What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-03-12 compared with 2024-03-18 · 359 added, 369 removed, 49 unchanged (94% of the section changed)

4 unchanged sentences

Business Overview and Recent Developing Trends

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

to be sold in the PRC market.

We purchase automobiles, primarily luxury brands such as Mercedes, Lexus, Range Rover, RAM and Toyota, from authorized dealers in the U.S.

market 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 expertise lies in our ability to identify the type of parallel-import vehicles that are in high demand and to procure them in a timely manner.

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

We are focusing our attention on the most popular of the luxury vehicles that provide us with the best profit opportunity.

We provide or utilize third parties in the U.S.

to provide logistics and warehousing services and to truck transport our vehicles from an authorized dealer in the U.S.

to the ultimate point of sale.

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 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 the point at which the market for luxury vehicles will firm and the positive spread between the price of vehicles sourced from brand manufacturers’ official distribution systems compared with those sourced via the parallel-import market will return.

We are responding to the current softness in luxury vehicle sales in China by reducing our operating costs, maintaining a very low level of inventory, and using our cashflow to strengthen our logistics and warehouse capabilities as well as cover overhead.

We have significant flexibility to reduce expenses due to our scalable operations;

for example, our procurement agents are paid on a commission basis only so these agents are paid only to the extent they purchase vehicles on our behalf.

We are proceeding with our plans to integrate the acquisition of Edward and to acquire additional U.S.-based logistics and warehousing service providers to reduce our reliance on the purchase and sale of luxury vehicles and augment our core operations with service revenue, which we believe will provide the opportunity to generate revenue by selling these services to third-party parallel importers as well as to importers of other goods.

We believe we can overlay these services with the financial services plans we launched in October 2022 for inventory financing (see “Item 1.

Business—Overview—Recent Development” for more details), such that we can essentially become a one-stop shop for small- and medium-sized traders within the global supply chain sector.

Key Factors Affecting our Results of Operations

We believe the following key factors may affect our financial condition and results of operations:

● Changes in consumer demand and consumption power in the PRC market .

We primarily generate revenue from the sale of vehicles to parallel-import vehicle dealers in China, directly or through U.S.

based exporters.

We currently focus on luxury brands and gasoline-powered vehicles.

Our industry is primarily driven by the increased number of wealthy consumers in the PRC market.

If the consumption and purchasing power of Chinese customers declines, or if they are less inclined to purchase large, expensive vehicles, such as sport utility vehicles or luxury automobiles, and more inclined to purchase smaller, less expensive, and more fuel-efficient vehicles, our business and results of operations could be adversely affected.

● Fluctuations in the average selling price per vehicle and the number of vehicles available for sale caused by competition.

The parallel-import vehicle dealership industry in the U.S.

is relatively competitive and rapidly evolving, with many new companies joining the competition in recent years.

We compete directly with other U.S.

companies that sell parallel-import vehicles to the PRC, although most of our competitors are small family businesses that obtain U.S.

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

It is expected that competition will intensify in the future, and the increased competition may lead to price reductions for vehicle sales, which may result in reduced margins and a loss of market share.

We purchase our inventory of vehicles from U.S.

automobile dealers via third-party professional purchasing agents, and each of them can purchase a limited number of vehicles before being placed on the “exporters list.” If these purchasing agents are unable or unwilling to continue in their present positions, or if we fail to recruit new purchasing agents or maintain a sufficient number of purchasing agents to meet our purchasing demand, our business may be severely disrupted.

If our procurement capabilities are impacted and we are unable to purchase popular vehicle models at reasonable procurement costs, our business and results of operations could be adversely affected.

We may lose customers if we cannot successfully compete, which could adversely affect our financial performance and business prospects.

● Our ability to expand markets.

During the year ended December 31, 2023, our three largest customers accounted for 53.2%, 25.5%, and 20.2% of our total revenue, respectively.

For the year ended December 31, 2022, our three largest customers accounted for approximately 65% of our total revenue, while for the year ended December 31, 2021, our four largest customers accounted for 81.9% of our total revenue.

While we have a strong record of performance, we cannot guarantee that we will continue to maintain our business relationships with these major customers at the same level, or at all.

In the event that a significant customer terminates its relationship with us, we cannot assure that we will be able to secure an alternative arrangement with another comparable customer in a timely manner, or at all.

Losing one or more of these major customers could adversely affect our revenue and profitability.

● China’s industrial Policies.

Changes in consumer demand in the PRC market for fuel-efficient vehicles and electric vehicles could adversely affect our vehicle sales volumes and results of operations.

Furthermore, government policies on the purchase and ownership of automobiles in the PRC, as well as stricter emission standards, may reduce the market demand for the automobiles we sell and thus negatively affect our business and growth prospects.

● Macroeconomic conditions.

We facilitate the import of automobiles of foreign brands into the PRC market as parallel-import vehicles, and any adverse change in political relations between the PRC and the U.S.

or any other country where those brands originate, including the ongoing trade conflicts between the U.S.

and the PRC, may negatively affect our business.

We are currently operating in a period of economic uncertainty and capital market disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflicts between Russia and Ukraine and in the Middle East.

Our business, financial condition, and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine, the Middle East, or any other geopolitical tensions.

Results of Operations

Major Components of Results of Operations

The automobile models we purchase and sell are among the most popular vehicles in the market, which we believe provide lucrative profit opportunities.

Our selection of customers and the models we plan to purchase are based on our efforts to maximize the overall profitability of each vehicle sale.

We will continue to apply this guiding principle in developing and refining our procurement and sales

As such, we consider market conditions, capital costs, and other factors when determining the models and categories we purchase and the prices at which we sell them.

While the brands, models, and their price ranges at which we sell may be adjusted, we intend to maintain the highest gross profit opportunities to improve the overall efficiency of our capital and maximize our earnings potential.

We generate revenue by selling vehicles to U.S.

parallel-import vehicle exporters and PRC parallel-import vehicle dealers.

A specific vehicle model’s pricing and profitability vary 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, the normal commercial terms, customer payment methods, and anticipated workload for trading activities.

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

In addition to those specific factors that impact the parallel-import vehicle market, our revenue may be impacted by global economic factors including the U.S.

dollar/RMB exchange rate, overall financial and economic conditions in the PRC, and any significant change in relevant import or export regulations.

Selling Price

Our revenue decreased by $16.8 million, or 30.5%, from $55.2 million in 2023 to $38.4 million in 2023.

Despite a year-over-year revenue decline in 2023, our average selling price per vehicle increased from 2022.

The initial rise was due to our shift towards models with higher profit margins.

Starting from the third quarter of 2023, we began adjusting our average selling prices downward in response to short-term market volatility, which continued during the fourth quarter with the onset of price inversion in the Chinese market.

These adjustments affected our fourth quarter sales, which resulted in a 39.4% drop in revenue from the same quarter in 2022.

Cost of Revenue

Our cost of revenue mainly comprises (i) the purchase cost of vehicles including dealership service fees and non-refundable taxes incurred during procurement, and (ii) fulfillment expenses, mainly including (a) compensation and bonuses for staff in the purchasing department, (b) commission paid to purchasing agents, (c) transportation and storage costs for vehicles, and (d) consulting fees paid to dealer experts to assist us in making the best purchase decisions.

Allowance for slow-moving inventories is also included in the cost of revenue when our cost of inventory is higher than net realizable value.

Our cost of revenue decreased by $16.6 million, or 32.8%, from $50.7 million in 2022 to $34.1 million in 2023, primarily as a result of our decline in sales.

Interest Expense, Net

To improve our cash flow and expand our business, we obtain loans from finance companies through (i) inventory financing by keeping inventories not intended for immediate sale as collateral, (ii) LC financing by using letters of credit received from our international customers in overseas sales of parallel-import vehicles as collateral, and (iii) accessing revolving lines of credit to further support our operations and strategic initiatives.

