What changed in this filing

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Item 1. Financial Statements

2025-05-05 compared with 2024-11-13 · 474 added, 428 removed, 413 unchanged (69% of the section changed)

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

CURRENT ASSETS:

Cash and cash equivalents

Accounts receivable, net

Loans receivable

Other receivables

Accounts receivable

Loan receivable

Other receivable

Prepaid expenses and other current assets

Current assets of discontinued operations

TOTAL CURRENT ASSETS

OTHER NONCURRENT ASSETS:

NONCURRENT ASSETS:

Property, plant, and equipment, net

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Intangibles, net

Other non-current assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Current portion of long-term debt

Loans payable from letter of credit financing

Loans payable from line of credit

Loans payable from premium finance

Due to a related party

Loan payable from premium finance

Operating lease liabilities, current

Accrued liabilities and other current liabilities

Current liabilities of discontinued operations

TOTAL CURRENT LIABILITIES

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TOTAL LIABILITIES

COMMITMENTS AND CONTINGENCIES (Note 18)

STOCKHOLDERS’ EQUITY

Common stock, $ 0.0001 par value, 1,000,000,000 shares authorized;

2,507,093 and 1,119,750 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively, including*:

Class A common stock, $ 0.0001 par value, 891,750,000 shares authorized, 1,960,218 and 604,125 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Class B common stock, $ 0.0001 par value, 108,250,000 shares authorized, 546,875 and 515,625 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

3,218,886 and 1,119,750 shares issued and outstanding, including*:

Class A common stock, $ 0.0001 par value, 891,750,000 shares authorized, 2,672,011 and 604,125 shares issued and outstanding

Class B common stock, $ 0.0001 par value, 108,250,000 shares authorized, 546,875 and 515,625 shares issued and outstanding

Additional paid-in capital

Subscription receivable

Retained earnings (Accumulated deficit)

Accumulated deficit

( 5,434,520 )

( 4,680,611 )

TOTAL STOCKHOLDERS’ EQUITY

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30,

Nine Months Ended September 30,

Parallel-import Vehicles

Logistics and Warehousing

Total Revenues

COST OF REVENUES

Cost of vehicles

Fulfillment expenses

Ocean freight service cost

Total cost of revenues

For the Three Months Ended March 31,

COST OF REVENUE

OPERATING EXPENSES

Selling expenses

General and administrative expenses

Allowance of credit loss of accounts receivable

Share-based compensation expenses

TOTAL OPERATING EXPENSES

(LOSS) INCOME FROM OPERATIONS

( 2,448,902 )

( 4,122,681 )

LOSS FROM OPERATIONS

OTHER INCOME (EXPENSES)

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Interest expenses

( 1,058,111 )

OTHER INCOME (EXPENSES), NET

( 1,054,102 )

(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES

( 2,375,272 )

( 4,090,071 )

Income tax (benefits) provision

( 1,052,969 )

NET (LOSS) INCOME

( 1,815,292 )

( 3,037,102 )

(Loss) Earnings per share - basic and diluted*

OTHER INCOME, NET

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

Income tax provision (benefits)

LOSS FROM CONTINUING OPERATIONS

LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX**

Loss from continuing operations per ordinary share - basic and diluted*

Loss from discontinued operations per ordinary share - basic and diluted*

Loss per share - basic and diluted*

Weighted average shares - basic and diluted*

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See also Note 17.

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

Termination of equity classified warrant

Issuance of common stock for acquisition

Net loss from continuing operations for the year

Net loss from discontinued operations for the year

Balance, March 31, 2024

Retrospectively restated for effect of the Company’s amended and restated articles of incorporation and bylaws and share reverse split on October 24, 2024.

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

CHEETAH NET SUPPLY CHAIN SERVICE INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended

September 30,

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

Cash flows from operating activities:

Net (loss) income

( 3,037,102 )

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

Loss from discontinued operations, net of tax

Loss from continuing operations

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

Amortization of operating lease right-of-use assets

Amortization of Intangible Assets

Allowance of credit loss of accounts receivable

Share-based compensation expenses

Deferred income tax expenses (benefits)

( 1,057,853 )

Deferred income tax benefits

Changes in operating assets and liabilities:

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Operating lease liabilities

Cash used in operating activities-continuing operations

( 1,470,341 )

Cash provided by operating activities-discontinued operations *

Net cash provided by operating activities

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Acquisition of business, net of cash acquired

Purchase of property, plant, and equipment

Loans made to third parties

( 3,075,400 )

Loans repayment received from third parties

Cash used in investing activities-continuing operations

( 3,026,400 )

Net cash used in investing activities

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Cash flows from financing activities:

Proceeds from follow-on public offering, net of expenses

Proceeds from initial public offering, net of expenses

Cash paid for warrant termination

Proceeds from issuance of common stock under private placement transaction

Repayments of inventory financing

( 4,164,100 )

Proceeds from letter of credit financing

Repayments of letter of credit financing

( 1,030,536 )

( 20,687,255 )

Proceeds from loans from dealer finance

Repayments of loans from dealer finance

Proceeds from Line of Credit

Repayment of Line of Credit

( 2,375,197 )

Proceeds from premium finance

Repayments of premium finance

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Borrowing from a related party

Repayments made to a related party

Net cash provided by (used in) financing activities

Cash provided by financing activities-continuing operations

Cash used in financing activities-discontinued operations*

( 1,004,565 )

Net increase in cash

Cash, beginning of period

Cash, end of period

Net cash used in financing activities

( 1,177,894 )

Net (decrease) increase in cash

( 1,326,813 )

Cash, beginning of year

Cash, end of year

Cash of continuing operations

Supplemental cash flow information

Cash paid for income taxes

Cash paid for interests

1 unchanged sentence

Fair value of common stock issued for acquisition

Reclassification- certain reclassifications have been made to the financial statements for the three months ended March 31, 2024, to conform to the presentation for the discontinued operations, with no effect on previously reported net income (loss).

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

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Cheetah Net Supply Chain Service Inc.

(“Cheetah Net” or the “Company”), formerly known as Yuan Qiu Business Group LLC, was established under the laws of the State of North Carolina on August 9, 2016 as a limited liability company (“LLC”).

(“Cheetah Net,” the “Company,” “we,” “our,” and “us”), formerly known as Yuan Qiu Business Group LLC, was established under the laws of the State of North Carolina on August 9, 2016 as a limited liability company (“LLC”).

On March 1, 2022, the Company filed articles of incorporation including articles of conversion with the Secretary of State of the State of North Carolina to convert from an LLC to a corporation, and changed its name to Cheetah Net Supply Chain Service Inc.

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Allen-Boy did not have any business activities until acquired by Cheetah Net.

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

Allen-Boy previously engaged in the parallel-import vehicle dealership business, which the Company discontinued in March 2025.

● (ii) Pacific Consulting LLC (“Pacific”), an LLC organized on January 17, 2019, under the laws of the State of New York, which was acquired by Cheetah Net from Yingchang Yuan, the previous owner of Pacific who beneficially owns 1,200,000 shares of Class A common stock of Cheetah Net, for a total consideration of $ 100 on February 15, 2019.

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

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

Pacific previously engaged in the parallel-import vehicle dealership business, which the Company discontinued in March 2025.

The Company intends to dissolve Pacific during the second quarter of fiscal year 2025.

● (iii) Entour Solutions LLC (“Entour”), an LLC organized on April 8, 2021 under the laws of the State of New York, which was acquired by Cheetah Net from Daihan Ding, the previous owner of Entour, for a total consideration of $ 100 on April 9, 2021.

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

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

Entour previously engaged in the parallel-import vehicle dealership business, which the Company discontinued in March 2025.

The Company intends to dissolve Entour during the second quarter of fiscal year 2025.

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

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

Logistics previously engaged in the parallel-import vehicle dealership business, which the Company discontinued in March 2025.

The Company intends to dissolve Logistics during the second quarter of fiscal year 2025.

● (v) Edward Transit Express Group Inc.

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

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

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

The Company and its wholly owned subsidiaries are primarily engaged in the comprehensive logistics and warehousing business.

Logistics and Warehousing

(“Edward”), a corporation incorporated on July 14, 2010 under the laws of the State of California, whose previous sole shareholder and owner, Juguang Zhang, transferred all his right, title, and interest in and to all of the issued and outstanding equity interests of Edward to Cheetah Net for a total consideration of $ 1,500,000 , consisting of a $ 300,000 cash payment and Cheetah Net’s Class A common stock initially valued at $ 1.2 million through a stock purchase agreement dated January 24, 2024, as amended.

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

(See Note 8).

As of the date of this quarterly report, Edward is engaged in logistics and warehousing services.

● (vi) TW & EW Services Inc.

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

The TWEW acquisition was closed on December 19, 2024.

As of the date of this quarterly report, TWEW is engaged in logistics and labor services to strengthen the Company’s position in the logistics sector.

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

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

On December 19, 2024, the Company entered into a membership interest purchase agreement with Pingzheng Li, the then 100 % owner of NexTrade, pursuant to which the Company 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 quarterly report, NexTrade is not engaged in any business operations.

● (viii) Cheetah Net Supply Chain Service Ltd (“Cheetah BVI”), a corporation incorporated on March 28, 2025 under the laws of the British Virgin Islands.

As of the date of this quarterly report, Cheetah BVI is not engaged in any business operations.

On September 30, 2024, the Company’s stockholders approved its fourth amended and restated articles of incorporation, which authorizes a reverse stock split of the issued shares of its 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 the Company’s board of directors.

On October 7, 2024, the Company’s board of directors (“Board”) approved a reverse stock split of the Company’s common stock at a ratio of 1 -for-16.

On October 21, 2024, the Company effectuated a reverse stock split of its common stock at a ratio of 1 -for-16.

Following such reverse split, each 16 shares of the Company’s 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 the Company’s common stock remained unchanged.

The Company’s 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).

All share information included in this quarterly report has been retrospectively adjusted to reflect the Reverse Stock Split as if it had occurred as of the earliest period presented.

Discontinued operations - Parallel-import Vehicles

The Company previously engaged in the business of sourcing and reselling parallel-import vehicles, primarily from the U.S.

market to dealers in 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.

In the past, this business contributed significantly to the Company’s revenue.

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

However, beginning in the second half of 2022, the business was negatively affected by the impact of the COVID-19 pandemic and related lockdowns in the PRC, 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 electric vehicles (“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 83.6 % compared to 2022.

The decline accelerated in 2024, and the Company’s vehicle sales decreased from 82 units in the first three months of fiscal year 2023 to 13 units in the first three months of 2024, representing a 86.0 % decrease in revenue.

The Company’s vehicle sales decreased 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 strains 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 for 2024, 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 the parallel-import vehicle market conditions continued to deteriorate and sales activity in this segment ceased, management determined that the business no longer had a sustainable path forward.

On March 3, 2025, the Board formally approved the discontinuation of the parallel-import vehicle business.

In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, the Company determined that the parallel-import vehicle segment met the conditions for reporting as a discontinued operation during the year ended December 31, 2024.

As a result, all financial results associated with this business have been reclassified as discontinued operations in the accompanying unaudited condensed consolidated financial statements for the three months ended March 31, 2024 and the consolidated financial statements for the year ended December 31, 2024 presented.

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

Logistics and Warehousing Services

The Company’s subsidiary, Edward, operates as a licensed Non-Vessel Operating Common Carrier.

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

Parallel-import Vehicles

In the People’s Republic of China (the “PRC”), parallel-import vehicles refer to vehicles purchased by dealers directly from overseas markets and imported for sale through channels other than brand manufacturers’ official distribution systems.

The Company purchases automobiles from the U.S.

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

The Company’s subsidiary, TWEW, specializes in general labor support services and logistics coordination, providing workforce solutions and operational efficiency tools tailored to the logistics and labor sectors.

TWEW’s expertise in labor management and logistical support enables the Company to streamline operations, expand service offering, and enhance market position.

As of the date of this quarterly report, the Company is undergoing a business transformation of its business model.

The Company is shifting its business focus from parallel-import vehicle sales to logistics and warehousing services.

Management continues to focus on improving operational efficiencies and expanding its market presence of the two acquired businesses.

The transformation of the Company’s business model could have a material and adverse effect on the Company’s business, financial condition, and results of operations.

The business shift may take longer time than expected to generate ideal profits depending on factors from the business environment and operation management and market expansion.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission (the “SEC”).

Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by U.S.

GAAP for complete financial statements.

These statements should be read in conjunction with the Company’s audited consolidated financial statements and noted thereto for the year ended December 31, 2023, included in the Company’s annual report on Form 10-K (File No.

001-41761), filed with the SEC on March 18, 2024 (the “Annual Report”).

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the unaudited condensed consolidated financial statements not misleading have been included.

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

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

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

Uses of estimates

In preparing the unaudited condensed consolidated financial statements in conformity with U.S.

GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

These estimates are based on information as of the date of the unaudited condensed consolidated financial statements.

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

GAAP”) for interim financial information.

Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted consistent with Article 10 of Regulation S-X.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments as necessary for the fair statement of the Company’s financial position as of March 31, 2025 and 2024, and results of operations and cash flows for the three months ended March 31, 2025 and 2024.

The consolidated balance sheet as of December 31, 2024 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by U.S.

The unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the unaudited condensed consolidated financial statements have read or have access to the audited consolidated financial statements for the preceding fiscal years.

Accordingly, these financial statements should be read in conjunction with the audited consolidated financial statements and related footnotes for the year ended December 31, 2024.

The accounting policies applied are consistent with those of the audited consolidated financial statements for the preceding fiscal year.

Results for the three months ended March 31, 2025 are not necessarily indicative of the results expected for the full fiscal year or for any future period.

The Company’s fiscal year end date is December 31.

Going Concern Consideration

The Company’s unaudited condensed consolidated financial statements are prepared assuming that the Company will continue as a going concern.

For the three months ended March 31, 2025, the Company reported a net operating loss of approximately $0.7 million.

Net cash provided by operating activities was approximately $ 1.8 million, with an approximately $ 2.5 million of positive cash flows from discontinued operations, partially offset by $0.7 million cash used in operating activities-continuing operations due to the ongoing transition to the logistics and warehousing business.

The Company may continue to incur operating losses and generate negative cash flow.

These factors may raise doubts about the Company’s ability to continue as a going concern.

As of March 31, 2025, the Company had cash and cash equivalents of approximately $ 0.3 million and a working capital balance of $ 9.3 million, including a loan receivable of $ 9.1 million due from third parties within a year.

Management has evaluated the Company’s ability to continue as a going concern in accordance with ASC 205-40, Presentation of Financial Statements – Going Concern.

This evaluation considered the Company’s current financial condition, expected cash flows, obligations due within the next 12 months, and available sources of liquidity.

While management understands that the ability of the Company to continue as a going concern is dependent upon its ability to successfully execute its new business strategy and eventually attain profitable operations, management has concluded that there are no conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the issuance date of these consolidated financial statements.

Accordingly, the Company’s unaudited condensed consolidated financial statements as of March 31, 2025 have been prepared on a going concern basis.

Use of estimates

In preparing the consolidated financial statements in conformity with U.S.

GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

These estimates are based on information as of the date of the consolidated financial statements.

Significant estimates required to be made by management include, but are not limited to, allowance credit losses of accounts receivables, the revenue recognition, impairment of long-lived assets, and the realization of deferred tax assets.

Actual results could differ from those estimates.

Risks and uncertainties

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.

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 the Company’s business and growth prospects;

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

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

● Recent changes in the U.S.

and international trade policies and tariffs on imports and exports, particularly the trade tensions between China and the U.S., have been intensified and may become worse in the future, resulting in the imposition of more tariffs or other trade restrictions, and may adversely impact our business and operating results.

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

Cash and cash equivalents

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

September 30,

As of March 31, 2025 and December 31, 2024, all cash and cash equivalents were related to continuing operations.

Cash held in Current Accounts

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Accounts receivable

Accounts receivable represent the amounts that the Company has an unconditional right to consideration, which are stated at the original amount less an allowance of credit loss.

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

The Company usually determines the adequacy of reserves for credit loss based on individual account analysis and historical collection trends.

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

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

The provision is recorded against accounts receivable balances, with a corresponding charge recorded in the unaudited condensed consolidated statements of operations.

Delinquent account balances are written off against the allowance of credit loss after management has determined that the likelihood of collection is remote.

In circumstances in which the Company receives payments for accounts receivable that have previously been written off, the Company reverses the allowance of credit loss.

As of September 30, 2024 and December 31, 2023, there were $ 1,095,094 and nil for allowance of credit loss of accounts receivable recorded.

See Note 3-Accounts receivable for details.

Loans receivable

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

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 a result of the Company’s decision to discontinue the parallel-import vehicles business, the entire accounts receivable balance of $ 2,540,501 as of December 31, 2024 was reclassified to “Current Assets of Discontinued Operations” in accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations.

During the three months ended March 31, 2025 and 2024, no allowance for credit losses on accounts receivable from continuing operations was 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.

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

As of the end of the reporting periods, no impairment allowance was recorded for these loans receivable.

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

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

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

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

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

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

As of March 31, 2025 and December 31, 2024, no impairment allowance was recorded for the loan receivable.

Property, plant, and equipment, net

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

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

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

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Intangible assets, net

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

The Company recorded intangible assets with the acquisitions of Edward and TWEW during the first quarter and the fourth quarter of 2024, respectively (see Note 8- Intangible Asset and Goodwill).

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.

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Customer relationships

10 - 12 years

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

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

The Company did no t recognize any impairment to intangible assets for the three months ended March 31, 2025 and 2024.

Fair value of financial instruments

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

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

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.

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

Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, loans receivable, loans payable, deferred revenue, and other payables and other current liabilities, approximated the fair value of the respective assets and liabilities as of September 30, 2024 and December 31, 2023 based upon the short-term nature of the assets and liabilities.

The Company believes that the carrying amount of long-term loans approximated fair value as of September 30, 2024 and December 31, 2023 based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rates.

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 March 31, 2025 and December 31, 2024 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 March 31, 2025 and December 31, 2024 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.

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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.

(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.

1 unchanged sentence

All ROU assets are reviewed for impairment annually.

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

There was no impairment for ROU lease assets for the three months ended March 31, 2025 and 2024.

Additionally, the Company elected a short-term lease exception policy, which allows entities to not apply the new standard to short-term leases (i.e., leases with terms of 12 months or less) and a hindsight policy, which allows an entity to include current considerations for existing leases when determining initial lease terms.

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

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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.

Share-based compensation

The Company has adopted its Amended and Restated 2024 Stock Incentive Plan (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.

For the three months ended March 31, 2025 and 2024, the Company did not record any impairment.

Revenue recognition

6 unchanged sentences

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

The Company operates in two business segments:

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.

In 2024, the Company generated revenue 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 vehicle dealers.

It purchases automobiles from the U.S.

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

market through its team of professional purchasing agents, and resells them to parallel-import vehicle 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.

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Historically, no customer returns have occurred.

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

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

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

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

The Company generates revenues 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 generated by Edward, 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, ensuring straightforward revenue recognition with no provisions for sales return allowances based on historical experiences of no returns.

Contract balances and remaining performance obligations

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

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.

Disaggregation of Revenue

The Company disaggregates its revenue by type and geographic areas, as the Company believes it best depicts how the nature, amount, timing, and uncertainty of the revenue and cash flows are affected by economic factors.

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

Three Months Ended

Nine Months Ended

September 30,

Revenue from Parallel-Import Vehicles

domestic market

Overseas market

Revenue from Logistics and Warehousing

The Company disaggregates its revenue by geographic areas, as the Company believes it best depicts how the nature, amount, timing, and uncertainty of the revenue and cash flows are affected by economic factors.

For the Three Months Ended

domestic market

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Total revenue

Geographic information

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

Three Months Ended

Nine Months Ended

September 30,

For the three months ended March 31, 2025, total revenue from continuing operations was $ 479,799 , an increase from $ 76,834 for the same period in 2024.

This growth was primarily driven by the acquisition of TWEW in November 2024, whose operations are entirely focused on the U.S.

domestic market.

Overseas market

Total revenue

Cost of Revenues

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.

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 has not assessed a valuation allowance as it determines it is more likely than not that all deferred tax assets will be realized before expiration.

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

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

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

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.

General and Administration Expenses

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

For the three months ended March 31, 2025 and 2024, general and administration expenses for the continuing operations were $ 1,000,519 and $ 767,642 , respectively.

Share-based Compensation

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

The Company accounts for income taxes under the asset and liability method, recognizing deferred tax assets and liabilities based on temporary differences between financial statement and tax bases of assets and liabilities, using enacted tax rates expected to apply when these differences reverse.

The impact of tax rate changes is recorded in the period of enactment.

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

As of March 31, 2025 and 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, using a two-step process to determine whether tax positions will be sustained.

The Company has concluded that there are no uncertain tax positions requiring recognition as of March 31, 2025 and December 31, 2024.

The Company is not subject to the Section 163(j) interest expense limitation, as it qualifies for an exception due to floor plan financing indebtedness.

The Company monitors tax law changes and has determined that no recent changes materially impact the financial statements.

The Company and its U.S.

1 unchanged sentence

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

As of September 30, 2024, the Company’s consolidated income tax returns for the tax years ended December 31, 2020 through December 31, 2023 remained open for statutory examination by U.S.

As of March 31, 2025, the Company’s consolidated income tax returns for the tax years ended December 31, 2021 through December 31, 2024 remained open for statutory examination by U.S.

tax authorities.

5 unchanged sentences

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

For the three and nine months ended September 30, 2024 and 2023, there were no dilutive shares outstanding.

For the three months ended March 31, 2025 and 2024, there were no dilutive shares outstanding, as presented in the tables below:

March 31, 2025

Per share amount

Basic and diluted EPS

Loss from continuing operations per ordinary share

Loss from discontinued operations per ordinary share

Loss from operations per ordinary share

March 31, 2024

Income (loss)

Per share amount

Basic and diluted EPS

Loss from continuing operations per ordinary share

Loss from discontinued operations per ordinary share

Loss from operations per ordinary share

Related parties and transactions

4 unchanged sentences

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

Shipping and handling costs

Shipping and handling costs, which are associated with shipping and delivery of vehicles to automobile dealers, are expensed as incurred and are included in selling expenses in the unaudited condensed consolidated statements of operations.

Total shipping and handling expenses were nil and $ 20,610 for the three and nine months ended September 30, 2024, respectively, and $ 113,470 and $ 405,182 for the three and nine months ended September 30, 2023, respectively.

Segment reporting

1 unchanged sentence

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

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

The Company reported two operating segments:

the parallel-import vehicle business and logistics and warehousing services in 2024.

Following the discontinuation of the parallel-import vehicles business, during the three months ended March 31, 2025, the Company reported a single reportable segment on logistics and warehousing services.

Recent accounting pronouncements

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

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

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

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

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

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

Early adoption is permitted.

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

In December 2023, the FASB issued ASU 2023-09 “Improvements to Income Tax Disclosures” (“ASU 2023-09”).

ASU 2023-09 intends to improve the transparency of income tax disclosures.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively.

The Company is currently assessing the impact of this guidance.

However, the Company does not expect a material impact to the consolidated financial statements.

NOTE 3 — ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:

September 30,

Accounts receivable

Parallel-import Vehicles

Logistics and Warehousing

allowance of credit loss

( 1,095,094 )

Total accounts receivable

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

Parallel-import Vehicles Segment

The Company identified four accounts with deferred payments overdue for over 150 days, totaling approximately $ 3.3 million of the $ 4.1 million total deferred payment balances as of September 30, 2024, which were backed by third-party guarantees.

During the nine months ended September 30, 2024, the Company successfully collected approximately $ 2.5 million of the December 31, 2023 overdue balance.

The Company conducted an updated assessment, considering recent collection experience, changes in economic conditions, and the specific risk profiles of each overdue account.

As a result, allowances for credit loss have been recorded for these balances, consistent with the Company’s policy of applying higher allowance percentages to accounts with extended aging to reflect the increased risk of uncollectible.

Specifically, a 30 % allowance has been recorded for one account with a balance overdue by more than 365 days, and a 25 % allowance has been recorded for accounts overdue by more than 210 days.

The following table presents the Company’s accounts receivable aging as of September 30, 2024:

September 30,

Accounts receivable aging:

Less than 150 days

Over 365 days

allowance for credit loss

( 1,095,094 )

Total accounts receivable

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

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

As of the date of this quarterly report, the Company has collected approximately $ 0.1 million in accounts receivable.

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

NOTE 4 — LOANS RECEIVABLE

Loans receivable consisted of the following:

September 30,

Vehicle pledge loan receivable

Short-term loan receivable

Total loans receivable

On December 6, 2023, the Company entered into two vehicle pledge loan agreements with a customer, securing the loans with the customer’s vehicle inventory.

The aggregate principal for these loans was set at $ 172,500 , determined as 90 % of each pledged vehicles’ manufacturer’s suggested retail price.

The initial term of each agreement was 90 days .

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

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

On December 11, 2023, the Company provided an unsecured short-term loan to one of its customers.

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

This loan carried an annual interest rate of 12.0 % and was originally set to mature on February 12, 2024.

However, on the maturity date, the Company and the borrower agreed to amend the terms of the loan to extend the maturity date to June 12, 2024, and increase the annual interest rate to 18.0 % for the extension period.

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

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

As of September 30, 2024, the customer had fully repaid the principal and related interests of the loan.

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

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

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

On July 23, 2024, the Company extended an additional unsecured short-term loan of $ 1,500,000 to Hongkong Sanyou Petroleum Co.

Limited under the same terms.

On August 16, 2024, the Company entered into an unsecured short-term loan agreement with Asia Finance Investment Limited for a principal amount of $ 649,250 .

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.

The Company adopted ASU 2023-07 beginning January 1, 2025.

The adoption did not have a material impact on its consolidated financial statements.

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.

The Company adopted ASU 2023-09 beginning January 1, 2025.

The adoption did not have a material impact on its consolidated financial statements.

NOTE 3 — LOAN RECEIVABLE

Loan receivable consisted of the following:

Short-term loan receivables

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

The principal amount of the loan is $ 1,000,000 , bearing an annual interest rate of 12.0 %, and is set to mature in 12 months .

On July 23, 2024, the Company extended an additional unsecured short-term loan of $ 1,500,000 to Hongkong Sanyou Petroleum Co Limited under the same terms.

On August 16, 2024, the Company entered into a one-year unsecured short-term loan agreement with Asia Finance Investment Limited for a principal amount of $ 649,250 .

After mutual debt adjustments, the adjusted principal balance of this loan is $ 558,295 .

2 unchanged sentences

Any overdue payments under this agreement bear an annual interest rate of 18 %.

Interest income for the three and nine months ended September 30, 2024 was $ 73,541 and $ 113,958 , respectively.

These amounts were accrued and recognized as interest receivable.

On October 2, 2024 and October 28, 2024, the Company entered into two one-year unsecured short-term loan agreements with Hongkong Sanyou Petroleum Co Limited, for the principal amount of the loan $ 1,000,000 and $ 1,000,000 , respectively, bearing an annual interest rate of 12.0 % and set to mature in 12 months .

On October 24, 2024, the Company entered into a one-year unsecured short-term loan agreement with Asia Finance Investment Limited for a principal amount of $ 530,000 .

This loan accrues interest at a monthly rate of 1.0 %, with a single lump-sum repayment due 12 months from the disbursement date.

On November 20, 2024, the Company entered into a one-year unsecured short-term loan agreement with Hongkong Sanyou Petroleum Co Limited.

The principal amount of the loan is $ 500,000 .

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

On January 7, 2025, the Company entered into a one-year unsecured short-term loan agreement with Asia Finance Investment Limited for a principal amount of $ 100,000 .

This loan accrues interest at a monthly rate of 1.0 %, with a single lump-sum repayment due 12 months from the disbursement date.

On January 29, 2025, the Company extended an additional unsecured short-term loan of $ 300,000 to Asia Finance Investment Limited under the same terms.

On March 5, 2025, the Company received an early repayment of $ 49,000 for the loan scheduled to mature on June 20, 2025.

On March 17, 2025, the Company entered into a one-year unsecured short-term loan agreement with Hongkong Sanyou Petroleum Co Limited.

The principal amount of the loan is $ 950,000 .

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

On March 18, 2025, the Company entered into a one-year unsecured short-term loan agreement with Asia Finance Investment Limited for a principal amount of $ 825,400 .

This loan accrues interest at a monthly rate of 1.0 %, with a single lump-sum repayment due 12 months from the disbursement date.

On March 19, 2025, the Company extended an additional unsecured short-term loan of $ 900,000 to Asia Finance Investment Limited under the same terms.

During the three months ended March 31, 2025 and 2024, the Company recorded interest income of $ 202,668 and $ 22,333 from short-term loan receivables, respectively.

NOTE 4 — OTHER RECEIVABLES

Other receivables consisted of the following:

September 30, 2024

March 31, 2025

December 31, 2024

Parallel-import Vehicles:

Vehicle Deposit (1)

Sales Tax Refundable (2)

Interest Receivable (1)

Logistics and Warehousing

Allowance for credit loss

Total Other Receivables

(1) Vehicle deposits represent security deposits paid to U.S.

automobile dealers to reserve vehicles.

(2) Sales tax refundable represents vehicle sales tax exempted in some states and to be refunded by the tax authorities.

(1) Interest receivable primarily relates to accrued interests from loan agreements disclosed in Note 3- Loan Receivable.

For further details on the loan arrangements generating these interest receivables, refer to Note 3.

NOTE 5 — DISCONTINUED OPERATIONS

1) Loss from discontinued operations for the three months ended March 31, 2024 was as follows :

For the Three Months

Ended March 31,

Cost of Revenue

Operating expenses

Selling, General and administrative expenses

Total operating expenses

Loss from discontinued operations

Other income (expenses)

Interest expenses

Other expenses, net

Loss from discontinued operations before income taxes

Income tax provision

Loss from discontinued operations

On March 3, 2025, the Board approved the discontinuation of the Company’s parallel-import vehicles business authorizing the writing off of receivables, and winding down of operations in compliance with applicable legal and regulatory requirements.

In accordance with ASC 205-20, Presentation of Financial Statements — Discontinued Operations, the Company 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 the three months ended March 31, 2024.

For the three months ended March 31, 2024, revenue from discontinued operations was $ 1.4 million.

The significant decline was due to the discontinuation of the Company’s parallel-import vehicles business.

Selling expenses related to the discontinued parallel-import vehicles business 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 of discontinued operations was $ 78,840 for three months ended March 31, 2024.

General and administrative expenses related to discontinued operations were operational expenses associated with sourcing, purchasing, and shipping vehicles, leading to improved financial performance in future periods.

Interest expenses of discontinued operations were $ 54,459 for the three months ended March 31, 2024, which were related to loan of inventory financing, loan of letter of credit financing, loan of dealer financing and revolving credit line of financing, all of which are classified under Current liabilities of discontinued operations.

Further details on these financing arrangements are provided in “3) Current liabilities of discontinued operations.” The loans related were all paid off as of March 31, 2025.

2) Results of Discontinued Operations and Assets and Liabilities of Discontinued Operations

The major components of assets and liabilities related to discontinued operations are summarized below:

CURRENT ASSETS:

Accounts receivable, net*

Other receivables**

TOTAL CURRENT ASSETS OF DISCONTINUED OPERATIONS

TOTAL ASSETS OF DISCONTINUED OPERATIONS

CURRENT LIABILITIES:

Accrued expense and other liabilities

TOTAL CURRENT LIABILITIES OF DISCONTINUED OPERATIONS

TOTAL LIABILITIES OF DISCONTINUED OPERATIONS

*Accounts Receivable, net

Accounts receivable consisted of the following:

Accounts receivable

Parallel-import Vehicles

allowance of credit loss

( 1,589,546 )

Total accounts receivable, net

The Company’s parallel-import vehicle business was negatively impacted by deteriorating macroeconomic conditions since the second half of 2022.

Several aged accounts receivable were concentrated among four long-term customers, who were in the process of business recovery.

These receivables were partially backed by third-party guarantees, providing some assurance of collection.

Through management’s active collection efforts, the Company successfully collected approximately $ 4.0 million of the outstanding balances during the year ended December 31, 2024.

The Company conducted an initial assessment of collectability and recognized a credit loss of $ 1.1 million for accounts deemed uncollectible during the first three quarters of 2024.

During the year-end CECL reassessment, the Company evaluated expected credit losses based on historical loss trends, customer risk factors, and forward-looking economic conditions, and provided an additional credit loss provision of $ 475,366 in the fourth quarter of 2024, resulting in a total allowance for credit loss of $ 1.6 million for the year ended December 31, 2024.

Subsequently, the Company collected an additional $ 2.5 million of the outstanding balance.

On March 3, 2025, following the Board’s approved decision on discontinued operations, the Company had zero account receivable balance after the above mentioned credit loss of $ 1.6 million and the subsequent collection of additional $ 2.5 million outstanding balance.

**Other Receivables

Write-down of other receivables for discontinued operations include below:

Vehicle deposits (1)

Sales tax deposits (2)

Other receivables

allowance of credit loss

Total other receivables, net

(1) Vehicle deposits were prepaid to suppliers for purchasing vehicles under the parallel-import vehicle business.

Following the business discontinuation, certain deposits became unrecoverable due to supplier financial distress and contract terminations.

The Company recognized a total expected credit loss of $ 100,800 on vehicle deposits for the discontinued operations during the year ended December 31, 2024.

(2) Sales tax receivables related to tax refunds and overpayments associated with vehicle transactions.

Due to changes in tax policies and the cessation of vehicle sales, certain tax receivables became unrecoverable.

The Company recognized a total credit loss of $ 34,886 for the discontinued operations during the year ended December 31, 2024.

3) Cash Flows from discontinued operations

For the Three Months Ended

Cash flows from operating activities:

Net (loss) income

(Loss) income from discontinued operations, net of tax

(Loss) from continuing operations

Cash used in operations-continuing operations

( 1,470,341 )

Cash provided by operations-discontinued operations

Net Cash provided by operating activities

Cash flows from investing activities:

Cash used in investing activities-continuing operations

( 3,026,400 )

Net Cash used in investing activities

( 3,026,400 )

Cash flows from financing activities:

Cash used by financing activities-continuing operations

Cash used in financing activities-discontinued operations

( 1,004,565 )

Net Cash used in financing activities

( 1,177,894 )

NOTE 6 — PROPERTY, PLANT, AND EQUIPMENT, NET

Property consisted of the following:

Property, plant, and equipment, net consisted of the following:

Estimated Useful Life

September 30, 2024

March 31, 2025

December 31, 2024

3 unchanged sentences

Property, plant, and equipment, net

During the three months ended March 31, 2025 and 2024, the Company recorded deprecation of $ 9,882 and $ 2,171 , respectively.

There was no impairment loss during the three months ended March 31, 2025 and 2024.

*Leasehold improvements were related to Edward’s full steel manual gates, yard fence, and office roof upgrade.

NOTE 7 — LEASES

16 unchanged sentences

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

The Company was also granted the option to extend the lease term for another three years starting from March 1, 2027 and ending February 28, 2030.

On January 10, 2025 and January 31, 2025, the Company sent two letters to the lessor requesting to terminate the lease, as the Company had vacated the property.

As of the date of this quarterly report, the Company has ceased to pay rent per the Company's legal counsel advice.

The Company’s subsidiary, Edward, entered into a Second Amendment to Lease Agreement with its landlord on May 22, 2023, which amended a previous lease agreement and the first amendment between the parties, whereby Edward leases a warehouse from the landlord with an initial lease term from June 1, 2013 to July 31, 2018.

3 unchanged sentences

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

The components of lease expenses for the nine months ended September 30, 2024 and 2023 were as follows:

For the Nine Months Ended

September 30,

Leases expenses

The components of lease expenses for the three months ended March 31, 2025 and 2024 were as follows:

For the Three Months Ended

Lease expenses

Operating lease expenses

Short-term lease expenses

Total leases expenses

September 30, 2024

December 31, 2023

Total lease expenses

During the three months ended March 31, 2025 and 2024, the Company incurred total operating lease expenses of $ 177,763 and $ 48,606 , respectively.

The total lease expenses were $ 208,129 and $ 55,517 for the three months ended March 31, 2025 and 2024, respectively.

March 31, 2025

March 31, 2024

Right-of-use assets

2 unchanged sentences

Total operating lease liabilities

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

September 30, 2024

December 31, 2023

The weighted average remaining lease terms and discount rates for all operating leases were as follows for the three months ended March 31, 2025 and 2024:

March 31, 2025

March 31, 2024

Remaining lease term and discount rate:

2 unchanged sentences

* The Company used weighted average incremental borrowing rate of 5.2 % per annum for its lease contracts based on the Company’s current borrowings from various financial institutions.

During the three months ended September 30, 2024 and 2023, the Company incurred total operating lease expenses of $ 139,555 and $ 28,962 , respectively.

During the nine months ended September 30, 2024 and 2023, the Company incurred total operating lease expenses of $ 251,302 and $ 133,277 , respectively.

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

2024 (excluding the nine months ended September 30, 2024)

As of March 31, 2025, future maturities of lease liabilities were as follows:

2025 (from April 1, 2025 to December 31, 2025)

Total lease payments

2 unchanged sentences

NOTE 8 — INTANGIBLE ASSET AND GOODWILL

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

1) Acquisition of Edward

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

The transaction closed on February 2, 2024.

The gross purchase price was $ 1.5 million.

Consideration paid consisted of $ 0.3 million of cash and the issuance of 79,521 shares of Cheetah Net’s Class A common stock with a fair value of $ 1.2 million.

Consideration paid consisted of $ 0.3 million of cash and the issuance of 79,521 shares of the Company’s Class A common stock with a fair value of $ 1.2 million.

In accordance with ASC 805, Business Combinations (“ASC 805”), it was determined that the fair value of the stock consideration was $ 0.9 million at the time of the transaction, reflecting a comprehensive evaluation of the stock’s market conditions and liquidity impacted by lock-up period restrictions.

1 unchanged sentence

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

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

During the second quarter of 2024, the Company finalized the purchase price allocation.

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

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

As of June 30, 2024

The final valuation of assets acquired and liabilities assumed was reflected in the financial statements as of December 31, 2024 and shown below.

As of December 31, 2024

As of March 31, 2024

16 unchanged sentences

The fair value of the fixed assets approximates its net carrying value as of the acquisition date.

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

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

The fair values of intangible assets, including $ 120,000 of developed technology, $ 360,000 of customer relationships, and $ 36,000 of trade names, were determined using assumptions that are representative of those market participants would use in estimating fair value.

2) Acquisition of TWEW

On November 27, 2024, Cheetah Net entered into a Stock Purchase Agreement to acquire 100 % of the equity interests in TWEW.

The transaction closed on December 19, 2024.

The gross purchase price was $ 1 million.

Consideration paid consisted of $ 0.2 million of cash and the issuance of 469,484 shares of the Company’s Class A common stock with a fair value of $ 0.8 million.

Following ASC 805, it was determined that the fair value of the stock consideration was $ 1 million at the time of the transaction, reflecting a comprehensive evaluation of the stock’s market conditions and liquidity impacted by lock-up period restrictions.

Acquired assets acquired and (liabilities):

Accounts Receivable

Other Current Assets

Customer Relationships

Deferred Tax Liability

Short term loan payable

Total Purchase Consideration

The fair value of the accounts receivable, other current assets, and short-term loan payable assumed approximates their gross contractual amounts.

The customer relationship intangibles of $ 600,000 were valued by discounting estimated after-tax earnings over their remaining useful lives using the multi-period excess earnings method, that are representative of those a market participant would use in estimating fair value.

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

Intangible Assets

Estimated Useful Lives (month)

Developed Technology

Customer Relationships

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

During the nine months ended September 30, 2024 and 2023, the Company incurred accumulated amortization expenses of $ 34,858 and nil , respectively.

NOTE 9 — LETTER OF CREDIT FINANCING (“LC FINANCING”)

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

Pursuant to the agreements, loans payable from LC financing were collateralized by letters of credit from overseas sales of parallel-import vehicles.

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

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

There was no balance as of September 30, 2024.

Interest expenses for LC financing were nil and $ 23,123 for the three and nine months ended September 30, 2024, respectively, and $ 207,648 and $ 789,104 for the three and nine months ended September 30, 2023, respectively.

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

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

(see Note 3).

NOTE 10 — REVOLVING LINE OF CREDIT

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

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

On December 12, 2022, the Company amended the Revolving Line of Credit Agreements to extend the maturity date to April 2024.

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

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

The Company repaid $ 584,541 during the three months ended September 30, 2024.

As of September 30, 2024 and December 31, 2023, the revolving lines of credit balance was $ nil and $ 688,711 .

Interest expenses incurred under the revolving lines of credit were $ 6,430 and $ 65,665 for the three and nine months ended September 30, 2024, respectively, and $ 63,277 and $ 120,675 for the three and nine months ended September 30, 2023, respectively.

Edward-Developed Technology

Edward-Customer Relationships

Edward-Trade Names

TWEW-Customer Relationships

During the three months ended March 31, 2025 and 2024, the Company incurred accumulated amortization expenses of $ 28,071 and $ 8,714 , respectively.

Total future amortization expenses for finite-lived intangible assets were estimated as follows:

2025 (from April 1, 2025 to December 31, 2025)

No impairment loss was made to the carrying amounts of the intangible assets for the three months ended March 31, 2025 and 2024.

NOTE 9 — PREMIUM FINANCE

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

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

As of September 30, 2024, the outstanding balance for this Premium Finance Agreement has been fully repaid.

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

1 unchanged sentence

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

The premium finance amounted to $ 178,801 and $ 148,621 as of September 30, 2024 and December 31, 2023, respectively.

Interest expenses incurred related to the Premium Finance Agreement were $ 1,404 and $ 2,400 for the three and nine months ended September 30, 2024, respectively.

Interest expenses incurred related to the Premium Finance Agreement during the three and nine months ended September 30, 2023 were both $ 3,584 .

Premium finance consisted of the following:

Premium finance

Interest expenses incurred related to the Premium Finance Agreement were $ 2,142 and $ 996 for the three months ended March 31, 2025 and 2024, respectively.

NOTE 10 — LONG-TERM BORROWINGS

Long-term borrowings consisted of the following:

September 30,

Small Business Administration (1)

13 unchanged sentences

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

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

The future maturities of the SBA loan as of March 31, 2025 were as follows:

Future repayment

2024 (excluding the nine months ended September 30, 2024)

2025 (from April 1, 2025 to December 31, 2025)

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

5 unchanged sentences

Beginning from December 1, 2022, the loan bears a fixed annual interest rate of 5.5 %, and the Company is required to make a monthly installment payment of $ 2,721 within the remaining term of loan, with the last installment to be paid in May 2031.

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

The future maturities of the loan from Thread Capital as of March 31, 2025 were as follows:

Future repayment

2024 (excluding the nine months ended September 30, 2024)

For the above-mentioned long-term borrowings, the Company recorded interest expenses of $ 7,027 and $ 22,590 for the three and nine months ended September 30, 2024, respectively, and $ 7,751 and $ 23,545 for the three and nine months ended September 30, 2023, respectively.

2025 (from April 1, 2025 to December 31, 2025)

For the above-mentioned long-term borrowings, the Company recorded interest expenses of $ 9,279 and $ 8,305 for the three months ended March 31, 2025 and 2024, respectively.

NOTE 11 — STOCK BASED COMPENSATION

3 unchanged sentences

Vested shares

On September 30, 2024, the compensation committee of the Company’s board of directors approved the grant of 45,938 shares of Class A common stock and 31,250 shares of Class B common stock (the “Award”) to Mr.

Huan Liu, CEO of the Company.

On September 30, 2024, the compensation committee of the Company’s Board approved the grant of 45,938 shares of Class A common stock and 31,250 shares of Class B common stock (the “Award”) to Mr.

Huan Liu, chief executive officer of the Company.

The Award vested immediately upon grant.

Nonvested shares

On September 30, 2024, the compensation committee of the Company’s board of directors approved the grant of 18,750 and 54,062 nonvested shares of Class A common stock to one director, one officer and five employees, respectively, vesting ratably on each of the first three anniversaries of the grant date.

A summary of the nonvested shares activity for the nine months ended September 30, 2024 is as follows:

On September 30, 2024, the compensation committee of the Company’s Board approved the grant of 18,750 and 54,062 shares of Class A common stock to one director and six employees, respectively, vesting ratably on each of the first three anniversaries of the grant date.

Subsequently, on November 30, 2024, the compensation committee of the Company’s board of directors approved the grant of 6,250 shares of Class A common stock to one employee.

A summary of the nonvested shares activity for the three months ended March 31, 2025 is as follows:

Average Grant

2 unchanged sentences

Outstanding as of December 31, 2024

Outstanding as of September 30, 2024

Outstanding as of March 31, 2025

The fair value of vested and nonvested shares is determined by the market closing price of Class A common stock at the grant date.

Accordingly, the Company recorded share-based compensation expenses of $ 261,666 for the nine months ended September 30, 2024.

As of September 30, 2024, total unrecognized compensation cost relating to nonvested shares was $ 233,002 , which is to be recognized over a weighted average period of 3 years.

NOTE 14 — RELATED PARTY TRANSACTIONS

Nature of relationship with a related party

Relationship with Our Company

Chief Executive Officer (“CEO”) and Chairman of the Board of Directors

West Buy Media Inc.

(“West Buy Media”)

100 % owned by Mr.

Huan Liu, CEO and Chairman of the Board of Directors

West Buy Media Inc., a North Carolina Corporation, served as the guarantor in connection with the Company’s operating lease signed on July 19, 2024 with an independent third party, Zina Development, LLC..

West Buy Media provides guarantees to the Company’s full payment and performance of all obligations in connection with this Lease.

(also see NOTE 7 — LEASES).

Due to a related party

September 30,

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

Huan Liu, for funds borrowed for working capital purposes during the Company’s normal course of business.

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

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

Repayments made to Mr.

Huan Liu totaled $ 13,423 for the nine months ended September 30, 2024, with no repayments made during the three-month period.

During the three and nine months ended September 30, 2023, repayments made to Mr.

Huan Liu were $ 28,875 .

There was no balance due to Mr.

Huan Liu as of September 30, 2024.

Accordingly, the Company recorded share-based compensation expenses of $ 16,185 for the three months ended March 31, 2025.

As of March 31, 2025, total unrecognized compensation cost relating to nonvested shares was $ 227,093 , which is to be recognized over a weighted average period of three years .

NOTE 12 — INCOME TAXES

1 unchanged sentence

The Company elected to file income taxes as a corporation instead of an LLC for the tax years ended December 31, 2020 through December 31, 2024.

(Loss) before Income tax expense (benefit)

For the Three Months Ended

Loss from continuing operations before income taxes

The components of the income tax provision were as follows:

Three Months Ended

Nine Months Ended

September 30,

For the Three Months Ended

Total current income tax provision

Total deferred income tax expenses (benefits)

( 1,057,297 )

Total income tax benefits

( 1,052,969 )

Total income tax expense (benefits)

Reconciliations of the statutory income tax rate to the effective income tax rate were as follows:

For the Three Months Ended

For the Nine Months Ended

September 30,

Federal statutory tax rate

Federal income tax at the statutory rate

State statutory tax rate

Permanent Items

Change in valuation allowance

Non-deductible expenses

Non-taxable income

Effective tax rate

Deferred tax assets, net were composed of the following:

September 30,

Deferred tax assets:

Net operating loss carry forwards

Tax attribute carryovers

Lease liability

Total deferred tax assets

Total gross deferred tax assets

Less valuation allowance

( 1,293,194 )

( 1,159,129 )

Total deferred tax assets, net of valuation allowance

Deferred tax liabilities:

3 unchanged sentences

Total deferred tax assets, net

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

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

During the nine months ended September 30, 2024, the Company’s operations accumulated a NOL of $ 2,882,692 , resulting in a cumulative U.S.

federal NOL of $ 3,201,298 , as of September 30, 2024, which is carried forward indefinitely.

As of September 30, 2024, the Company also had a cumulative State NOL of $ 3,201,298 , which may reduce future State taxable income, and the State NOL balance as of September 30, 2024 will expire beginning in 2041.

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

As of March 31, 2025 and December 31, 2024, the Company recorded a valuation allowance of $ 1,293,194 and $ 1,159,129 against deferred tax assets, respectively, 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, using a two-step process to determine whether tax positions will be sustained.

The Company has concluded that there are no uncertain tax positions requiring recognition as of March 31, 2025 and 2024.

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

1 unchanged sentence

Its average annual gross receipts for the three tax years preceding 2022 do not exceed the relevant threshold amount ($ 27 million for 2022).

The Company will no longer meet the small business exception in 2024, but it meets one of the other exceptions to the §163(j) limitation, “floor plan financing indebtedness” (indebtedness used to finance the acquisition of motor vehicles held for sale or lease or secured by such inventory) and will therefore continue to be exempt from the §163(j) interest expenses limitation in 2024.

The Company periodically evaluates the likelihood of the realization of deferred tax assets and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized.

Management considers new evidence, both positive and negative, that could affect the Company’s future realization of deferred tax assets including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant factors.

The Company believes that it is more likely than not that its deferred tax assets will be realized before expiration.

The Company no longer met the small business exception in 2024, but it meets one of the other exceptions to the §163(j) limitation, “floor plan financing indebtedness” (indebtedness used to finance the acquisition of motor vehicles held for sale or lease or secured by such inventory) and will therefore continue to be exempt from the §163(j) interest expenses limitation in 2025.

The Company monitors tax law changes and has determined that no recent changes materially impact the financial statements.

NOTE 13 — CONCENTRATIONS

7 unchanged sentences

Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations, including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.

As of September 30, 2024 and December 31, 2023, all of the Company’s cash was on deposit at financial institutions in the U.S., which are insured by the Federal Deposit Insurance Corporation subject to certain limitations.

Recent tariff actions imposed by governments of the U.S.

and the PRC present risks to the Company’s logistics and warehousing operations, potentially affecting shipping volumes, warehouse utilization, and customer demand.

The Company has been monitoring trade policy developments closely.

As of March 31, 2025 and December 31, 2024, all of the Company’s cash was on deposit at financial institutions in the U.S., which are insured by the Federal Deposit Insurance Corporation subject to certain limitations.

The Company has not experienced any losses in such accounts.

Accounts receivable in the Company’s parallel-import vehicle business are typically unsecured and derived from revenues earned from parallel-import car dealers, thereby exposing the Company to credit risk.

This risk is mitigated by the Company’s assessment of its parallel-import car dealers’ creditworthiness and its ongoing monitoring of outstanding balances.

Concentrations

Parallel-import automobile dealers were our major customers during the year ended December 31, 2023.

The Company has undergone a business transformation since the acquisition of Edward, which happened in February 2024 (see also NOTE 8 — Intangible Asset and Goodwill).

The Company has undergone a business transformation since the acquisition of Edward, which happened in February 2024 and TWEW in December 2024 (see also NOTE 8 — Intangible Asset and Goodwill).

As of the date of this quarterly report, the Company’s logistic and warehousing business is still in its early stage.

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

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

As of September 30, 2024, three parallel-import car dealers in our parallel-import vehicles segment accounted for 92.4 % ( 57.5 %, 17.5 %, and 17.4 %, respectively) of the accounts receivable balance.

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

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

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

NOTE 14 — STOCKHOLDERS’ EQUITY

Cheetah Net was established under the laws of the State of North Carolina on August 9, 2016.

Under the Company’s amended and restated articles of incorporation on July 2, 2024, the total authorized number of shares of common stock is 1,000,000,000 with par value of $ 0.0001 , which consists of 891,750,000 shares of Class A common stock and 108,250,000 shares of Class B common stock.

Under the Company’s amended and restated articles of incorporation dated July 2, 2024, the total authorized number of shares of common stock is 1,000,000,000 with par value of $ 0.0001 , which consists of 891,750,000 shares of Class A common stock and 108,250,000 shares of Class B common stock.

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

30 unchanged sentences

On July 26, 2024, the Company closed the offering, with net proceeds to the Company of approximately $ 1.1 million for the Company’s working capital and general corporate purposes.

As of September 30, 2024, there were 1,960,218 shares of Class A common stock and 546,875 shares of Class B common stock issued and outstanding .

Reverse Stock Split

At a special stockholders’ meeting held on September 30, 2024, the Company’s stockholders approved the Company’s Fourth Amended and Restated Articles of Incorporation to authorize a reverse stock split.

Subsequently, on October 7, 2024, the Company’s board of directors approved the Reverse Stock Split and filed its Fourth Amended and Restated Articles of Incorporation with the State of North Carolina pursuant to North Carolina Revised Statutes 55-8-21 on October 8, 2024.

The Reverse Stock Split took effect on October 21, 2024.

Starting on October 24, 2024, the Company’s Class A common stock began trading on the Nasdaq Capital Market on a post-split basis.

All share information included in this quarterly report has been retrospectively adjusted to reflect the Reverse Stock Split as if it had occurred as of the earliest period presented.

On November 27, 2024, the Company entered into a stock purchase agreement with TWEW and its stockholders (the “TWEW Seller”).

Pursuant to the Agreement, the Company agreed to acquire 100 % of the shares in TWEW from the TWEW Seller (the “TWEW Acquisition”) for a total purchase price that included a cash payment of $ 200,000 and the issuance of 469,484 shares of the Company’s unregistered Class A common stock, valued at $ 800,000 .

On December 19, 2024, the Company closed the TWEW Acquisition and issued 469,484 shares accordingly.

As of March 31, 2025 and December 31, 2024, there were 2,672,011 shares of Class A common stock and 546,875 shares of Class B common stock issued and outstanding, respectively.

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

1 unchanged sentence

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

Shares Issuable as of

Shares Issuable &

terminated as of

Title of Warrant

4 unchanged sentences

On March 27, 2024, the Company completed the payment of termination fees totaling $ 78,125 , which was recorded as an offset to additional paid in capital within stockholders’ equity.

Reverse Stock Split

The Reverse Stock Split took effect on October 21, 2024.

Starting on October 24, 2024, the Company’s Class A common stock began trading on the Nasdaq Capital Market on a post-split basis.

All share information included in this quarterly report on Form 10-Q has been retrospectively adjusted to reflect the Reverse Stock Split as if it had occurred as of the earliest period presented.

There were no warrant shares remaining as of March 31, 2025 and December 31, 2024.

NOTE 15 — COMMITMENTS AND CONTINGENCIES

4 unchanged sentences

On August 7, 2024, the court conducted an inquest and awarded the Company $ 64,359.22 in fees and costs.

As of the date of this quarterly report, a proposed judgment concerning those monetary damages is pending.

NOTE 19 — SUBSEQUENT EVENTS

On October 2, 2024 and October 28, 2024, the Company entered into two one-year short-term agreements with Hongkong Sanyou Petroleum Co Limited, with principal amount of the loan $ 1,000,000 , respectively, bearing an annual interest rate of 12.0 % and set to mature in 12 months .

On October 24, 2024, the Company entered into a short-term loan agreement with Asia Finance Investment Limited.

The principal amount of the loan was $ 530,000 , bearing an annual interest rate of 12.0 % and was set to mature in 12 months .

On November 7, 2024, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC, notifying the Company that it had regained compliance with the minimum closing bid price requirement for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2).

The letter confirmed that, for the 10 consecutive business days from October 24, 2024 to November 6, 2024, the closing bid price of the Company’s Class A common stock had been at $ 1.00 or greater and that, accordingly, the matter concerning the Company’s failure to comply with the Minimum Bid Price Requirement was closed.

The final judgment was entered on January 14, 2025.

To enforce the judgment, the Company initiated post-judgment collection efforts.

On January 23, 2025, the Company served subpoenas and a restraining notice on the Defendant’s bank, and information subpoenas on her former employers to help with the Company’s post judgment collection efforts.

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

What changed 10-Q

Item 1. Financial Statements