Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this quarterly report on Form 10-Q.
Forward-Looking Statements
This quarterly report on Form 10-Q contains “forward-looking statements.” All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to: any projections of earnings, revenue, or other financial items; any statements regarding the adequacy, availability, and sources of capital, any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan,” “project,” or “anticipate,” and other similar words. In addition to any assumptions and other factors and matters referred to specifically in connection with such forward-looking statements, factors that could cause actual results or outcomes to differ materially from those contained in the forward-looking statements include those factors set forth in “Item 1A. Risk Factors” included in our annual report on Form 10-K (File No. 001-41761) (the “Annual Report”), which was filed with the SEC on March 12, 2025.
Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed in this quarterly report. We do not intend, and undertake no obligation, to update any forward-looking statement, except as required by law.
The information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes included in this quarterly report on Form 10-Q, and the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Annual Report.
Business Overview and Recent Developing Trends
We are a provider of logistics and warehousing services, historically in connection with the sale of parallel-import vehicles sourced in the U.S. to be sold in the PRC market, and more recently for the transportation of other goods between the U.S. and the PRC. 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.
Between 2016 and the first half of 2022, the Company experienced growth in sales volume and gross profit due to favorable market conditions. Beginning in the second half of 2023, the business was negatively affected by a decline in customer demand due to weakening macroeconomic conditions, price competition from luxury automakers in the PRC, and a shift in consumer preference toward domestic EVs. These market challenges led to a decline in parallel-import vehicle sales by 30.5% in 2023, and 95.7% in 2024, with vehicle sales declining to 14 units in 2024 from 2023 units in 2023. In addition, the Company recorded a credit loss of $1.6 million for the year ended December 31, 2024, due to the increasing difficulty in collecting outstanding receivables.
On March 3, 2025, the Company’s board of directors approved the discontinuation of the Company’s parallel-import vehicle business. In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, all financial results associated with this business have been reclassified as discontinued operations in the accompanying consolidated financial statements for all periods presented. For additional financial details regarding discontinued operations, refer to Note 5 – Discontinued Operations.
The Company shifted its business focus since February 2024 by acquiring Edward to provide services related to international trades between the PRC and the U.S., and relocating its headquarter in July 2024 to Irvine, California, to utilize the ports of Los Angeles and Long Beach. The Company further expanded into labor and logistics service by acquiring TWEW in December 2024.
Additionally, on December 19, 2024, we acquired 100% membership interest of NexTrade, a Delaware limited liability company for the consideration of $1. As of the date of this quarterly report, NexTrade has not been engaged in any business operations.
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Further, on March 28, 2025, we incorporated a wholly owned subsidiary, Cheetah BVI, in the British Virgin Islands. The incorporation of Cheetah BVI is intended to support our future international business development and facilitate potential global partnerships. As of the date of this quarterly report, Cheetah BVI has not commenced operations.
Reverse Stock Split
On September 30, 2024, our stockholders approved our fourth amended and restated articles of incorporation, which authorizes a reverse stock split of the issued shares of our common stock, par value $0.0001 per share, at a ratio ranging from 1-for-10 to 1-for-30, as determined at the discretion of our board of directors. On October 7, 2024, our board of directors approved a reverse stock split of our common stock at a ratio of 1-for-16. On October 21, 2024, we effectuated a reverse stock split of our common stock at a ratio of 1-for-16. Following such reverse split, each 16 shares of our common stock outstanding were automatically combined into one new share of common stock. No fractional shares were issued in connection with the reverse split; any fractional shares resulting from the reverse split were rounded up to the nearest whole share. The par value per share of our common stock remained unchanged. Our Class A common stock started trading on a post-split basis on October 24, 2024, at which time the Class A common stock was assigned a new CUSIP number (16307X202).
Dissolution of Subsidiaries
During the quarter ended June 30, 2025, the Company dissolved two wholly owned subsidiaries, Cheetah Net Logistics LLC and Pacific Consulting LLC, as part of an internal corporate restructuring. Both entities were previously organized under the laws of the State of New York and were formally dissolved on June 24, 2025.
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. and the PRC.