Accrued interest is recorded as interest expense.

As of the date of this annual report, our LC financing annual interest rate is 18.0%, and our revolving line of credit interest rate is 18.0%.

We are a provider of logistics and warehousing services, historically in connection with the sale of parallel-import vehicles sourced in the U.S.

to be sold in the PRC market, and more recently for the transportation of other goods between the U.S.

Parallel-import vehicles in the PRC refer to automobiles purchased directly from overseas markets and imported for sale outside of the brand manufacturers’ official distribution networks.

This business contributed significantly to our revenue since our inception.

Between 2016 and the first half of 2022, the Company experienced growth in sales volume and gross profit due to favorable market conditions.

Since, beginning in the second half of 2023, the business was negatively affected by a decline in customer demand due to weakening macroeconomic conditions, price competition from luxury automakers in the PRC, and a shift in consumer preference toward domestic EVs.

These market challenges led to a decline in parallel-import vehicle sales by 30.5% in 2023 and a reduction in net income by 87.5% compared to 2022.

The decline accelerated in 2024, with vehicle sales decreasing from 303 units in 2023 to 14 units in 2024, resulting in a 95.7% drop in revenue from $38.3 million in 2023 to $1.6 million in 2024.

In addition, the financial strain on the Company’s customers made it increasingly difficult to collect outstanding receivables.

While the Company successfully recovered $4.0 million in 2024 and collected additional $2.5 million from the five aged accounts as of the date of the annual report, the remaining $1.6 million from two customers was determined to be uncollectible, as a result, the management recorded as a credit loss of $1.6 million for the year ended December 31, 2024.

As market conditions continued to deteriorate and sales activity in the parallel-import vehicle segment ceased, on March 3, 2025, our board of directors approved the discontinuation of our parallel-import vehicle business.

In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, we determined that the parallel-import vehicle segment met the conditions for reporting as a discontinued operation.

As a result, all financial results associated with this business have been reclassified as discontinued operations in the accompanying consolidated financial statements for all periods presented.

For additional financial details regarding discontinued operations, refer to Note 5 – Discontinued Operations.

Logistics and Warehousing

In February 2024, we acquired Edward to expand our logistics and warehousing service 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.

In July 2024, we relocated our headquarters from Charlotte, NC, to Irvine, CA, which we believe will enable a stronger management focus on our logistics and warehousing business due to Irvine’s proximity to the important ports of Los Angeles and Long Beach.

In December 2024, we acquired TWEW, a California-based labor and logistics service provider which specializes in general labor support services and logistics coordination to further expand our logistics services.

As of the date of this annual report, we are actively integrating TWEW’s operations to strengthen our position in the logistics sector.

Additionally, on December 19, 2024, we entered into a membership interest purchase agreement with Pingzheng Li, the then 100% owner of NexTrade, pursuant to which we purchased the 100% membership interests in NexTrade for the consideration of $1.

The transaction closed on the same day.

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

Reverse Stock Split

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).

Risks and Uncertainties

Our operations are in the U.S.

and our primary market is in the PRC.

Accordingly, our business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the U.S.

and the PRC, as well as by the general state of

The Company is undergoing a business transformation of our business model.

As a company located in the U.S.

and doing business with the PRC, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the U.S.

and the PRC, as well as by the general state of the U.S.

and the PRC economies.

Our results may be adversely affected by changes in the political, regulatory, and social conditions in the U.S.

Risks and uncertainties related to our business include, but are not limited to, the following:

● changes in consumer demand in the Chinese market towards fuel-efficient vehicles and electric vehicles could adversely affect our vehicle sales volumes and results of operations;

● the PRC government policies on the purchase and ownership of automobiles and stricter emissions standards may reduce the market demand for the automobiles we sell and thus negatively affect our business and growth prospects;

● any adverse change in political relations between the PRC and the U.S.

or any other country where those brands originate, including the ongoing trade conflicts between the U.S.

and the PRC, may negatively affect our business;

● the ongoing military conflicts between Russia and Ukraine and between Israel and Hamas could materially and adversely affect the global economy and capital markets, including significant volatility in commodity prices, especially energy prices, credit and capital markets, as well as supply chain interruptions;

● the inflation in the economy may result in higher interest rates and capital costs, shipping costs, supply shortages, and increased costs of labor, and may adversely affect our liquidity, business, financial condition, and results of operations, particularly if we are unable to achieve commensurate increases in the prices we charge our customers.

Our business, financial condition, and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics, and other catastrophic incidents, which could significantly disrupt our operations.

Our operations in 2022 were affected by the COVID-19 pandemic.

First, the COVID-19 pandemic restricted our purchasing agents in the U.S.

from freely purchasing designated automobiles at U.S.

automobile dealerships, either because of the short supply of vehicles or because of store closings or limited opening hours due to the COVID-19 pandemic.

Second, the COVID-19 pandemic adversely affected the market demand for our products.

Due to the implementation of significant governmental measures in the PRC, including lockdowns, closures, quarantines, and travel bans, intended to control the spread of the virus, parallel-import vehicle consumers were less willing to spend, and their purchasing power declined.

Consequently, the market demand for luxury cars, which make up the vast majority of our inventory, has decreased dramatically.

As of the date of this annual report, the spread of COVID-19 has been under control, and during the year ended December 31, 2023, the COVID-19 pandemic did not have a material impact on our financial positions and operating results.

Comparison of Results of Operations for the Years Ended December 31, 2023 and 2022

For the Years ended December 31,

Cost of Revenue

Cost of vehicles

Fulfillment expenses

Total cost of revenue

Selling expenses

General and administrative expenses

Total operating expenses

Income from Operations

Other Income (Expenses)

Interest expenses, net

Other income, net

Subsidy income from Business Recovery Grant Program

Total other expenses, net

Income before Provision for Income Tax

Provision for Income Taxes

Years Ended December 31,

During the year ended December 31, 2023, our financial performance reflected the consequences of our strategic decisions and external market forces.

Our revenue experienced a substantial decline compared to the previous year.

Revenue from our operations decreased by $16.8 million, or 30.5%, from approximately $55.2 million in 2022 to $38.4 million in 2023.

This decline can be primarily attributed to an intentional pause in vehicle procurement in the fourth quarter of 2023, prompted by price inversion in the Chinese market, as well as a change in our procurement pricing strategy as detailed in our most recent quarterly report.

The impact of these factors was particularly pronounced in the fourth quarter of 2023, during which period revenue was $5.8 million, a decrease of 39.4%, or $3.8 million, from the $9.6 million reported in the fourth quarter of the previous year.

Year Ended December 31,

Average Selling Price Changes

Ave Selling Price

Porsche Cayenne

Mercedes G550

Mercedes GLS 450

Mercedes Benz GLS600

Mercedes Benz S500

Land Rover Range Rover

Toyota Sequoia

Mercedes-Benz Sprinter

(i) In 2023, we sold 303 vehicles, a 34.6% decrease from 463 in 2022.

The decline was primarily due to market volatility in China, particularly price fluctuations, resulting in a halt in vehicle procurement in the fourth quarter.

During this period, 49 vehicles were sold compared to 77 in 2022, representing a 36.4% decrease.

(ii) During the year ended December 31, 2023, we strategically restructured our product portfolio by discontinuing the sale of select luxury car models, such as the Porsche Cayenne, Mercedes G550, and MB S500.

This decision was driven by our objective to better align with market demand, streamline resource allocation toward higher-demand models, and improve our inventory cost management.

(iii) Our average selling price per vehicle for the years ended December 31, 2023 and 2022 was $126,455 and $119,122 respectively, representing an increase of $7,334, or 6.2 %, per vehicle.

