a ratio of 1-for-16.

Following such reverse split, each 16 shares of our common stock outstanding were automatically combined into one new share of common stock.

No fractional shares were issued in connection with the reverse split;

any fractional shares resulting from the reverse split were rounded up to the nearest whole share.

The par value per share of our common stock remained unchanged.

Our Class A common stock started trading on a post-split basis on October 24, 2024, at which time the Class A common stock was assigned a new CUSIP number (16307X202).

Unless otherwise indicated, all share and per share amounts presented in this document have been retrospectively adjusted to reflect the reverse stock split as if it had occurred as of the earliest period presented.

Our Industry and Business Model

We generate revenue primarily from the sales of parallel-import vehicles.

(I) Parallel-Import Vehicles

For the years ended December 31, 2024 and 2023, we generated revenue primarily from the sales of parallel-import vehicles.

In the PRC, parallel-import vehicles refer to those purchased directly by dealers from overseas markets and imported into the PRC market for sale through channels other than brand manufacturers’ official distribution systems.

Models and prices of parallel-import vehicles vary from mid-range to high-end brands, with the manufacturer’s suggested retail price (“MSRP”) typically not less than $40,000.

Parallel-import cars are popular in China because they are relatively cheaper and offer a wider variety of models and versions with more customization possibilities than regular imported cars.

Specifically, because parallel-import vehicles do not have to pass through multiple levels of distributors, such as China general distributors, regional distributors, and 4S stores, to reach their end consumers, they can generally be priced at least 10% to 15% lower than regular imported cars.

Parallel-import cars are popular also because some overseas models cannot be produced and sold in China due to certain regulations concerning environmental protection and emission standards and can only be introduced into the PRC market through parallel imports.

As manufacturers frequently arbitrage markets, setting the price according to local market conditions so the same vehicle will have different retail prices in different territories, this enables parallel-import vehicle dealers to utilize a profit

maximization strategy to drive profit from the industry.

Currently, there are no U.S.

federal or state laws, regulation, or rules on trade or export that prohibit the export of vehicles that will be parallel imported into foreign countries.

Nonetheless, manufacturers and their distributors sometimes regard parallel-import vehicles as a competitor to their network of franchised dealerships, and thus may take measures to limit or reduce the opportunities for third parties, such as parallel-import vehicle dealers, to profit through leveraging the manufacturers’ different pricing strategies across the world.

For example, they may add provisions in their sales agreements that restrict the export of the purchased automobiles, or they may build and update their Suspect Customer Database and monitor and limit the sales of automobiles to those suspect customers.

Models and prices of parallel-import vehicles vary from mid-range to high-end brands, with a manufacturer’s suggested retail price (“MSRP”) typically not less than $40,000.

Parallel-import vehicles used to be popular in China because they were relatively cheaper and offered a wider variety of models and versions with more customization possibilities than regular imported cars.

Specifically, because parallel-import vehicles do not have to pass through multiple levels of distributors, such as China general distributors, regional distributors, and 4S stores, to reach their end consumers, they could generally be priced at least 10% to 15% lower than regular-imported vehicles.

Parallel-import vehicles were popular also because some overseas models could not be produced and sold in China due to certain regulations concerning environmental protection and emission standards and could only be introduced into the PRC market through parallel imports.

Parallel-import vehicles in China are generally divided into three categories based on the original country of procurement, including the U.S.

version, the Middle East version, and the European version.

All of the cars we sell are of the U.S.

All of the cars we sold in the past two fiscal years were of the U.S.

version with MSRPs typically not less than $80,000.

Suppliers of the U.S.

version of parallel-import cars are typically unable to purchase large quantities of vehicles, so most of the industry’s participants are small family businesses who purchase cars from local dealers and resell them to local dealers/exporters in the U.S.

Suppliers of U.S.

versions of parallel-import cars are typically unable to purchase large quantities of vehicles, so most of the industry’s participants are small family businesses who purchase cars from local dealers and resell them to local dealers/exporters in the U.S.

or to dealers/importers in China.

dealers of parallel-import vehicles, vehicle sourcing capabilities are critical.

In order to rein in prices of foreign luxury cars in the PRC market, which are typically higher than elsewhere in the world, the PRC government has issued policies to promote the development of the parallel-import car industry.

Since the PRC government issued policies to promote the layout of parallel-import vehicle trials in October 2014, the parallel-import vehicle market began to grow.

In 2016, the Ministry of Commerce of the PRC and seven other departments issued “Several Opinions on Promoting Pilot Parallel Import of Automobiles” to speed up the implementation of the pilot policy measures to promote parallel-import cars.

China began piloting parallel imports of automobiles in February 2016, where the first cities to pilot parallel imports of cars were Shanghai, Tianjin, Fuzhou, Shenzhen, and Huangpu, followed by Chengdu, Xinjiang Uygur Autonomous Region, Dalian, and Ningbo.

As a result of these government policies, more Chinese consumers have access to foreign premium cars, such as Porsche and Land Rover, which have spurred sales despite overall softening sales in the broader market.

The market liberalization in 2016 was partly driven by the PRC government’s desire to break up monopolies, benefit consumers, and encourage more cooperation between suppliers and dealers in a fairer and more reasonable environment.

In 2017, China’s new “Measures for the Administration of Automobile Sales” (the “Measures”) were released.

Article 36 of the Measures provides a regulatory basis for the parallel importation of automobiles.

This document contributed to the rapid development of the parallel import model in China.

The new regulation defines the supplier of imported cars as “the operator who imports cars from abroad,” and the authorization of the manufacturer is no longer required for importing cars.

Under the traditional brand authorization model, the car manufacturer is in control of the product types and specifications of the imported cars.

With the development of the parallel import model, however, a growing number of PRC end consumers choose to bypass the brand-authorized dealers in favor of non-authorized dealers for a variety of reasons such as price and special needs.

The development of the parallel-import vehicle industry has since grown significantly.

Furthermore, in 2019, the Ministry of Commerce of the PRC and six other departments issued the “Opinions on Further Promoting the Development of Parallel Import of Automobiles,” which emphasizes the need to (i) permit and support establishment of compliance and modification sites for parallel-import automobiles to ensure the automobiles meet the national standards;

(ii) promote the normalization and institutionalization of the parallel import of automobiles;

(iii) further improve trade facilitation for parallel-import automobiles;

and (iv) further strengthen the supervision and accountability of parallel-import automobiles.

