Quanome Technologies, Inc. 10-Q

Item 1. Financial Statements LAKESIDE HOLDING LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2025 AND JUNE 30, 2024 (UNAUDITED) As of March 31, 2025 As of June 30, 2024 ( unaudited) ( audited ) ASSETS CURRENT ASSETS Cash $ 1,499,257 $ 123,550 Accounts receivable – third parties, net 1,397,499 2,082,152 Accounts receivable – related party, net 306,295 763,285 Prepayment and other receivable 91,426 - Contract assets 71,331 129,506 Inventories, net 216,489 - Due from related parties 856,570 441,279 Loan to a third party 573,546 - Total current assets 5,012,413 3,539,772 NON-CURRENT ASSETS Investment in other entity 15,741 15,741 Property and equipment at cost, net of accumulated depreciation 533,993 344,883 Intangible asset, net 386,811 - Right of use operating lease assets 3,619,138 3,471,172 Right of use financing lease assets 102,398 37,476 Deferred tax asset - 89,581 Deferred offering costs - 1,492,798 Deposit and prepayment 269,269 202,336 Total non-current assets 4,927,350 5,653,987 TOTAL ASSETS $ 9,939,763 $ 9,193,759 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payables – third parties $ 1,577,044 $ 1,161,858 Accounts payables – related parties 68,895 227,722 Accrued liabilities and other payables 1,448,588 1,335,804 Current portion of obligations under operating leases 2,389,965 1,186,809 Current portion of obligations under financing leases 48,617 37,619 Loans payable, current 617,682 746,962 Contract liabilities 42,168 - Dividend payable - 98,850 Tax payable 106,433 79,825 Due to shareholders - 1,018,281 Convertible notes - current 484,541 - Total current liabilities 6,783,933 5,893,730 NON-CURRENT LIABILITIES Loans payable, non-current 156,509 136,375 Loan payable to a related party 124,176 - Deferred tax liabilities 96,703 - Obligations under operating leases, non-current 1,815,211 2,506,402 Obligations under financing leases, non-current 72,651 17,460 Convertible note - non-current 140,792 - Total non-current liabilities 2,406,042 2,660,237 TOTAL LIABILITIES $ 9,189,975 $ 8,553,967 Commitments and Contingencies EQUITY Common stocks, $ 0.0001 par value, 200,000,000 shares authorized, 7,500,000 and 6,000,000 issued and outstanding as of March 31, 2025 and June 30, 2024, respectively 750 600 Subscription receivable - ( 600 ) Additional paid-in capital 5,113,511 642,639 Statutory reserve 7,014 - Deficits ( 4,365,856 ) ( 5,819 ) Accumulated other comprehensive income ( 5,631 ) 2,972 Total equity 749,788 639,792 TOTAL LIABILITIES AND EQUITY $ 9,939,763 $ 9,193,759 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 LAKESIDE HOLDING LIMITED CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2025 AND 2024 (UNAUDITED) Nine Months Ended March 31, Three Months Ended March 31, 2025 2024 2025 2024 Revenue from cross-border freight solutions – third party $ 9,559,567 $ 12,457,709 $ 2,857,504 $ 3,817,726 Revenue from cross-border freight solutions – related parties 1,205,354 1,067,633 448,360 643,037 Revenue from distribution of pharmaceutical products – third parties 715,362 — 497,276 — Total revenue 11,480,283 13,525,342 3,803,140 4,460,763 Cost of revenue from cross-border freight solutions – third party 8,756,778 9,367,882 2,602,784 3,038,231 Cost of revenue from cross-border freight solutions – related party 1,286,380 1,469,845 365,330 446,968 Cost of revenue from pharmaceutical products – third parties 240,966 — 119,175 — Total cost of revenue 10,284,124 10,837,727 3,087,289 3,485,199 Gross profit 1,196,159 2,687,615 715,851 975,564 Operating expenses: Selling expenses 158,118 — 103,630 — General and administrative expenses 5,429,398 2,803,311 1,680,339 962,481 Loss from deconsolidation of a subsidiary — 73,151 — — Provision (reversal) of allowance for expected credit loss 8,021 22,198 6,065 ( 27,393 ) Total operating expenses 5,595,537 2,898,660 1,790,034 935,088 (Loss) income from operations ( 4,399,378 ) ( 211,045 ) ( 1,074,183 ) 40,476 Other income Other income, net 310,796 190,887 109,255 102,438 Interest expense ( 156,266 ) ( 79,400 ) ( 87,274 ) ( 25,536 ) Total other income 154,530 111,487 21,981 76,902 (Loss) income before income taxes ( 4,244,848 ) ( 99,558 ) ( 1,052,202 ) 117,378 Income tax expense 108,175 130,735 18,594 104,610 Net (loss) income ( 4,353,023 ) ( 230,293 ) ( 1,070,796 ) 12,768 Less: net loss attributable to non-controlling interest — ( 3,025 ) — — Net (loss) income attributable to the Company ( 4,353,023 ) ( 227,268 ) ( 1,070,796 ) 12,768 Other comprehensive (loss) income: Foreign currency translation (loss) income ( 8,603 ) 3,122 3,583 — Comprehensive (loss) income ( 4,361,626 ) ( 227,171 ) ( 1,067,213 ) 12,768 Less: comprehensive loss attributable to non-controlling interest — ( 3,119 ) — — Comprehensive (loss) income attributable to the Company $ ( 4,361,626 ) $ ( 224,052 ) $ ( 1,067,213 ) $ 12,768 Loss per share – basic and diluted $ ( 0.58 ) $ ( 0.04 ) $ ( 0.14 ) $ — Weighted Average Shares Outstanding – basic and diluted 7,500,000 6,000,000 7,500,000 6,000,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 LAKESIDE HOLDING LIMITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2025 AND 2024 (UNAUDITED) For The Three Months Ended March 31, 2024 Common Shares Amount Subscription Receivable Additional Paid in Capital Retained Earnings (Deficits) Accumulated Other Comprehensive Income (Loss) Non- controlling Interest Total Balance at December 31, 2023 6,000,000 $ 600 $ ( 600 ) $ 642,639 $ ( 20,603 ) $ 2,972 $ — $ 625,008 Net income — — — — 12,768 — — 12,768 Balance at March 31, 2024 6,000,000 $ 600 $ ( 600 ) $ 642,639 $ ( 7,835 ) $ 2,972 $ — $ 637,776 For The Nine Months Ended March 31, 2024 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, 2023 6,000,000 $ 600 $ ( 600 ) $ — $ 862,072 $ ( 244 ) $ ( 7,068 ) $ 854,760 Net loss for the period — — — — ( 227,268 ) — ( 3,025 ) ( 230,293 ) Termination of S Corporation upon reorganization — — — 642,639 ( 642,639 ) — — — Deconsolidation of a subsidiary — — — — — — 10,187 10,187 Foreign currency translation adjustment — — — — — 3,216 ( 94 ) 3,122 Balance at March 31, 2024 6,000,000 $ 600 $ ( 600 ) $ 642,639 $ ( 7,835 ) $ 2,972 $ — $ 637,776 For The Three Months Ended March 31, 2025 Common Shares Amount Subscription Receivable Additional Paid in Capital Statutory Reserves Deficits Accumulated Other Comprehensive Income (Loss) Total Balance at December 31, 2024 7,500,000 $ 750 $ — $ 4,942,791 $ — $ ( 3,288,046 ) $ ( 9,214 ) $ 1,646,281 Net loss — — — — — ( 1,070,796 ) — ( 1,070,796 ) Statutory reserve — — — — 7,014 ( 7,014 ) — — Foreign currency translation adjustment — — — — — — 3,583 3,583 Issuance of convertible note — — — 170,720 — — — 170,720 Balance at March 31, 2025 7,500,000 $ 750 $ — $ 5,113,511 $ 7,014 $ ( 4,365,856 ) $ ( 5,631 ) $ 749,788 For The Nine Months Ended March 31, 2025 Common Shares Amount Subscription Receivable Additional Paid in Capital Statutory Reserves Deficits Accumulated Other Comprehensive Income (Loss) Total Balance at June 30, 2024 6,000,000 $ 600 $ ( 600 ) $ 642,639 $ — $ ( 5,819 ) $ 2,972 $ 639,792 Paid in capital — — 600 — — — — 600 Net loss — — — — — ( 4,353,023 ) — ( 4,353,023 ) Statutory reserve — — — — 7,014 ( 7,014 ) — — Initial public offering, net of share issuance costs 1,500,000 150 — 4,300,152 — — — 4,300,302 Foreign currency translation adjustment — — — — — — ( 8,603 ) ( 8,603 ) Issuance of convertible note — — — 170,720 — — — 170,720 Balance at March 31, 2025 7,500,000 $ 750 $ — $ 5,113,511 $ 7,014 $ ( 4,365,856 ) $ ( 5,631 ) $ 749,788 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 LAKESIDE HOLDING LIMITED CONDENSSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 2025 AND 2024 (UNAUDITED) For the Nine Months Ended March 31, 2025 2024 Cash flows from operating activities: Net loss $ ( 4,353,023 ) $ ( 230,293 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation – G&A 86,413 53,985 Depreciation – cost of revenue 62,441 54,493 Amortization of intangible asset 32,056 — Amortization and interest expense of operating lease assets 1,515,688 658,713 Depreciation of right-of-use finance assets 24,081 22,548 Provision of allowance for expected credit loss 8,021 22,198 Interest expense of convertible note 40,541 — Deferred tax expense 81,567 36,264 Interest income ( 11,645 ) — Loss from derecognition of shares in subsidiary — 73,151 Changes in operating assets and liabilities: Accounts receivable – third parties 666,858 ( 283,936 ) Accounts receivable – related parties 466,764 ( 565,824 ) Contract assets 58,175 ( 58,498 ) Inventories, net ( 216,489 ) — Due from related parties ( 41,230 ) 212,342 Due to related party — 14,536 Prepayment and other deposit ( 158,359 ) 2,623 Accounts payables – third parties 415,186 493,085 Accounts payables – related parties ( 158,827 ) 57,420 Contract liabilities 42,168 — Accrued expense and other payables 393,633 111,122 Tax payable 26,608 94,471 Operating lease liabilities ( 1,151,931 ) ( 606,756 ) Net cash (used in) provided by operating activities ( 2,171,304 ) 161,644 Cash flows from investing activities: Purchase of furniture and equipment ( 36,072 ) — Payment for leasehold improvement ( 76,456 ) — Net cash payment for asset acquisition ( 552,721 ) — Loan to a third party ( 561,901 ) — Payment made for investment in other entity — ( 29,906 ) Net cash outflow from deconsolidation of a subsidiary (Appendix A) — ( 48,893 ) Net cash used in investing activities ( 1,227,150 ) ( 78,799 ) Cash flows from financing activities: Proceeds from loans 294,975 225,000 Repayment of loans ( 420,765 ) ( 200,132 ) Net proceeds from issuance of convertible notes 755,512 — Proceeds from a loan from a related party 124,176 — Repayment of equipment and vehicle loans ( 85,591 ) ( 89,802 ) Principal payment of finance lease liabilities ( 22,814 ) ( 21,485 ) Payment for deferring offering cost — ( 140,000 ) Advances from Hupan Pharmaceutical prior to acquisition 276,365 — Proceeds from initial public offering, net of share issuance costs 5,351,281 — Advances to related parties ( 685,247 ) — Proceeds from shareholders — 158,455 Repayment to shareholders ( 805,345 ) — Net cash provided by (used in) financing activities 4,782,547 ( 67,964 ) Effect of exchange rate changes on cash ( 8,386 ) 3,216 Net increase in cash 1,375,707 18,097 Cash, beginning of the period 123,550 174,018 Cash, end of the period $ 1,499,257 $ 192,115 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for income tax $ — $ — Cash paid for interest $ 67,704 $ 24,030 SUPPLEMENTAL SCHEDULE OF NON-CASH IN INVESTING AND FINANCING ACTIVITIES Deferred offering costs within due to shareholders $ — $ 660,826 Deferred offering costs within accrued expense and other payables $ — $ 176,176 Property additions included in loan payable $ 102,235 — Additions to leasehold improvement through accounts payable and other payable $ 123,176 — Due to shareholder offset against due from related parties $ 311,185 — NON-CASH ACTIVITIES Right of use assets obtained in exchange for operating lease obligations $ 1,447,494 $ — Right of use assets obtained in exchange for finance lease obligation $ 89,003 $ 19,982 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 unaudited condensed consolidated financial statements. 4 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 16). In connection with the offering, the Company’s common shares began trading on the Nasdaq Capital Market under the trading symbol “LSH.” As of March 31, 2025, the Company’s subsidiaries are as follows: Name Date of Incorporation/ Acquisition Jurisdiction of Formation Percentage of direct/indirect Economic Ownership Principal Activities Parent Company Lakeside Holding Limited August 28, 2023 Nevada 100 % Holding company Subsidiaries/companies with ownership American Bear Logistics Corp. (“ABL Chicago”) February 5, 2018 Illinois 100 % Logistics services Sichuan Hupan Jincheng Enterprise Management Co., Ltd (“Sichuan Hupan”)* July 10, 2024 Sichuan, China 100 % Exploring business opportunities in China Hupan Pharmaceutical (Hubei) Co., Ltd (“Hupan Pharmaceutical”)** November 21, 2024 Hubei, China 100 % Medical Injection and Pharmaceutical Distributor Wuhan Hupan New Energy Technology limited Co., Ltd (“Hupan New Energy”) *** December 12, 2024 Wuhan, China 80% by Hupan Pharmaceutical Dormant Wuhan Ruixinda Technology Limited Co., Ltd (“Wuhan Ruixinda”)*** December 20, 2024 Wuhan, China 51% by Hupan New Energy Dormant * On July 10, 2024, the Company incorporated a wholly-owned subsidiary, Sichuan Hupan Jincheng Enterprise Management Co., Ltd, in China. The Company is actively exploring the potential business opportunities in mainland China. ** On November 5, 2024, Sichuan Hupan entered into an equity transfer agreement (the “Equity Transfer Agreement”), through which the Company acquired 100 % of the equity interests in Hupan Pharmaceutical, a comprehensive pharmaceutical distribution and supply chain service provider, for a total consideration of $ 0.6 million (see Note 21). The transaction was completed on November 21, 2024. *** Subsequent to period-end, Hupan New Energy and Wuhan Ruixinda was deregistered on April 8, 2025 and May 12, 2025, respectively. 5 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION (cont.) Reorganization A reorganization of the legal structure was completed on September 23, 2023 (“The Reorganization”). 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 Chief Executive Officer (“CEO”), and Mr. Shuai Li, the President, 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 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, 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. 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 (Note 16). As at July 1, 2024, 7,500,000 shares of common stock are issued and outstanding. 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. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and principles of consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Lakeside Holding Limited and its wholly owned subsidiaries (collectively the “Company”). In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these unaudited condensed consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles (“GAAP”) requires the use of management estimates. These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2024. Going concern The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. As of March 31, 2025, the Company had an accumulated deficit of approximately $ 4.4 million and a working capital deficit of approximately $ 1.8 million. For the nine months ended March 31, 2025, the Company incurred a net loss of approximately $ 4.4 million and the net cash used in operating activities was approximately $ 2.2 million. Losses have principally occurred as a result of the substantial resources required for general and administrative expenses associated with our operations. The continuation of the Company as a going concern is dependent upon the continued financial support from its external financing. The Company currently plans to fund its operations and support its ongoing acquisition projects mainly through cash flow from loans, issuance of notes and additional equity financing from outside investors, if necessary, to ensure sufficient working capital. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations. These factors, among others, raise the substantial doubt regarding the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan provide the opportunity for the Company to continue as a going concern. 6 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Use of estimates and assumptions In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the 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 condensed 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 measurements of convertible notes with accompanying warrants. 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. The estimated contract asset is based on the estimated completion percentage of the performance obligation. We believe that customers simultaneously benefit from the comprehensive services they provide. For customers with goods entering the United States, we offer customs clearance, container unloading, storage, unpacking, packing, and transportation services to customer-specified locations after the goods arrive at a U.S. seaport or airport. For customers shipping goods overseas, we provide cargo space arrangement, storage, packing, export customs clearance, and transportation to the seaport or airport for loading. The 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. As a result, we recognize revenue over time. We believe that the methodology employed is comparable to that of other global logistics companies and offers faithful depiction of the services rendered to customers. Cash Cash consists of unrestricted balances held with banks and deposits at banks or other financial institutions, which are available for withdrawal or use and have original maturities of three months or less. The Company maintains its bank accounts in the United States, which are insured by Federal Deposit Insurance Corporation (“FDIC”) and in mainland China, which are insured by the People’s Bank of China Financial Stability Department (“FSD”) while there is a RMB 500,000 deposit insurance limit for a legal entity’s aggregated balance at each bank. As of March 31, 2025 and June 30, 2024, the Company had approximately $ 1.5 million and $ 0.1 million of cash in banks, most held in the banks located in the mainland of China and in the United States, respectively. Most of cash balance as of March 31, 2025 and June 30, 2024 are denominated in RMB and USD, respectively. 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 March 31, 2025 and June 30, 2024, the Company recorded the allowance of credit loss of $ 62,087 and $ 54,066 , respectively. Inventories, net Inventories are stated at the lower of cost or net realizable value, using the first-in, first out (FIFO) method. Costs include the cost of pharmaceutical products or solutions. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is estimated using selling price in the normal course of business less any costs to complete and sell products. 7 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 March 31, 2025 and 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 Software 3 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 condensed consolidated statements of income (loss) and other comprehensive income (loss). Intangible Assets, net Intangible assets consist primarily of business license purchased from a third-party. It grants the Company the right of selling and distributing pharmaceutical products and solutions. Intangible assets are stated at cost less accumulated amortization. The license is amortized using the straight-line method over the estimated useful economic life of 5 years. Accounts payable The account payables are derived from logistics and forwarding service providers and from the pharmaceutical products supplier. Balances due to logistics service providers are typically settled within 7 to 30 days, while payables to pharmaceutical product suppliers are generally settled within 60 days. 8 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Impairment of long-lived asset Long-lived assets, including plant, property and equipment and intangible asset, 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 and intangible asset consistent with the approach applied for its other long-lived assets. No impairment charge was recognized for the three and nine months ended March 31, 2025 and 2024, respectively. 