This increase demonstrates our ability to adjust pricing strategies effectively and underscores the positive impact of our portfolio restructuring on our revenue profile.

However, this increase was contrasted with a decrease in the volume of vehicles sold, as a result of the strategic pause in procurement in response to the price inversion in the Chinese market, which led to an overall decline in revenue.

Years Ended December 31,

domestic market

Overseas market

(iv) Sales to U.S.

market dealers/exporters in 2023 amounted to 73 vehicles, representing 24.1% of total unit sales and 21.3% of total revenue during the year, compared with 29 vehicles sold in 2022 amounting to 6.3% of total unit sales and 6.9% of total revenue in 2022.

Sales to overseas markets in 2023, primarily the PRC market, amounted to 230 vehicles, representing 75.9%

of total unit sales and 78.7% of total revenue during the year, compared with 434 vehicles in 2022, representing 93.7% of total unit sales and 93.1% of total revenue.

The size of our procurement group enables us to purchase a large number of vehicles within a short period of time;

therefore, many of our U.S.-based peers turn to us for vehicle purchasing.

Our cooperation with selected U.S.

counterparts generally improves our cash flow without compromising our ability to deliver vehicles to our PRC clients.

Recent developments, including the price inversion in the Chinese market, have reinforced the effectiveness of this approach.

Cost of Revenue

The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in the U.S.

Risks and uncertainties related to the Company’s business include, but are not limited to, the following:

● The business shift from parallel-import vehicle sales to logistics and warehousing services may depend on factors from the business environment to operation management and market expansion;

● The government policies on ocean freight business and tariff policy may reduce the market demand for the freight, logistics and warehousing business, and thus negatively affect our business and growth prospects;

● Our logistics and warehousing business depend highly on the limited customers and third-party transportation and labor providers;

● Any adverse change in political relations between the PRC and the U.S., including the ongoing trade conflicts between the U.S.

and the PRC, may negatively affect its business;

● The competition of logistics and warehousing industry dependent on factors such as service quality, speed reliability, and pricing may limit our expanding non-vehicle logistics warehousing revenue, and our success in these areas will depend on our ability to develop and scale an effective salesforce to market these services to international trading companies in the U.S.

The Company’s business, financial condition, and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics, and other catastrophic incidents, which could significantly disrupt the Company’s operations.

Results of Operations

The following discussion analyzes our results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023.

In 2024, as we fully exited our parallel-import vehicle business, all financial results related to this segment have been reclassified as discontinued operations in accordance with ASC 205-20, Presentation of Financial Statements — Discontinued Operations.

For further details, please refer to Note 5 — Discontinued Operations.

Logistics and warehousing services business now represents our sole operating segment reported under continuing operations.

The following table provides a summary of our consolidated results of operations for the years ended December 31, 2024 and 2023, highlighting the financial impact of both continuing and discontinued operations:

Years Ended December 31,

Cost of Revenue

Cost of vehicles

Fulfillment expenses

Total cost of revenue

Our total cost of revenue decreased by $16.6 million, or 32.8%, from $50.7 million in 2022 to $34.1 million in 2023.

For the years ended December 31, 2023 and 2022, our total cost as a percentage of our total revenue was 88.9% and 91.9%, respectively.

Our total cost of revenue decreased in line with the reduced revenue, indicating effective cost control measures.

The procurement strategy shift, initiated earlier in 2023, was a significant factor in this decrease, allowing us to manage costs more effectively despite external market pressures.

Cost of Vehicles

Total cost of vehicles sold decreased by $16.3 million, or 33.7%, from $48.5 million in 2022 to $32.2 million in 2023.

For the years ended December 31, 2023 and 2022, we sold 303 and 463 vehicles, respectively.

The average purchase price per vehicle increased from $104,826 in 2022 to $106,217 in 2023.This increase was primarily driven by the increased MSRP of the vehicles we acquired.

The cost of vehicles sold was approximately 84.0% and 88.0% of revenue for the years ended December 31, 2023, and 2022, respectively.

This favorable change is primarily attributed to the altered composition of our sales between the U.S.

domestic and overseas markets.

During this period, we experienced a strategic shift with an increased percentage of sales occurring domestically.

Given the lower transportation costs associated with U.S.

domestic sales compared to the expenses incurred for overseas delivery, our cost of revenue as a percentage of total revenue improved.

Fulfillment Expenses

Years Ended December 31,

Fulfillment Expenses

Payroll and benefits

Buyer commission

Vehicle storage and towing

Vehicle insurance expenses

Consulting Fees

Total fulfillment expenses

Fulfillment expenses decreased by approximately $0.3 million, or 12.3%, from $2.1 million in 2022, to $1.9 million in 2023.

The decrease was mainly attributable to the cost reductions in payroll and benefits as well as the improved management of vehicle storage and towing costs.

The decrease was partially offset by an increase in vehicle insurance and other miscellaneous expenses.

In 2023, we made a shift in our procurement strategy by transporting a majority of our vehicles to the West Coast.

While this decision resulted in an increase in procurement costs, it was offset by a decrease in selling expenses.

The new strategy also streamlines shipping time and expedites receipt of payment through letters of credit, since it takes approximately 14 to 21 days 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 ones), resulting in significantly shorter payment cycles.

As a result of the foregoing, our gross profit decreased by $0.2 million, or 5.0%, from $4.5 million in 2022 to $4.3 million in 2023.

As of percentage of revenue, the gross margin increased 3%, from 8.1% in 2022 to 11.1% in 2023.

This positive shift is primarily attributable to our strategic adjustments within our product portfolio.

These adjustments, which centered on optimizing the inventory mix towards products with more favorable margins, played a pivotal role in cushioning the revenue downtrend and improving our gross margin ratio.

Total operation expenses

Total other income (expense)

(Loss) from continuing operations before tax provision

Income tax (benefits)

(Loss) from continuing operations

(Loss) income from discontinued operations, net of tax

Net (Loss) income

Our total revenue from continuing operations was $455,805 in 2024, reflecting our transition into the logistics and warehousing business.

Meanwhile, the parallel-import vehicle business was discontinued during the year ended December 31, 2024, and its financial results are presented separately as discontinued operations in accordance with ASC 205-20.

For further details, please refer to Note 5 – Discontinued Operations.

We reported a $5.2 million net loss for the year ended December 31, 2024.

The loss was primarily driven by the wind-down of the discontinued parallel-import vehicle operations, increased operating expenses associated with our transition to logistics and warehousing services, and tax provisions related to deferred tax adjustments.

Loss from continuing operations for the years ended December 31, 2024 and 2023 were $3.2 million and $1.7 million, respectively.

Loss from discontinued operations, net of tax, was approximately $2.0 million in 2024, compared to income of $1.8 million in 2023, reflecting the financial impact of ceasing the parallel-import vehicle business, including associated costs and adjustments.

Logistics and Warehousing Services

In 2024, our logistics and warehousing revenue came from the two newly acquired businesses, Edward and TWEW, with revenue recognition beginning after their respective acquisition dates.

The following table provides a breakdown of revenues from each entities:

For the Years Ended December 31,

Revenues from Edward

Revenues from TWEW

Total revenues

For the year ended December 31, 2024, we reported revenue of $455,805 from logistics and warehousing services segment, including $316,852, or 69.5% of our total revenue following the acquisition of Edward in February 2024, and $138,953, or 30.5 % of our total revenue, following the acquisition of TWEW in November 2024 (See also Note 8).

We will continue to focus on improving operational efficiencies and expanding our market presence of the two acquired businesses in the California area.

Operating Expenses

Selling Expenses

Years Ended December 31,

Selling Expenses

Payroll and benefits

Ocean freight

Total selling expenses

In 2023, our total selling expenses decreased by 25.7% to $0.7 million, representing 1.7% of our revenue, a slight increase from 1.6% in 2022.