In 2022, the Ministry of Commerce of the PRC and 16 other departments promulgated the “Circular on Several Measures for Invigorating Automobile Circulation and Promoting Automobile Consumption,” which provides that the PRC government will further promote the sustainable and healthy development of parallel import of automobiles by supporting the parallel import of automobiles in ports that permit automobile imports and improving the mandatory product certification and information disclosure system for parallel-import automobiles.

Such regulations and policies comply with U.S.

laws on trade and exports.

Currently, we are primarily engaged in parallel-import vehicle dealership business, where we purchase automobiles from the U.S.

market through our large team of professional purchasing agents, and resell them to our customers, including both U.S.- and PRC-based parallel-import car dealers.

We derive profits primarily from the price difference between our buying and selling prices for parallel-import vehicles.

Our operating principle is to maximize sales margins rather than volume, so we mainly focus on luxury vehicle brands in large demand because of the strong purchasing power of the end consumers in the PRC and higher markups for pricing.

This strategy allows us to maintain efficient operations and effective management by keeping the size and scope of our Company within reasonable limits.

Our Customers

We primarily serve two types of customers:

We purchased automobiles from the U.S.

market through our team of professional purchasing agents, and resold them to our customers, including both U.S.- and PRC-based parallel-import vehicle dealers.

We derived profits primarily from the price difference between our buying and selling prices for parallel-import vehicles.

Our parallel-import vehicle operating principle was to maximize sales margins rather than volume, so we mainly focused on luxury vehicle brands in large demand because of the strong purchasing power of the end consumers in the PRC and higher markups for pricing.

This strategy allowed us to maintain efficient operations and effective management by keeping the size and scope of our Company within reasonable limits.

From 2016 to the first half of 2022, we experienced significant growth in sales volume, revenue, and gross profit due to our core strengths and a favorable economic climate.

However, the parallel-import vehicle market has faced significant challenges in recent years.

Since the second half of 2023, the market for new luxury vehicles in the PRC has been negatively impacted by weak economic conditions and a shift in consumer demand towards EVs, mainly those produced domestically by PRC manufacturers.

Luxury import brand dealers have responded to these threats by discounting the sale price of their vehicles, which has lately prevented us from generating a profit from the sale of parallel import vehicles.

These factors, compounded by the lingering effects of the COVID-19 pandemic and lockdowns in the PRC, have significantly impacted our parallel-import vehicle business.

Due to the unfavorable market conditions, our board of directors approved the discontinuation of our parallel-import vehicle business on March 3, 2025.

To offset the negative impact brought by the decline in the parallel-import vehicle market and to diversify our revenue sources, in February 2024, we acquired Edward, a California-based common carrier specializing in ocean transportation services, to start our logistics and warehousing operations.

Beginning in the second quarter of 2024, we increased our marketing staff to pursue new business opportunities and focus on international trade flows between the PRC and the U.S.

Also, in December 2024, we acquired TWEW, a California-based provider of labor and logistics services.

Through TWEW, we provide general labor services including loading, unloading, and other labor-related activities.

Logistics and Warehousing Services.”

Our Parallel-Import Vehicles Customers

We primarily served two types of customers in our parallel-import vehicles business in the past two fiscal years:

(i) PRC customers and (ii) U.S.

domestic customers.

Specifically, our PRC customers refer to those Chinese automobile dealers/importers who intend to import automobiles into the PRC market as parallel-import vehicles.

domestic customers are parallel-import car dealers/exporters based in the U.S., which are typically the branches or upstream suppliers of Chinese parallel-import vehicle car dealers, who often lack purchasing capabilities in the U.S.

Specifically, our PRC customers were Chinese automobile dealers/importers who intended to import automobiles into the PRC market as parallel-import vehicles.

domestic customers were parallel-import car dealers/exporters based in the U.S., which were typically the branches or upstream suppliers of Chinese parallel-import vehicle car dealers, who often lack purchasing capabilities in the U.S.

market and need to purchase vehicles from us to transport to their PRC branches or sell to their PRC customers.

Our customers are willing to work with us because we are able to provide them with a large number of vehicles having a wide variety of models, thus greatly reducing the difficulty of collecting and managing vehicles for them.

Our parallel-import vehicles customers were willing to work with us because we were able to provide them with a large number of vehicles having a wide variety of models, thus greatly reducing the difficulty of collecting and managing vehicles for them.

Our PRC and U.S.

customers generated approximately 78.7% and 21.3% of our revenue, respectively, during the year ended December 31, 2023, and 93.1% and 6.9% of our revenue, respectively, during the year ended December 31, 2022.

We had a total of four and 17 customers for the years ended December 31, 2023 and 2022, respectively.

For the year ended December 31, 2023, our three largest customers accounted for approximately 98.9% of our total revenue, while for the year ended December 31, 2022, our three largest customers accounted for 65% of our total revenue.

As an example of a typical transaction, under a sales contract entered into by and between our Company and a PRC customers, we are required to (i) load the designated automobiles on a vessel by the time of shipment specified in the contract at a U.S.

parallel-import vehicles customers generated approximately 87.7% and 12.3% of our revenue from parallel-import vehicles, respectively, during the year ended December 31, 2024, and 78.2% and 21.8% of our revenue from parallel-import vehicles, respectively, during the year ended December 31, 2023.

We had a total of two and four customers for the years ended December 31, 2024 and 2023, respectively.

For the year ended December 31, 2024, our two largest customers accounted for approximately 100% of our total revenue from parallel import vehicles.

For the year ended December 31, 2023, our three largest customers accounted for approximately 98.9% of our total revenue from parallel-import vehicles.

As an example of a typical transaction, under a sales contract entered into by and between our Company and a PRC parallel-import vehicle customer, we were required to (i) load the designated automobiles on a vessel by the time of shipment specified in the contract at a U.S.

port of loading;

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and (iv) ensure that the sold automobiles are brand new.