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 and exchange listing costs. The deferred offering costs are offset against additional paid-in capital upon receipts of the capital raised at IPO closing date. Asset Acquisition When an acquisition is related to a single asset or a group of similar assets, or does not meet the definition of a business combination, as the acquired entity does not have an input and a substantive process that together significantly contribute to the ability to create outputs, we account for the acquisition as an asset acquisition. In an asset acquisition, any direct acquisition-related transaction costs are capitalized as part of the purchase consideration. Deferred taxes are recorded on temporary book/tax differences in an asset acquisition using the simultaneous equations method and adjusted the assigned value of the non-monetary assets acquired to include the deferred tax liability. 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. 9 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) 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. Related parties The Company adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. 10 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) 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 and cash equivalent, accounts receivable from third parties and related parties, amount due from related parties, due to shareholders, other receivables, contract assets, loan receivable balance from a third party, accounts payable, convertible notes - current, loan to a related party, other payables, dividend payable and accrued expenses and other current liabilities approximate fair value due to their short-term nature. For lease liabilities, loan payable to a related party, convertible notes 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 March 31, 2025 and June 30, 2024. Convertible notes In accordance with ASC 470, Debt ("ASC 470") the Company records its 7 % original issue discount secured convertible promissory notes (“Notes”) at the aggregate principal amount, less discount. The Company evaluated the loan portion of the Notes and the accompanying warrant under the guidance of ASC 470-20, “Debt with Conversion and Other Options,” and ASC 815, “Derivatives and Hedging.” The Company determined that the warrant met the criteria for equity classification under ASC 815-40. Accordingly, the fair value of the warrant was recorded as a component of additional paid-in capital and convertible debt instrument as a liability in accordance with ASC 470-20 on the issuance date. Convertible debt is subsequently accounted for at amortized cost in accordance with the interest method described in ASC 835-30 (see Note 12). Common stock warrants The Company evaluates common stock warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity. The Company assesses whether common stock warrants are freestanding financial instruments and whether they meet the criteria to be classified in stockholders’ equity, or classified as a liability. Where common stock warrants do not meet the conditions to be classified in equity, the Company assesses whether they meet the definition of a liability under ASC 815. 11 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Debt issuance costs Direct and incremental costs and original issue discounts and premiums incurred in connection with the issuance of long-term debt are deferred and amortized to interest expense using the effective interest method or, if the amounts approximate the effective interest method, on a straight-line basis. All debt issuance costs are presented as a direct reduction of debt on the unaudited condensed consolidated balance sheets. Approximately $ 24,517 was amortized to interest expense during the three months ended March 31, 2025 . Revenue recognition The Company adopted ASC Topic 606 “Revenue from Contracts with Customers” and all subsequent ASUs that modified ASC 606. 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 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 and distribution of pharmaceutical products. No practical expedients were used when adoption ASC606. Revenue recognition policies are as follows: 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. 12 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Revenue recognition (cont.) Revenue from cross-border freights solutions (cont.) 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 with cargo space booking service, 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 customers shipping goods overseas without cargo space booking service, the Company determines that the performance period for revenue recognition is between pickup date and the date when the goods depart from airport or port. 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. Revenue from distribution of pharmaceutical products During the nine months ended March 31, 2025, the Company started to generate revenue from the distribution of pharmaceutical and medical products. The Company orders products from the manufacturer, receives and carries the product at a designated warehouse, and delivers the product directly to its customers’ warehouses or designated locations. Revenue is recognized when control of goods is transferred to the customers upon goods delivered to the customers and acceptance by the customers. 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 unaudited condensed consolidated statements of income (loss) and comprehensive income (loss). In the Company’s distribution of pharmaceutical products business, the Company determined that in all of its major business activities, it serves as a principal rather than an agent within their revenue arrangements. 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 three months ended March 31, 2025 and 2024 is disclosed as below: 13 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Revenue recognition (cont.) Disaggregation of revenues (cont.) By service/product type For the three months ended March 31, 2025 2024 Cross-border ocean freights solutions $ 1,278,903 $ 2,116,106 Cross-border airfreights solutions 2,026,961 2,344,657 Distribution of pharmaceutical products 497,276 — Total revenue $ 3,803,140 $ 4,460,763 For the three months ended March 31, 2025 2024 Timing of revenue recognition: Service transferred over time $ 3,305,864 $ 4,460,763 Product sales at a point in time 497,276 — Total revenue $ 3,803,140 $ 4,460,763 By customer geographic location For the three months ended March 31, 2025 2024 Asia-based customers $ 3,348,413 $ 3,822,169 U.S.-based customers 454,727 638,594 Total revenue $ 3,803,140 $ 4,460,763 The Company’s disaggregation of revenues for the nine months ended March 31, 2025 and 2024 is disclosed as below: By service type For the nine months ended March 31, 2025 2024 Cross-border ocean freights solutions $ 4,490,299 $ 5,632,765 Cross-border airfreights solutions 6,274,622 7,892,577 Distribution of pharmaceutical products 715,362 — Total revenue $ 11,480,283 $ 13,525,342 For the nine months ended March 31, 2025 2024 Timing of revenue recognition: Services transferred over time $ 10,764,921 $ 13,525,342 Product sales at a point in time 715,362 — Total revenue $ 11,480,283 $ 13,525,342 By customer geographic location For the nine months ended March 31, 2025 2024 Asia-based customers $ 9,126,336 $ 8,119,137 U.S.-based customers 2,353,947 5,406,205 Total revenue $ 11,480,283 $ 13,525,342 14 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) 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 liabilities Contract liabilities represent estimated advances received from customers. The contract liabilities are reported in a net position on a customer-by-customer basis at the end of each reporting period. Contract liabilities are recognized when the Company receives prepayment from customers resulting from purchase order. Contract liabilities will be recognized as revenue when the products are delivered. As of March 31, 2025, the Company recorded contract liabilities of $ 42,168 , which will be recognized as revenue upon delivery of the products sold. For the nine months ended March 31, 2025, the amounts transferred from contract liabilities to revenue at the beginning of the fiscal period were nil . Cost of revenues In the Company’s transportation business, 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. In the Company’s distribution of pharmaceutical products business, cost of revenues primarily consists of cost of products, freights arrangement charges and other overhead cost allocation. Selling expenses Selling expenses primarily include salaries expense and traveling expense of sales team engaged in developing potential customers and maintaining customer relationships and transportation cost for selling pharmaceutical products. 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 was $ 7,960 and $ 7,320 for the three months ended March 31, 2025 and 2024, respectively. The expense related to matching employees’ contributions was $ 23,838 and $ 21,372 for the nine months ended March 31, 2025 and 2024, respectively. 