This change is due to a 29.9% reduction in ocean freight expenses and 19.1% decrease in payroll and benefits, despite a 191.2% increase in other expenses.

The decrease in selling expenses can be attributed primarily to a reduction in the number of vehicles sold during the fourth quarter.

General and Administrative Expenses

3 unchanged sentences

Rental and Leases

Travel & entertainment

Legal & accounting fees

Travel and Entertainment

Legal and Accounting Fees

Recruiting Fees

1 unchanged sentence

Insurance Expenses

Depreciation and Amortization Expenses

Total General and Administrative Expenses

General and administrative expenses increased by $0.8 million, or 53.1%, to $2.2 million in 2023 from $1.4 million in 2022, primarily due to (i) an increase in personnel-related expenses by approximately $0.3 million, or 65.6%, as a result of the recruitment of additional employees in 2023, (ii) the leasing of an additional office workplace in New York, resulting in increased rental and lease expenses, (iii) an increase in legal and accounting expenses, and (iv) an increase in insurance expenses due to higher costs associated with directors and officers insurance.

Other Income (Expenses)

Interest Expenses, net

General and administrative expenses for our continuing operations increased by $1.4 million, or 66.3%, to $3.6 million for the year ended December 31, 2024 from $2.2 million for the year ended December 31, 2023, primarily due to (i) an increase of $0.5 million in personnel-related expenses which was attributed to the hiring of additional staff to support the newly launched logistics and warehousing segment, and labor services segment, (ii) an increase of $0.3 million in rental and leases following the acquisition of Edward with the addition of a new office workspace in California, (iii) an increase of $0.1 million in recruiting expenses associated with the development of new business lines, aligning with the Company’s strategic shift towards logistics and warehousing, (iv) an increase of $0.2 million in insurance expenses due to higher costs associated with directors and officers insurance, (v) an increase of $0.1 million in depreciation and amortization expenses, primarily due to the acquisition of new fixed assets and additional intangible assets, as detailed in Notes 6 & 8, and (vi) an increase of $0.2 million in other miscellaneous general and administration expenses during the year ended December 31, 2024.

Share-based compensation expenses

Years Ended December 31,

Inventory financing

Letter of credit financing

Dealers finance charges

Other loan interest

Line of credit interest

Share-based compensation expenses

Share-based compensation expenses were $0.3 million and nil for the years ended December 31, 2024 and 2023, respectively.

On August 16, 2024, our board of directors approved the adoption of the Amended and Restated 2024 Stock Incentive Plan (the “Plan”).

Subsequently, on September 30, 2024, our stockholders approved the Plan.

The total number of shares granted by the compensation committee of our board of directors on September 30, 2024 were 150,000, including 118,750 shares of Class A common stock and 31,250 shares of Class B common stock.

Share-based compensation expenses of $277,345 were recognized during the year ended December 31, 2024.

See Note 11 for more details.

Other Income (Expenses), net

Years Ended December 31,

Interest income

Interest expenses:

Loan Interest expense

Credit Card Interest

Interest expense on Tax

Premium Finance Interest

Interest expenses decreased significantly by approximately $1.2 million, or 49.2%, to $1.2 million for the year ended December 31, 2023, from $2.4 million for the year ended December 31, 2022, primarily due to (i) the significant drop in inventory financing activities and reduced LC financing activities and (ii) the completion of our IPO in the third quarter of 2023, which marked a significant financial milestone and resulted in a substantial capital infusion.

This financial event has played a key role in reducing our reliance on external financing and, subsequently, in the reduction of interest expenses.

In order to improve our liquidity and retain more cash to acquire new cars, we may enter into short-term loans from time to time, pledging our inventory as collateral before the vehicles are delivered to our customers.

We incur interest expenses on such inventory financing, provided mainly by small lenders, generally at a rate of 1.35% to 1.80% per month.

In 2023, the total weighted average balance of funds we obtained through inventory financing was $0.6 million, the interest expenses incurred was $0.1 million, and the weighted average annual interest rate was 17.6%.

In 2022, the total weighted average balance of funds we obtained through inventory financing was $4.5 million, the interest expense incurred was $0.7 million, and the weighted average annual interest rate was 16.6%.

As we continue to develop our third-party financial services, which are provided in the form of financing for inventory purchase, we intend to minimize our own inventory financing obtained from other parties.

We may also 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 borrow approximately 90% or more of the letter of credit amount with a monthly interest rate of approximately 1.5%.

In 2023, the total weighted average balance of funds we obtained through LC financing decreased to $4.7 million, the interest expenses incurred was $0.9 million, and the weighted average annual interest rate was 19.5%.

In 2022, the total weighted average balance of funds we obtained through LC financing was $9.0 million, the interest expenses incurred was $1.7 million, and the weighted average annual interest rate was 18.5%.

The decrease in total weighted average balance of funds through LC financing and the related interest expenses incurred in 2023 reflected a lower volume of vehicles shipped and greater use of our revolving lines of credit.

As of December 31, 2023, the total weighted average balance of funds we obtained through revolving lines of credit was $0.9 million, the interest expenses incurred were $0.2 million for year ended December 31, 2023, and the weighted average annual interest rate was 18.0%.

Provision for Income Taxes

Our provision for income taxes, which consists of U.S.

federal and state income taxes, amounted to approximately $50,000 and $0.2 million in 2023 and 2022, respectively.

Total Interest expenses

Total other income(expense), net

Interest income from continuing operations was $320,472 for the year ended December 31, 2024, compared to $9,938 for the year ended December 31, 2023, representing an increase of $310,534, or 3,124.7%.

The significant increase was primarily driven by interest earned on short-term loan receivables and certificates of deposit, funded by the net proceeds from our IPO, the May Offering, and the July Offering.

Interest expense incurred from our continuing operations was $35,951 for the year ended December 31,2024, decreased $5,932 or 14.2%, from $41,883 in 2023, mainly due to decreased credit card interest.

Income Tax (Benefits)

Our income tax benefits for continuing operations were $0.2 million for the year ended December 31, 2024, compared with income tax benefits of approximately $0.5 for the same period in 2023.

As a result of the above factors, we had a net loss of $3.2 million from our continuing operations for the year ended December 31, 2024, compared to net loss of $1.7 million for the same period of 2023.

Parallel- Import vehicle Business (Discontinued Operations)

As disclosed in Note 5 – Discontinued Operations, we fully exited our parallel-import vehicle business in 2024, and its financial results have been classified as discontinued operations in our accompanying consolidated financial statements.

The following discussion provides an overview of the financial impact of discontinued operations and related expense items.

Financial Impact of Discontinued Operations

The following table summarizes the financial results of our discontinued operations for the years ended December 31, 2024 and 2023:

Years Ended December 31,

domestic market

Overseas market

Total Revenue

Cost of Revenue

Cost of vehicle

Fulfilment expense

Total Cost of Revenue

Gross (loss) profit

Revenue from discontinued operations was $1.6 million for the year ended December 31, 2024, compared to $38.3 million for the year ended December 31, 2023, representing a decrease of $36.7 million, or 95.7%.

The significant decline was primarily due to the termination of parallel-import vehicle sales and the phase-out of operations.

Revenue from the U.S.

domestic market declined by 97.5% to $0.2 million, while revenue from the overseas market decreased by 95.3% to $1.4 million in 2024.

Cost of revenue decreased by $32.4 million, or 95.0%, to $1.7 million in 2024, compared to $34.1 million in 2023, primarily due to the substantial reduction in vehicle purchases and fulfillment expenses following the discontinuation of the business.

The cost of vehicles decreased by $30.7 million, or 95.3%, while fulfillment expenses declined by $1.7 million, or 92.5%, in line with lower sales volumes.