Pursuant to the sales contract, the PRC customer (i) is responsible for import customs clearance and other relevant import issues;

(ii) is required to bear all costs and risks once the designated automobiles arrive at the designated port of destination in the PRC;

and (iii) is responsible for arranging payment as specified in the contract.

In the event of any dispute, controversy, or claim arising out of or relating to such sales contracts, both parties agree (i) they will first try to resolve such disputes through friendly consultation;

Pursuant to the sales contract, the PRC customer (i) was responsible for import customs clearance and other relevant import issues;

(ii) was required to bear all costs and risks once the designated automobiles arrive at the designated port of destination in the PRC;

and (iii) was responsible for arranging payment as specified in the contract.

In the event of any dispute, controversy, or claim arising out of or relating to such sales contracts, both parties agreed (i) they will first try to resolve such disputes through friendly consultation;

and that (ii) the validity, interpretation, and implementation of such contracts shall be governed by the laws of the State of North Carolina in the U.S.

Similarly, our U.S.

customers enter into sales agreements for each automobile sold by us.

customers entered into sales agreements for each automobile sold by us.

According to a typical sales agreement entered into between our U.S.

customers and our Company, we will (i) sell the designated automobile to the U.S.

customers and our Company, we would (i) sell the designated automobile to the U.S.

customer for the amount specified in the agreement and certify that all of the information provided therein is true and accurate to the best of our knowledge;

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Meanwhile, the U.S.

customer acknowledges that the automobile described therein is sold “as is” and that there is no guarantee or warranty either expressed or implied with respect to the automobile.

Our Suppliers

We do not have typical suppliers, because we purchase all of our automobiles via our team of professional purchasing agents from U.S.

automobile dealers that have the designated automobile model in stock.

The designated brands and models are usually luxury or mid- to high-end vehicles that are in high demand in the PRC market, such as Mercedes GLS450, Mercedes G63, BMW X7, and Lexus 600.

Our Professional Purchasing Agents

As of December 31, 2023, we worked with 389 independent contractors as our professional purchasing agents, responsible for purchasing designated models of vehicles using the knowledge and negotiating skills they have acquired from our training.

We have developed a standardized system of recruiting, training, and managing professional purchasing agents.

Specifically, we post job listings on various job platforms to attract qualified potential candidates, and assign received resumes to our full-time procurement specialists, who will schedule interviews by telephone or in person.

A second interview will be conducted by a procurement manager and/or human resources manager to further review the candidate’s background and qualifications.

Upon reviewing the applicant’s experience in the industry, knowledge of our Company, and other qualifications, we will determine whether a candidate is a good fit.

In addition, we have designed and developed our own referral program that incentivizes our existing agents to utilize their network to attract additional qualified agents and thus further expand our purchasing agent base.

In particular, we encourage our purchasing agents to introduce such positions to their connections and forward their resumes or contact information to our Company if consent is granted.

The candidates so referred, if retained, will receive our training and start working as purchasing agents, and the referral agent will earn a $200 commission for each deal the referred agents close.

There is no limit or cap on how many referrals can be made in our referral program.

In the referral program, existing agents act as mentors to new agents by providing them with initial training and helping them become familiar with our Company.

Since most of the purchasing agents have other part-time employment, training sessions are provided to accommodate their schedules.

In a training session, our procurement specialists outline the details, such as models with specifications, buying procedures, commission structure, and agent conduct when visiting a dealership.

The agents are trained continuously after each deal is completed to improve their skills and knowledge.

To determine whether a new purchasing agent has been fully trained and understands well his or her responsibilities, workflow, and company procedures and policies, a procurement manager will schedule an assessment test or call with the new agent before the agent places his or her first order with a dealership.

We manage our purchasing agents through a variety of communication tools including texts, phone calls, emails, and zoom meetings.

Each purchasing agent is assigned to a procurement specialist in charge, who leads and trains a group of agents.

Depending on the agent’s schedule, the procurement specialists in charge are in direct communication with their agents on a weekly basis for updates on active deals, leads for new potential deals, and scheduling vehicle pick-ups.

As each of our purchasing agents may only be able to perform a limited number of purchases before being recorded in the U.S.

dealers’ Suspect Customer Database, we may encounter difficulty maintaining a sufficient number of purchasing agents to meet our purchasing demand.

Our newly established referral program helps us maintain sufficient purchasing agents by offering incentives to existing agents in the form of a referral commission on each successfully concluded transaction completed by a new agent whom they referred to us.

As a result, agents are more motivated to work and stay with our Company.

In accordance with a typical independent contractor agreement entered between a professional purchasing agent and our Company, the purchasing agent agrees to (i) acquire the automobile identified by our Company and promptly transfer possession of the automobile to us;

customer acknowledged that the automobile described therein was sold “as is” and that there was no guarantee or warranty either expressed or implied with respect to the automobile.

Our Parallel-Import Vehicles Suppliers

We did not have regular suppliers for our parallel-import vehicles business in the past two fiscal years, because we purchased all of our automobiles via our team of professional purchasing agents from U.S.

automobile dealers that had the designated automobile model in stock.

The designated brands and models were usually luxury or mid- to high-end vehicles that were in high demand in the PRC market, such as Mercedes GLS450, Mercedes G63, BMW X7, and Lexus 600.

Our Professional Purchasing Agents for Parallel-Import Vehicles

As of December 31, 2024, we did not work with any independent contractors on parallel-import vehicle purchases due to the shrinkage of the parallel-import vehicle market.

Due to the unfavorable market conditions, our board of directors approved the discontinuation of our parallel-import vehicle business on March 3, 2025.

See “—Overview.”

We developed a standardized system of recruiting, training, and managing professional purchasing agents.

Specifically, we posted job listings on various job platforms to attract qualified potential candidates and assigned received resumes to our full-time procurement specialists, who would schedule interviews by telephone or in person.

A second interview would be conducted by a procurement manager and/or human resources manager to further review the candidate’s background and qualifications.

Upon reviewing the applicant’s experience in the industry, knowledge of our Company, and other qualifications, we would determine whether a candidate is a good fit.

In addition, we designed and developed our own referral program that incentivized our agents to utilize their network to attract additional qualified agents and thus further expanded our purchasing agent base.

In particular, we encouraged our purchasing agents to introduce such positions to their connections and forward their resumes or contact information to our Company if consent was granted.