15 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Employee defined contribution plan Full-time employees of the Company in the PRC participate in a government-mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to them. Chinese labor regulations require that the Company make contributions to the government for these benefits based on government prescribed percentage of the employee’s salaries. The Company has no legal obligation for the benefits beyond the contributions. The total amount was expensed as incurred. For the three months ended March 31, 2025 and 2024, employee welfare contribution expenses amounted to approximately $ 11,456 and nil , respectively. For the nine months ended March 31, 2025 and 2024, employee welfare contribution expenses amounted to approximately $$ 22,681 and nil , respectively. Value added tax (“VAT”) Revenue represents the invoiced value of goods and service, net of VAT. The VAT is based on gross sales price and VAT rates range up to 13 %, depending on the type of products sold or services provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in taxes payable. All of the VAT returns filed by the Company’s subsidiaries in PRC remain subject to examination by the tax authorities for five years from the date of filing. 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 three months ended March 31, 2025 and 2024, the Company recognized rental income amounted to $ 95,279 and $ 99,004 , respectively. For the nine months ended March 31, 2025 and 2024, the Company recognized rental income amounted to $ 283,573 and $ 179,687 , 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. The Company’s PRC subsidiary is governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified 25 % enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on case-by-case basis. 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 March 31, 2025 and June 30, 2024, 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. 16 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Statutory reserves The Company’s PRC subsidiaries are required to allocate at least 10 % of their after-tax profit to the general reserve in accordance with the PRC accounting standards and regulations. The allocation to the general reserve will cease if such reserve has reached to 50 % of the registered capital of respective company. These reserves can only be used for specific purposes and are not transferable to the Company in form of loans, advances, or cash dividends. There is no such regulation of providing statutory reserve in United States. Comprehensive income (loss) Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under GAAP are recorded as an element of equity but are excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies. 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 Lakeside Sichuan and Hupan Pharmaceutical, is the U.S. dollar. The functional currency of Lakeside Sichuan and Hupan Pharmaceutical is the RMB. The assets, liabilities, revenues, and expenses of Lakeside Sichuan and Hupan Pharmaceutical are remeasured in accordance with ASC 830. For the period ended March 31, 2025, assets and liabilities of Lakeside Sichuan and Hupan Pharmaceutical are translated into U.S. dollars based upon exchange rates prevailing at the end of each period. Revenues and expenses of Lakeside Sichuan and Hupan Pharmaceutical are translated at average exchange rates during the reporting period. The resulting translation adjustment is included in accumulated other comprehensive loss. The following table outlines the currency exchange rates that were used in creating the condensed consolidated financial statements in this report: March 31, 2025 Balance sheet items, except for equity accounts US$ 1 =RMB 7.2567 Items in the statements of income and cash flows US$ 1 =RMB 7.2080 17 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) 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. 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, accounts receivable, contract assets, other receivable, loan receivable balance from a third party 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 bank accounts in mainland China, where there is a RMB 500,000 deposit insurance limit for a legal entity’s aggregated balance at each bank. As of March 31, 2025 and June 30, 2024, three bank account exceeded the insured limit. To limit the exposure to credit risk relating to deposits, the Company primarily places cash deposits with large financial institutions in the mainland China. The Company also has 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 March 31, 2025 and June 30, 2024, no bank balance exceeded the insured limit. 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 and loan receivable balance from a third party are monitored on an ongoing basis with the result that the Company’s exposure to impairment is not significant. As of March 31, 2025 and June 30, 2024, none of the Company’s due from related parties and loan receivable balance from a third party are impaired. 18 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Concentrations and risks (cont.) b. Foreign exchange risk Our subsidiaries in PRC have functional currency in RMB. PRC subsidiaries’ expense transactions are denominated in RMB and their assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. 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, considering the volume of its business, the impact of foreign exchange risk is limited. c. Interest rate risk The 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 analyzes its cash flow position, its ability to generate sufficient revenue sources in the future and its operating and capital expenditure commitments. The Company typically funds the working capital needs primarily from operations, loans, as well as shareholder advances to the Company. 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 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 June 30, 2025. 19 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Recent accounting pronouncements (cont.) 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 condensed 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 unaudited condensed consolidated balance sheets, statements of income (loss) and comprehensive income (loss) and statements of cash flows. NOTE 3 — ACCOUNTS RECEIVABLE, NET Accounts receivable, net consists of the following: March 31, 2025 June 30, 2024 Accounts receivable – third-party customers $ 1,455,249 $ 2,122,107 Less: allowance for credit loss – third-party customers ( 57,750 ) ( 39,955 ) Accounts receivable from third-party customers, net $ 1,397,499 $ 2,082,152 Accounts receivable – related party customers $ 310,632 $ 777,396 Less: allowance for credit loss – related party customers ( 4,337 ) ( 14,111 ) Total accounts receivable, net $ 306,295 $ 763,285 Approximately $ 0.2 million or 69.7 % of the accounts receivable from related party customers have been collected as of the report date. Approximately $ 1.1 million or 78.3 % of the accounts receivable from third party customers have been collected as of the report date. The movement of allowance for credit loss for the nine months ended March 31, 2025 and the year ended June 30, 2024 is as follows: March 31, 2025 June 30, 2024 Beginning balance $ 54,066 $ 25,909 Addition of provision 8,021 28,157 Ending balance $ 62,087 $ 54,066 The Company recorded addition of allowance for credit loss of $ 6,065 and reversal of allowance for credit loss of $ 27,393 for the three months ended March 31, 2025 and 2024, respectively. The Company recorded addition of allowance for credit loss of $ 8,021 and $ 22,198 for the nine months ended March 31, 2025 and 2024, respectively. 20 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 4 — INVENTORIES, NET Inventories, net consists of the following: March 31, 2025 June 30, 2024 Finished goods $ 216,489 $ - Less: inventory allowance - - Inventories, net $ 216,489 $ - NOTE 5 — LOAN TO A THIRD PARTY On October 8, 2024, the Company entered into a loan agreement with a third party for a principal amount up to $ 2 million at a fixed interest rate of 4.35 % per annum with a maturity date of twelve months. There is no pledge and guarantee from the third party and the loan is on demand and can be called by the Company. The loan balance was $ 573,546 , including interest income receivable of $ 11,645 , as of March 31, 2025. NOTE 6 — PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following: March 31, 2025 June 30, 2024 Furniture and Fixtures $ 61,159 $ 49,887 Machinery equipment 286,811 281,230 Vehicles 455,882 324,267 Software 5,317 - Leasehold improvement 266,194 82,050 Subtotal 1,075,363 737,434 Less: accumulated depreciation ( 541,370 ) ( 392,551 ) Property and equipment, net $ 533,993 $ 344,883 Depreciation expense recorded in general and administrative expense was $ 35,609 and $ 17,995 for the three months ended March 31, 2025 and 2024, respectively. Depreciation expense recorded in cost of revenue was $ 26,113 and $ 18,165 for the three months ended March 31, 2025 and 2024, respectively. Depreciation expense recorded in general and administrative expense was $ 86,413 and $ 53,985 for the nine months ended March 31, 2025 and 2024, respectively. Depreciation expense recorded in cost of revenue was $ 62,441 and $ 54,493 for the nine months ended March 31, 2025 and 2024, respectively. 