Risks and uncertainties related to the Company’s business include, but are not limited to, the following:
● The business shift from parallel-import vehicle sales to logistics and warehousing services may depend on factors from the business environment to operation management and market expansion;
● The government policies on ocean freight business and tariff policy may reduce the market demand for the freight, logistics, and warehousing business, and thus negatively affect our business and growth prospects;
● Our logistics and warehousing business depend highly on the limited customers and third-party transportation and labor providers;
● The competition of logistics and warehousing industry dependent on factors such as service quality, speed reliability, and pricing may limit our expanding non-vehicle logistics warehousing revenue, and our success in these areas will depend on our ability to develop and scale an effective salesforce to market these services to international trading companies in the U.S. and the PRC; and
● Recent changes in U.S. and international trade policies and tariffs on imports and exports, particularly the trade tensions between China and the United States 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.
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Results of Operations
The following table provides a summary of our consolidated results of operations for the three and six months ended June 30, 2025 and 2024, highlighting the financial impact of both continuing and discontinued operations:
Three Months Ended June 30,
Change
Six Months Ended June 30,
Change
2025
2024
Amount
%
2025
2024
Amount
%
USD
%
USD
%
USD
%
USD
%
Revenues
$
354,126
100.0
%
$
93,563
100.0
%
$
260,563
278.5
%
$
833,925
100.0
%
$
170,397
100.0
%
$
663,528
389.4
%
Cost of Revenues
319,226
90.1
45,598
48.7
%
273,628
600.1
%
742,769
89.1
88,098
51.7
%
654,671
743.1
%
Gross Profit
34,900
9.9
%
47,965
51.3
%
(13,065)
(27.2)
%
91,156
10.9
%
82,299
48.3
%
8,857
10.8
%
General and administration expenses
805,305
227.4
%
865,354
924.9
%
(60,049)
(6.9)
%
1,805,824
216.5
%
1,632,996
958.3
%
172,828
10.6
%
Share-based compensation expenses
10,444
2.9
%
—
—
%
10,444
N/A
%
26,629
3.2
%
—
—
%
26,629
N/A
%
Interest income, net
264,168
74.6
%
19,939
21.3
%
244,229
1,224.9
%
463,446
55.6
%
40,564
23.8
%
422,882
1,042.5
%
Other income, net
17,140
4.8
%
153
0.2
%
16,987
11,102.6
%
29,756
3.6
%
774
0.5
%
28,982
3,744.4
%
(Loss) from continuing operations before tax provision
(499,541)
(141.1)
%
(797,297)
(852.1)
%
297,756
37.3
%
(1,248,095)
(149.7)
%
(1,509,359)
(885.8)
261,264
(17.3)
%
Income tax (benefits)
12,987
3.7
%
(247,275)
(264.3)
%
260,262
(105.3)
%
18,342
2.2
%
(492,989)
(289.3)
%
511,331
(103.7)
%
Loss from continuing operations
(512,528)
(144.7)
%
(550,022)
(587.9)
%
37,494
6.8
%
(1,266,437)
(151.9)
%
(1,016,370)
(596.5)
%
(250,067)
(24.6)
%
Loss from discontinued operations, net of tax
—
—
%
(62,858)
(67.2)
%
62,858
100.0
%
—
—
%
(205,440)
(120.6)
%
(205,440)
100.0
%
Net Loss
$
(512,528)
(144.7)
%
$
(612,880)
(655.0)
%
$
100,352
16.4
%
$
(1,266,437)
(151.9)
%
$
(1,221,810)
(717.0)
%
$
(44,627)
(3.7)
%
Comparison of the Three Months Ended June 30, 2025 and 2024
Continuing Operations-Logistics and Warehousing Services
Revenues
For the Three Months Ended June 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
USD
%
USD
%
Revenues
Revenues from Edward
$
52,684
14.9
%
$
93,563
100.0
%
$
(40,879)
(43.7)
%
Revenues from TWEW
301,442
85.1
%
—
—
%
$
301,442
N/A
Total revenues
$
354,126
100.0
%
$
93,563
100.0
%
$
260,563
278.5
%
For the three months ended June 30, 2025, we reported revenue of $354,126 from logistics and warehousing services segment, including $52,684, or 14.9%, of our total revenue from Edward, which we acquired in February 2024, and $301,442, or 85.1%, of our total revenue from TWEW, which we acquired in December 2024.
Revenue from Edward decreased by 43.7%, primarily due to i) a temporary suspension in U.S.-PRC ocean freight activities in April 2025 after the U.S. government’s threat in late March 2025 to impose higher tariffs on goods imported from the PRC, partially offset by ii) stabilized trade flow in May and June 2025 following the resumption of trade negotiations between the two countries since May 2025.
The Company has taken proactive measures to navigate the business by increasing labor and logistics service business during the second quarter of 2025.
We will continue to focus on improving operational efficiencies and expanding our market presence of the two acquired businesses in the California area.
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Cost of Revenues
For the Three Months Ended June 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
USD
%
USD
%
Cost of Revenues
Cost of Revenues from Edward
$
25,797
8.1
%
$
45,598
100.0
%
$
(19,801)
(43.4)
%
Cost of Revenues from TWEW
293,429
91.9
%
—
—
$
293,429
N/A
Total cost of revenues
$
319,226
100.0
%
$
45,598
100.0
%
$
273,628
600.1
%
For the three months ended June 30, 2025, total cost of revenues increased to $319,226 from $45,598 for the same period in 2024, representing an increase of $273,628, or 600.1%, primarily due to the contribution from TWEW. Cost of revenues attributable to TWEW was $293,429, representing 91.9% of total cost of revenues in the second quarter of 2025.
Cost of revenues from Edward was $25,797, or 8.1% of total cost of revenues for the three months ended June 30, 2025, compared to $45,598 for the same period in 2024, representing a decrease of $19,801, or 43.4%, consistent with the corresponding decline in revenue from Edward.
Cost of revenues is mainly labor costs for TWEW and ocean freight service cost for Edward.
Operating Expenses
General and Administrative Expenses
Three Months Ended June 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
General and Administrative Expenses
Payroll and Benefits
$
302,082
$
335,868
$
(33,786)
(10.1)
%
Rental and Leases
208,129
81,347
126,782
155.9
%
Travel and Entertainment
20,017
7,962
12,055
151.4
%
Legal and Accounting Fees
84,958
196,146
(111,188)
(56.7)
%
Insurance Expenses
68,804
86,466
(17,662)
(20.4)
%
Depreciation and Amortization Expenses
37,954
18,536
19,418
104.8
%
Recruiting Expenses
5,453
81,598
(76,145)
(93.3)
%
Others
77,908
57,431
20,476
35.7
%
Total General and Administrative Expenses
$
805,305
$
865,354
$
(60,050)
(6.9)
%
General and administrative expenses for the Company’s continuing operations decreased by $60,050, or 6.9%, to $805,305 for the three months ended June 30, 2025 from $865,354 for the three months ended June 30, 2024. The decrease was mainly due to (i) a decrease of $111,188 in legal and accounting fees as we incurred additional professional fees for preparing a registration statement on Form S-1 during the quarter ended June 30, 2024, (ii) $33,786 in payroll and benefits expense due to staff optimization and cost-saving measures following the initial hiring to support the newly launched logistics and warehousing segment, (iii) a decrease of $17,662 in insurance expenses resulting from a change in our insurance provider, (iv) a decrease of $76,145 in recruiting expenses during the three months ended June 30, 2025, as the prior-year period included significant hiring efforts associated with the launch of our logistics and warehousing segment, partially offset by (iv) an increase of 126,782 in rental and leases following the acquisition of Edward and the relocation of our headquarters to California in July 2024, (v) an increase of $12,055 in travel and entertainment expenses as part of business development efforts and client engagement, (vi) an increase of $20,476 in other miscellaneous general and administration expenses during the three months ended June 30, 2025, and (vii) an increase of $19,418 in depreciation and amortization expenses, primarily due to the acquisition of new fixed assets and recorded intangible assets from Edward and TWEW acquisitions.
