Quanome Technologies, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. LAKESIDE HOLDING LIMITED INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 6413 ) F-2 Consolidated Balance Sheets as of June 30, 2024 and 2023 F-3 Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Years Ended June 30, 2024 and 2023 F-4 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended June 30, 2024 and 2023 F-5 Consolidated Statements of Cash Flows for the Years Ended June 30, 2024 and 2023 F-6 Notes to Consolidated Financial Statements F-7 – F-32 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Lakeside Holding Limited Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Lakeside Holding Limited and its subsidiaries (the “Company”) as of June 30, 2024 and 2023, and the related consolidated statements of income (loss) and comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the two-year period ended June 30, 2024, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. / s / ZH CPA, LLC We have served as the Company’s auditor since 2023. Denver, Colorado September 30, 2024 999 18 th Street, Suite 3000, Denver, CO, 80202 USA Phone: 1.303.386.7224 Fax: 1.303.386.7101 Email: admin@zhcpa.us F- 2 LAKESIDE HOLDING LIMITED CONSOLIDATED BALANCE SHEETS As of June 30, 2024 As of June 30, 2023 ASSETS CURRENT ASSETS Cash $ 123,550 $ 174,018 Accounts receivable – third parties, net 2,082,152 1,373,676 Accounts receivable – related party, net 763,285 44,627 Prepayment and other receivable - 52,623 Contract assets 129,506 44,740 Due from related parties 441,279 746,130 Total current assets 3,539,772 2,435,814 NON-CURRENT ASSETS Investment in other entity 15,741 — Property and equipment at cost, net of accumulated depreciation 344,883 489,520 Right of use operating lease assets 3,471,172 2,271,070 Right of use financing lease assets 37,476 48,206 Deferred tax asset 89,581 — Deferred offering costs 1,492,798 90,000 Prepayment, deposit and other receivable 202,336 137,336 Total non-current assets 5,653,987 3,036,132 TOTAL ASSETS $ 9,193,759 $ 5,471,946 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payables – third parties $ 1,161,858 $ 462,214 Accounts payables – related parties 227,722 365,413 Accrued liabilities and other payables 1,335,804 325,701 Current portion of obligations under operating leases 1,186,809 769,782 Current portion of obligations under financing leases 37,619 42,889 Loans payable, current 746,962 586,688 Dividend payable 98,850 98,850 Tax payable 79,825 32,829 Due to shareholders 1,018,281 90,000 Total current liabilities 5,893,730 2,774,366 NON-CURRENT LIABILITIES Loans payable, non-current 136,375 231,599 Deferred tax liability - 24,752 Obligations under operating leases, non-current 2,506,402 1,564,633 Obligations under financing leases, non-current 17,460 21,836 Total non-current liabilities 2,660,237 1,842,820 TOTAL LIABILITIES $ 8,553,967 $ 4,617,186 Commitments and Contingencies EQUITY Common stocks, $ 0.0001 par value, 200,000,000 shares authorized, 6,000,000 and 6,000,000 issued and outstanding as of June 30, 2024 and 2023, respectively* 600 600 Subscription receivable ( 600 ) ( 600 ) Additional paid-in capital 642,639 - Accumulated other comprehensive income (loss) 2,972 ( 244 ) (Deficits) Retained earnings ( 5,819 ) 862,072 Total stockholders’ equity 639,792 861,828 Non-controlling interests in subsidiary - ( 7,068 ) Total equity 639,792 854,760 TOTAL LIABILITIES AND EQUITY $ 9,193,759 $ 5,471,946 * Shares and per share data are presented on a retroactive basis to reflect the issuance of 6,000,000 common stocks. The accompanying notes are an integral part of these consolidated financial statements. F- 3 LAKESIDE HOLDING LIMITED CONSOLIDATED STATEMENT OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) For the Years Ended June 30, 2024 2023 Revenue from third party $ 16,450,908 $ 12,763,577 Revenue from related parties 1,864,247 109,314 Total revenue 18,315,155 12,872,891 Cost of revenue from third party 12,316,374 8,385,222 Cost of revenue from related parties 2,282,824 1,923,380 Total cost of revenue 14,599,198 10,308,602 Gross profit 3,715,957 2,564,289 Operating expenses: Selling expense 2,500 79,822 General and administrative expenses 4,138,190 2,331,312 Loss from deconsolidation of a subsidiary 73,151 - Provision (reversal) of allowance for expected credit loss 28,157 ( 93,742 ) Total operating expenses 4,241,998 2,317,392 (Loss) Income from operations ( 526,041 ) 246,897 Other income (expense): Other income, net 338,435 885,501 Interest expense ( 108,008 ) ( 123,600 ) Total other income, net 230,427 761,901 (Loss) Income before income taxes ( 295,614 ) 1,008,798 Credit (Provision) for income taxes 67,337 ( 65,068 ) Net (loss) income and comprehensive (loss) income ( 228,277 ) 943,730 Net loss attributable to non-controlling interest ( 3,025 ) ( 39,872 ) Net (loss) income attributable to common stockholders ( 225,252 ) 983,602 Other comprehensive (loss) income Foreign currency translation gain (loss) 3,122 ( 255 ) Comprehensive (loss) income ( 225,155 ) 943,475 Less: comprehensive loss attributable to non-controlling interest ( 3,119 ) ( 39,883 ) Comprehensive (loss) income attributable to the Company $ ( 222,036 ) $ 983,358 (Loss) earnings per share – basic and diluted $ ( 0.04 ) $ 0.16 Weighted average shares outstanding – basic and diluted* 6,000,000 6,000,000 For the Years Ended June 30, 2024 2023 Pro Forma information Statement for Income Tax Provision as a C Corporation upon Reorganization (Loss) Income before income taxes $ ( 295,614 ) $ 1,008,798 Credit (Provision) for income taxes 239,466 ( 307,683 ) Net (loss) income and comprehensive (loss) income $ ( 56,148 ) $ 701,115 Net loss attributable to non-controlling interests ( 3,025 ) ( 39,872 ) Net (loss) income attributable to common stockholders ( 53,123 ) 740,987 Other Comprehensive income (loss) Foreign currency translation (loss) gain 3,122 ( 255 ) Comprehensive (loss) income ( 53,026 ) 700,860 Less: net loss attributable to non-controlling interest ( 3,119 ) ( 39,883 ) Comprehensive (loss) income attributable to the Company $ ( 49,907 ) $ 740,743 (Loss) Earnings per share – Basic and diluted* $ ( 0.01 ) $ 0.12 Weighted Average Shares Outstanding – Basic and diluted* 6,000,000 6,000,000 * Shares and per share data are presented on a retroactive basis to reflect the issuance of 6,000,000 common stocks. The accompanying notes are an integral part of these consolidated financial statements. F- 4 LAKESIDE HOLDING LIMITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 Common Shares* Amount Subscription Receivable Additional Paid in Capital Retained Earnings (Deficits) Accumulated Other Comprehensive Income (Loss) Non- controlling Interest Total Balance at June 30, 2022 6,000,000 $ 600 $ ( 600 ) $ — $ 78,470 $ — $ — $ 78,470 Net income (loss) for the year — — — — 983,602 — ( 39,872 ) 943,730 Capital dividend declared — — — — ( 200,000 ) — — ( 200,000 ) Capital contribution made by non-controlling shareholders — — — — — — 32,815 32,815 Foreign currency translation adjustment — — — — — ( 244 ) ( 11 ) ( 255 ) Balance at June 30, 2023 6,000,000 $ 600 $ ( 600 ) $ — $ 862,072 $ ( 244 ) $ ( 7,068 ) $ 854,760 Termination of S Corporation upon reorganization — — — 642,639 ( 642,639 ) — — — Net loss for the year — — — — ( 225,252 ) — ( 3,025 ) ( 228,277 ) Deconsolidation of a subsidiary — — — — — — 10,187 10,187 Foreign currency translation adjustment — — — — — 3,216 ( 94 ) 3,122 Balance at June 30, 2024 6,000,000 $ 600 $ ( 600 ) $ 642,639 $ ( 5,819 ) $ 2,972 — $ 639,792 * Shares and per share data are presented on a retroactive basis to reflect the issuance of 6,000,000 common stocks. The accompanying notes are an integral part of these consolidated financial statements. F- 5 LAKESIDE HOLDING LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended June 30, 2024 2023 (Revised) Cash flows from operating activities: Net (loss) income $ ( 228,277 ) $ 943,730 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation – G&A 71,980 130,755 Depreciation – overhead cost 72,657 - Non-cash operating lease expense 1,005,686 826,284 Depreciation of right-of-use finance assets 30,712 31,780 Provision (Reversal) of allowance for expected credit loss 28,157 ( 93,742 ) Deferred tax (benefit) expense ( 114,333 ) 32,239 Loss from derecognition of shares in subsidiary 73,151 — Changes in operating assets and liabilities: Accounts receivable – third parties ( 722,522 ) ( 506,152 ) Accounts receivable – related parties ( 732,769 ) ( 28,887 ) Contract assets ( 84,766 ) 54,441 Due from related party 328,820 ( 579,496 ) Prepayment, other deposit ( 12,377 ) 18,672 Accounts payables – third parties 699,644 54,410 Accounts payables – related parties ( 137,691 ) ( 101,896 ) Accrued expense and other payables 468,284 57,701 Tax payable 46,996 32,829 Lease liabilities – Operating lease ( 846,992 ) ( 833,365 ) Net cash (used in) provided by operating activities ( 53,640 ) 39,303 Cash flows from investing activities: Payment made for