21 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 7 — INTANGIBLE ASSETS, NET Net intangible assets consists of the following: March 31, 2025 June 30, 2024 License $ 418,867 $ - Less: accumulated amortization ( 32,056 ) - Intangible asset, net $ 386,811 $ - On November 5, 2024, the Company purchased a license of pharmaceutical distribution in Mainland China through its acquisition of 100 % equity interest in Hupan Pharmaceutical. The Company recognized the distribution license as an intangible asset of $ 418,867 based on the assessment of fair value at the purchase date (see Not 21), adjusted by deferred taxes recorded on temporary book/tax differences in an asset acquisition using the simultaneous equations method. The transaction was closed on November 21, 2024. No impairment expense was recognised for the three and nine months ended March 31, 2025 and 2024, respectively. Amortization expense of $ 32,056 and $ 32,056 was recognised for the three and nine months ended March 31, 2025, respectively. NOTE 8 — 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 March 31, 2025 and June 30, 2024, balance of lease liabilities was $ 4,205,176 and $ 3,693,211 , respectively. The Company recognized additional operating lease liabilities of $ 511,965 as result of entering into three new operating lease agreements for the nine months ended March 31, 2025. The ROU asset was recognized at the discount rate of 10.25 % for one lease with a lease term of 1.6 years in the U.S., 4.42 % for another lease with a lease term of 2 years in China and 4.42 % for another lease with a lease term of 5 years in China, resulting in a total of $ 1,447,494 on the commencement date. As of March 31, 2025, the Company recognized additional finance lease liabilities of $ 66,189 as result of entering into two new finance lease agreements for the nine months ended March 31, 2025. The ROU asset was recognized at the discount rate of 9.75 % and 10.75 % for both two leases with a lease term of 5 years in the U.S., resulting in a total of $ 89,003 on the commencement date. Total operating lease expenses on offices, warehouses, and warehouse equipment for the three months ended March 31, 2025 and 2024 were $ 526,685 and $ 219,571 , respectively. Total operating lease expenses on offices, warehouses, and warehouse equipment for the nine months ended March 31, 2025 and 2024 were $ 1,515,688 and $ 658,713 , respectively. Total finance lease expenses on warehouse machinery and equipment for the three months ended March 31, 2025 and 2024 were $ 10,613 and $ 8,756 , respectively. Depreciation of finance lease right-of-use assets were $ 8,600 and $ 8,756 for the three months ended March 31, 2025 and 2024, respectively. Total finance lease expenses on warehouse machinery and equipment for the nine months ended March 31, 2025 and 2024 were $ 28,044 and $ 23,854 , respectively. Depreciation of finance lease right-of-use assets were $ 24,081 and $ 22,548 for the nine months ended March 31, 2025 and 2024, respectively. 22 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 8 — LEASES (cont.) The following table includes supplemental cash flow and non-cash information related to leases: For the nine months ended March 31, 2025 2024 Cash paid of amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,151,931 $ 606,756 Operating cash flows from finance leases $ 3,963 $ 1,306 Financing cash flows from finance leases $ 22,814 $ 21,485 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities $ 89,003 $ 19,982 Operating lease liabilities $ 1,447,494 $ — The weighted average remaining lease terms and discount rates for all of operating lease and finance leases is as follows: Mar 31, 2025 June 30, 2024 Weighted-average remaining lease term (years): Operating lease 2.7 years 3.05 years Finance lease 3.36 years 1.31 years Weighted average discount rate: Operating lease 7.10 % 6.30 % Finance lease 9.21 % 6.51 % The following is a schedule of maturities of operating and finance lease liabilities as of March 31, 2025: Operating leases Twelve months ending March 31, Repayment 2026 $ 2,595,757 2027 718,284 2028 588,257 2029 609,985 2030 131,715 Total future minimum lease payments 4,643,998 Less: imputed interest ( 438,822 ) Total operating lease liabilities $ 4,205,176 Financing leases Twelve months ending March 31, Repayment 2026 $ 55,477 2027 27,189 2028 21,656 2029 21,656 2030 12,632 Total future minimum lease payments 138,610 Less: imputed interest ( 17,342 ) Total finance lease liabilities $ 121,268 23 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 9 — ACCRUED LIABILITIES AND OTHER PAYABLES Accrued liabilities and other payables comprise the following amounts relating to the operation of the Company March 31, 2025 June 30, 2024 Credit card payables $ 381,829 $ 235,673 Payroll liabilities 301,208 120,379 Accrued expense (a) 430,390 435,019 Other payables (b) 335,161 544,733 Total $ 1,448,588 $ 1,335,804 Note (a): The balance mainly consists of accrued interest of $ 210,171 and $ 175,019 and accrued professional fee of $ 220,219 and $ 260,000 as of March 31, 2025 and June 30, 2024, respectively. (b): The balance mainly consists of payable related to initial offering cost of nil and $ 541,819 as of March 31, 2025 and June 30, 2024, respectively. NOTE 10 — 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: March 31, 2025 June 30, 2024 Equipment loans $ 46,850 $ 84,357 Vehicle loans 200,433 146,283 Other loans 526,908 652,697 Total 774,191 883,337 Less: loan payable, current ( 617,682 ) ( 746,962 ) Loan payable, non-current $ 156,509 $ 136,375 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 $ 7,829 and $ 15,427 as of March 31, 2025 and June 30, 2024, respectively. 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 $ 1,137 and $ 3,642 as of March 31, 2025 and June 30, 2024, 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 CEO. The loan balance was $ 1,137 and $ 3,642 as of March 31, 2025 and June 30, 2024, respectively. 24 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 10 — LOANS PAYABLE (cont.) 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 $ 1,797 and $ 7,085 as of March 31, 2025 and June 30, 2024, 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 nil and $ 1,252 as of March 31, 2025 and June 30, 2024, 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 nil and $ 256 as of March 31, 2025 and June 30, 2024, 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 nil and $ 690 as of March 31, 2025 and June 30, 2024, 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 $ 15,401 and $ 20,823 as of March 31, 2025 and June 30, 2024, 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 CEO. The loan term was 5 years . The loan balance was $ 12,113 and $ 18,972 as of March 31, 2025 and June 30, 2024, 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 $ 7,436 and $ 12,569 as of March 31, 2025 and June 30, 2024, respectively. The Company made the total principal repayments of $ 11,984 and $ 16,052 in connection with the above equipment loans during the three months ended March 31, 2025 and 2024, respectively. Interest expenses for the above-mentioned equipment loans amounted to $ 1,200 and $ 2,162 during the three months ended March 31, 2025 and 2024, respectively. The Company made the total principal repayments of $ 37,507 and $ 47,958 in connection with the above equipment loans during the nine months ended March 31, 2025, and 2024, respectively. Interest expenses for the above-mentioned equipment loans amounted to $ 4,256 and $ 7,267 during the nine months ended March 31, 2025 and 2024, 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 $ 3,974 and $ 15,853 as of March 31, 2025 and June 30, 2024, 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 CEO. The loan balance was $ 4,507 and $ 12,540 as of March 31, 2025 and June 30, 2024, respectively. 25 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 10 — 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 $ 47,529 and $ 62,630 as of March 31, 2025 and June 30, 2024, 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 $ 47,277 and $ 55,259 as of March 31, 2025 and June 30, 2024, respectively. On October 4, 2024, the Company entered into a vehicle loan with Tesla, Inc. for a principal amount of $ 102,235 at a fixed interest rate of 9.14 % per annum with a maturity date of October 18, 2030 . The loan balance was $ 97,146 and $ nil as of March 31, 2025 and June 30, 2024, respectively. The Company made the total principal repayments of $ 17,731 and $ 14,042 in connection with the above vehicle loans during the three months ended March 31, 2025 and 2024, respectively. Interest expenses for the above-mentioned above vehicle loans amounted to $ 3,383 and $ 1,500 during the three months ended March 31, 2025 and 2024, respectively. The Company made the total principal repayments of $ 48,085 and $ 41,843 in connection with the above vehicle loans during the nine months ended March 31, 2025 and 2024, respectively. Interest expenses for the above-mentioned equipment loans amounted to $ 7,827 and $ 4,783 during the nine months ended March 31, 2025 and 2024, respectively. Other loans March 31, 2025 June 30, 2024 Loan A $ 120,000 $ 150,000 Loan B — 200,000 Loan C 50,000 50,000 Loan D 115,000 175,000 Loan E 23,303 77,697 Loan F 87,500 — Loan G 31,130 — Loan H 99,975 — Total $ 526,908 $ 652,697 (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 $ 30,000 during the nine months ended March 31, 2025. (b) 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 . The Company has made repayment of $ 200,000 during the nine months ended March 31, 2025. 26 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 10 — LOANS PAYABLE (cont.) (c) 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. (d) 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. 