The candidates so referred, if retained, would receive our training and start working as purchasing agents, and the referral agent would earn a $200 commission for each deal the referred agents closed.

There were no limit or cap on how many referrals could be made in our referral program.

In the referral program, existing agents acted as mentors to new agents by providing them with initial training and helping them become familiar with our Company.

Since most of the purchasing agents had other part-time employment, training sessions were provided to accommodate their schedules.

In a training session, our procurement specialists would outline the details, such as models with specifications, purchasing procedures, commission structures, and agent conduct when visiting a dealership.

The agents were trained continuously after each deal was completed to improve their skills and knowledge.

To determine whether a new purchasing agent had been fully trained and understood well his or her responsibilities, workflow, and company procedures and policies, a procurement manager would schedule an assessment test or call with the new agent before the agent placed his or her first order with a dealership.

We managed our purchasing agents through a variety of communication tools, including texts, phone calls, emails, and Zoom meetings.

Each purchasing agent would be assigned to a procurement specialist in charge, who led and trained a group of agents.

Depending on the agent’s schedule, the procurement specialists in charge were in direct communication with their agents on a weekly basis for updates on active deals, leads for new potential deals, and scheduling vehicle pick-ups.

In accordance with a typical independent contractor agreement entered between a professional purchasing agent and our Company, the purchasing agent agreed to (i) acquire the automobile identified by our Company and promptly transfer possession of the automobile to us;

(ii) diligently execute all documents related to the transfer of title and delivery of the automobile;

(iii) deliver the automobile without any physical damage, including all purchasing documents, user manuals, window sticker, keys, spare tires, and interior carpets;

and (iv) acknowledge that the automobile is at all times the sole property of our Company insofar as we fulfill our obligation to fund all related costs of purchasing the automobile and to pay/reimburse all fees owed pursuant to the independent contractor agreement.

Pursuant to the independent contractor agreement, we are required to pay the purchasing agent a service fee calculated according to an agreed-upon payment structure specified in the agreement, which includes (i) a base fee ranging from $500 to $2,000, depending on the model of the purchased automobile, and (ii) an incentive bonus that amounts to 25% of any further discount achieved by the purchasing agent beyond the pre-determined benchmark discount required for the purchased automobile.

Such agreement also includes liability exemption clauses providing that the purchasing agent shall not be liable for any fines or lawsuits imposed by dealerships or manufacturers due to export infractions or infringements and we agree to indemnify, defend, and hold harmless the purchasing agent from and against any liability, losses, claims, costs, interests, penalties, expenses, and damages arising from any non-negligent execution of the role as purchasing agents on behalf of our Company.

Brands We Supply

The brands of automobiles we have procured include Mercedes, BMW, Porsche, Land Rover, Lexus, Bentley, Ram, and Toyota.

and (iv) acknowledge that the automobile was at all times the sole property of our Company insofar as we fulfilled our obligation to fund all related costs of purchasing the automobile and to pay/reimburse all fees owed pursuant to the independent contractor agreement.

Pursuant to the independent contractor agreement, we were required to pay the purchasing agent a service fee calculated according to an agreed-upon payment structure specified in the agreement, which included (i) a base fee ranging from $500 to $2,000, depending on the model of the purchased automobile, and (ii) an incentive bonus that amounted to 25% of any further discount achieved by the purchasing agent beyond the pre-determined benchmark discount required for the purchased automobile.

Such an agreement also included liability exemption clauses providing that the purchasing agent shall not be liable for any fines or lawsuits imposed by dealerships or manufacturers due to export infractions or infringements, and we agreed to indemnify, defend, and hold harmless the purchasing agent from and against any liability, losses, claims, costs, interests, penalties, expenses, and damages arising from any non-negligent execution of the role as purchasing agents on behalf of our Company.

Parallel-Import Vehicles Brands We Supplied

The brands of automobiles we have procured include Mercedes, BMW, Land Rover, Lexus, Ram, and Toyota.

The following table sets forth a breakdown of brands purchased during the years ended December 31, 2024 and 2023.

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Mercedes Benz GLS450

Mercedes Benz S500

Mercedes Benz G63

Mercedes Benz G550

Mercedes Benz GLS600

Porsche Cayenne

Land Rover Range Rover

Toyota Sequoia

Mid- to High-End Brands

Services and Operational Flow

We make procurement decisions based on our extensive experience and insight into the PRC parallel-import vehicle industry.

In order to avoid overstocking or understocking inventory, we must forecast inventory needs and expenses through meticulous market analysis and weekly sales department meetings.

Specifically, our management estimates, based on the data from the General Administration of Customs of China, that approximately 20,000 parallel-import cars have been exported annually from the U.S.

to China in recent years, most of which are of low-end and mid-range brands.

Our founding team understands the factors driving the growth of the luxury-car segment in China and the desires of the Chinese consumer.

In addition, we have some close business partners in China who are parallel-import car traders or dealers, including some of our PRC customers and some third parties or potential customers.

They provide us with timely information on the PRC market and often offer us more favorable terms of settlement.

To develop our sales strategy and support our procurement department’s purchasing plans, the sales department meets weekly with our procurement department to discuss the latest market needs and dynamics, including sales prices, brand composition, and inventory changes.

Nonetheless, in the event that we overstock or understock our inventory, our business, financial condition, and results of operations may be adversely harmed.

We primarily procure automobiles through our team of professional purchasing agents, who serve as independent contractors, from U.S.

automobile dealers that have the designated automobile model in stock.

As of December 31, 2023 and 2022, we worked with approximately 389 and 342 professional purchasing agents, respectively.

Walter Folker, who currently serves as our Vice President of Procurement, oversees a full-time procurement manager, who in turn supervise five full-time procurement specialists, as of December 31, 2023.

Those full-time procurement specialists are responsible for training our purchasing agents and providing them with timely phone coaching and on-site support.

Due to our standardized recruitment, training, and management of professional purchasing agents, we believe our efficient procurement management and organizational skills set us apart from other competitors in the industry.

See “—Our Professional Purchasing Agents.” Our purchasing agents negotiate the best price for our designated automobile models using the knowledge and negotiating skills they received from our training.