As a result, we reported a gross loss of $24,820 for the year ended December 31, 2024, compared to a gross profit of $4.2 million in 2023, reflecting a decline of $4.3 million, or 100.6%.

The decrease was primarily attributable to the cessation of the parallel-import vehicle business and the significant drop in revenue.

Selling, General, and Administrative Expenses for Discontinued Operations

The following table presents selling, general, and administrative (“SGA”) expenses for the discontinued operations:

Years Ended December 31,

Selling expenses

Allowance of credit loss of accounts receivables

Forfeited vehicle deposit expense

Credit Loss on vehicle sale tax receivable

Total SGA Expenses

Total SGA Expenses for the discontinued parallel-import vehicle business increased by approximately $1.2 million, or 175.8%, to $1.8 million in 2024, compared to $0.7 million in 2023.

The increase was primarily driven by credit losses of $1.6 million for aged uncollectible accounts receivable, and $0.1 million of forfeited vehicle deposits and sales tax receivables, reflecting the financial impact of the business exit.

However, in the second half of 2024, certain customers were impacted by broader economic pressures, resulting in slower payment cycles and delays in remittances.

These challenges were reflected in our financial performance, as we recorded a credit loss of $1.6 million on accounts receivable and a credit loss of $34,885 on vehicle-related sales tax receivables.

Additionally, we recognized a forfeited vehicle deposit expense of $100,800, primarily due to supplier-related contract terminations following the cessation of vehicle purchases.

We remain focused on optimizing collections and has implemented a structured approach to manage outstanding receivables.

Through ongoing efforts, we have recovered $2.5 million as of the date of this annual report.

We continue to monitor and evaluate outstanding balances to maximize recoverability and ensure a disciplined financial transition from the vehicle import business.

For further details on credit losses, refer to Note 5 – Discontinued Operations.

Interest Expenses

The table below presents interest expenses for the years ended December 31, 2024 and 2023:

Interest Expenses

Inventory Financing

Finance Deal charges

Line of Credit

Total interest expenses

Total interest expenses for the discontinued operations decreased significantly to $ 88,788 for the year ended December 31, 2024, compared to $1.2 million in 2023.

This decrease was primarily due to the cessation of vehicle purchases and the associated financing activities.

The absence of inventory financing and a substantial decrease in LC financing charges were the main causes of this decline.

Liquidity and Capital Resources

Cash Flows and Working Capital

We assess our liquidity in terms of our ability to generate adequate amounts of cash to meet current and future needs.

We have relied primarily upon cash provided by operations and financing activities, including as necessary third-party loans and financial support from our founders.

As reflected in the accompanying consolidated financial statements, we reported net income of approximately $135,000 for the year ended December 31, 2023.

We also reported cash provided by operating activities of $5.6 million for the year ended December 31, 2023, a positive working capital of $7.5 million and total stockholders’ equity of $6.9 million.

In December 2023, we further advanced our financial services strategy, initially launched in October 2022, with a focus on providing inventory financing services.

This strategic progression was marked by the introduction of 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.

In August 2023, we completed our IPO of 1.25 million shares of Class A common stock and raised net proceeds of approximately $3.7 million after expenses.

We commenced using our revolving lines of credit during the second quarter of 2023, which has reduced our borrowings under our inventory and LC financing and reduce our interest expenses.

We entered into a series of loan agreements with third-party companies for working capital purposes during the year ended December 31, 2023.

Pursuant to these agreements, loan payables from LC financing were collateralized by letters of credit from overseas sales of parallel-import vehicles.

The accounts receivable in connection with letters of credit with book value of $1,084,775 and $7,502,291 were pledged as collateral to guarantee our borrowings from these third-party companies as of December 31, 2023 and 2022, respectively.

In October 2022, we entered into agreements with two third-party companies that have been providing financial support to us since 2021.

Pursuant to the agreements, we can borrow under revolving lines of credit of up to $10.0 million and $5.0 million, respectively, from these two third-party companies for a total of $15.0 million for a period of 12 months at a fixed interest rate of 1.5% per month.

In December 2022, we amended the revolving line of credit agreements to extend their maturity dates to April 2024.

In June 2022, we sold 1,666,000 shares of Class A common stock at a purchase price of $1.80 per share.

The gross proceeds were approximately $3.0 million, before deducting the offering expenses of approximately $0.3 million.

The net proceeds were approximately $2.7 million, of which approximately $0.6 million was received in September 2022, $0.5 million in November 2022, $0.1 million in

December 2022, $0.7 million in March 2023, and $0.5 million in July 2023, for a total receipt of approximately $2.4 million.

The balance of $0.6 million is expected to be paid within six months after our IPO.

In March 2022, we entered into an amended agreement with the SBA to borrow an additional $350,000 for 30 years as working capital to alleviate economic injury caused by the COVID-19 pandemic.

In aggregate, our SBA borrowings amounted to $500,000 with a maturity date of May 23, 2050.

The amended loan bears a fixed interest rate of 3.75% per annum.

Beginning from March 2022, 24 months from the date of the original loan agreement, we are required to make a new monthly installment payment of $2,485 within the remaining term of the loan, with the last installment to be paid in May 2050.

In assessing our liquidity, we monitor and analyze our cash on-hand, our ability to generate sufficient revenue, the collection of our accounts receivable, our ability to obtain additional financial support in the future, and our operating and capital expenditure commitments.

We reported cash of $0.4 million as of December 31, 2023.

As of December 31, 2023, our working capital amounted to approximately $7.5 million (namely, $9.8 million of current assets less $2.3 million of current liabilities), including $1.8 million loans payable.

Our solid working capital position is supported additionally by our ability to borrow under our existing credit facilities based on past experience, our good credit history, and well-established relationship with the lenders.

We have from time to time in the past several years been supported with loans from our principal stockholder, and we believe such support will be available in the future, if needed.

The completion of the IPO in the third quarter of 2023 provided us with a substantial influx of capital.

With improved access to funds as a result of being a public company, we now have the increased financial flexibility to operate without the current need for external debt financing and can manage our operations with a more comfortable cash flow position.

We are working to further improve our liquidity and capital sources primarily by generating cash from operations, debt financing, and, if needed, financial support from our principal stockholder.

In order to fully implement our business plan and sustain continued growth, we may also seek additional equity financing from outside investors.

Based on the current operating plan, management believes that the above-mentioned measures collectively will provide sufficient liquidity to meet our future liquidity and capital requirements for at least 12 months from the issuance date of the consolidated financial statements.

Cash Flows for the Years Ended December 31, 2023 and 2022

The following table summarizes our cash flow for the years ended December 31, 2023 and 2022:

Historically, our primary uses of cash have been to finance working capital needs.

We believe that we will be able to fund current operations and other commitments for at least the next 12 months from operating cash flow and proceeds from the capital infusion which were held in our cash and cash equivalents.

We may, however, require additional cash resources due to changes in business conditions or other future developments.

If these sources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility.

The sale of additional equity or equity-linked securities could result in additional dilution to stockholders.

The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financial covenants that would restrict operations.

Financing may not be available in amounts or on terms acceptable to us, or at all.

As of December 31, 2024, we had current assets of $11.0 million, consisting of cash and cash equivalents of $1.7 million, $6.1 million in loan receivables, $0.4 million of other receivables, $0.3 million in prepaid expenses other current assets from continuing operations, as well as $2.5 million in current assets from discontinued operations, primarily accounts receivable, which had been fully collected as of the date of this report.

As of December 31, 2024, our current liabilities, all of which related to continuing operations, totaled approximately $0.9 million, consisting of $0.4 million of operating lease liabilities, $0.2 million of other payables, and $0.2 million of loan payable, including the current portion of long-term borrowings.