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 . The Company made repayment of $ 60,000 during the nine months ended March 31, 2025. Both parties agreed to extend the remaining principal balance of $ 115,000 payment term to on demand. (e) 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 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) On October 16, 2024, the Company entered a loan of $ 150,000 with an unrelated party. The loan is personally guaranteed by Henry Liu, the CEO, with a fixed interest of 33.37 % per annum and payable on monthly basis, for 12 months period and matured on October 16, 2025 . The monthly payment is $ 16,250 for the first six months and $ 13,250 for the remaining six months blending of interest and principal. (g) The Company entered a loan of $ 45,000 with an unrelated party on November 5, 2024. The loan is personally guaranteed by Henry Liu, the CEO, with a fixed interest of 24.16 % per annum and payable on monthly basis, for 12 months period and matured on November 5, 2025 . The monthly payment is $ 4,259 blending of interest and principal. (h) The Company entered a loan of $ 99,975 with an unrelated party on January 21, 2025. The loan is unsecured, with no interest bearing for 6 months period and matured on July 21, 2025. The Company made the total principal repayments of $ 80,851 and $ 108,362 in connection with the above other loans during the three months ended March 31, 2025 and 2024, respectively. Interest expenses for the above-mentioned other loans amounted to $ 25,808 and $ 17,547 during the three months ended March 31, 2025 and 2024, respectively. The Company made the total principal repayments of $ 420,765 and $ 150,620 in connection with the above other loans during the nine months ended March 31, 2025 and 2024, respectively. Interest expenses for the above-mentioned other loans amounted to $ 63,872 and $ 59,998 for the nine months ended March 31, 2025 and 2024, respectively. 27 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 10 — LOANS PAYABLE (cont.) The repayment schedule for the Company’s loans is as follows: Twelve months ending March 31, Vehicle loans Equipment loans Others Total 2026 $ 66,154 39,114 539,275 644,543 2027 57,636 10,838 — 68,474 2028 41,176 — — 41,176 2029 34,571 — — 34,571 2030 22,283 — — 22,283 2031 13,000 — — 13,000 Total undiscounted borrowings 234,820 49,952 539,275 824,047 Less: imputed interest ( 34,387 ) ( 3,102 ) ( 12,367 ) ( 49,856 ) Total $ 200,433 46,850 526,908 774,191 NOTE 11 — LOAN FROM A RELATED PARTY On March 1, 2025, the Company entered into a loan agreement with a related party for a principal amount up to $ 124,176 , bearing interest at a fixed interest rate of 7.79 % per annum, with a maturity date of March 1, 2028 . There is no pledge and guarantee from the third part. The loan balance was $ 124,176 and nil as of March 31, 2025 and June 30, 2024, respectively, and interest expense in connection with the loan for the three and nine months ended March 31, 2025 was nil for both periods. NOTE 12 — CONVERTIBLE NOTES On March 5, 2025, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with an institutional investor (the “Investor”). Under the Securities Purchase Agreement, the Company agreed to issue 7 % original issue discount secured convertible promissory notes (“Notes”) in the aggregate principal amount of up to $ 4.5 million and accompanying Warrants (as defined below), in up to three separate tranches that are each subject to certain closing conditions (the “Financing”). On March 5, 2025, the initial closing of the first tranche (the “First Closing of First Tranche”) occurred, pursuant to which the Company issued to the Investor a Note in a principal amount of $ 1,000,000 (the “First Tranche”). For the subsequent closing of the first tranche, the Investor agreed to purchase an additional Note in the principal amount of $ 500,000 , subject to the satisfaction of certain closing conditions including the Equity Conditions (as defined in the Securities Purchase Agreement), after a resale Registration Statement on Form S-3 or S-1 (the “Resale Registration Statement”) has been declared effective by the Securities and Exchange Commission (the “Commission”) for the registration of common stock of the Company (the “Common Stock”) issuable upon conversion of the Notes and the Warrants (as defined below). The Company and the Investor may also, pursuant to the Securities Purchase Agreement, choose to consummate a second tranche and a third tranche of financing, subject to certain closing conditions. Pursuant to the Securities Purchase Agreement, the Company agreed to issue, upon the consummation of the closing of each tranche, common stock purchase warrants (“Warrants”) to the Investor, in each case to purchase a number of shares of common stock determined by dividing 40 % of the applicable principal amount of the corresponding Note by the VWAP (as defined in the Securities Purchase Agreement) immediately prior to the applicable closing date. In the First Closing of the First Tranche, the Company issued Investor Warrants to purchase 318,827 shares of common stock at an initial exercise price of $ 1.9098 per share, subject to certain adjustments set forth therein. The Note is convertible into Common Stock at an initial conversion price of $ 1.9098 , subject to certain adjustments (the “Conversion Price”), provided that the Conversion Price shall not be reduced below $ 0.234 (the “Floor Price”). The Note does not bear any interest absent an Event of Default (as defined in the Note) and matures on June 5, 2026. Commencing on the earlier of (i) the 60-day anniversary after the date hereof and (ii) the date on which the first Resale Registration Statement shall have been declared effective by the Commission, the Company is required to pay to the Investor the outstanding principal balance under the Note in monthly installments, on such date and each one (1) month anniversary thereof, in an amount equal to 105 % of the total principal amount multiplied by the quotient determined by dividing one by the number of months remaining until the maturity date of the Note, until the outstanding principal amount has been paid in full or, if earlier, upon acceleration, conversion or redemption of the Note in accordance with its terms. All monthly payments are payable by the Company, in cash, provided that under certain circumstances, as provided in the Note, the Company may elect to pay in common stock. At any time after the original issuance date, the Note shall be convertible (in whole or in part) at the option of the Investor into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing (x) that portion of the outstanding Principal and any accrued and unpaid interest thereon that Invest elects to convert by (y) the Applicable Conversion Price then in effect on the date. 28 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 12 — CONVERTIBLE NOTES (cont.) The Company evaluated the loan portion of the Note and the accompanying warrant under the guidance of ASC 470-20, “Debt with Conversion and Other Options,” and ASC 815, “Derivatives and Hedging.” The Company determined that the warrant met the criteria for equity classification under ASC 815-40. Accordingly, the fair value of the warrant was recorded as a component of additional paid-in capital on the issuance date. The Company also evaluated the conversion feature embedded in its convertible note under ASC 815 and determined that embedded derivative is clearly and closely related to its host contract as its indexed to the Company's stock price and its underlying economic characteristics and risks. As such, bifurcation of the conversion feature as a derivative was not required. The Company accounted for the Note as a liability under ASC 470-20. The Note is subsequently accounted for at amortized cost in accordance with the interest method under ASC 835-30. The debt discount and issuance cost will be amortized to interest expense over the term of the Note using the effective interest method. On the issuance date, the fair value of note payable with conversion feature was estimated using discounted cash flow method with a discount rate of 30 % for note payable without conversion feature and Black-Scholes pricing model for the embedded conversion feature. The fair value of warrants was estimated using the Black-Scholes pricing model with the following weighted-average assumptions: market value of underlying share of $ 1.21 , risk free rate of 4.08 %, expected term of 5 years; exercise price of the warrants of $ 1.9098 , volatility of 120.4 %; and expected future dividends of nil . The aggregate fair value of the debt and equity components exceeded the face value of the Note. Accordingly, the Company allocated the proceeds based on the relative fair value method. The note also included an original issue discount and incurred total debt issuance costs, which were allocated to the note payable and warrants on the relative fair value basis in accordance with ASC 835-30 and ASC 470-20. The debt discount and issuance cost will be amortized to interest expense over the term of the Convertible Bonds using the effective interest method. The Company recorded a relative fair value of note payable of $ 774,033 and relative fair value of warrants of $ 225,967 on issuance date. After allocating the proceeds of the liability and equity component, the Company allocated $ 244,488 initial purchaser’s discount and debt issuance cost of $ 70,000 and $ 174,488 , respectively. The initial purchaser’s discount and debt issuance costs primarily consisted of underwriting fees , lawyers fee, investor legal fee, auditor fee and SEC registration fee. These costs were allocated to the debt and equity component based on the allocation of the proceeds as follows: Amount Equity Component Debt Component Initial purchaser’s debt discount $ 70,000 $ 15,818 $ 54,182 Debt issuance cost 174,488 39,428 135,060 Total $ 244,488 $ 55,246 $ 189,242 The portion allocated to debt component is amortized to interest expense using the effective interest method over the effected life of the Notes, or approximately 15 months term. The effective interest rate on the liability component of the Notes for the period from date of issuance is 95.52 % , which remains unchanged from the date of issuance. March 31, 2025 Long Term Debt Outstanding principal $ 774,033 Unamortized Initial Purchaser’s debt discount and debt issuance cost ( 164,725 ) Accrued interest 16,025 Net carry amount $ 625,333 Convertible note, current $ 484,541 Convertible note, non-current 140,792 Total $ 625,333 The Company recognized interest expense of $ 40,541 and $ 40,541 for the three and nine months ended March 31, 2025, which includes $ 24,517 related to the amortization of the debt discount. 