We decide which automobiles to purchase primarily based on the demand and selling price for specific automobile models in the PRC market and their availability in the U.S.

We regularly issue

instructions about the brands and models of vehicles to be purchased, as well as the maximum acceptable prices and pick-up time limits.

Professional purchasing agents can visit dealerships across the U.S.

for quotes based on their schedules and convenience, and provide us with the price information they obtain.

We then select the lowest prices for models in demand and assist those purchasing agents who provide such quotes in completing the purchases.

Once the purchases are completed, the purchasing agents sell automobiles to our Company at their purchase prices and charge us a service fee per automobile based on the model of the vehicle and the discount they obtained from the automobile dealers.

See “—Our Professional Purchasing Agents.” A purchasing agent usually pays the deposit to automobile dealers using a Company-issued credit and pays the remaining balance via bank cashier check from our Company’s bank account.

The purchasing agents may occasionally advance funds to the automobile dealers, which will be reimbursed once they provide a receipt and other required documents.

In addition, we will fund any other costs, fees, and taxes incurred by purchasing agents related to the purchase and transfer of automobiles.

Once the purchasing agents receive the titles of the purchased automobiles from the Department of Motor Vehicles, they immediately sign the titles over to Cheetah Net.

Parallel-Import Vehicles Services and Operational Flow

We made procurement decisions based on our extensive experience and insights into the PRC parallel-import vehicle industry.

In order to avoid overstocking or understocking inventory, we would forecast inventory needs and expenses through meticulous market analysis and weekly sales department meetings.

Specifically, our management would estimate, based on the data from the General Administration of Customs of China, that approximately 20,000 parallel-import cars had been exported annually from the U.S.

to China in recent years, most of which were of low-end and mid-range brands.

Our founding team understood the factors driving the growth of the luxury-car segment in China and the desires of the Chinese consumer.

In addition, we had some close business partners in China who were parallel-import car traders or dealers, including some of our PRC customers and some third parties or potential customers.

They provided us with timely information on the PRC market and often offered us more favorable terms of settlement.

To develop our sales strategy and support our procurement department’s purchasing plans, the sales department met weekly with our procurement department to discuss the latest market needs and dynamics, including sales prices, brand composition, and inventory changes.

Nonetheless, in the event that we overstocked or understocked our inventory, our business, financial condition, and results of operations could be adversely harmed.

We primarily procured automobiles through our team of professional purchasing agents, who served as independent contractors, from U.S.

automobile dealers that had the designated automobile model in stock.

Walter Folker, our previous Vice President of Procurement, oversaw a full-time procurement manager, who in turn supervised our full-time procurement specialists.

Those full-time procurement specialists were responsible for training our purchasing agents and providing them with timely phone coaching and on-site support.

Our purchasing agents negotiated the best price for our designated automobile models using the knowledge and negotiating skills they received from our training.

We decided which automobiles to purchase primarily based on the demand and selling price for specific automobile models in the PRC market and their availability in the U.S.

We regularly issued instructions about the brands and models of vehicles to be purchased, as well as the maximum acceptable prices and pick-up time limits.

Professional purchasing agents could visit dealerships across the U.S.

for quotes based on their schedules and convenience and provide us with the price information they obtained.

We would then select the lowest prices for models in demand and assist those purchasing agents who provided such quotes in completing the purchases.

Once the purchases were completed, the purchasing agents sell automobiles to our Company at their purchase prices and charge us a service fee per automobile based on the model of the vehicle and the discount they obtained from the automobile dealers.

See “—Our Professional Purchasing Agents.”

A purchasing agent would usually pay the deposit to automobile dealers using a Company-issued credit and would pay the remaining balance via bank cashier check from our Company’s bank account.

The purchasing agents would occasionally advance funds to the automobile dealers, which we would reimburse once they provided a receipt and other required documents.

In addition, we would fund other costs, fees, and taxes incurred by purchasing agents related to the purchase and transfer of automobiles.

Once the purchasing agents received the titles of the purchased automobiles from the Department of Motor Vehicles, they would immediately sign the titles over to us.

Automobiles purchased from U.S.

automobile dealers are picked up by our purchasing agents and delivered to us at a designated warehouse or other agreed delivery location.

automobile dealers would be picked up by our purchasing agents and delivered to us at a designated warehouse or other agreed delivery locations.

Below is a diagram showing the procurement process:

The following chart demonstrates the number of vehicles we acquired each year since 2016.

We are able to support an annual purchase volume of 500 to 600 cars with our current team size and working capital reserves.

In the future, if our client base expands, we may

adjust the brands of luxury cars we offer.

This could result in more cars to be acquired, with a higher or lower average purchase price per vehicle than the current level.

Nevertheless, we will primarily focus on vehicles with MSRPs between $80,000 and $130,000.

We were able to support an annual purchase volume of 500 to 600 cars with our team size and working capital reserves before our business focus shift to logistics and warehousing services.

We discontinued to acquire vehicles since the second quarter of 2024, and discontinued parallel-import vehicle business following the approval of Company’s Board of Director on March 3, 2025 due to unfavorable market conditions.

Year 2020 was affected by the COVID-19 pandemic and China’s Implementation of National VI Standards.

We actively monitor our automobile inventory as part of our inventory management process.

It is our policy to keep our inventory levels as low as possible while maintaining reasonable levels.

The balance of our inventory as of December 31, 2023 and 2022 accounted for approximately 15.4% and 41.2% of our total current assets, respectively.

The automobiles are stored in the third-party warehouses until they are shipped to China or delivered to our U.S.

Financing for Procurement

Our business requires a large amount of capital.

To maintain our liquidity, we sometimes use the following financing instruments for procurement, including inventory financing, letter of credit financing (“LC financing”), and revolving line of credit:

● Inventory Financing :

In order to improve our liquidity and retain more cash to buy new cars, we may borrow short-term loans from time to time secured by the vehicles we purchased (namely, our inventory) as collateral.

We incur interest expense on such inventory financing, provided by funding companies, which are usually small lenders, generally at a rate of 1.35% to 1.80% per month.

In most cases, we first look for inventory financing from a lender who understands our business and the luxury car market, and then negotiate the loan terms with them.

Different lenders and funding companies charge different interest rates, fees, and repayment terms for inventory financing.