The following table summarizes our cash flows for the years ended December 31, 2024 and 2023, with continuing operations and discontinued operations presented separately:

Years ended December 31,

Net cash provided by operating activities

Cash outflows from operations-continuing operations

Cash inflows from operations-discontinued operations

Net cash used in investing activities

Net cash (used in) financing activities

Net increase (decrease) in cash

Cash outflows from operations-continuing operations

Net cash provided by (used in) financing activities

Cash inflows from operations-continuing operations

Cash outflows from operations-discontinued operations

Net increase in cash

Operating Activities

Net cash provided by operating activities was $5.6 million for the year ended December 31, 2023.

This was primarily attributable to a collection of $0.6 million in accounts receivable, a $4.5 million decrease in inventory, $0.5 million decrease in other receivables, and other less significant factors.

Net cash provided by operating activities was $2.2 million for the year ended December 31, 2022.

This was primarily attributable to a net profit of $0.8 million, adjusted by a $10.5 million reduction in inventory and offset by (i) a $1.8 million decrease in deferred revenue (because customer prepayment and deposit was recognized as revenue during 2022 when revenue recognition criteria were met), (ii) a $7.1 million increase in accounts receivable, and (iii) other factors of less significance.

Net cash used in operating activities from continuing operations was $3.5 million for the year ended December 31, 2024.

The negative cash flow was primarily due to (i) a net loss of $3.2 million during the year ended December 31, 2024;

(ii) an increase of $0.3 million in deferred income tax benefits;

and (iii) an increase of $0.3 million in other receivables and a decrease of $0.2 million in operating lease liabilities, partially offset by (iv) an increase of $0.3 million in amortization of operating lease right-of-use assets, and $0.3 million in share-based compensation expenses, respectively.

Net cash used in operating activities from continuing operations was $1.6 million for the year ended December 31, 2023.

This was primarily attributable to (i)a net loss of $1.7 million;

(ii) an increase in amortization of operating lease right-of-use assets of $0.1 million;

offset by (iii) a decrease in operating lease liabilities of $0.2 million.

Net cash provided by operating activities from discontinued operations was $3.7 million in 2024.

The decline was primarily attributable to (i) a decrease of $1.5 million in inventory;

(ii)a decrease of $3.9 million in accounts receivable;

offset by $1.7 million decrease in loans payable.

Net cash provided by operating activities from discontinued operations was $7.2 million for the year ended December 31, 2023.

This was primarily attributable to (i) a net income of $1.8 million;

(ii) a collection of $0.6 million in accounts receivable, a $4.5 million decrease in inventory, $0.5 million decrease in other receivables, and other less significant factors.

Investing Activities

Net cash used in investing activities was $0.7 million and nil for the years ended December 31, 2023 and 2022, respectively.

The increase of investing activities consisted of (i) $0.5 million in short-term loans lent to third parties, and (ii) $0.2 million in vehicle pledge loans extended to third parties.

Net cash used in investing activities from continuing operations was approximately $6.1 million for the year ended December 31, 2024, including (i) approximately $0.3 million in cash paid for the Edward and TWEW acquisitions, net of cash acquired, (ii) purchase of fixed assets of $0.4 million, (iii) $6.3 million in short-term loans lent to third parties, and offset by (iv) $0.9 million proceeds of repayment from short-term loans lent to third parties.

For the year ended December 31, 2023, net cash used in investing activities was $0.7 million in short-term loans lent to third parties.

There were no investing activities related to discontinued operations for the years ended December 31, 2024 and 2023.

Financing Activities

Net cash used in financing activities of $4.6 million for the year ended December 31, 2023, consisted of (i) net repayments of LC financing of $25.5 million;

(ii) net repayments of inventory financing of $4.2 million;

(iii) net repayments of revolving lines of credit of $2.6 million;

and (iv) repayments of dealers financing of $0.4 million;

partially offset by (v) proceeds from LC financing of $19.4 million;

(vi) proceeds from revolving lines of credit of $3.2 million;

(vi) proceeds from dealers financing of $0.4 million;

(vii) proceeds from premium finance of $0.2 million;

(viii) a reduction in subscriptions receivable of $1.2 million;

and (ix) net proceeds from our IPO of $3.7 million.

Net cash used in financing activities of $2.6 million for the year ended December 31, 2022, consisted of (i) net repayment of LC financing of $34.3 million;

(ii) net repayment of inventory financing of $26.1 million;

(iii) repayment to a founder of $1.4 million;

and (iv) repayment of dealers financing of $0.2 million;

partially offset by (v) net proceeds from LC financing of $33.3 million, (vi) net proceeds from inventory financing of $24.3 million;

(vii)issuance of common stock of $1.2 million;

(viii) net financing support from long-term borrowing of $0.4 million;

and (ix) financial support of $0.3 million from our founder.

Contractual Obligations

The following table sets forth our contractual obligations as of December 31, 2023:

Lease commitment

Long-term borrowings

Except for those disclosed above, we did not have any significant capital or other commitments, long-term obligations, or guarantees outstanding as of December 31, 2023.

Net cash provided by financing activities from continuing operations was $8.8 million for the year ended December 31, 2024, which consisted of (i) net proceeds from July Offering of approximately $1.1 million, (ii) net proceeds from the May Offering of approximately $7.3 million, (iii) proceeds of $0.6 million from the issuance of shares of common stock in private placements;

partially offset by (iv) net repayments of premium finance of approximately $0.3 million.

Net cash provided by financing activities from continuing operation of $5.0 million for the year ended December 31, 2023, consisted of (i) proceeds from initial public offering of approximately $3.7 million;

(ii) a reduction in subscriptions receivable of $1.2 million;

(iii) proceeds from premium finance of $0.2 million and other less significant factors.

Net cash used in financing activities from discontinued operations was $1.7 million for the year ended December 31, 2024, primarily reflecting (i) net repayments of LC financing of $1.0 million;

and (ii) net repayments of revolving lines of credit of $0.7 million;

Net cash used in financing activities from discontinued operations was $9.6 million for the year ended December 31, 2023, consisted of (i) net repayments of LC financing of $6.1 million;

(ii) repayments of inventory financing of $4.2 million;

(iii) repayments of dealers financing of $0.4 million;

and partially offset by (iv) net proceeds from revolving lines of credit of $0.7 million.

Off-Balance Sheet Arrangements

We did not have during the period presented, and we do not currently have, any off-balance sheet financing arrangements as defined under the rules and regulations of the SEC, or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Estimates

We prepare our financial statements in conformity with the accounting principles generally accepted in the U.S.

GAAP”), which require us to make judgments, estimates, and assumptions that affect our reported amount of assets, liabilities, revenue, costs and expenses, and any related disclosures.

Although there were no material changes made to the accounting estimates and assumptions in the past three years, we continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances.

Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates.

Estimated allowance for doubtful accounts receivable

Management reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances.

Our Company determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trend.

On March 13, 2024, we received requests for deferred payments from two clients, both supported by third-party guarantors.

These accounts have been subject to a heightened review process, with our assessment including an evaluation of the clients’ reasons for deferral and an analysis of the financial standing of the guarantors.

Based on this review, as of December 31, 2023, we concluded that these receivables remained fully collectible and, consequently, did not establish an allowance for doubtful accounts.

This conclusion is subject to change as future evaluations may indicate a heightened risk of non-collection.

For a detailed information on overdue amounts, please refer to “Note 3—Accounts Receivable” in the notes to our consolidated financial statements.

Estimated allowance for inventories obsolescence

Management’s estimated allowance for the inventory obsolescence reserves is based on management’s assessment of realization of inventory.

Any excess of the cost over the realizable value of each item of inventories recognized as a provision for diminution in the value of inventories.

As of December 31, 2023 and 2022, we recorded no reserves of inventories from the carrying amount to their net realizable values.

Estimate of the valuation allowance of deferred tax assets

Our Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized.