29 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 13 — GENERAL AND ADMINISTRATIVE EXPENSES For the nine months ended March 31, 2025 2024 Payroll expense $ 2,482,917 $ 1,646,558 Staff benefit expense 423,465 321,229 Professional expense 792,984 56,400 Travelling and entertainment 451,459 159,916 Office expense 358,638 259,750 Lease expense 248,398 57,286 Insurance 190,154 20,001 Other expense 146,234 72,107 Repair and maintenance 102,040 110,224 Depreciation expense 86,413 53,985 Advertising 95,485 27,329 Motor expense 13,341 17,415 Bank charges 2,703 1,111 Management fee 3,111 — Amortization 32,056 — Total $ 5,429,398 $ 2,803,311 For the three months ended March 31, 2025 2024 Payroll expense $ 770,807 $ 624,230 Staff benefit expense 145,462 122,312 Professional expense 236,858 24,063 Travelling and entertainment 39,810 — Other expense 46,821 17,632 Office expense 103,617 95,586 Lease expense 96,592 19,095 Insurance 65,023 13,053 Repair and maintenance 28,548 19,997 Depreciation expense 35,609 17,995 Advertising 72,715 3,000 Motor expense 3,616 5,048 Bank charges 823 470 Amortization 32,056 — Management fee 1,982 — Total $ 1,680,339 $ 962,481 30 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 14 — RELATED PARTY TRANSACTIONS The relationship of related parties is summarized as follows: Name of Related Party Relationship with the Company Mr. Henry Liu CEO, and an ultimate shareholder of the Company Mr. Shuai Li President, 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 American Bear Logistics (Shenzhen) Co., Ltd. (“ABL Shenzhen”) 100% owned subsidiary of ABL Wuhan LLL Intermodal Inc. (“Intermodal”) Controlled by Mr. Henry Liu ABL LAX LLC. (“ABL LAX”) Controlled by Mr. Henry Liu and Mr. Shuai Li a) Summary of balances with related parties Due from related parties consists of mainly the accumulated rent, storage fees and the salaries of contractors charged from the following parties: March 31, 2025 June 30, 2024 Due from Weship $ 635,139 $ 422,742 Due from Intermodal 89,855 18,537 Due from ABL LAX 131,576 — Total $ 856,570 $ 441,279 The Company has collected approximately $ 26,447 from Weship and $ 1,332 from ABL LAX as of the report date, and is planning to collect the remaining receivable balance from three related parties by the end of June 2025. b) Summary of balances payable to related parties March 31, 2025 June 30, 2024 Account payable to Weship $ 24,145 $ 175,172 Account payable to ABL Wuhan 25,970 52,000 Account payable to Intermodal 18,780 550 Total $ 68,895 $ 227,722 c) Summary of balances receivable from related parties March 31, 2025 June 30, 2024 Accounts receivable from Weship $ 7,385 $ 32,435 Accounts receivable from ABL Shenzhen 147,336 — Accounts receivable from ABL Wuhan 155,911 744,961 Total $ 310,632 $ 777,396 The Company has collected approximately $ 0.2 million from the related parties as of the report date. 31 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 14 — RELATED PARTY TRANSACTIONS (cont.) d) Summary of related parties’ transactions For the three months ended March 31, 2025 2024 Revenue from Weship (a) $ 3,579 $ 29,295 Revenue from ABL Wuhan (a) $ 245,006 $ 613,742 Revenue from ABL Shenzhen (a) $ 199,775 $ — Cost of revenue charged by Weship (b) $ 146,650 $ 297,769 Rental income from Weship (c) $ 76,629 $ 91,063 Rental income from Intermodal (d) $ 11,963 $ — Cost of revenue charged by Intermodal (e) $ 153,324 $ 131,199 Cost of revenue charged by ABL Wuhan (f) $ 62,620 $ 18,000 For the nine months ended March 31, 2025 2024 Revenue from Weship (a) $ 5,341 $ 57,362 Revenue from ABL Wuhan (a) $ 692,212 $ 1,010,271 Revenue from ABL Shenzhen (a) $ 507,801 — Cost of revenue charged by Weship (b) $ 661,763 $ 1,061,960 Rental income from Weship (c) $ 255,483 $ 147,447 Rental income from Intermodal (d) $ 11,963 $ — Cost of revenue charged by Intermodal (e) $ 494,333 $ 378,160 Cost of revenue charged by ABL Wuhan (f) $ 127,548 $ 29,725 During the three and nine months ended March 31, 2025 and 2024, the Company had the following transactions with its related parties — Weship, ABL Wuhan, ABL Shenzhen and Intermodal (a) The Company provides logistic forwarding services to Weship, ABL Wuhan and ABL Shenzhen and charges Weship, ABL Wuhan and ABL Shenzhen 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 2024 to March 2025. (d) The Company subleased portion of its warehouse space to Intermodal for four months and another warehouse for twelve months. (e) Intermodal is one of the Company’s vendors for truck delivery service. (f) 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. 32 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 14 — RELATED PARTY TRANSACTIONS (cont.) e) Due to shareholders March 31, 2025 June 30, 2024 Due to shareholders, end $ — $ ( 1,018,281 ) The balance with the shareholders is unsecured, interest free, and due on demand. The Company had balance of due to shareholder Henry Liu of nil and $ 986,923 and Shuai Li of nil and $ 31,358 as of March 31, 2025 and June 30, 2024, respectively. f) Dividend payable to shareholders March 31, 2025 June 30, 2024 Dividend payable to Mr. Henry Liu $ — $ ( 27,056 ) Dividend payable to Mr. Shuai Li — ( 71,794 ) Total $ — $ ( 98,850 ) No non-taxable dividend was declared to shareholders for the three and nine months ended March 31, 2025. As of March 31, 2025, dividends payable of $ 98,850 were offset against balances due from shareholders. g) Salaries and employee benefits paid to major shareholders For the three months ended March 31, 2025 2024 Mr. Henry Liu $ 19,707 $ 25,318 Mr. Shuai Li 22,584 29,009 Total $ 42,291 $ 54,327 For the nine months ended March 31, 2025 2024 Mr. Henry Liu $ 53,492 $ 80,713 Mr. Shuai Li 61,299 85,217 Total $ 114,791 $ 165,930 33 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 15 — 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 September 23, 2023, 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, is governed by the income tax laws of the PRC and is subjected to 25 % 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 $ 17,894 increase to the net deferred tax assets to $ 50,877 and an increase to the provision for income taxes of $ 17,894 during the nine months ended March 31, 2024. As of March 31, 2025 and June 30, 2024, 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 period ended March 31, 2025 and 2024, 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. The provision for income tax for the nine months ended March 31, 2025 and 2024 consists of the following: For the nine months ended March 31, 2025 2024 Current income tax expense $ 26,608 $ 94,471 Deferred income tax expense 81,567 18,370 Deferred state tax adjustment – change of tax rates — 17,894 Total income tax expense $ 108,175 $ 130,735 34 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 15 — TAXES (cont.) The following table reconciles the statutory tax rate to the Company’s effective tax the nine months ended March 31, 2025 and 2024: For the nine months ended March 31, 2025 2024 Loss before tax $ ( 4,244,848 ) $ ( 99,558 ) Statutory state tax rate 21 % 21 % Income tax recovery at the federal statutory rate ( 891,418 ) ( 20,907 ) Illinois state tax/PET tax recovery ( 270,536 ) 21,682 Illinois replacement tax recovery ( 96,620 ) 7,743 Non-deductible expense 21,153 — Change in valuation allowance 1,360,798 — Tax benefit as S corporate — 65,045 Tax effect on other tax jurisdiction ( 15,202 ) 57,172 Total income tax expense $ 108,175 $ 130,735 The provision for income tax for the three months ended March 31, 2025 and 2024 consists of the following: For the three months ended March 31, 2025 2024 Current income tax expense $ 26,608 $ 94,471 Deferred income tax expense ( 8,014 ) 10,139 Total income tax expense $ 18,594 $ 104,610 The following table reconciles the statutory tax rate to the Company’s effective tax the three months ended March 31, 2025 and 2024: For the three months ended March 31, 2025 2024 (Loss) income before tax $ ( 1,052,202 ) $ 117,378 Statutory state tax rate 21 % 21 % Income tax (recovery) expense at the federal statutory rate ( 220,962 ) 24,649 Illinois state tax/PET tax (recovery) expense ( 70,470 ) 21,682 Illinois replacement tax (recovery) expense ( 25,168 ) 7,743 Non-deductible expense 21,153 — Change in valuation allowance 312,122 65,045 Tax effect on other tax jurisdiction 1,919 ( 14,509 ) Total income tax expense $ 18,594 $ 104,610 35 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 15 — TAXES (cont.) The Company’s deferred tax assets and liabilities consist of the following: March 31, 2025 June 30, 2024 Deferred tax assets: Allowance for credit loss $ 18,937 $ 16,490 Lease liability – operating 1,201,611 1,126,429 Lease liability – financing 36,987 16,799 Non-capital loss carried forward 1,148,608 - Valuation allowance ( 1,360,798 ) - Total deferred tax assets $ 1,045,343 $ 1,159,718 Deferred tax liabilities: Right of use assets – operating ( 1,014,112 ) ( 1,058,707 ) Right of use assets – financing ( 31,231 ) ( 11,430 ) Intangible asset – license ( 96,703 ) - Total deferred tax liabilities ( 1,142,046 ) ( 1,070,137 ) Deferred tax (liability) assets, net $ ( 96,703 ) $ 89,581 NOTE 16 — 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. 