Generally, we receive approximately 70% of the MSRP value of a car if we pledge it in a lender’s warehouse and apply for financing.

Interest expense is calculated based on the agreed interest rate and the actual number of days borrowed.

We generally need to clear all loans prior to customs clearance to further deliver cars to our PRC customers.

For the years ended December 31, 2023 and 2022, our interest expense accrued through inventory financing was approximately $115,000 and $750,000, respectively.

● LC Financing :

To increase our liquidity, we finance our operations from time to time through short-term loans using letters of credit, typically received from our international customers in overseas sales of parallel-import vehicles, as collateral.

Generally, we receive approximately 90% or more of the LC amount with a monthly interest rate of approximately 1.5%.

For the years

ended December 31, 2023 and 2022, our interest expense accrued through LC financing was approximately $930,000 and $1,670,000, respectively.

● Revolving Lines of Credit :

As part of our ongoing efforts to enhance liquidity, on October 5, 2022, we entered into revolving line of credit agreements with two financial support companies, as detailed in “Note 11—Revolving Line of Credit” in the notes to our consolidated financial statements.

These agreements enable us to access up to $15.0 million in total, with individual limits of $10.0 million and $5.0 million respectively, for a 12-month period at a fixed interest rate of 1.5% per month.

The agreements were amended on December 12, 2022, to extend their maturity dates to April 2024.

These revolving lines of credit provide us with a significant buffer to manage cash flow and meet procurement demands effectively.

For the years ended December 31, 2023 and 2022, our interest expense accrued through revolving lines of credit was approximately $160,000 and nil, respectively.

Sales and Services

We sell our automobile inventories to our U.S.

customers (parallel-import vehicle exporters based in the U.S.) or PRC customers (Chinese parallel-import car dealers who purchase cars from us and import them into the PRC to resell them to other dealers or end consumers).

A specific vehicle model’s pricing and profitability vary based on the market demand and supply for that model.

In the past two fiscal years, we sold our automobile inventories to both U.S.

customers (parallel-import vehicle exporters based in the U.S.) and PRC customers (Chinese parallel-import car dealers who purchased cars from us and imported them into the PRC to resell them to other dealers or end consumers).

A specific vehicle model’s pricing and profitability varied based on the market demand and supply for that model.

We set our selling prices based on multiple factors, including the price of the same model sold by authorized dealers in China, normal commercial terms, market pricing adjustments, customer payment methods, operational efficiency of our Company, and anticipated workload for trading activities.

The selling price is finalized as the MSRP plus service fees, which are determined upon comprehensive consideration of the overall market adjustments for vehicles as well as the customer’s payment method.

For example, for the year ended December 31, 2023, the total selling price for customers using letters of credit as payment method ranged from 120% to 130% of the MSRP plus a market adjustment of up to $25,000, while the total selling price for customers using telegraphic transfer (wire transfer) as the payment method was the MSRP plus an adjustment price ranging from $4,000 to $37,000 as determined on a case-by-case basis.

During the years ended December 31, 2023 and 2022, the sales price of our vehicles ranged between $77,499 and $277,300.

The selling price was finalized as the MSRP plus service fees, which were determined upon comprehensive consideration of the overall market adjustments for vehicles as well as the customer’s payment method.

The following table sets forth the breakdown of our sales revenue by brands and models during the years ended December 31, 2024 and 2023.

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Mercedes Benz GLS450

Mercedes Benz S500

Mercedes Benz G63

Mercedes Benz G550

Mercedes Benz GLS600

Porsche Cayenne

Land Rover Range Rover

Toyota Sequoia

Mid- to High-End Brands

Typically, we enter into sales contracts with our PRC and U.S.

See “—Our Customers.” Our U.S.

Typically, we would enter into sales contracts with our PRC and U.S.

See “—Our Parallel-Import Vehicles Customers.” Our U.S.

customers usually pay the full amount to us within two days before or after the automobile is delivered to the appointed warehouse.

In most cases, our PRC customers make their payments one or two weeks after we arrange for a freight forwarding company to load the automobile and provide them with the ocean bill of lading and other related documents.

In most cases, our PRC customers would make their payments one or two weeks after we arranged for a freight forwarding company to load the automobile and provided them with the ocean bill of lading and other related documents.

Fulfillment and U.S.

Customs Clearance

For our domestic sales, we deliver the purchased vehicles to U.S.

customers at their designated warehouses and provide the original copy of the title to them within the agreed timeframe.

customers are responsible for export and cross-border transportation matters on their own after purchasing automobiles.

In this case, we bear the risk of damage and loss before delivering the automobile to the warehouse designated by the U.S.

For our PRC customers, it is our responsibility to arrange for the ocean freight forwarder to load the automobile to be shipped and provide them with the ocean bill of lading and related documents.

As such, we bear the risk of damage and loss prior to arranging for the shipping of automobiles by third-party logistics service providers, but these risks pass to our PRC customers once the automobile is dispatched on board.

Our PRC customers, namely, Chinese parallel-import car dealers, will be responsible for after-sale services for the end consumers of those parallel-import vehicles.

Prior to shipping the automobiles, we generally require PRC customers to make the majority of the amount owed (typically the MSRP amount) upfront via a letter of credit, where the release of payment is contingent upon our submission of a bill of lading and other required documents to the issuing bank underlying the letter of credit for its review.

Once we confirm receipt of the letter of credit, we will settle the loan (if any) and arrange for customs clearance and shipping by third-party logistics service providers.

In the event that all customs clearance procedures have been completed with all forms filled out and accepted by U.S.

Customs and Border Protection (“Customs”), we will ship the automobiles and provide the issuing bank with the bill of landing and related documents for its review.

Upon completion of the review, the issuing bank releases payment to us, and the bill of landing and related documents to PRC customers, which are necessary to obtain the automobiles from the freight forwarder.

We cooperate with third-party logistics service providers whose primary responsibility is to provide cross-border logistics services, typically by sea, for the delivery of our automobiles to our PRC customers.

For our domestic sales, we delivered the purchased vehicles to U.S.

customers at their designated warehouses and provided the original copy of the title to them within the agreed timeframe.

customers were responsible for export and cross-border transportation matters on their own after purchasing automobiles.

In this case, we bore the risk of damage and loss before delivering the automobile to the warehouse designated by the U.S.

For our PRC customers, it was our responsibility to arrange for the ocean freight forwarder to load the automobile to be shipped and provide them with the ocean bill of lading and related documents.

As such, we bore the risk of damage and loss prior to arranging for the shipping of automobiles by third-party logistics service providers, but these risks passed to our PRC customers once the automobile was dispatched on board.

Our PRC customers, namely, Chinese parallel-import car dealers, were responsible for after-sale services for the end consumers of those parallel-import vehicles.

Prior to shipping the automobiles, we would generally require PRC customers to make the majority of the amount owed (typically the MSRP amount) upfront via a letter of credit, where the release of payment was contingent upon our submission of a bill of lading and other required documents to the issuing bank underlying the letter of credit for its review.

Once we confirmed receipt of the letter of credit, we would settle the loan (if any) and arrange for customs clearance and shipping by third-party logistics service providers.

In the event that all customs clearance procedures had been completed with all forms filled out and accepted by U.S.

Customs and Border Protection (“Customs”), we would ship the automobiles and provide the issuing bank with the bill of lading and related documents for its review.

Upon completion of the review, the issuing bank would release payment to us and the bill of lading and related documents to PRC customers, which were necessary to obtain the automobiles from the freight forwarder.

We cooperated with third-party logistics service providers whose primary responsibility was to provide cross-border logistics services, typically by sea, for the delivery of our automobiles to our PRC customers.

(II) Logistics and Warehousing Services

Logistics and warehousing services is a business line we launched in February 2024.

Following the downturn in the parallel-import vehicle market, our management decided to pivot toward logistics and warehousing, drawing on the extensive experience we had developed in transporting parallel-import vehicles.

In February 2024 and December 2024, we acquired Edward and TWEW, respectively, and have since generated revenue from their existing logistics and warehousing operations.

For the year ended December 31, 2024, our logistics and warehousing business contributed 21.8% of our total revenue.

As of December 31, 2024, we had an active customer base of 24 customers for our logistics and warehousing business, as compared with seven when we initially launched the business in February 2024.

Although, as of the date of this annual report, logistics and warehousing accounts for a relatively small portion of our total revenue, we have taken actions to streamline operations, expand service offering, and enhance market position.

Therefore, we anticipate the logistics and warehousing business will become our primary focus in the foreseeable future.

Our logistics and warehousing business focuses on providing freight forwarding services for clients shipping goods from the U.S.

to mainland China or Hong Kong.

We operate as a Non-Vessel-Operating Common Carrier (“NVOCC”), bridging the gap between shippers and ocean carriers to facilitate the movement of cargo.

Generally, our customers lack either the industry knowledge or direct relationships with ocean carriers necessary to secure reliable, cost-effective transportation.

By acting as our customers’ U.S.

point of contact, we coordinate shipments on their behalf, leveraging our expertise and carrier network to streamline logistics.

Our primary responsibilities include:

(i) cargo storage, (ii) freight forwarding, (iii) U.S.

customs clearance, and (iv) labor services and cargo loading and unloading.

Customers may engage us for any combination of these services.

For the year ended December 31, 2024, we conducted the first three services exclusively through Edward and handled labor services and cargo loading and unloading solely through TWEW.

Cargo Storage

The workflow of cargo storage begins when a customer submits a shipping request.

Our customers are typically U.S.-based merchants needing to ship goods to Asia.

They cover the cost of transporting their cargo from their locations to our California warehouse.

Once the cargo arrives at our warehouse, our staff inspects it and records details such as contents and final destination in our system.

As of the date of this annual report, we lease one warehouse located in Gardena, California, covering approximately 8,800 square feet.

Properties.” Our warehouse is equipped with handling equipment (such as forklifts and pallet jacks) and security measures (such as surveillance cameras and fire sprinkler systems) to protect stored cargo.

Freight Forwarding

After the cargo is received, customers may choose to either have us ship it or engage another service provider to do so.

If a customer opts for our ocean freight service, we will secure space for the cargo through our established network of ocean carriers.

As of the date of this annual report, we work with three ocean carriers, each of which had a longstanding partnership with Edward prior to its acquisition and continues to work with us after the acquisition.

We enter into master service agreements with ocean carriers, typically lasting for 12 months.

These service agreements generally contain a minimum quantity commitment (“MQC”), which is the minimum volume of cargo (often measured in 20 and 40-foot equivalent units), that we, as the shipper, must tender to the carrier within the contractual period.

This arrangement allows us to secure favorable rates and enough space while enabling the carrier to allocate its capacity efficiently.

Under these agreements, we must submit individual booking requests within the timeframe specified by the agreement.

In return for our MQC commitment, the carrier reserves space for our shipments at the agreed-upon rates.

Ocean freight fees are generally paid at the estimated time of departure.

However, we have credit arrangements with certain ocean carriers and, in some cases, settle multiple transactions together on a periodic basis.

If we fail to meet the MQC, we may be subject to a “Dead Freight” penalty, meaning we must pay the contracted rate for any shortfall in the MQC.

If the carrier cannot provide sufficient space, the contract permits a reduction of our MQC obligation by the undelivered volume.

Because these agreements include a “Dead Freight” penalty, they typically do not offer early termination clauses.

Once cargo leaves our warehouse, we coordinate with trucking companies to transport it to the port.

According to industry practices, we and the trucking companies typically reach agreements for each service engagement, primarily through email communications, rather than executing formal written service agreements.

As of the date of this annual report, we work with nine trucking companies.

The ocean carriers and trucking companies serve as our suppliers.

Customs Clearance

Before cargo departs the United States, we handle U.S.

customs clearance on behalf of the client if engaged to do so.

Specifically, the customer signs a power of attorney designating us as its legal agent at the U.S.

custom, authorizing us to endorse, sign, declare, or certify any entry, withdrawal, declaration, certificate, bill of lading, or other document required by law or regulation in connection with the shipment of the goods.

Labor Services and Cargo Loading and Unloading

We provide general labor and container loading and unloading workforce services to clients through TWEW.

We enter into cooperation agreements with customers, which stipulates our obligations such as to supply workers to customers and handle payroll, taxes, and insurances.