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Share-based compensation expenses
Three Months Ended June 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
Share-based compensation expenses
$
10,444
$
—
$
10,444
N/A
Share-based compensation expenses were $10,444 and nil for the three months ended June 30, 2025 and 2024, respectively.
On August 16, 2024, our board of directors approved the adoption of the Amended and Restated 2024 Stock Incentive Plan (the “Plan”). Subsequently, on September 30, 2024, our stockholders approved the Plan. The total number of shares granted by the compensation committee of our board of directors on September 30, 2024 was originally reported as 150,000, including 118,750 shares of Class A common stock and 31,250 shares of Class B common stock, in our quarterly report for the quarter ended March 31, 2025. During the quarter ended June 30, 2025, we identified an error and noted that the correct allocation shall be 112,500 shares of Class A common stock and 31,250 shares of Class B common stock, for a total of 143,750 shares granted as of the date of this quarterly report. The error was due to the forfeiture, on January 17, 2025, of 6,250 shares of Class A common stock that had been granted under the Plan on November 30, 2024. Share-based compensation expenses of $10,444 were recognized during the three months ended June 30, 2025. See Note 11 – Stock Based Compensation for more details.
Other Income (Expenses), net
Three Months Ended June 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
Interest income
$
272,228
$
28,241
$
243,987
863.9
%
Interest expenses:
Loan Interest expense
(6,736)
(8,011)
1,275
15.9
%
Credit Card Interest
(462)
(291)
(171)
(59.0)
%
Premium Finance Interest
(862)
—
(862)
N/A
%
Total Interest expenses
(8,060)
(8,302)
(242)
2.9
%
Other income, net
17,140
153
16,987
11,102.6
%
Total other income, net
$
281,308
$
20,092
$
261,216
1,300.1
%
Interest income from continuing operations was $272,228 for the three months ended June 30, 2025, compared to $28,241 for the three months ended June 30, 2024, representing an increase of $243,987, or 863.9%. The significant increase was primarily driven by interest earned on short-term loan receivables and certificates of deposit, funded by the net proceeds from the Company’s public offerings closed in May and July 2024.
Interest expense incurred from our continuing operations was $8,060 for the three months ended June 30, 2025, which slightly decreased by $242, or 2.9%, from $8,302 for the three months ended June 30, 2024, mainly due to decreased loan interest expenses.
Income Tax (Benefits)
Our income tax provision for continuing operations was nil for the three months ended June 30, 2025, compared with income tax benefits of approximately $247,275 for the same period in 2024.
The consolidated statement of operations reflects income tax expense of approximately $12,987 for the three months ended June 30, 2025, which were the tax payments related to prior periods and acquisition-related tax filings upon the filing 2024 tax returns in April 2025. These additional amounts primarily consist of: (i) $2,000 of tax obligations owed by the Company for the 2024 tax year, (ii) $1,101 of pre-acquisition tax obligations of Edward, and (iii) $9,886 of pre-acquisition tax obligations of TWEW. These payments do not impact the Company’s estimated annual effective tax rate for 2025.
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Net Loss
As a result of the above factors, we had a net loss of $512,528 from our continuing operations for the three months ended June 30, 2025, compared to net loss of $550,022 for the same period of 2024.
Discontinued Operations -Parallel- Import vehicle Business
As disclosed in Note 5 – Discontinued Operations, our Board approved the discontinuation of our parallel-import vehicle business on March 3, 2025. The Company fully exited its parallel-import vehicle business during the year ended December 31, 2024. In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, the following discussion provides an overview of the operating results of discontinued operations during the second quarter of 2024.
Discontinued Operations- Parallel -Import Vehicles Business
The following table summarizes the operating results of our discontinued operations for the three months ended June 30, 2024:
Three Months Ended June 30,
2024
(Unaudited)
Revenue
U.S. domestic market
$
200,297
Overseas market
—
Total Revenue
$
200,297
Cost of Revenue
Cost of vehicle
$
200,297
Fulfilment expense
15,537
Total Cost of Revenue
$
215,834
Gross loss
$
(15,537)
During the three months ended June 30, 2024, the Company generated revenue of $200,297 from the parallel-vehicle business. Only one vehicle was sold during this quarter following the significant downturn of parallel-import vehicle business in the PRC.
We also reported cost of revenue of $215,834, mainly cost of vehicles, and a gross loss of $15,537 of the discontinued business for the three months ended June 30, 2024.
Selling Expenses for Discontinued Operations
The following table presents selling expenses for the discontinued operations:
Three Months Ended June 30,
2024
(Unaudited)
Selling Expenses
Payroll and benefits
$
19,422
Total selling expenses
$
19,422
Total selling expenses for the discontinued parallel-import vehicle business was $19,422 for the three months ended June 30, 2024.
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Interest Expenses
The table below presents interest expenses for the three months ended June 30, 2024:
June 30,
2024
(Unaudited)
Interest Expenses
Line of Credit
27,899
Total interest expenses
$
27,899
Total interest expenses on line of credit charges were $27,899 for the three months ended June 30, 2024.
Net loss for the discontinued operations was approximately $62,858 for the three months ended June 30, 2024.
Comparison of the Six Months Ended June 30, 2025 and 2024
Revenues
For the Six Months Ended June 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
USD
%
USD
%
Revenues
Revenues from Edward
$
115,199
13.8
%
$
170,397
100.0
%
$
(55,198)
(32.4)
%
Revenues from TWEW
718,726
86.2
%
—
—
$
718,726
N/A
Total revenues
$
833,925
100.0
%
$
170,397
100.0
%
$
663,528
389.4
%
For the six months ended June 30, 2025, we reported revenue of $833,925 from logistics and warehousing services segment, including $115,199, or 13.8%, of our total revenue from Edward, which we acquired in February 2024, and $718,726, or 86.2%, of our total revenue from TWEW, which we acquired in December 2024.
Revenue from Edward decreased by 32.4%, primarily due to i) a temporary suspension in U.S.-China ocean freight activities in April 2025 after the U.S. government’s threat in late March 2025 to impose higher tariffs on goods imported from China, partially offset by ii) stabilized trade flow in May and June 2025, following the resumption of trade negotiations between the two countries since May 2025.
The Company has taken proactive measures to navigate the business by increasing labor and logistics service business during the six months ended June 30, 2025.
We will continue to focus on improving operational efficiencies and expanding our market presence of the two acquired businesses in the California area.
Cost of Revenues
For the Six Months Ended June 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
USD
%
USD
%
Cost of Revenues
Cost of Revenues from Edward
$
67,607
9.1
%
$
88,098
100.0
%
$
(20,491)
(23.3)
%
Cost of Revenues from TWEW
675,162
90.9
%
—
—
$
675,162
N/A
Total cost of revenues
$
742,769
100.0
%
$
88,098
100.0
%
$
654,671
743.1
%
For the six months ended June 30, 2025, total cost of revenues increased to $742,769 from $88,098 for the same period in 2024, representing an increase of $654,671, or 743.1%, primarily due to the contribution from TWEW. Cost of revenues attributable to TWEW was $675,162, representing 90.9% of total cost of revenues during the six months ended June 30, 2025.
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Cost of revenues from Edward was $67,607, or 9.1 % of total cost of revenues for the six months ended June 30, 2025, compared to $88,098 for the same period in 2024, representing a decrease of $20,491, or 23.3%, consistent with the corresponding decline in revenue from Edward.
Cost of revenues is mainly labor costs for TWEW and ocean freight service cost for Edward.
Operating Expenses
General and Administrative Expenses
Six Months Ended June 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
General and Administrative Expenses
Payroll and Benefits
$
616,274
$
532,290
$
83,984
15.8
%
Rental and Leases
416,258
167,552
248,706
148.4
%
Travel and Entertainment
62,047
27,445
34,602
126.1
%
Legal and Accounting Fees
342,963
506,062
(163,099)
(32.2)
%
Insurance Expenses
137,540
174,439
(36,899)
(21.2)
%
Depreciation and Amortization Expenses
75,907
29,422
46,485
158.0
%
Recruiting Expenses
6,474
85,084
(78,610)
(92.4)
%
Others
148,361
110,702
37,658
34.0
%
Total General and Administrative Expenses
$
1,805,824
$
1,632,996
$
172,827
10.6
%
General and administrative expenses for the Company’s continuing operations increased by $172,827, or 10.6%, to $1.8 million for the six months ended June 30, 2025 from $1.6 million for the six months ended June 30, 2024, primarily due to (i) an increase of $248,706 in rental and leases following the acquisition of Edward and the relocation of the Company’s headquarters to California in July 2024, (ii) an increase of $83,984 in personnel-related expenses, which was attributed to the hiring of additional staff to support the newly launched logistics and warehousing segment, (iii) an increase of $46,485 in depreciation and amortization expenses, primarily due to the acquisition of fixed assets and recorded intangible assets from Edward and TWEW acquisitions, (iv) an increase of $34,602 in travel and entertainment expenses as part of business development efforts and client engagement, (v) an increase of $37,658 in other miscellaneous general and administration expenses during the six months ended June 30, 2025, partially offset by (vi) a decrease of $163,099 in legal and accounting fees, primarily because the prior period included additional professional fees related to the preparation of a registration statement on Form S-1 during the first and second quarters of 2024, which did not recur in the current period, (vii) a decrease of $78,610 in the recruiting expenses during the three months ended June 30, 2025, as the prior-year period included significant hiring efforts associated with the launch of the Company’s logistics and warehousing segment, and (viii) a decrease of $36,899 in insurance expenses resulting from a change in our insurance provider.
Share-based compensation expenses
Six Months Ended June 30,
2025
2024
Amount
%
(Unaudited)
(Unaudited)
Share-based compensation expenses
$
26,629
$
—
$
26,629
N/A
Share-based compensation expenses were $26,629 and nil for the six months ended June 30, 2025 and 2024, respectively.
On August 16, 2024, our board of directors approved the adoption of the Amended and Restated 2024 Stock Incentive Plan (the “Plan”). Subsequently, on September 30, 2024, our stockholders approved the Plan. The total number of shares granted by the compensation committee of our board of directors on September 30, 2024 was originally reported as 150,000, including 118,750 shares of Class A common stock and 31,250 shares of Class B common stock, in our quarterly report for the quarter ended March 31, 2025. During the quarter ended June 30, 2025, we identified an error and noted that the correct allocation shall be 112,500 shares of Class A common stock and 31,250 shares of Class B common stock, for a total of 143,750 shares granted as of the date of this quarterly report. The error was due to the forfeiture, on January 17, 2025, of 6,250 shares of Class A common stock that had been granted under the Plan on November 30, 2024. Share-based compensation expenses of $26,629 were recognized during the six months ended June 30, 2025. See Note 11 – Stock Based Compensation for more details.
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Other Income (Expenses), net
Six Months Ended June 30,
Change
2025
2024
Amount
%
(Unaudited)
(Unaudited)
Interest income
$
480,318
$
57,171
$
423,147
740.1
%
Interest expenses:
Loan Interest expense
(13,406)
(15,563)
2,206
(14.1)
%
Credit Card Interest
(462)
(49)
(413)
842.9
%
Premium Finance Interest
(3,004)
(996)
(2,008)
201.6
%
Total Interest expenses
(16,872)
(16,607)
(265)
1.6
%
Other income, net
29,756
774
28,982
3,744.4
%
Total other income net
$
493,202
$
41,338
$
451,864
1,093.1
%
Interest income from continuing operations was $480,318 for the six months ended June 30, 2025, compared to $57,171 for the six months ended June 30, 2024, representing an increase of $423,147, or 740.1 %. The significant increase was primarily driven by interest earned on short-term loan receivables and certificates of deposit, funded by the net proceeds from the Company’s public offerings closed in May and July 2024.
Interest expense incurred from our continuing operations was $16,872 for the six months ended June 30, 2025, which slightly increased by $265, or 1.6%, from $16,607 for the six months ended June 30, 2024, mainly due to an increased Premium Finance interest for D&O Insurance, partially offset by the decreased interest for long-term loans.
Income Tax (Benefits)
Our income tax provision for continuing operations were $5,200 for the six months ended June 30, 2025, compared with income tax benefits of approximately $492,989 for the same period in 2024.
The consolidated statement of operations reflects income tax expense of approximately $18,342 for the six months ended June 30, 2025, which includes the current quarter provision of $5,200, and approximately $13,142 of tax payments related to prior periods and acquisition-related tax filings upon the filing of 2024 tax returns in April 2025. These additional amounts primarily consist of: (i) $2,155 of tax obligations owed by the Company for the 2024 tax year, (ii) $1,101 of pre-acquisition tax obligations of Edward, and (iii) $9,886 of pre-acquisition tax obligations of TWEW. These payments do not impact the Company’s estimated annual effective tax rate for 2025.
Net Loss
As a result of the above factors, we had a net loss of $1,266,437 from our continuing operations for the six months ended June 30, 2025, compared to net loss of $1,016,370 for the same period of 2024.
Discontinued Operations -Parallel- Import vehicle Business
As disclosed in Note 5 – Discontinued Operations, our Board approved the discontinuation of our parallel-import vehicle business on March 3, 2025. The Company fully exited its parallel-import vehicle business during the year ended December 31, 2024. In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, the following discussion provides an overview of the operating results of discontinued operations during the six months ended June 30, 2024.
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Discontinued Operations- Parallel -Import Vehicles Business
The following table summarizes the operating results of our discontinued operations for the six months ended June 30, 2024:
Six Months Ended June 30,
2024
(Unaudited)
Revenue
U.S. domestic market
$
200,297
Overseas market
1,430,951
Total Revenue
$
1,631,248
Cost of Revenue
Cost of vehicle
$
1,515,270
Fulfilment expense
140,798
Total Cost of Revenue
$
1,656,068
Gross loss
$
(24,820)
During the six months ended June 30, 2024, we generated revenue of $1.6 million from the parallel-vehicle business. Only 14 units of vehicles were sold following the significant downturn of parallel-import vehicle business as described in “—Business Overview and Recent Developing Trends.”
We also reported cost of revenue of 1.7 million, mainly the fulfillment expenses, and a gross loss of $24,820 of the discontinued business for the six months ended June 30, 2024.
Selling Expenses for Discontinued Operations
The following table presents selling expenses for the discontinued operations:
Six Months Ended June 30,
2024
(Unaudited)
Selling Expenses
Payroll and benefits
$
77,652
Ocean freight
20,610
Total selling expenses
$
98,262
Total selling expenses for the discontinued parallel-import vehicle business was $98,262 for the six months ended June 30, 2024.
Interest Expenses
The table below presents interest expenses for the six months ended June 30, 2024:
June 30,
2024
(Unaudited)
Interest Expenses
LC Financing
23,123
Line of Credit
59,235
Total interest expenses
$
82,358
Total interest expenses on LC financing and line of credit charges were $82,358 for the six months ended June 30, 2024.
Net loss for the discontinued operations was approximately $205,440 for the six months ended June 30, 2024.
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Liquidity and Capital Resources
Historically, our primary uses of cash have been to finance the working capital needs. We believe that we will be able to fund current operations and other commitments for at least the next 12 months from operating cash flow and proceeds from the capital infusion which were held in our cash and cash equivalents.
We may, however, require additional cash resources due to changes in business conditions or other future developments. If these sources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked securities could result in additional dilution to stockholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financial covenants that would restrict operations. Financing may not be available in amounts or on terms acceptable to us, or at all.
As of June 30, 2025, we had current assets of $9.9 million, consisting of cash and cash equivalents of $0.2 million, $8.7 million in loan receivables, $0.8 million of other receivables, and $0.1 million in prepaid expenses and other current assets from continuing operations. Our current liabilities, all of which related to continuing operations, totaled approximately $0.9 million, consisting of $0.6 million of operating lease liabilities, $0.3 million of other payables, and 36,412 of the current portion of long-term borrowings. The Company also had $590,352 of long-term borrowings payable, and $950,372 of operating lease liabilities, long-term portion.
The following table summarizes our cash flows for the six months ended June 30, 2025 and 2024, with continuing operations and discontinued operations presented separately:
Six Months ended June 30,
2025
2024
(Unaudited)
(Unaudited)
Net cash provided by operating activities
$
1,333,668
$
827,980
Cash used in operations-continuing operations
(1,206,833)
(2,137,280)
Cash provided by operations-discontinued operations
2,540,501
2,965,260
Net cash used in investing activities
(2,661,150)
(912,617)
Cash used in operations-continuing operations
(2,661,150)
(912,617)
Net cash (used in) provided by financing activities
(138,294)
5,944,540
Cash (used in) provided by operations-continuing operations
(138,294)
7,053,275
Cash used in operations-discontinued operations
—
(1,108,735)
Net (decrease) increase in cash
$
(1,465,776)
$
5,859,903
Operating Activities
Net cash used in operating activities from continuing operations was $1.2 million for the six months ended June 30, 2025. The negative cash flow was primarily due to (i) a net loss of $1.3 million during the six months ended June 30, 2025, and (ii) an increase of $0.5 million in other receivables, partially offset by (iii) an increase of $0.2 million in amortization of operating lease right-of-use assets and intangible assets, and (iv) $0.2 million in prepaid expenses.
Net cash used in operating activities from continuing operations was $2.3 million for the six months ended June 30, 2024. This was primarily attributable to (i) a net loss of $1.0 million, (ii) a deferred tax benefit of $0.5 million, (iii) an increase of $0.7 million in other receivables, partially offset by non-cash adjustments including, (iv) $77,801 in amortization of operating lease right-of-use assets, (v) $21,786 in amortization of intangible assets, and (vi) an increase of $30,474 in other payables.
Net cash provided by operating activities from discontinued operations was $2.5 million for the six months ended June 30, 2025, primarily due to the collection of $2.5 million in accounts receivable resulting from vehicle sales.
Net cash provided by operating activities from discontinued operations was $3.2 million for the six months ended June 30, 2024. This was primarily attributable to (i) the collection of $1.4 million in accounts receivable resulting from vehicle sales, (ii) a $1.5 million decrease in vehicle inventory, (iii) a $0.2 million decrease in other receivables from vehicle deposit and sales tax return, and (iv) a $0.1 million increase in other payables.
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Investing Activities
Net cash used in investing activities from continuing operations was approximately $2.7 million for the six months ended June 30, 2025, including (i) $3.5 million in short-term loans receivable from third parties, and offset by (ii) $0.8 in proceeds of repayment from these loans.
For the six months ended June 30, 2024, net cash used in investing activities was $0.9 million, including (i) $0.2 million in cash paid in the Edward acquisition, (ii) $0.4 million in cash paid in the purchase of property and equipment, (iii) $1.0 million in cash in short-term loans receivable from third parties, offset by (iii) $0.7 million in proceeds of repayment from pledged loans and short-term loans made to third parties.
There were no investing activities related to discontinued operations for the six months ended June 30, 2025 and 2024.
Financing Activities
Net cash used in financing activities from continuing operations was $138,294 for the six months ended June 30, 2025, which consisted of (i) net repayment of premium finance of $120,461, and (ii) net repayment of long-term borrowings of $17,833.
Net cash provided by financing activities from continuing operation of $7.1 million for the six months ended June 30, 2024, consisted of (i) cash received from public offering proceeds of $7.3 million, offset by (ii) cash paid for warrant termination of $78,125, (iii) repayments of premium finance of $148,621, (iv) repayments of long-term borrowing of $15,676, and (v) repayment of $13,423 to a related party.
There were no financing activities related to discontinued operations for the six months ended June 30, 2025.
Net cash used in financing activities from discontinued operations was $1.1 million for the six months ended June 30, 2024, which was the repayment of LC financing.
Off-Balance Sheet Arrangements
We do not currently have any off-balance sheet financing arrangements as defined under the rules and regulations of the SEC, or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions, and estimates that affect the amounts reported. Note 2, “Summary of Significant Accounting Policies” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of the Annual Report describe the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since the Annual Report.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk .
As a smaller reporting company, we are not required to provide this information.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.