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 issuance expenses of a total of $ 1.0 million, were approximately $ 5.35 million. As of March 31, 2025 and June 30, 2024, 7,500,000 and 6,000,000 common shares were issued and outstanding, respectively, with par value of $ 0.0001 . 36 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 16 — STOCKHOLDERS’ EQUITY (cont.) 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. For the period ended March 31, 2025, the Company closed its IPO and net proceed from offering, deducted by the IPO deferring cost and par value was transferred to additional paid-in capital. On the issuance date of the Notes, the Company recorded the relative fair value of the warrant of $ 170,720 after allocation of discount and issuance cost (see Note12) as a component of additional paid-in capital, using the Black-Scholes pricing model. 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. Management determined that these warrants meet the requirements for equity classification under ASC 815-40 because they are indexed to their own shares and meet the requirements for equity classification. The warrants were recorded at their fair value on the date of grant as a component of shareholders’ equity. The fair value of these warrants was $ 159,000 , which was considered a direct cost of IPO and included in additional paid-in capital. The fair value has been estimated using the Black-Scholes pricing model with the following weighted-average assumptions: market value of underlying share of $ 4.00 , risk free rate of 4.3 %, expected term of five years ; exercise price of the warrants of $ 4.5 , volatility of 61 %; and expected future dividends of nil . As of March 31, 2025, 75,000 warrants in connection with IPO funding was outstanding, with an exercise price of $ 4.5 and remaining life of 4.50 years. Common stock purchase warrants Pursuant to the Securities Purchase Agreement, the Company agreed to issue, upon the consummation of the closing of each tranche, common stock purchase warrants (“Warrants”) to the Investor (see Note 12). As of March 31, 2025, 318,827 warrants in connection with the Notes were outstanding, with an exercise price of $ 1.9098 and remaining life of 4.93 years. Statutory reserves The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve are required to be at least 10 % of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50 % of the entity’s registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The statutory reserve as determined pursuant to PRC statutory laws totaled approximately $ 7,014 and nil as of March 31, 2025 and June 30, 2024, respectively. NOTE 17 — EARNINGS (LOSS) PER SHARE For the three and nine months ended March 31, 2025, the Company has no stock option issued and its warrants are considered to be antidilutive. Thus, no impact on diluted earnings per share. For the three and nine months ended March 31, 2024, the Company has no stock options and warrants issued and no impact on diluted earnings per share. For the three months ended March 31, 2025 2024 Net (loss) income attributable to the Company $ ( 1,070,796 ) $ 12,768 Weighted average number of common shares outstanding – Basic and Diluted 7,500,000 6,000,000 Loss per share – Basic and Diluted $ ( 0.14 ) $ — 37 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 17 — EARNINGS (LOSS) PER SHARE (cont.) For the nine months ended March 31, 2025 2024 Net loss attributable to the Company $ ( 4,353,023 ) $ ( 227,268 ) Weighted average number of common shares outstanding – Basic and Diluted 7,500,000 6,000,000 Loss per share – Basic and Diluted $ ( 0.58 ) $ ( 0.04 ) NOTE 18 — CONCENTRATIONS RISK The Company had two and two third-party customers individually generated over 10% of the Company’s total revenue for the nine months ended March 31, 2025 and 2024, respectively. The Company had no and no related-party customer individually generated over 10% of the Company’s total revenue for the nine months ended March 31, 2025 and 2024, respectively. As of March 31, 2025 and June 30, 2024, the Company had one and no third-party customers and no and one related-party customer individually represented over 10% of account receivables, respectively. The Company had no and no third-party suppliers individually represented over 10% of the Company’s cost of revenue for the nine months ended March 31, 2025 and 2024, respectively. The Company had no and no related-party suppliers individually represented over 10% of the Company’s cost of revenue for the nine months ended March 31, 2025 and 2024, respectively. The Company had one and one third-party supplier and no and one related-party supplier represented over 10% of the Company’s accounts payable as of March 31, 2025 and June 30, 2024, respectively. NOTE 19 — SEGMENT REPORTING An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Company’s chief operating decision maker in order to allocate resources and assess performance of the segment. Management of the Company concludes that it has two reporting segments listed as below for the nine months ended March 31, 2025. The Company and its subsidiaries are located either in the U.S. or China. The Company is primarily engaged in the business of providing customized cross-border freight solutions in the U.S. and distribution of pharmaceutical products in China. For the nine months ended March 31, 2024, the Company’s CEO reviews consolidated results when making decisions about allocating resources and assessing performance of the Company, rather than by service types or customer geographic location; hence the Company concluded it has only one reporting segment. 38 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 19 — SEGMENT REPORTING (cont.) The summary of key information by segments for the nine months ended March 31, 2025 was as follows: Cross-border freight solutions (U.S.) Pharmaceutical distribution (China) Others Total for the nine months ended March 31, 2025 Revenue from external customers $ 9,559,567 $ 715,362 $ – $ 10,274,929 Revenue from related parties $ 1,205,354 $ – $ – $ 1,205,354 Cost of revenue $ 10,043,158 $ 240,966 $ – $ 10,284,124 Gross profit $ 721,763 $ 474,396 $ – $ 1,196,159 Depreciation & amortization $ 143,702 $ 37,208 $ – $ 180,910 Income tax provision $ 89,581 $ 18,594 $ – $ 108,175 Capital expenditure $ 181,963 $ 155,991 $ – $ 337,954 Long-lived assets $ 4,086,014 $ 841,336 $ – $ 4,927,350 Segment assets $ 6,622,288 $ 2,326,550 $ 990,925 $ 9,939,763 Segment loss $ ( 2,823,421 ) $ ( 398,645 ) $ ( 1,130,957 ) $ ( 4,353,023 ) NOTE 20 — COMMITMENTS AND CONTINGENCIES Contractual Commitments As of March 31, 2025, 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 $ 4,643,998 $ 2,595,757 $ 1,306,541 $ 741,700 $ — Finance lease obligations 138,610 55,477 48,845 34,288 — Vehicle loans 234,820 66,154 98,812 56,854 13,000 Equipment loans 49,952 39,114 10,838 — — Other loans 539,275 539,275 — — — Convertible note 1,000,000 840,000 160,000 — — Loan payable to a related party 124,176 — 124,176 — — Total $ 6,730,831 $ 4,135,777 $ 1,749,212 $ 832,842 $ 13,000 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 March 31, 2025. 39 LAKESIDE HOLDING LIMITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 21 — ASSETS ACQUISITION Hupan Pharmaceutical (Hubei) Co., Ltd acquisition On November 5, 2024, the Company entered into an equity transfer agreement (the “Equity Transfer Agreement”) with Hubei Haoyaoshi Zhenghe Pharmacy Chain Co., Ltd and Hubei Huayao Pharmaceutical Co., Ltd to acquire 100 % of the equity interests in Hupan Pharmaceutical (Hubei) Co., Ltd (“Hupan Pharmaceutical”), a pharmaceutical distribution and supply chain service provider headquartered in Wuhan, China. Pursuant to the Equity Transfer Agreement, Sichuan Hupan will acquire the entirety of the equity interests that Hubei Haoyaoshi Zhenghe Pharmacy Chain Co., Ltd and Hubei Huayao Pharmaceutical Co., Ltd. hold in Hupan Pharmaceutical, for a total consideration of RMB 4.0 million (US$ 552,730 ). The acquisition was accounted for as an asset acquisition because the acquisition was related to the pharmaceutical distribution license, a single asset. The acquisition was closed on November 21, 2024. The following table summarizes the fair value of the identifiable assets: Amount Cash $ 552,730 Payable to Hupan Pharmaceutical ( 276,365 ) Net consideration $ 276,365 Assets acquired and liabilities assumed: Cash acquired 9 Intangible assets – license of pharmaceutical distribution 418,867 Other payables ( 37,794 ) Deferred tax liabilities ( 104,717 ) Total net assets acquired $ 276,365 The Company recorded impairment of intangible assets of nil and nil , respectively, for the three and nine months ended March 31, 2025. NOTE 22 — SUBSEQUENT EVENTS The Company evaluated all events and transactions that occurred after March 31, 2025 up through the date the Company issued these condensed consolidated financial statements, and unless disclosed below, there are not any material subsequent events that require disclosure in these condensed consolidated financial statements. Subsequent closing of the first tranche of the Notes On April 22, 2025, the subsequent closing of the first tranche (the “Subsequent Closing”) was consummated, pursuant to which the Company issued to the Investor a Note in a principal amount of $ 500,000 and certain Warrants to purchase 202,082 shares of common stock at an initial exercise price of $ 1.1929 per share, subject to adjustments in the Warrants. The Note issued in the Subsequent Closing is convertible into Common Stock at an initial conversion price of $ 1.1929 , subject to certain adjustments (the “Conversion Price”), provided that the Conversion Price shall not be reduced below $ 0.2 (the “Floor Price”). The Note does not bear any interest absent an Event of Default (as defined in the Note) and matures on July 22, 2026. 40