These workers typically work on terminal loading and unloading operations.

We hire workers from independent third parties.

Customers payments are generally calculated based on the hours worked by the assigned workers.

These agreements can typically be early terminated by either party with prior written notice.

Technology and Intellectual Property

The success of our business depends on our proprietary technologies.

We have developed our Office Automation System (the “OA System”), an information technology system we use to track our order status and monitor our business workflow.

The OA system facilitates the storage, exchange, and management of order data, thereby increasing our productivity and efficiency.

Currently, the OA System has four main modules:

Dashboard, Resume, Orders, and Pick-Up.

● Dashboard .

The Dashboard module is designed for publishing company policies, operational guidelines, and vehicle specifications.

Additionally, it can display the daily numbers of new orders so that employees can keep track of trends over time.

The Human Resources Department of our Company selects resumes from job posting platforms and uploads them to the OA System with scores based on company resume scoring instructions.

The scored resumes are assigned to our procurement specialists daily for the purpose of hiring talent purchasing agents on a continuous basis.

Once the purchasing agents have placed orders with U.S.

automobile dealers, our procurement specialist creates a new order in this module and uploads the required documents for back office review.

The back office carefully reviews the information and documents and makes notes or comments when further information is needed.

As soon as the back office collects and confirms all required information and documents, it will approve or cancel the order in accordance with our order review policy.

When an approved order is ready for pick-up, procurement specialists submit a Pick-Up Form and upload additional or updated information and documents under this module for final review by the back office.

It is the responsibility of the back office to finalize the cost and specifications before approving the order and preparing for pick-up.

After the vehicle has been successfully picked up, its relevant information is moved to the next module, Logistics, which is currently under construction.

As of the date of this annual report, we have registered three domain names in the U.S., including (i) Cheetah-net.com, a domain name registered on August 17, 2022 and associated with the Cheetah Net website;

Our logistics and warehousing business leverages GoFreight, a freight forwarding management software that streamlines workflows, enhances shipment tracking, and supports multi-modal logistics, with a primary focus on ocean freight.

Key features of GoFreight include an automated freight management system that minimizes manual tasks, a centralized dashboard for shipment visibility, and integrated tools for efficient import and export operations.

We previously relied on our Office Automation System (the “OA System”), an information technology system used to track order status and monitor business workflow, to conduct our parallel-import vehicles business.

The OA System facilitated the storage, exchange, and management of order data, thereby enhancing our productivity and efficiency.

As of the date of this annual report, we have discontinued the use of the OA System.

However, we cannot rule out the possibility of reusing it should we resume our parallel-import vehicles operations.

As of the date of this annual report, we own four domain names in the U.S., including (i) Cheetah-net.com, a domain name registered on August 17, 2022 and associated with the Cheetah Net website;

(ii) Pacificconsultingusa.com, a domain name registered on January 7, 2019 and associated with the Pacific Consulting LLC website;

and (iii) Allen-boy.com, a domain name registered on December 5, 2018 and currently not in use.

(iii) Allen-boy.com, a domain name registered on December 5, 2018 and currently not in use;

and (iv) edwardtransitusa.com, a domain name associated with the Edward website, which was registered by Edward prior to our acquisition and subsequently transferred to our domain provider on April 17, 2024.

We also own the trademark “LOFIRST,” which was originally registered by Edward and later acquired by us following our acquisition of Edward.

We hold an Ocean Transportation Intermediary License (License No.

015545N), which allows us to operate as an NVOCC.

As of December 31, 2024, we had a total of 15 employees, 13 of whom worked as full-time employees, as set forth in the following table:

Customer Services and Operations

Sales and Marketing

General and Administration

Warehousing Management

Administration

Executive officer

Our employment contracts with full-time employees include a confidentiality clause.

In addition to our employees, we worked with 389 independent contractors as of December 31, 2023.

These independent contractors serve as our professional purchasing agents, primarily responsible for visiting the U.S.

Under our logistics and warehousing services, we worked with two independent contractors as of December 31, 2024.

These independent contractors provided general labor support for our operations.

Under our parallel-import vehicles business, we worked with 389 independent contractors as of December 31, 2023.

These independent contractors served as our professional purchasing agents, primarily responsible for visiting the U.S.

automobile dealers and negotiating the best vehicle purchase price.

1 unchanged sentence

None of our employees is represented by labor unions.

The automobile dealership industry in the U.S.

is highly competitive and rapidly evolving, with many new companies constantly entering the market.

We are committed to the niche market of selling automobiles to U.S.

and PRC parallel-import vehicle dealers.

We compete with other U.S.

companies that sell parallel-import vehicles sourced in the U.S.

to be sold in the PRC market.

Our ability to compete effectively in the parallel-import vehicle dealership industry depends upon many factors, including our experience and in-depth insight into the industry, as well as the ability to provide vehicles in large quantities to Chinese parallel-import car dealers on a recurring basis.

Generally, we do not have major competitors, because most of our competitors are small family businesses that obtain U.S.

cars through their family members or friends in the U.S., and thus cannot guarantee recurring large supplies.

With a large purchasing agent team responsible for our procurement, we have become a stable supplier for Chinese parallel-import car dealers.

Accordingly, we believe we are well-positioned to effectively compete in the parallel-import vehicles dealership industry.

It is possible, however, that some of our current or future competitors may have a greater brand recognition, or more financial, technical, or marketing resources.

We may lose clients if we fail to compete successfully, which could adversely affect our financial performance and business prospects.

We cannot guarantee that our strategies will remain competitive or successful in the future.

The logistics and warehousing industry in the U.S.

is highly competitive and rapidly evolving, with many new entrants in recent years and only a few leading companies.

We believe our ability to compete effectively for customers depends on several factors:

the quality and variety of services we offer in our logistics and warehousing business, our relationships with ocean carriers, customers, customs, and trucking companies, and our ability to recruit and retain talented professionals with industry expertise.

Based on these factors and our stable supplier and customer connections, we believe our niche focus on international trade flows between the PRC and U.S., combined with integrated services, provides a differentiated value proposition.

However, some of our current or future competitors may have longer operating histories, greater brand recognition, or more extensive financial, technical, or marketing resources than we do.

What changed 10-K

Item 1. Business