In making such a determination, our Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

We have not assessed a valuation allowance as we determine it is more likely than not that all deferred tax assets will be realized before expiration.

Revenue Recognition

We do not currently have any off-balance sheet financing arrangements as defined under the rules and regulations of the SEC, or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported.

Note 2, “Summary of Significant Accounting Policies” of the Notes to in Part II, Item 8 of the 2024 Form 10-K describe the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements.

ASC 606 establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers.

1 unchanged sentence

ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts.

The five-step model requires that our Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) our Company satisfies the performance obligation.

The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way our Company records its revenue.

The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue.

Under the new guidance, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

In addition, the new guidance requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

Our Company is primarily engaged in the parallel-import vehicle dealership business and generates revenue from the sales of parallel-import vehicles to both domestic and oversea parallel-import car dealers.

We generated revenues from the parallel-import vehicle dealership and logistics and warehousing services.

Revenue from the parallel-import vehicle dealership business is generated from the sales of parallel-import vehicles to both domestic and overseas parallel-import car dealers.

We purchase automobiles from the U.S.

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

In accordance with ASC 606, our Company recognizes revenue at the point in time when the performance obligation has been satisfied and control of the vehicles has been transferred to the dealers.

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

In accordance with ASC 606, the Company recognizes revenue at the point in time when the performance obligation has been satisfied and control of the vehicles has been transferred to the dealers.

For sales to U.S.

domestic parallel-import car dealers, revenue is recognized when a vehicle is delivered, and its title has been transferred to the dealers.

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

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

All of our Company’s contracts have one single performance obligation as the promise is to transfer the individual vehicle to parallel-import car dealers, and there is no separately identifiable other promises in the contracts.

Company’s vehicles are sold with no right of return and our Company does not provide other credits or sales incentives to parallel-import car dealers.

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

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

All of the Company’s contracts have one single performance obligation as the promise is to transfer the individual vehicle to parallel-import vehicle dealers,

and there is no separately identifiable other promise in the contracts.

The Company’s vehicles are sold with no right of return and the Company does not provide other credits or sales incentives to parallel-import car dealers.

Historically, no customer returns have occurred.

Therefore, our Company did not provide any sales return allowances for the years ended December 31, 2023 and 2022.

Contract balances and remaining performance obligations

Contract balances typically arise when a difference in timing between the transfer of control to the parallel-import car dealers and receipt of consideration occurs.

Our Company did not have contract assets nor contract liabilities as of December 31, 2023 and 2022.

Therefore, the Company did not provide any sales return allowances for the years ended December 31, 2024 and 2023.

In 2024, the Company generated revenue from freight forwarding services provided by Edward and general labor and logistics provided by TWEW to corporate and retail clients, including transportation, cargo warehousing, freight forwarding, labor service, and cargo loading and unloading.

Revenue for freight forwarding services, both export and import, is recognized when the services are provided.

The Company’s role as the principal in these services involves managing the process up to the point where control is transferred based on contractual terms, allowing revenue recognition on a gross basis throughout the transit period.

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

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

Each contract is typically structured with a single performance obligation without allowances for returns or sales incentives.

There were no provisions for sales return allowances based on historical experiences of no returns.

Revenue from general labor and logistics services, provided through TWEW, is recognized upon services rendered, based on verified labor hours or project milestones outlined in client agreements, with billing tied to predefined service rates (e.g., per-hour fees or fixed-scope pricing).

The Company recognizes revenue on a gross basis as the principal service provider, reflecting its contractual obligation to deliver labor solutions to clients, despite outsourcing workforce operations to third parties.

Contracts generally consist of a single performance obligation (supplying labor resources), with revenue measured at the transaction price agreed upon in service agreements.

No provisions for returns or sales incentives are included, as historical experience indicates no material rights of return or refunds.

Cost of Revenue

Parallel-import Vehicles Segment

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

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

It also includes fulfillment expenses, which consist primarily of (i) vehicle warehousing and towing fees, (ii) vehicle insurance expenses, (iii) commissions paid to purchasing agents incurred in vehicle pick-up and the vehicle title transfer process, (iv) broker consulting fees incurred to acquire new vehicles, and (v) purchase department labor costs.

Logistics and Warehousing Segment

Cost of logistics and warehousing service revenue mainly includes the cost of freight and fulfillment expenses for freight forwarding services, while cost of labor services comprises payments to third parties for outsourced workforce provisioning, including bundled recruitment, training, and payroll processing.

Cost recognition aligns with service delivery progress, validated through subcontractor utilization reports and client acceptance documentation.

Selling, General and Administration Expenses

Selling expenses was related to the discontinued parallel-import vehicles business and include salaries and benefits for the Company’s sales personnel, and ocean freight expenses, which are associated with shipping and delivery of vehicles to automobile dealers, are expensed as incurred.

Total selling expenses for the discontinued parallel-import vehicle business were $117,819 and $668,172 for years ended December 31, 2024 and 2023, respectively.

The Company’s general and administrative expenses primarily include employee salaries and benefits, depreciation, office lease expenses, travelling and entertainment expenses, legal and consulting fees, insurance and other miscellaneous administrative expenses.

For the years ended December 31, 2024 and 2023, general and administration expenses for the continuing expenses of $3,641,713 and $2,190,513, respectively, were attributable to continuing operations, with no allocation to discontinued operations.

Share-based compensation

The Company has adopted the Plan for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Company’s operations.

Shareholders, directors, and employees of the Company receive remuneration in the form of share-

based awards including option, restricted stock, restricted stock unit, dividend equivalent, or other awards that are permitted under the Plan, whereby the recipients render services as consideration for such share-based compensation.

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the cost over the period during which the employee is required to provide service in exchange for the award, which generally is the vesting period.

The amount of cost recognized is adjusted to reflect any expected forfeitures prior to vesting.

The fair value of stock award is measured at grant date’s per share closing price of the Company’s common stock, and the fair value of option is measured at grant date using the Black-Scholes pricing model, taking into account the terms and conditions upon which the share-based awards are granted.

Where the employees have to meet vesting conditions before becoming unconditionally entitled to the share-based awards, the total estimated fair value of the share-based awards is spread over the vesting period, taking into account the probability that the share-based awards will vest, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date.

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

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

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

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized.

In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

The Company assesses deferred tax assets to determine whether they are realizable.

As of December 31, 2024, the Company recorded a full valuation allowance against deferred tax assets, as it has generated a three-year cumulative pretax book loss and is forecasting a loss for 2025.

Based on this evidence, realization of deferred tax assets is not considered more-likely-than-not at this time.

The Company records uncertain tax positions in accordance with ASC 740, Income Taxes, on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company records interest and penalties related to an uncertain tax position, is and when required, as part of income tax expenses in the consolidated statements of operations.

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

The Company and its U.S.

operating subsidiaries are subject to the U.S.

The Company elected to file income taxes as a corporation instead of an LLC for the tax years ended December 31, 2020 through December 31, 2021.

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

tax authorities.

(Loss) Earnings per share

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

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

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

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

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

Related parties and transactions

The Company identifies related parties, and accounts for and discloses related party transactions in accordance with ASC 850, “Related Party Disclosures” and other relevant ASC standards.

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

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

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

Transactions between related parties are also considered to be related party transactions even though they may not be given accounting recognition.

Segment reporting

The Company uses the management approach in determining reportable operating segments.

The management approach considers the internal reporting used by the Company’s chief operating decision maker for making operating decisions about the allocation of resources of the segment and the assessment of its performance in determining the Company’s reportable operating segments.

As of December 31, 2023, the Company operated as a single reportable segment, focused solely on the parallel-import vehicle business.

In 2024, the Company expanded its operations and reported two operating segments:

the parallel-import vehicle business and logistics and warehousing services.

However, following the discontinuation of the parallel-import vehicles business, as of December 31, 2024, the Company transitioned back to a single reportable segment, now focused exclusively on logistics and warehousing services.