investment in other entity ( 29,906 ) — Net cash outflow from deconsolidation of a subsidiary (Appendix A) ( 48,893 ) — Acquisition of property and equipment — ( 18,288 ) Net cash used in investing activities ( 78,799 ) ( 18,288 ) Cash flows from financing activities: Proceeds from loans 400,000 — Repayment of loans ( 214,986 ) ( 100,864 ) Repayment of equipment and vehicle loans ( 119,964 ) ( 104,598 ) Principal payment of finance lease liabilities ( 29,628 ) ( 20,640 ) Payment for deferred offering cost ( 170,000 ) ( 90,000 ) Advance to related parties ( 23,969 ) — Proceeds from shareholders 237,302 110,550 Repayment to shareholders — ( 47,536 ) Net cash provided by (used in) financing activities 78,755 ( 253,088 ) Effect of exchange rate changes on cash and cash equivalents 3,216 32,560 Net decrease in cash ( 50,468 ) ( 199,513 ) Cash, beginning of the year 174,018 373,531 Cash, end of the year $ 123,550 $ 174,018 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for income tax $ — $ — Cash paid for interest $ 31,161 $ 26,474 SUPPLEMENTAL SCHEDULE OF NON-CASH IN FINANCING ACTIVITIES Deferred offering costs within due to shareholders $ 860,979 $ 90,000 Deferred offering costs within accrued expense and other payables $ 541,819 $ — NON-CASH ACTIVITIES Dividends declared $ — $ 200,000 Dividends declared and offset against due from shareholders $ — $ 101,150 Property and equipment additions included in loan payable $ — $ 98,245 Right of use assets obtained in exchange for operating lease obligations $ 2,094,498 $ 124,600 Right of use assets obtained in exchange for finance lease obligation $ 19,982 $ 32,107 APPENDIX A – Net cash outflow from deconsolidation of a subsidiary Working capital, net $ 29,812 $ — Investment in other entity recognized ( 15,741 ) — Elimination of NCl at deconsolidation of a subsidiary 10,187 — Loss from deconsolidation of a subsidiary ( 73,151 ) — Cash $ ( 48,893 ) $ — The accompanying notes are an integral part of these consolidated financial statements. F- 6 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION Lakeside Holding Limited (the “Company”), is a holding company established on August 28, 2023 under the laws of the State of Nevada. The Company, acting through its subsidiary, is primarily engaged in providing customized cross-border ocean freight solutions and airfreight solutions. On July 1, 2024, the Company closed its initial public offering (“IPO”) of 1,500,000 shares of its common stock at an IPO price of $ 4.50 per share for aggregate gross proceeds of approximately $ 6.75 million from the offering (Note 11). In connection with the offering, the Company’s common shares began trading on the Nasdaq Capital Market under the trading symbol “LSH.” Reorganization A Reorganization of the legal structure was completed on September 23, 2023. The Reorganization involved the incorporation of Lakeside Holding Limited and the transfer the shares of American Bear Logistics Corp (“ABL Chicago”) to the Company. Prior to the Reorganization, Mr. Henry Liu, the Chairman of the Board and Chief Executive Officer (“CEO”), and Mr. Shuai Li, the President and Chief Operating Officer (“COO”), each owned 50 % equity interest of the ABL Chicago (collectively, the “Controlling Group”). On September 23, 2023, the Controlling Group transferred their 100 % equity interest in ABL Chicago to the Company for a consideration of $ 1,000 . Upon this Reorganization, the Company ultimately owns 100% equity interest of ABL Chicago. As of the date of this report, the Controlling Group collectively holds 76.0 % equity interest of the Company through H&L Logistics International LLC which holds 36.0 % equity interest of the Company, and Jiushen Transport LLC, which holds 40.0 % equity interest of the Company. As part of the series of reorganization transactions to be completed before the offering, a 120-for-1 share split was conducted by the Company on March 29, 2024. After the share split and as of the date of this consolidated financial statements, the issued share capital of the Company consists of $ 600 divided into 6,000,000 common shares, par value of $ 0.0001 each. Before and after the Reorganization, the Company, together with its subsidiaries, is effectively controlled by the same Controlling Group, and therefore the Reorganization is considered as a recapitalization of entities under common control in accordance with Accounting Standards Codification (“ASC”) 805-50-25. The consolidation of the Company and its subsidiaries have been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements in accordance with ASC 805-50-45-5. Details of the Company and its subsidiary are set out below upon the Reorganization: Name Date of Incorporation Jurisdiction of Formation Percentage of direct/indirect Economic Ownership Principal Activities Parent Company Lakeside Holding Limited August 28, 2023 Nevada 100 % Holding company Subsidiary American Bear Logistics Corp. (“ABL Chicago”) February 5, 2018 Illinois 100 % Logistics services American Bear International Logistics (Wuhan) Corp. (“ABL Wuhan”)* March 27, 2019 Wuhan, China 51 % Logistics services * ABL Wuhan ceased to be the Company’s subsidiary after August 4, 2023. F- 7 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION (cont.) On February 5, 2018, American Bear Logistics Corp. (“ABL Chicago”) was established under the laws of the State of Illinois. The Company is providing customized cross-border ocean and airfreight solutions. On July 8, 2022, ABL Chicago entered into an agreement with two third-party individuals who were the original shareholders of American Bear International Logistics (Wuhan) Corp. (“ABL Wuhan”), to acquire 51 % ownership interest of ABL Wuhan with nominal consideration. ABL Wuhan was originally incorporated on March 27, 2019 in Wuhan City, Hubei Province, China, with a total registered capital of RMB 0.5 million (approximately $ 0.07 million). Prior to the acquisition, ABL Wuhan had no active business operations since its inception and the registered capital had not been paid. Management concluded that this acquisition did not qualify as a business combination under ASC 805 — Business Combinations. ABL Wuhan primarily focuses on facilitating the logistic services for customers in China. On May 18, 2023, ABL Wuhan increased its registered capital to RMB 3.0 million (approximately $ 0.41 million). On August 4, 2023, ABL Wuhan further increased its registered capital to RMB 5.0 million (approximately $ 0.7 million), while ABL Chicago reduced its unpaid registered capital contribution of RMB 530,000 (approximately $ 75,000 ). Concurrently, the third-party shareholder increased their registered capital contribution accordingly. Following this change, the third-party shareholder owns 80 % of equity interest and ABL Chicago owns 20 % of equity interest. Consequently, ABL Wuhan ceased to be the Company’s subsidiary after August 4, 2023. On February 2, 2024, ABL Chicago reduced its unpaid registered capital contribution of RMB 750,000 (approximately $ 105,000 ) in its investee (ABL Wuhan). Concurrently, the third-party shareholder increased their registered capital contribution accordingly. Following this change, the third-party shareholder owns 95 % of equity interest and ABL Chicago owns 5 % of equity interest. The Company recognized a loss of $ 73,151 from deconsolidation of a subsidiary and recorded as investment in other entity of $ 15,741 on consolidated balance sheets as of June 30, 2024. The following table summarized the assets and liabilities of ABL Wuhan as of the deconsolidation date: Cash $ 48,893 Working capital (excluding cash), net 29,812 Carrying value of net assets 78,705 Fair value of the consideration received — Fair value of the retained noncontrolling investment 15,741 Carrying value of noncontrolling interest deconsolidated ( 10,187 ) Loss on deconsolidation of a subsidiary $ ( 73,151 ) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and principles of consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and have been consistently applied. The accompanying consolidated financial statements include the financial statements of Lakeside Holding Limited and its subsidiaries. All inter-company balances and transactions have been eliminated upon consolidation. F- 8 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Revision of cash flow statement The Company identified errors in the statement of cash flows for the year ended June 30, 2023 relating to interest expense of $ 24,172 , which were previously included as cash flows from financing activities and have been reclassified as cash flows from operating activities. The Company considered the errors identified in accordance with the SEC’s Staff Accounting Bulletin No. 99 and determined the impact was immaterial to the previously issued consolidated financial statements. Nonetheless, the Company has revised the previously reported consolidated statements of cash flows for the year ended June 30, 2023. This reclassification had no impact on the Company’s operating results or financial positions for the respective years. Use of estimates and assumptions 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 financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant accounting estimates required to be made by management include allowance for credit losses, the percentage of performance obligation completed at the reporting period. The Company evaluates its estimates and assumptions on an ongoing basis and its estimates on historical experience, current and expected future conditions and various other assumptions that management believes are reasonable under the circumstances based on the information available to management at the time these estimates and assumptions are made. Actual results and outcomes may differ significantly from these estimates and assumptions. Cash Cash consists of balances with the banks. The Company maintains all of its bank accounts in the United States, which are insured by Federal Deposit Insurance Corporation (“FDIC”). Accounts receivable, net Accounts receivables are carried at the original invoiced amount less an estimated allowance for expected credit losses based on the probability of future collection. The Company reviews its 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 grant credit to customers, without collateral, under normal payment terms. The Company uses a loss rate method to estimate the allowance for credit losses. For those past due balances over one year and other higher risk receivables identified by the Company are reviewed individually for collectability. The Company evaluates the expected credit loss of accounts receivable based on customer financial condition and historical collection information adjusted for current market economic conditions and forecasts of future economic performance when appropriate. Loss-rate approach is based on the historical loss rates and expectations of future conditions. The Company writes off potentially uncollectible accounts receivable against the allowance for credit losses if it is determined that the amounts will not be collected. As of June 30, 2024 and 2023, the Company recorded the allowance of credit loss of $ 54,066 and $ 25,909 , respectively. F- 9 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Investment in Other entity The Company assesses its investment in ABL Wuhan and determines that no significant influence over investee existed, as defined in ASC 323-10-15-6, and therefore accounts for the investment using the cost method of accounting. Under the cost method of accounting, the investment is measured at cost, adjusted for observable price changes and impairments, with changes recognized in net income. The investment in other entity that does not report net asset value is subject to qualitative assessment for indicators of impairments. On August 4, 2023, ABL Wuhan ceased to be the Company’s subsidiary and became the Company’s long-term investment. As of June 30, 2024, the Company’s investment in ABL Wuhan amounted to $ 15,741 and no impairment charges was recorded. Property and equipment Property and equipment are stated at cost less accumulated depreciation. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows: Useful life Furniture and fixtures 7 years Machinery equipment 5 years Vehicles 5 years Leasehold improvement Lesser of the lease term or estimated useful lives of the assets Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in other income or expenses in the consolidated statements of income (loss) and other comprehensive income (loss). Impairment of long-lived asset Long-lived assets, including plant, property and equipment, are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than the Company had originally estimated. When these events occur, the Company evaluates the impairment by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Company recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. The Company reviews the impairment of its right-of-use assets consistent with the approach applied for its other long-lived assets. No impairment charge was recognized for the years ended June 30, 2024 and 2023, respectively. Accounts payable The account payables are derived from logistic services and forwarding service providers. The balances arise from logistics services provider are usually settled within 7 to 30 days. F- 10 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Deferred offering costs Pursuant to ASC 340-10-S99-1, incremental offering costs directly attributable to an offering of equity securities are deferred and would be charged against the gross proceeds of the offering as a reduction of additional paid-in capital. These costs include legal fees related to the registration drafting and counsel, consulting fees related to the registration preparation, audit fees, SEC filing and print related costs, exchange listing costs, and road show related costs. Leases The Company evaluates the contracts it entered into to determine whether such contracts contain leases at inception. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee. Operating Leases A lease for which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lease as an operation lease. Operating leases are included in the line items right-of-use (ROU) asset, lease liabilities, current, and lease liabilities, non-current in the consolidated balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. For operating leases, the Company measures its lease liabilities based on the present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the lease or its incremental borrowing rate, which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. The Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. The Company measures ROU assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Company begins recognizing lease expense when the lessor makes the underlying asset available to the Company. Lease expenses for lease payments are recognized on a straight-line basis over the lease term. For leases with lease term less than one year (short-term leases), the Company has elected not to recognize a lease liability or ROU asset on its consolidated balance sheet. Instead, it recognizes the lease payments as expenses on a straight-line basis over the lease term. Short-term lease costs are immaterial to its consolidated statements of operations and cash flows. Finance leases Leases that transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. Lease cost for finance leases where the Company is the lessee includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation of right-of-use finance asset” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense”. Finance lease ROU assets are amortized over the shorter of their estimated useful lives or the terms of the respective leases. If the Company is reasonably certain to exercise the option to purchase the underlying asset at the end of lease term, the finance lease ROU assets are amortized to the end of useful life of the assets on a straight-line basis. F- 11 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Related parties The Company adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Non-controlling interest The non-controlling interests are presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interests in the operating results of the Company are presented on the face of the consolidated statements of income (loss) and comprehensive income (loss) as an allocation of the total income or loss between non-controlling interest holders and the shareholders of the Company. As of June 30, 2023, non-controlling interests represent 49 % non-controlling shareholders’ interests in ABL Wuhan. On August 4, 2023, ABL Wuhan ceased to be the Company’s subsidiary and became the Company’s investment in other entity. Therefore, the Company did not have non-controlling interest as of June 30, 2024. Fair value of financial instruments ASC 820, “Fair Value Measurements” (ASC 820) and ASC 825, “Financial Instruments” (ASC 825), requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value: Level 1 — Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities Level 2 — Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 — Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The carrying value of cash, accounts receivable from third parties and related parties, amount due from related parties, due to shareholders, other receivables, contract assets, accounts payable, other payables, dividend payable and accrued expenses and other current liabilities approximate fair value due to their short-term nature. For lease liabilities and loans payable, their carrying value approximate the fair value at the year-end, as the interest rates used to discount the host contracts approximate market rates. The Company noted no transfers between levels during any of the periods presented. The Company did not have any instruments that were measured at fair value on a recurring nor non-recurring basis as of June 30, 2024. Revenue recognition Revenues were presented under ASC 606 and all subsequent ASUs that modified ASC 606 for the years ended June 30, 2024 and 2023. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the Company applies the following steps: Step 1: Identify the contract (s) with a customer F- 12 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Revenue recognition (cont.) Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The Company generates revenue from providing cross-border ocean and airfreight solutions. No practical expedients were used when adoption ASC606. Revenue recognition policies are as follow: Revenue from cross-border freights solutions The Company provides comprehensive services in the United States for customers to transport goods from overseas to the United States and from the United States to overseas. Operating under service contracts, for goods entering the United States, after the goods arrive at a U.S. seaports or airports, the Company offers customs clearance, container unloading, storage, unpacking, packing, and transportation services to the locations specified by the customers. For customers shipping goods overseas, the Company provides cargo space arrangements, storage, packing, export customs clearance, and arranges transportation to seaports or airports for loading. The transaction price is determined based on the range of services provided and the volume of goods. The Company considers these comprehensive services as one performance obligation since these promises are not distinct within the context of the contract, and the bundle of integrated services represents a combined output. This performance obligation is satisfied over time as customers receive the benefits of these services during the process of transporting goods from one location to another. For goods entering the United States, the Company determines that the performance period for revenue recognition is between the pickup date and the date of completing delivery. For customers shipping goods overseas, the Company determines that the performance period for revenue recognition is between the container or cargo space confirmed date and the date of arrival at destination for customer orders with cargo space booking service. For customers shipping goods overseas, the Company determines that the performance period for revenue recognition is between pickup date and the date when the goods are departed from airport or port for customer orders without cargo space booking service.. The performance period may be estimated if the date of completing delivery or the departure date or arrival date has not occurred by the reporting date. Determining the performance period and the progress of the transportation as of the reporting date requires management’s estimation and judgement, which may impact the timing of revenue recognition. Principal and agent considerations In the Company’s transportation business, the Company utilizes independent contractors and third-party carriers and related party carriers in the performances of some transportation services as and when needed. U.S. GAAP requires us to evaluate, using a control model, whether the Company itself promises to provide services to the customers (as a principal) or to arrange for services to be provided by another party (as an agent). Based on the Company’s evaluation using a control model, the Company determined that in all of its major business activities, it serves as a principal rather than an agent within their revenue arrangements. Revenue and the associated purchased transportation costs are both reported on a gross basis within the consolidated statements of income (loss) and comprehensive income (loss). F- 13 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Disaggregation of revenues The Company disaggregates its revenue from types of services providing and the customer geographic of its customers, 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 revenues for years ended June 30, 2024 and 2023 is disclosed as below: By service type June 30, 2024 June 30, 2023 Cross-border ocean freights solutions $ 7,873,835 $ 8,073,685 Cross-border airfreights solutions 10,441,320 4,799,206 Total revenue $ 18,315,155 $ 12,872,891 By customer geographic location June 30, 2024 June 30, 2023 Asia-based customers $ 13,081,165 $ 5,531,468 U.S.-based customers 5,233,990 7,341,423 Total revenue $ 18,315,155 $ 12,872,891 By customer geographic Contract assets Contract assets represent estimated amounts for which the Company has the right to consideration for the services provided while a delivery is still in-transit and has not yet invoiced the customer. Upon completion of the performance obligations, which can vary in duration based upon the method of transport and billing the customer, these amounts become classified within accounts receivable. Contract assets increased by $ 84,766 or 189.5 % from $ 44,740 as of June 30, 2023 to $ 129,506 as of June 30, 2024. The increase was mainly due to more in-transit deliveries that has not yet invoiced the customers near the period ended June 30, 2024. Cost of revenues Cost of revenue primarily consists of the transportation and delivery costs, warehouse service charges, custom declaration and terminal charges, freight arrangement charges and other overhead cost allocation, which includes operating and financing lease-related costs, the depreciation expenses of property and equipment and others miscellaneous items. F- 14 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) General and administrative expenses General and administrative expenses primarily include salaries and staff benefits, repair and maintenance expense, depreciation on property and equipment, lease expenses, travelling and entertainment, bank charges, legal and professional fees, insurance expenses and other office expenses. 401(k) benefit plan 401(k) benefit plan covers substantially all employees and allows voluntary employee contributions up to the annually adjusted Inland Revenue Service (“IRS”) dollar limit. These voluntary contributions are matched equal to 100 % of the first 3 % of the employee’s compensation contributed and 50 % of contributions exceeding 3 % of eligible compensation, not to exceed 5 % of the total eligible compensation. The employees’ voluntary contributions and the Company’s matching contributions are 100 % vested immediately. The Company adopted the 401(k) benefit plan from April 2022. The expense related to matching employees’ contributions for the years ended June 30, 2024 and 2023 was $ 30,616 and $ 32,896 , respectively. Rental income The Company subleased portion of its offices area, warehouse and parking lots to third parties and related parties. The Company recognizes rental income over the sublease period. For the years ended June 30, 2024 and 2023, the Company recognized rental income amounted to $ 327,235 and $ 547,002 , respectively. Income taxes Before the Reorganization, the Company has elected to be taxed as an S Corporation for federal and state income tax purposes. As an S Corporation, the Company is not subject to federal income tax and state tax in Illinois. However, Illinois allows subchapter S corporations to elect to pay the Pass-through Entity (PTE) tax at entity level for tax years ending on or after December 31, 2021 and beginning prior to January 1, 2026. The PTE tax rate is equal to 4.95 % of the taxpayer’s net income for the taxation year. The S corporation making the election is liable for paying the PTE tax, and the shareholders will receive credit for the amount of PTE tax credit paid but shall be liable to pay any remaining tax based on their share of the pass-through entity’s income and credits. Illinois also taxes 1.5 % replacement tax on S corporation’s net taxable income and franchise tax based on the corporation’s paid-in-capital for the 12 months prior to the annual report filing date. The franchise tax is not applicable for the Company. After the Reorganization, the Company is subjected to U.S. federal income tax at 21 % and the 7.0 % state tax and the 2.5 % replacement tax in the state of Illinois. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. The Company accounts for uncertain tax positions in accordance with FASB ASC Topic No. 740, Accounting for Uncertainty in Income Taxes. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50 % likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. As of June 30, 2024 and June 30, 2023, the Company did not have a liability for unrecognized tax benefits. It is the Company’s policy to includes penalties and interest expense related to income taxes as a component of other expense and interest expense, respectively, as necessary. The Company’s historical tax years will remain open for examination by the local authorities until the statute of limitations has passed. F- 15 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Basic and diluted earnings (loss) per share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Foreign currency transactions Our reporting currency is the U.S. dollar. The functional currency of our operations, except for ABL Wuhan, is the U.S. dollar. The functional currency of ABL Wuhan is the RMB. The assets, liabilities, revenues, and expenses of ABL Wuhan are remeasured in accordance with ASC 830. For the year ended June 30, 2023, assets and liabilities of ABL Wuhan are translated into U.S. dollars based upon exchange rates prevailing at the end of each period. Revenues and expenses of ABL Wuhan are translated at average exchange rates during the reporting period. The resulting translation adjustment is included in accumulated other comprehensive loss. During the year ended June 30, 2024, ABL Wuhan ceased to be the Company’s subsidiary after August 4, 2023. There is no translated adjustment regarding ABL Wuhan since the date of deconsolidation. Commitments and contingencies In the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. If the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingency liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. Segment reporting The Company follows ASC 280, “ Segment Reporting.” The Company’s Chief Executive Officer or chief operating decision-maker reviews the consolidated financial results when making decisions about allocating resources and assessing the performance of the Company as a whole and hence, the Company has only one reportable segment. The Company operates and manages its business as a single segment. As the Company’s long-lived assets are substantially all located in the United States and substantially all the Company’s revenues are derived from within the United States. F- 16 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Concentrations and risks a. Concentration of credit risk The Company estimates credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents, accounts receivable, contract assets, other receivable and amounts due from related parties. The Company has designed their credit policies with an objective to minimize their exposure to credit risk. The maximum exposure of such assets to credit risk is their carrying amounts at the balance sheet dates. The Company maintains majority of the bank accounts at financial institutions in the United States, where there is $ 250,000 standard deposit insurance coverage limit per depositor, per FDIC-insured bank and per ownership category. As of June 30, 2024 and 2023, the cash deposited of $ 123,550 and $ 174,018 is within the insurance coverage limit, respectively. To limit the exposure to credit risk relating to deposits, the Company primarily places cash deposits with large financial institutions in the United States. The Company has adopted a credit policy of dealing with creditworthy counterparties to mitigate the credit risk from defaults. The management team conducts credit evaluations of its customers, and generally does not require collateral or other security from them. The Company establishes an accounting policy to provide for allowance for credit loss based on the individual customer’s financial condition, credit history, and the future economic conditions. Due from related parties’ balances are monitored on an ongoing basis with the result that the Company’s exposure to impairment is not significant. As of June 30, 2024 and 2023, none of the Company’s due from related parties are impaired. b. Foreign exchange risk ABL Wuhan which ceased to be our subsidiary on August 4, 2023 has functional currency in RMB. The value of the Chinese Yuan against the U.S. dollar is affected by the changes in China and United States economic conditions. We do not believe that we currently have any significant direct foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk. Also, by considering the volume of ABL Wuhan’s business, the impact of foreign exchange risk is limited. c. Interest rate risk Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Our exposure to interest rate risk primarily relates to the interest rates from our lessors and our private lenders. The shareholder loans bear no interest. We have not been exposed to material risks due to the fact that our leasing obligations’ interest rates and private loan’s interest are fixed at commence date of the leases and loans and we have not used any derivative financial instruments to manage our interest risk exposure. However, we cannot provide assurance that we will not be exposed to material risks due to changes in market interest rate in the future. d. Liquidity risk Liquidity risk arises through the excess of financial obligations over available financial assets due at any point in time. Our objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet our liquidity requirements at any point in time. The Company monitors and analyze its cash flow position, its ability to generate sufficient revenue sources in the future and its operating and capital expenditure commitments. The Company is historically funded the working capital needs primarily from operations, loans, as well as shareholder advances to the Company. F- 17 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Recent accounting pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. In August 2020, the FASB issued ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. This ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The new standard will become effective for us beginning January 1, 2024, using either a modified retrospective or a fully retrospective method of transition and early adoption is permitted. Management is currently evaluating the impact of the new standard on our financial statements. In June 2022, the FASB issued ASU No. 2022-03, “ Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ,” which clarifies and amends the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities. The guidance will be effective for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years. The Company does not expect the adoption to have a material impact on the consolidated financial statements. In November 2023, the FASB issued ASU No. 2023-07, “Improvements to Reportable Segment Disclosures” (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. This ASU will likely result in us including the additional required disclosures when adopted. Management is currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2024. In December 2023, the FASB issued ASU No. 2023-09, “Improvements to Income Tax Disclosures” (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income tax paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. This ASU will likely result in the required additional disclosures being included in the Company’s consolidated financial statements, once adopted. The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of income (loss) and comprehensive income (loss) and statements of cash flows. F- 18 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 — ACCOUNTS RECEIVABLE, NET Accounts receivable, net consists of the following: June 30, 2024 June 30, 2023 Accounts receivable – third-party customers $ 2,122,107 $ 1,399,585 Less: allowance for credit loss – third-party customers ( 39,955 ) ( 25,909 ) Accounts receivable from third-party customers, net $ 2,082,152 $ 1,373,676 Add: accounts receivable – related party customers $ 777,396 $ 44,627 Less: allowance for credit loss – related party customers ( 14,111 ) - Total accounts receivable, net $ 763,285 $ 44,627 Approximately $ 2.8 million or 95.8 % of the accounts receivable balance as of June 30, 2024 has been collected as of the report date. The movement of allowance for credit loss for the years ended June 30, 2024 and 2023 is as follows: June 30, 2024 June 30, 2023 Beginning balance $ 25,909 $ 150,459 Written off - ( 30,808 ) Addition (reversal) of provision 28,157 ( 93,742 ) Ending balance $ 54,066 $ 25,909 The Company recorded addition of allowance for credit loss of $ 28,157 and reversal of allowance for credit loss of $ 93,742 for the years ended June 30, 2024 and 2023, respectively. F- 19 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 — PROPERTY AND EQUIPMENT, NET Property, plant and equipment, net consists of the following: June 30, 2024 June 30, 2023 Furniture and Fixtures $ 49,887 $ 49,887 Machinery equipment 281,230 281,230 Vehicles 324,267 324,267 Leasehold improvement 82,050 82,050 Subtotal 737,434 737,434 Less: accumulated depreciation ( 392,551 ) ( 247,914 ) Property and equipment, net $ 344,883 $ 489,520 Depreciation expense recorded in general and administrative expense was $ 71,980 and $ 130,755 for the years ended June 30, 2024 and 2023, respectively. Depreciation expense recorded in cost of revenue was $ 72,657 and $ nil for the years ended June 30, 2024 and 2023, respectively. NOTE 5 — LEASES The Company has multiple lease agreements for warehouses, warehouse machinery and equipment and offices. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of June 30, 2024, the Company recognized additional operating lease liabilities of $ 1,358,796 compared to the June 30, 2023 balance of $ 2,334,415 , as result of entering into a new operating lease agreement. The ROU asset was recognized at the discount rate of 8.50 %, resulting in $ 2,094,498 on the commencement date. As of June 30, 2024, the Company recognized additional finance lease liabilities of $ 19,982 , as result of entering into a new finance lease agreement. The ROU asset was recognized at the discount rate of 8.50 %, resulting in $ 19,982 on the commencement date. Total operating lease expenses on offices, warehouses, and warehouse equipment for the years ended June 30, 2024 and 2023 were $ 1,005,686 and $ 826,284 , respectively. Total finance lease expenses on warehouse machinery and equipment for the years ended June 30, 2024 and 2023 were $ 32,525 and $ 33,756 , respectively. Amortization of finance lease right-of-use assets were $ 30,712 and $ 31,780 for the years ended June 30, 2024 and 2023, respectively. The following table includes supplemental cash flow and non-cash information related to leases: June 30, 2024 June 30, 2023 Cash paid of amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 846,992 $ 833,365 Operating cash flows from finance leases $ 1,813 $ 1,976 Financing cash flows from finance leases $ 29,628 $ 20,640 Right-of-use assets obtained in exchange for lease obligations: Operating lease liabilities $ 2,094,498 $ 124,600 Finance lease liabilities $ 19,982 $ 32,107 F- 20 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 — LEASES (cont.) The weighted average remaining lease terms and discount rates for all of operating lease and finance leases is as follows: June 30, 2024 June 30, 2023 Weighted-average remaining lease term (years): Operating lease 3.05 years 1.55 years Finance lease 1.31 years 1.63 years Weighted average discount rate: Operating lease 6.30 % 3.42 % Finance lease 6.51 % 4.11 % The following is a schedule of maturities of operating and finance lease liabilities as of June 30, 2024: Operating leases Twelve months ending June 30, Repayment 2025 $ 1,391,267 2026 1,245,608 2027 529,084 2028 548,629 2029 521,614 Total future minimum lease payments 4,236,202 Less: imputed interest ( 542,991 ) Total operating lease liabilities $ 3,693,211 Financing leases Twelve months ending June 30, Repayment 2025 $ 38,961 2026 14,994 2027 3,154 Total future minimum lease payments 57,109 Less: imputed interest ( 2,030 ) Total finance lease liabilities $ 55,079 F- 21 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 — ACCRUED LIABILITIES AND OTHER PAYABLES Accrued liabilities and other payables comprise the following amounts relating to the operation of the Company June 30, 2024 June 30, 2023 Credit card payables $ 235,673 $ 141,645 Payroll liabilities 120,379 58,853 Accrued expense 435,019 112,044 Other payables (a) 544,733 13,159 Total $ 1,335,804 $ 325,701 Note (a): The balance mainly consists of payable related to initial offering cost of $ 541,819 and $ nil as of June 30, 2024 and 2023, respectively. NOTE 7 — LOANS PAYABLE The Company obtained multiple loans to finance the purchase of vehicles and warehouse machinery and obtained other loans to support its working capital needs. The loan balance consists of the following: June 30, 2024 June 30, 2023 Equipment loans $ 84,357 $ 148,338 Vehicle loans 146,283 202,265 Other loans 652,697 467,684 Total 883,337 818,287 Less: loan payable, current ( 746,962 ) ( 586,688 ) Loan payable, non-current $ 136,375 $ 231,599 Equipment loans On December 7, 2020, the Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 48,033 at a fixed interest rate of 3.99 % per annum with a maturity date of December 1, 2025 . The loan balance was $ 15,427 and $ 25,211 as of June 30, 2024 and 2023, respectively. On December 3, 2020, the Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 3,150 at a fixed interest rate of 6.75 % per annum with a maturity date of December 2, 2023 . The loan balance was $ nil and $ 570 for as of June 30, 2024 and 2023, respectively. On March 11, 2021, the Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 3,150 at a fixed interest rate of 6.75 % per annum with a maturity date of March 10, 2024 . The loan balance was $ nil and $ 848 as of June 30, 2024 and 2023, respectively. F- 22 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 — LOANS PAYABLE (cont.) On March 9, 2021, the Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 12,700 at a fixed interest rate of 3.99 % per annum with a maturity date of July 6, 2025 . The loan balance was $ 3,642 and $ 6,867 as of June 30, 2024 and 2023, respectively. On April 7, 2021, the Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 12,700 at a fixed interest rate of 3.99 % per annum with a maturity date of July 6, 2025 . The loan was guaranteed by Mr. Henry Liu, the Chairman of the Board and CEO. The loan balance was $ 3,642 and $ 6,867 as of June 30, 2024 and 2023, respectively. On June 4, 2021, the Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 26,800 at a fixed interest rate of 3.79 % per annum with a maturity date of June 3, 2025 . The loan balance was $ 7,085 and $ 13,907 as of June 30, 2024, and 2023, respectively. On June 14, 2021, the Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 20,724 at a fixed interest rate of 6 % per annum with a maturity date of August 06, 2024 . The loan balance was $ 1,252 and $ 8,504 as of June 30, 2024 and 2023, respectively. On July 13, 2021, the Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 8,465 at a fixed interest rate of 6 % per annum with a maturity date of June 30, 2024 . The loan balance was $ 256 and $ 3,234 as of June 30, 2024 and 2023, respectively. On September 28, 2021, the Company entered into another equipment loan with Toyota Commercial Finance for a principal amount of $ 23,600 at a fixed interest rate of 3.54 % per annum with a maturity date of June 30, 2024 . The loan balance was $ 690 and $ 8,812 as of June 30, 2024 and 2023, respectively. On February 21, 2023, the Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 29,705 at a fixed interest rate of 7.90 % per annum with a maturity date of February 20, 2027 . The loan balance was $ 20,823 and $ 27,571 as of June 30, 2024 and 2023, respectively. On June 10, 2021, the Company entered into an equipment loan with Amur Equipment Finance for a principal amount of $ 41,239 at a fixed interest rate of 13.92 % per annum with a maturity date of June 9, 2026 . The loan is personally guaranteed by Henry Liu, the Chairman of the Board and CEO. The loan term was 5 years . The loan balance was $ 18,972 and $ 27,077 as of June 30, 2024 and 2023, respectively. On September 9, 2021, the Company entered into an equipment loan with Hatachi Capital America Corp. for a principal amount of $ 28,450 at a fixed interest rate of 9.49 % per annum with a maturity date of March 15, 2026 . The loan balance was $ 12,569 and $ 18,871 as of June 30, 2024 and 2023, respectively. The Company made the total principal repayments of $ 73,149 and $ 68,230 in connection with the above equipment loans during the years ended, 2024 and 2023, respectively. Interest expenses for the above-mentioned equipment loans amounted to $ 9,168 and $ 11,511 for years ended, 2024 and 2023, respectively. Vehicle loans On May 20, 2020, the Company entered into a vehicle loan with BMW Financial Services for a principal amount of $ 77,844 at a fixed interest rate of 0.9 % per annum with a maturity date of June 4, 2025 . The loan balance was $ 15,853 and $ 31,567 as of June 30, 2024 and 2023, respectively. On July 29, 2021, the Company entered into a vehicle loan with AutoNation Honda O’Hare for a principal amount of $ 41,851 at a fixed interest rate of 1.90 % per annum with a maturity date of August 10, 2025 . The loan was guaranteed by Mr. Henry Liu, the Chairman of the Board and CEO. The loan balance was $ 12,540 and $ 23,076 as of June 30, 2024 and 2023, respectively. F- 23 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 — LOANS PAYABLE (cont.) On June 3, 2022, the Company entered into a vehicle loan with Tesla, Inc. for a principal amount of $ 101,050 at a fixed interest rate of 3.24 % per annum with a maturity date of June 18, 2027 . The loan balance was $ 62,630 and $ 82,203 as of June 30, 2024 and 2023, respectively. On January 23, 2023, the Company entered into a vehicle loan with Tesla, Inc. for a principal amount of $ 68,540 at a fixed interest rate of 5.34 % per annum with a maturity date of February 9, 2029 . The loan balance was $ 55,259 and $ 65,418 as of June 30, 2024 and 2023, respectively. The Company made the total principal repayments of $ 62,169 and $ 52,233 in connection with the above vehicle loans during the years ended, 2024 and 2023, respectively. Interest expenses for the above-mentioned above vehicle loans amounted to $ 6,188 and $ 5,352 for years ended, 2024 and 2023, respectively. Other loans June 30, 2024 June 30, 2023 Loan A $ 150,000 $ 300,000 Loan B — 17,684 Loan C 200,000 100,000 Loan D 50,000 50,000 Loan E 175,000 — Loan F 77,697 — Total $ 652,697 $ 467,684 (a) The Company entered a loan of $ 300,000 with an unrelated party on March 1, 2022. The loan is unsecured, with a fixed interest of 15 % per annum and payable on monthly basis, for 6 months period and matured on September 1, 2022 . On September 1, 2022, both parties agreed to extend the loan’s principal payment term to on demand. The Company has made repayment of $ 150,000 during the year ended June 30, 2024. (b) The Company entered a loan of $ 150,000 with an unrelated party on January 28, 2022. The loan is personally guaranteed by Henry Liu, the Chairman of the Board and CEO, with a fixed interest of 9.99 % per annum for 18 months period and matured on August 14, 2023 . The monthly payment is $ 9,014 blending of interest and principal. (c) The Company entered a loan of $ 200,000 with an unrelated party on July 26, 2021. The loan is unsecured, with no interest bearing for 6 months period and matured on January 25, 2022. The Company paid a principal of $ 100,000 during the year ended June 30, 2021 and both parties agreed to extend the remaining principal balance of $ 100,000 payment term to on demand. On April 8, 2024, the Company entered another loan of $ 100,000 with the same party. The loan is unsecured, with no interest bearing for a 6-month period and matured on September 7, 2024 . (d) The Company entered a loan agreement of 50,000 with an employee on October 27, 2021. The loan is non-interest bearing, for a 12-month period, and matured on October 26, 2022 . On October 26, 2022, both parties agreed to extend the loan term to on demand. (e) The Company entered a loan agreement of $ 100,000 with an unrelated party on July 3, 2023. The loan is non-interest bearing, for a 6-month period and both parties agreed to extend the remaining principal balance of $ 100,000 payment term to on demand. On April 10, 2024, the Company entered another loan agreement of $ 75,000 with same party. The loan is non-interest bearing, for a 6-month period, and matured on September 9, 2024 . (f) The Company entered a loan of $ 125,000 with an unrelated party on August 17, 2023. The loan is personally guaranteed by Henry Liu, the Chairman of the Board and CEO, with a fixed interest of 16.00 % per annum for 24 months period and matured on August 16, 2025 . The monthly payment is $6,120 blending of interest and principal. F- 24 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 — LOANS PAYABLE (cont.) The Company made the total principal repayments of $ 228,978 and $ 125,949 in connection with the above other loans during the years ended, 2024 and 2023, respectively. Interest expenses for the above-mentioned other loans amounted to $ 76,967 and $ 104,528 for years ended, 2024 and 2023, respectively. The repayment schedule for the Company’s loans is as follows: Twelve months ending June 30, Vehicle loans Equipment loans Others Total 2025 $ 62,169 $ 53,988 $ 648,440 $ 764,597 2026 37,167 31,936 12,240 81,343 2027 35,353 5,790 — 41,143 2028 13,406 — — 13,406 2029 8,937 — — 8,937 Total undiscounted borrowings 157,032 91,714 660,680 909,426 Less: imputed interest ( 10,749 ) ( 7,357 ) ( 7,983 ) ( 26,089 ) Total $ 146,283 $ 84,357 $ 652,697 $ 883,337 NOTE 8 — GENERAL AND ADMINISTRATIVE EXPENSES June 30, 2024 June 30, 2023 Payroll expense $ 2,328,547 $ 1,197,082 Staff benefit expense 407,894 235,008 Office expense 394,630 179,547 Professional expense 381,932 104,177 Travelling and entertainment 188,679 161,290 Repair and maintenance 151,358 112,034 Lease expense 91,670 102,382 Depreciation expense 71,980 130,755 Insurance 38,470 31,337 Advertising 29,537 11,325 Other expense 27,943 35,268 Motor expense 24,433 29,949 Bank charges 1,117 1,158 Total $ 4,138,190 $ 2,331,312 F- 25 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 — RELATED PARTY TRANSACTIONS The relationship of related parties is summarized as follow: Name of Related Party Relationship to the Company Mr. Henry Liu Chairman of the Board, CEO, and an ultimate shareholder of the Company Mr. Shuai Li President, COO, and an ultimate shareholder of the Company Weship Transport Inc. (“Weship”) Controlled by Mr. Henry Liu American Bear Logistics (Wuhan) Co., Ltd. (“ABL Wuhan”) The Company owns 5% of equity interest LLL Intermodal Inc. (“Intermodal”) Controlled by Mr. Henry Liu a) Summary of balances with related parties Due from related parties consist of mainly rent receivables from the following: June 30, 2024 June 30, 2023 Due from Weship $ 422,742 $ 731,243 Due from Intermodal 18,537 14,887 Total $ 441,279 $ 746,130 The Company has collected approximately $ nil from Weship as of the report date, and is planning to collect the remaining receivable balance from three related parties by the end of December 2024. b) Summary of balances payable to related parties June 30, 2024 June 30, 2023 Account payable to Weship $ 175,172 $ 365,413 Account payable to ABL Wuhan 52,000 — Account payable to Intermodal 550 — Total $ 227,722 $ 365,413 c) Summary of balances receivable from related parties June 30, 2024 June 30, 2023 Account receivable from Weship $ 32,435 $ 44,627 Account receivable from ABL Wuhan 744,961 — Total $ 777,396 $ 44,627 F- 26 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 — RELATED PARTY TRANSACTIONS (cont.) d) Summary of related parties’ transactions For the years ended June 30, 2024 2023 Revenue from Weship $ 28,870 $ 109,314 Revenue from ABL Wuhan $ 1,835,377 $ — Cost of revenue charged by Weship $ 1,555,680 $ 1,598,143 Rental income from Weship $ 288,185 $ 481,252 Cost of revenue charged by Intermodal $ 564,519 $ 325,237 Cost of revenue charged by ABL Wuhan $ 162,625 $ — During the years ended June 30, 2024 and 2023, the Company had the following transactions with its related parties — Weship, ABL Wuhan and Intermodal (a) The Company provides logistic forwarding services to Weship and ABL Wuhan and charges Weship and ABL Wuhan at its regular market rate for the services provided. (b) Weship is one of the Company’s vendors for truck delivery service. (c) The Company subleased portion of its warehouse space to Weship for rental income. The Company subleased its warehouse in Chicago to Weship in July 2023 and again for the period from January to June 2024. The Company also subleased another warehouse in Los Angeles beginning in August 2023. (d) Intermodal is one of the Company’s vendors for truck delivery service. (e) ABL Wuhan provides labor force and certain cross-border freight consolidation and forwarding services and is one of our cross-border freight consolidation and forwarding service providers. e) Due to shareholders June 30, 2024 June 30, 2023 Due to shareholders, end $ ( 1,018,281 ) $ ( 90,000 ) The balance with the shareholders is unsecured, interest free, and due on demand. The Company had balance of due to shareholder Henry Liu of $ 986,923 and $ 90,000 and Shuai Li of $ 31,358 and $ nil as of June 30, 2024 and 2023, respectively. f) Dividend payable to shareholders June 30, 2024 June 30, 2023 Dividend payable to Mr. Henry Liu $ ( 27,056 ) $ ( 27,056 ) Dividend payable to Mr. Shuai Li ( 71,794 ) ( 71,794 ) Total $ ( 98,850 ) $ ( 98,850 ) No non-taxable dividend was declared to shareholders for the year ended June 30, 2024. During the year ended June 30, 2023, ABL Chicago declared non-taxable dividend of total $ 200,000 to its two shareholders from its accumulated retained earnings, of which $ 101,150 of dividends declared was offset against balances due from shareholders. F- 27 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 — RELATED PARTY TRANSACTIONS (cont.) g) Salaries and employee benefits paid to major shareholders June 30, 2024 June 30, 2023 Mr. Henry Liu $ 97,597 $ 96,647 Mr. Shuai Li 104,628 101,352 Total $ 202,225 $ 197,999 NOTE 10 — TAXES Corporate Income Taxes Before the Reorganization, the Company was elected to be taxed as an “S Corporation” under the provisions of the Internal Revenue Code and comparable state income tax law. As an S Corporation, the Company is not subject to Federal income tax and Illinois State tax. Taxable income “pass through” to the personal tax returns of the owners. However, Illinois allows subchapter S corporations to elect to pay the Pass-through Entity (“PTE”) tax at entity level for tax years ending on or after December 31, 2021 and beginning prior to January 1, 2026. The PTE tax rate is equal to 4.95 % of the taxpayer’s net income for the taxable year. The S corporation making the election is liable for paying the PTE tax, and the shareholders will receive credit for the amount of PTE tax credit paid but shall be liable to pay any remaining tax based on their share of the pass-through entity’s income and credits. Illinois also taxes 1.5 % replacement tax on S corporation’s net taxable income. The Company terminated its status as a Subchapter S Corporation as of June 30, 2024, in connection with its Reorganization. As a C Corporation, the Company combined statutory income tax rate is 28 % in each period, representing a U.S. federal income tax rate of 21.0 % and 7 % state income tax for Illinois. Also, as a C Corporation, the Company is subjected to Illinois State replacement tax at rate of 2.5 % and no PTE tax is applicable. The Company’s PRC subsidiary, Wuhan ABL, which ceased to a subsidiary since August 4, 2023, is governed by the income tax laws of the PRC and is qualified as small and micro-sized enterprises with annual taxable income less than RMB 3 million and is subjected to 5 % of the preferential tax rate. In conjunction with the termination of the Subchapter S corporation status, the C Corporation deferred tax assets and liabilities were estimated for future tax consequences attributable to difference between the financial statement carrying amounts of the Company’s existing assets and liabilities and their respective tax bases. The deferred tax assets and liabilities were measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of the change in tax rates resulting from becoming a C Corporation was recognized as a $ 72,152 decrease to the net deferred tax assets to $ 89,581 and an decrease to the provision for income taxes of $ 186,485 during the year ended June 30, 2024. As of June 30, 2024 and 2023, the Company did not have an accrued liability for uncertain tax positions and does not anticipate recognition of any significant liabilities for uncertain tax positions during the next 12 months. For the years ended June 30, 2024 and 2023, no amounts were incurred for income tax uncertainties or interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company’s tax years since its formation remain subject to possible income tax examination by its major taxing authorities for all periods. F- 28 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 — TAXES (cont.) The provision for income tax for the years ended June 30, 2024 and 2023 consists of the following: June 30, 2024 June 30, 2023 Current income tax expense $ 46,996 $ 32,829 Deferred income tax expense ( 114,333 ) 32,239 Total income tax (credit) provision $ ( 67,337 ) $ 65,068 The following table reconciles the statutory tax rate to the Company’s effective tax for the years ended June 30, 2024 and 2023: June 30, 2024 June 30, 2023 Income (loss) before tax $ ( 295,614 ) $ 1,008,798 Statutory state tax rate 21 % 6.45 % Income tax (credit) expense at the federal statutory rate $ ( 62,079 ) $ 65,068 Illinois state tax/PET tax ( 2,171 ) — Illinois replacement tax ( 74 ) — Federal income tax 32,358 — Non-capital loss not utilized adjustment ( 35,371 ) — Income tax provision ( 67,337 ) 65,068 F- 29 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 — TAXES (cont.) The Company’s deferred tax assets and liabilities consist of the following: June 30, 2024 June 30, 2023 Deferred tax assets: Allowance for credit loss $ 16,490 $ 1,671 Lease liability – operating 1,126,429 150,570 Lease liability – financing 16,799 4,175 Total deferred tax assets 1,159,718 156,416 Deferred tax liabilities: Property and equipment - ( 31,575 ) Right of use assets – operating ( 1,058,707 ) ( 146,484 ) Right of use assets – financing ( 11,430 ) ( 3,109 ) Total deferred tax liabilities ( 1,070,137 ) ( 181,168 ) Deferred tax assets (liabilities), net $ 89,581 $ ( 24,752 ) NOTE 11 — STOCKHOLDERS’ EQUITY Common Stocks The Company was incorporated under the laws of the State of Nevada on August 28, 2023. In accordance with the Company’s Articles of Incorporation, the Company is authorized to issue 50,000 shares of common stock with par value of $ 0.0001 . 50,000 shares of common stocks of the Company were issued on August 28, 2023. On October 25, 2023, the Company amended its Articles of Incorporation to increase its number of authorized common stocks from 50,000 shares to 200,000,000 shares. On March 29, 2024, a 120-for-1 share split was conducted by the Company. After the share split and as of the date of this report, the issued share capital of the Company consists of $ 600 divided into 6,000,000 common shares, par value of $ 0.0001 each. Additional Paid-in Capital The Company transferred its accumulated retained earnings as of September 23, 2023 from retained earnings to additional paid-in capital as the original owners’ contribution to the capital of the Company upon the Reorganization and the termination of S corporation for ABL Chicago. F- 30 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 12 — EARNINGS PER SHARE For the years ended June 30, 2024 and 2023, the Company has no stock options and warrants issued and no impact on diluted earnings per share. For the years ended June 30, 2024 2023 Net (loss) income attributable to the Company $ ( 225,252 ) $ 983,602 Weighted average number of common shares outstanding – Basic and Diluted 6,000,000 6,000,000 (Loss) earnings per share – Basic and Diluted $ ( 0.04 ) $ 0.16 NOTE 13 — CONCENTRATIONS AND CREDIT RISK The Company had three and one third-party customers and one and no related-party customer individually generated over 10% of the Company’s total revenue for the years ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and 2023, the Company had one and two third-party customers and no and one related-party customer individually represented over 10% of account receivables, respectively. The Company had one and no third-party suppliers and one and one related-party suppliers individually represented over 10% of the Company’s cost of revenue for the years ended June 30, 2024 and 2023, respectively. The Company had one and no third-party supplier and one and one related-party supplier represented over 10% of the Company’s accounts payable as of June 30, 2024 and 2023, respectively. NOTE 14 — COMMITMENTS AND CONTINGENCIES Contractual Commitments As of June 30, 2024, the Company’s contractual obligations consist of the following: Contractual Obligations Total Less than 1 year 1 – 3 years 3 – 5 years More than 5 years Operating lease obligations $ 4,236,202 $ 1,391,267 $ 1,774,692 $ 1,070,243 $ — Finance lease obligations 57,109 38,961 18,148 — — Vehicle loans 157,032 62,169 72,520 22,343 — Equipment loans 91,714 53,988 37,726 — — Other loans 660,680 648,440 12,240 — — Total $ 5,202,737 $ 2,194,825 $ 1,915,326 $ 1,092,586 $ — F- 31 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 14 — COMMITMENTS AND CONTINGENCIES (cont.) Contingencies The Company may be involved in certain legal proceedings, claims and disputes arising from the commercial operations, which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. Although the Company can give no assurances about the resolution of pending claims, litigation or other disputes and the effect such outcomes may have on the Company, the Company believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on the Company’s consolidated financial position or results of operations or liquidity as of June 30, 2024 and 2023. NOTE 15 — SUBSEQUENT EVENTS The Company evaluated all events and transactions that occurred after June 30, 2024 up through the date the Company issued these consolidated financial statements, for disclosure or recognition in the consolidated financial statements of the Company as appropriate. Incorporation of A Subsidiary On July 10, 2024, the Company incorporated a wholly-owned subsidiary, Sichuan Hupan Jincheng Qiye Guanli Limited, in China, with registered capital of RMB 50 million (approximately $ 6.9 million). Initial Public Offering On July 1, 2024, the Company closed its IPO of 1,500,000 shares of its common stock at an IPO price of $ 4.50 per share for aggregate gross proceeds of approximately $ 6.75 million from the offering. The total net proceeds to the Company from the IPO, after deducting discounts, expense allowance, and expenses, were approximately $ 5.79 million. Pursuant to the terms and conditions of the underwriting agreement, dated as of June 28, 2024, by and between The Benchmark Company, LLC and Axiom Capital Management, Inc., (the “Representative”) and the Company (the “Underwriting Agreement”), the underwriters had an overallotment option, exercisable for 30 days by July 30, 2024, to purchase up to an additional 225,000 shares from the Company at the offering price less of $ 4.50 the underwriting discount and commissions to cover over-allotments. As of the reporting date, no such option has been exercised. Representative’s Warrants Pursuant to the Underwriting Agreement, the Company issued to the Representative and its designee warrants (the “Representative’s Warrants”) to purchase 75,000 shares of common stock. The Representative’s Warrants are exercisable at a per share exercise price of $ 4.50 equal to IPO price and are exercisable at any time and from time to time, in whole or in part, during the period commencing on December 30, 2024 and terminating on June 30, 2029. Neither the Representative’s Warrants nor any of the shares issued upon exercise of the Representative’s Warrants may be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities by any person, for a period of six months immediately following the commencement of sales of the offering. F- 32 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.