Accounts receivable, net

Accounts receivable represent the amounts that our Company has an unconditional right to consideration, which are stated at the original amount less an allowance for doubtful accounts.

Our Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances.

Our Company determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends.

Our Company establishes a provision for doubtful receivables when there is objective evidence that our Company may not be able to collect amounts due.

The allowance is based on management’s best estimate of specific losses on individual exposures, as well as a provision on historical trends of collections.

Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment.

Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the collection is not probable.

As of December 31, 2023 and 2022, there was no allowance for doubtful accounts recorded as we consider all of the outstanding accounts receivable fully collectible.

Loans receivable, net

The Company’s loans receivable are recognized at the point of loan disbursement, initially measured at fair value, primarily reflecting the disbursed amount and associated transaction costs.

Accounts receivable represent the amounts that the Company has an unconditional right to consideration, which are stated at the original amount less an allowance of credit loss, in accordance with the Current Expected Credit Loss (“CECL”) model under ASC 326.

The Company estimates expected credit losses based on a combination of historical loss experience, customer creditworthiness, current economic conditions, and reasonable and supportable forward-looking information.

The allowance for credit losses is updated at each reporting period to reflect changes in credit risk.

The allowance for credit losses is recorded against accounts receivable balances, with a corresponding charge to the consolidated statements of operations.

Delinquent account balances are written off against the allowance when management determines that collection is remote.

If previously written-off receivables are subsequently recovered, the Company records a reversal of the allowance for credit losses.

As of December 31, 2024, all accounts receivable related to the discontinued parallel-import vehicle business, including the associated allowance for credit losses, have been reclassified to “Current Assets of Discontinued Operations” in the consolidated balance sheets.

Accordingly, the remaining accounts receivable presented in continuing operations are solely related to the Company’s logistics and warehousing business.

As of December 31, 2024 and 2023, there no allowance for credit losses on accounts receivable from continuing operations were recorded.

(See Note 5 – Discontinued Operations for further details.)

Loan receivable

The Company’s loans receivable, which consist of loans to third parties, are recognized at the point of loan disbursement, initially measured at fair value, primarily reflecting the disbursed amount and associated transaction costs.

Both secured and unsecured lending are encompassed in these receivables, with terms including varying interest rates and maturity dates.

3 unchanged sentences

This approach considers historical credit loss experience, current conditions, and reasonable forecasts in estimating potential credit losses.

As of the date of this annual report, no significant impairment allowance has been recorded for these loans receivable.

Inventories, net

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

The cost of inventory mainly includes the cost of auto vehicles purchased from U.S.

As of the end of the reporting periods, no impairment allowance was recorded for the loan receivables.

Inventory primarily consists of new vehicles held for sale and are stated at the lower of cost or net realizable value using the specific identification method, which includes the cost of vehicles purchased from U.S.

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

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

We recorded no inventory reserve as of December 31, 2023 and 2022.

Our Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

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

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

Our Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized.

We have not assessed a valuation allowance as we determine it is more likely than not that all deferred tax assets will be realized before expiration.

Our Company records uncertain tax positions in accordance with ASC 740 (“ASC 740”), Income Taxes, on the basis of a two-step process in which (1) our Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, our Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

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

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

Our Company elected to file income taxes as a corporation instead of an LLC for the tax years ended December 31, 2020 through December 31, 2023.

As of December 31, 2023, the tax years ended December 31, 2020 through December 31, 2022 for our consolidated income tax returns remain open for statutory examination by U.S.

tax authorities.

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

The Company depleted its inventory on vehicles by the first quarter of 2024.

The Company does not hold any inventory related to its continuing logistics and warehousing business.

As a result of the Company’s decision to discontinue the parallel-import vehicles business, the entire inventory balance of $1,515,270 as of December 31, 2023, was reclassified to “Current Assets of Discontinued Operations” in accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations.

Intangible assets, net

The Company recorded intangible assets with the acquisitions of Edward and TWEW during the year ended December 31, 2024.

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

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

The Company did not recognize any impairment to intangible assets for the year ended December 31, 2024.

Fair value of financial instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

A three-level fair value hierarchy prioritizes the inputs used to measure fair value.

The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.

The three levels of input used to measure fair value are as follows:

● Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data.

● Level 3 — inputs to the valuation methodology are unobservable.

Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, loans receivable, loans payable, and other payables and other current liabilities, approximated the fair value of the respective assets and liabilities as of December 31, 2024 and 2023 based upon the short-term nature of the assets and liabilities.

The Company applied level 3 to obtain the fair value of intangible assets and goodwill.

See NOTE 8 — Intangible Asset and Goodwill.

The Company believes that the carrying amount of long-term loans approximated fair value as of December 31, 2024 and 2023 based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rates.

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

842, Leases (“Topic 842”).

The Company leases office space, which is classified as operating leases in accordance with Topic 842.

Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases, usually with an initial term of 12 months or less) on the commencement date:

(i) lease liability, which is a lessee’s obligation to make lease payments arising from a

lease, measured on a discounted basis;

and (ii) right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease.

The ROU asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received.

All ROU assets are reviewed for impairment annually.

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

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

Goodwill is tested for impairment at the reporting unit level, which is an operating segment, or one level below.

The Company has one reporting unit.

The Company measures goodwill impairment, if any, as the amount by which the carrying amount of the reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill.

The review of goodwill impairment consists of either using a qualitative approach to determine whether it is more likely than not that the fair value of the assets is less than their respective carrying values or a one-step quantitative impairment test.

In performing the qualitative assessment, the Company considers many factors in evaluating whether the carrying value of goodwill may not be recoverable, including declines in the Company’s stock price and market capitalization of the Company and macroeconomic conditions.

If, based on the results of the qualitative assessment, it is concluded that it is not more likely than not that the fair value of a reporting unit exceeds its carrying value, additional quantitative impairment testing is performed.

The quantitative test requires that the carrying value of each reporting unit be compared with its estimated fair value.

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

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

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

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

Impairment of long-lived assets

The Company reviews long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

If an impairment indicator is present, the Company evaluates recoverability by comparing the carrying amount of the asset group to the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset group.

If the assets are impaired, an impairment loss is measured as the amount by which the carrying amount of the asset group exceeds the fair value of the asset.

The Company estimates fair value using the expected future cash flows discounted at a rate consistent with the risks associated with the recovery of the asset.

For the years ended December 31, 2024 and 2023, the Company did not record any impairment.

Recent accounting pronouncements

See “Note 2—Summary of Significant Accounting Policies—Recent Accounting Pronouncements” in the notes to our consolidated financial statements for a discussion of recent accounting pronouncements.

ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , requires disclosures about significant segment expenses and additional interim disclosure requirements.

This standard also requires a single reportable segment to provide all disclosures required by Accounting Standards Codification Topic 280.

This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The amendments should be applied retrospectively for all prior periods presented in the consolidated financial statements.

We intend to adopt this standard in our Annual Report on Form 10-K for the year ending December 31, 2025.

We are currently evaluating the potential impact of adopting this standard on our disclosures.

Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , establishes incremental disaggregation of income tax disclosures pertaining to the effective tax rate reconciliation and income taxes paid.

This standard is effective for fiscal years beginning after December 15, 2024, and requires prospective application with the option to apply it

retrospectively.

We intend to adopt this standard in our Annual Report on Form 10-K for the year ending December 31, 2025.

We are currently evaluating the potential impact of adopting this standard on our disclosures.

Quantitative and Qualitative Disclosures About Market Risk.

As a smaller report company, we are not required to provide the information required by this item.

Financial Statements and Supplementary Data.

Please see the financial statements beginning on page F-1 following the signature pages in this Annual Report on Form 10-K and incorporated herein by reference.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis