What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-10-14 compared with 2024-09-30 · 1420 added, 787 removed, 559 unchanged (80% of the section changed)

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LAKESIDE HOLDING LIMITED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID:

INDEX TO THE CONSOLIDATED FINANCIAL STATEMETNS

Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of June 30, 2025 and 2024 F-3

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Notes to Consolidated Financial Statements F-7 – F-44

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

Independent Registered

Public Accounting Firm

To the Shareholders and Board of Directors of

Lakeside Holding Limited

Opinion on the Consolidated Financial Statements

Opinion on the

Consolidated Financial Statements

We have audited the accompanying consolidated

balance sheets of Lakeside Holding Limited and its subsidiaries (the “Company”) as of June 30, 2024 and 2023, and the related

consolidated statements of income (loss) and comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the

years in the two-year period ended June 30, 2024, and the related notes (collectively referred to as the consolidated financial statements).

balance sheets of Lakeside Holding Limited and its subsidiaries (the Company) as of June 30, 2025 and 2024, and the related consolidated

statements of income (loss) and comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years

in the two-year period ended June 30, 2025, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company

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Basis for Opinion

These consolidated financial statements are the

responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial

statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect

to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

These consolidated financial statements

are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated

financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent

with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards

of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated

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Accordingly, we express no such opinion.

Our audits included performing procedures to

assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made

by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide

a reasonable basis for our opinion.

Our audits included performing procedures

to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing

procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

/ s / ZH CPA, LLC

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Denver, Colorado

September 30, 2024

999 18 th Street, Suite 3000, Denver,

CO, 80202 USA Phone:

1.303.386.7224 Fax:

October 14, 2025

999 18 th Street, Suite 3000, Denver, CO, 80202 USA Phone:

1.303.386.7224

1.303.386.7101 Email:

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CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2025 AND 2024

CURRENT ASSETS

Accounts receivable – third parties, net

Accounts receivable – related party, net

Prepayment and other receivable

Accounts receivable – third parties, net of credit loss allowance of $ 87,728 and $ 39,955

Accounts receivable – related party, net of credit loss allowance of $ nil and $ 14,111

Note receivable

Prepayment and other receivable – third parties

Other receivable – related party

Contract assets

Due from related parties

Inventories, net

Right of return asset

Loan receivable from related parties

Loan receivable from a third party

Total current assets

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Property and equipment at cost, net of accumulated depreciation

Intangible assets, net

Right of use operating lease assets

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Deferred offering costs

Prepayment, deposit and other receivable

Deposit and prepayment

Total non-current assets

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Loans payable, current

Contract liabilities

Dividend payable

Due to shareholders

Convertible debts - current

Refund liabilities

Total current liabilities

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Loans payable, non-current

Deferred tax liability

Loan payable to a related party

Deferred tax liabilities

Obligations under operating leases, non-current

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Additional paid-in capital

Accumulated other comprehensive income (loss)

(Deficits) Retained earnings

Total stockholders’ equity

Non-controlling interests in subsidiary

Statutory reserve

( 5,315,371 )

Accumulated other comprehensive income

TOTAL LIABILITIES AND EQUITY

* Shares and per share data are presented on a retroactive

basis to reflect the issuance of 6,000,000 common stocks.

The accompanying notes are

an integral part of these consolidated financial statements.

The accompanying notes are an integral part of

these consolidated financial statements.

LAKESIDE HOLDING LIMITED

CONSOLIDATED STATEMENT OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENT OF INCOME (LOSS)

AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED JUNE 30, 2025 AND 2024

For the Years Ended

Revenue from third party

Revenue from related parties

Revenue from cross-border freight solutions – third party

Revenue from cross-border freight solutions – related parties

Revenue from distribution of pharmaceutical products – third parties

Total revenue

Cost of revenue from third party

Cost of revenue from related parties

Cost of revenue from cross-border freight solutions – third party

Cost of revenue from cross-border freight solutions – related party

Cost of revenue from pharmaceutical products – third parties

Total cost of revenue

Operating expenses:

Selling expense

Selling expenses

General and administrative expenses

Loss from deconsolidation of a subsidiary

Provision (reversal) of allowance for expected credit loss

Provision of allowance for expected credit loss

Total operating expenses

(Loss) Income from operations

Loss from operations

( 4,959,169 )

Other income (expense)

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Interest expense

Total other income, net

(Loss) Income before income taxes

Credit (Provision) for income taxes

Net (loss) income and comprehensive (loss) income

Total other (expense) income

Loss before income taxes

( 4,944,259 )

Income tax expense (credit)

( 5,246,136 )

net loss attributable to non-controlling interest

Net (loss) income attributable to common stockholders

Net loss attributable to the Company

( 5,246,136 )

Other comprehensive (loss) income:

Foreign currency translation gain (loss)

Foreign currency translation gain

Comprehensive (loss) income

( 5,236,793 )

comprehensive loss attributable to non-controlling interest

Comprehensive (loss) income attributable to the Company

Comprehensive loss attributable to the Company

$ ( 5,236,793 )

(Loss) earnings per share – basic and diluted

Weighted average shares outstanding – basic and diluted*

For the Years Ended

Pro Forma information Statement for Income Tax Provision as a

C Corporation upon Reorganization

(Loss) Income before income taxes

$ ( 222,036 )

Credit (Provision) for income taxes

Net (loss) income and comprehensive (loss) income

Net loss attributable to non-controlling interests

Net (loss) income attributable to common stockholders

Other Comprehensive income (loss)

Foreign currency translation (loss) gain

Comprehensive (loss) income

net loss attributable to non-controlling interest

Comprehensive (loss) income attributable to the Company

(Loss) Earnings per share – Basic and diluted*

Loss per share – basic and diluted-

Weighted Average Shares Outstanding – basic and diluted

* Shares and per share data are presented on a retroactive

basis to reflect the issuance of 6,000,000 common stocks.

The accompanying notes are

an integral part of these consolidated financial statements.

The accompanying notes are an integral part of

these consolidated financial statements.

LAKESIDE HOLDING LIMITED

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FOR THE YEARS ENDED JUNE 30, 2025 AND 2024

Common Shares*

Earnings (Deficits)

Other Comprehensive Income

Balance at June 30, 2022

Net income (loss) for the year

Capital dividend declared

Capital contribution made by non-controlling shareholders

Foreign currency translation adjustment

Comprehensive

Income (Loss)

Balance at June 30, 2023

Termination of S Corporation upon reorganization

Net loss for the year

Deconsolidation of a subsidiary

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Balance at June 30, 2024

* Shares and per share data are presented on a retroactive

basis to reflect the issuance of 6,000,000 common stocks.

The accompanying notes are

an integral part of these consolidated financial statements.

Paid in capital

( 5,246,136 )

Statutory reserve

Initial public offering, net of share issuance costs

Issuance of Convertible debts with detachable warrants

Issuance of common shares through a private placement

Foreign currency translation adjustment

Balance at June 30, 2025

$ ( 5,315,371 )

The accompanying notes are an integral part of

these consolidated financial statements.

LAKESIDE HOLDING LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2025 AND 2024

For the Years Ended

Cash flows from operating activities:

Net (loss) income

$ ( 5,246,136 )

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

$ ( 228,277 )

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

Depreciation – G&A

Depreciation – overhead cost

Non-cash operating lease expense

Depreciation – cost of revenue

Amortization of intangible asset

Straight line lease expense of operating leases

Depreciation of right-of-use finance assets

Provision (Reversal) of allowance for expected credit loss

Deferred tax (benefit) expense

Amortization of discount and bond issuance cost

Provision of allowance for expected credit loss

Interest expense of convertible debenture

Deferred tax expense

Interest income

Loss from derecognition of shares in subsidiary

Loss on disposal of property and equipment

Changes in operating assets and liabilities:

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Accounts receivable – related parties

Note receivable

Contract assets

Due from related party

Prepayment, other deposit

Inventories, net

Right of return assets

Other receivable – related parties

Prepayment and other deposit – third parties

Accounts payables – third parties

Accounts payables – related parties

Contract liabilities

Accrued expense and other payables

Lease liabilities – Operating lease

Net cash (used in) provided by operating activities

Refund liabilities

Operating lease liabilities

( 1,540,032 )

Net cash used in operating activities

( 2,655,006 )

Cash flows from investing activities:

Purchase of property and equipment

Payment for leasehold improvement

Total cash payment for asset acquisition

Cash acquired from assets acquisition

Loan to related parties

Interest received from loan to a third party

Payment made for investment in other entity

Net cash outflow from deconsolidation of a subsidiary (Appendix A)

Acquisition of property and equipment

Net cash used in investing activities

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Repayment of loans

Net proceeds from issuance of convertible debts

Repayment of principal of convertible debts

Proceeds from a loan from a related party

Repayment of equipment and vehicle loans

Principal payment of finance lease liabilities

Payment for deferred offering cost

Advance to related parties

Payment for deferring offering cost

Proceeds from initial public offering, net of share issuance costs

Proceeds from a private placement, net of share issuance costs

Advances to related parties

Proceeds from shareholders

Repayment to shareholders

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash

Net cash provided by financing activities

Effect of exchange rate changes on cash

Net increase (decrease) in cash

Cash, beginning of the year

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Cash paid for interest

SUPPLEMENTAL SCHEDULE OF NON-CASH IN FINANCING ACTIVITIES

SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES

Deferred offering costs within due to shareholders

Deferred offering costs within accrued expense and other payables

NON-CASH ACTIVITIES

Dividends declared

Dividends declared and offset against due from shareholders

Property and equipment additions included in loan payable

Property additions included in loan payable

Property disposal through loan payable

Right of use assets obtained in exchange for operating lease obligations

Right of use assets obtained in exchange for finance lease obligation

Additions to property and equipment through accounts payable and other payable

Additions to leasehold improvement through accounts payable and other payable

Due to shareholder offset against loan receivables related parties

Due to shareholder offset against loan receivables from a third party

APPENDIX A – Net cash outflow from deconsolidation of a subsidiary

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Loss from deconsolidation of a subsidiary

The accompanying notes are

an integral part of these consolidated financial statements.

The accompanying notes are an integral part of

these consolidated financial statements.

LAKESIDE HOLDING LIMITED

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offering, the Company’s common shares began trading on the Nasdaq Capital Market under the trading symbol “LSH.”

As of June 30, 2025, the Company’s

subsidiaries are as follows:

Incorporation/

Acquisition Jurisdiction of

Formation Percentage of

direct/indirect

Ownership Principal

Parent Company

Lakeside Holding Limited August 28, 2023 Nevada Parent 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

July 10, 2024, the Company incorporated a wholly-owned subsidiary, Sichuan Hupan Jincheng Enterprise Management Co., Ltd, in China.

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 net consideration of $ 0.3 million

(see Note 20).

The transaction was completed on November 21, 2024.

April 8, 2025 and May 12, 2025, Hupan New Energy and Wuhan Ruixinda were deregistered, respectively.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION (cont.)

Reorganization

A reorganization of the legal

structure was completed on September 23, 2023.

The Reorganization involved the incorporation of Lakeside Holding Limited and the

transfer the shares of American Bear Logistics Corp (“ABL Chicago”) to the Company.

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,

Henry Liu, the Chairman of the Board and Chief Executive Officer (“CEO”), and Mr.

Shuai Li, the President and

Chief Operating Officer (“COO”), each owned 50 % equity interest of the ABL Chicago (collectively, the “Controlling Group”).

On September 23, 2023, the Controlling Group transferred their 100 % equity interest in ABL Chicago to the Company for a consideration

Upon this Reorganization, the Company ultimately owns 100% equity interest of ABL Chicago.

As of the date of this report, the

Controlling Group collectively holds 76.0 % equity interest of the Company through H&L Logistics International LLC which holds 36.0 %

equity interest of the Company, and Jiushen Transport LLC, which holds 40.0 % equity interest of the Company.

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.

the share split and as of the date of this consolidated financial statements, the issued share capital of the Company consists of $ 600

divided into 6,000,000 common shares, par value of $ 0.0001 each.

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,

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in accordance with ASC 805-50-45-5.

Details of the Company and its subsidiary are set

out below upon the Reorganization:

Name Date of Incorporation Jurisdiction of Formation Percentage of direct/indirect Economic Ownership Principal Activities

Parent Company

Lakeside Holding Limited August 28, 2023 Nevada 100 % Holding company

American Bear Logistics Corp.

(“ABL Chicago”) February 5, 2018 Illinois 100 % Logistics services

American Bear International Logistics (Wuhan) Corp.

(“ABL Wuhan”)* March 27, 2019 Wuhan, China 51 % Logistics services

* ABL Wuhan ceased to be the Company’s subsidiary after

August 4, 2023.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION AND BUSINESS

DESCRIPTION (cont.)

On February 5, 2018, American

Bear Logistics Corp.

(“ABL Chicago”) was established under the laws of the State of Illinois.

The Company is providing customized

cross-border ocean and airfreight solutions.

On July 8, 2022, ABL Chicago

entered into an agreement with two third-party individuals who were the original shareholders of American Bear International Logistics

(Wuhan) Corp.

(“ABL Wuhan”), to acquire 51 % ownership interest of ABL Wuhan with nominal consideration.

ABL Wuhan was originally

incorporated on March 27, 2019 in Wuhan City, Hubei Province, China, with a total registered capital of RMB 0.5 million (approximately

$ 0.07 million).

Prior to the acquisition, ABL Wuhan had no active business operations since its inception and the registered capital

had not been paid.

Management concluded that this acquisition did not qualify as a business combination under ASC 805 — Business

Combinations.

ABL Wuhan primarily focuses on facilitating the logistic services for customers in China.

On May 18, 2023, ABL Wuhan

increased its registered capital to RMB 3.0 million (approximately $ 0.41 million).

On August 4, 2023, ABL

Wuhan further increased its registered capital to RMB 5.0 million (approximately $ 0.7 million), while ABL Chicago reduced

its unpaid registered capital contribution of RMB 530,000 (approximately $ 75,000 ).

Concurrently, the third-party shareholder

increased their registered capital contribution accordingly.

Following this change, the third-party shareholder owns 80 % of equity

interest and ABL Chicago owns 20 % of equity interest.

Consequently, ABL Wuhan ceased to be the Company’s subsidiary after August 4,

On February 2, 2024, ABL

Chicago reduced its unpaid registered capital contribution of RMB 750,000 (approximately $ 105,000 ) in its investee (ABL Wuhan).

Concurrently,

the third-party shareholder increased their registered capital contribution accordingly.

Following this change, the third-party shareholder

owns 95 % of equity interest and ABL Chicago owns 5 % of equity interest.

The Company recognized a loss

of $ 73,151 from deconsolidation of a subsidiary and recorded as investment in other entity of $ 15,741 on consolidated balance sheets as

of June 30, 2024.

The following table summarized the assets and liabilities

of ABL Wuhan as of the deconsolidation date:

Working capital (excluding cash), net

Carrying value of net assets

Fair value of the consideration received

Fair value of the retained noncontrolling investment

Carrying value of noncontrolling interest deconsolidated

Loss on deconsolidation of a subsidiary

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.

total net proceeds to the Company from the IPO, after deducting discounts, expense allowance, deferred IPO cost and expenses, were approximately

$ 5.35 million (Note 16).

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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The accompanying consolidated

financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America

financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and have been consistently applied.

The accompanying consolidated financial statements include the financial

statements of Lakeside Holding Limited and its subsidiaries.

The accompanying consolidated financial statements include the financial statements of

Lakeside Holding Limited and its subsidiaries.

All inter-company balances and transactions have been eliminated upon consolidation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (cont.)

Revision of cash flow statement

The Company identified errors in the statement of cash flows for the

year ended June 30, 2023 relating to interest expense of $ 24,172 , which were previously included as cash flows from financing activities

and have been reclassified as cash flows from operating activities.

The Company considered the errors identified in accordance with the

SEC’s Staff Accounting Bulletin No.

99 and determined the impact was immaterial to the previously issued consolidated financial

Nonetheless, the Company has revised the previously reported consolidated statements of cash flows for the year ended June 30,

This reclassification had no impact on the Company’s operating results or financial positions for the respective years.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates and assumptions

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

Significant accounting estimates required to be made by management include allowance for credit losses, the percentage of

performance obligation completed at the reporting period.

The Company evaluates its estimates and assumptions on an ongoing basis and

its estimates on historical experience, current and expected future conditions and various other assumptions that management believes

are reasonable under the circumstances based on the information available to management at the time these estimates and assumptions are

Actual results and outcomes may differ significantly from these estimates and assumptions.

Cash consists of balances with

The Company maintains all of its bank accounts in the United States, which are insured by Federal Deposit Insurance Corporation

Significant accounting estimates required to be made by management include allowance for credit losses, return liabilities,

percentage of performance obligation completed at the reporting period, the measurements of convertible debts 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.

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”) at a limit of $ 250,000 per depositor, 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 June 30, 2025 and 2024, the Company had approximately $ 5.0 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 June 30, 2025 and 2024 were denominated in RMB while most of cash balance as of June 30, 2024 were denominated

Accounts receivable, net

receivables are carried at the original invoiced amount less an estimated allowance for expected credit losses based on the probability

of future collection.

The Company reviews its accounts receivable on a periodic basis and makes general and specific allowances when

there is doubt as to the collectability of individual balances.

The Company grant credit to customers, without collateral, under normal

payment terms.

The Company uses a loss rate method to estimate the allowance for credit losses.

For those past due balances over one

year and other higher risk receivables identified by the Company are reviewed individually for collectability.

The Company evaluates

the expected credit loss of accounts receivable based on customer financial condition and historical collection information adjusted

for current market economic conditions and forecasts of future economic performance when appropriate.

Loss-rate approach is based

on the historical loss rates and expectations of future conditions.

The Company writes off potentially uncollectible accounts receivable

against the allowance for credit losses if it is determined that the amounts will not be collected.

As of June 30, 2024 and 2023,

the Company recorded the allowance of credit loss of $ 54,066 and $ 25,909 , respectively.

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.

uses a loss rate method to estimate allowance for credit losses for accounts receivable from cross-border freights solutions and aging

schedule to estimate the allowance for credit losses for accounts receivable from distribution of pharmaceutical products respectively.

Loss-rate approach is based on the historical loss rates.

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.

For those past due balances over one year and other higher risk receivables identified by

the Company are reviewed individually for collectability.

The Company writes off potentially uncollectible accounts receivable against

the allowance for credit losses if it is determined that the amounts will not be collected.

As of June 30, 2025 and 2024, the Company

recorded the allowance of credit loss of $ 87,728 and $ 54,066 , respectively.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Notes receivable, net

Notes receivable represents

bank acceptance notes issued by financial institutions in the People’s Republic of China (“PRC”), typically received

from customers as settlement for trade receivables.

These notes are payable on demand or at a specified future date and are guaranteed

by the issuing bank.

As of June 30, 2025 and 2024, the Company held

notes receivable totaling $ 65,152 and $ nil , all of which are expected to be collected within twelve months and are classified as current

The Company recognized $ nil allowance for expected credit loss on bank notes receivable during the reporting periods, as all the

acceptance notes were endorsed to suppliers for accounts payable payments.

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.

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.

As of June 30, 2025, the Company did not record any inventory provision.

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.

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 used the

measurement alternative under ASC 321-10-35-2.

Under this approach, the investment is measured at cost, and adjusted for impairments,

with changes recognized in net income.

The investment in other entity that does not report net asset value is subject to qualitative assessment

for indicators of impairments.

On August 4, 2023, ABL

Wuhan ceased to be the Company’s subsidiary and became the Company’s long-term investment.

As of June 30, 2024, the Company’s

investment in ABL Wuhan amounted to $ 15,741 and no impairment charges was recorded.

As of June 30, 2025 and 2024,

the Company’s investment in ABL Wuhan amounted to $ 15,741 and $ 15,741 respectively, and no impairment charges was recorded.

Property and equipment

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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 consolidated statements of income (loss) and other comprehensive income (loss).

Impairment of long-lived asset

Long-lived assets, including

plant, property and equipment, are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse

change to market conditions that will impact the future use of the assets) indicate that the carrying amount may not be fully recoverable

or that the useful life is shorter than the Company had originally estimated.

When these events occur, the Company evaluates the impairment

by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of

the assets and their eventual disposition.

If the sum of the expected future undiscounted cash flows is less than the carrying value of

the assets, the Company recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the

The Company reviews the impairment of its right-of-use assets consistent with the approach applied for its other long-lived assets.

No impairment charge was recognized for the years ended June 30, 2024 and 2023, respectively.

Accounts payable

account payables are derived from logistic services and forwarding service providers.

The balances arise from logistics services provider

are usually settled within 7 to 30 days.

Expenditures for maintenance and repairs, which do not materially extend

the useful lives of the assets, are charged to expense as incurred.

Expenditures for major renewals and betterments which substantially

extend the useful life of assets are capitalized.

The cost and related accumulated depreciation of assets retired or sold are removed

from the respective accounts, and any gain or loss is recognized in other income or expenses in the consolidated statements of income

(loss) and other comprehensive income (loss).

LAKESIDE HOLDING LIMITED

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ACCOUNTING POLICIES (cont.)

Intangible Assets, net

Intangible assets consist

primarily of business license acquired from asset acquisition.

It grants the Company the right of selling and distributing pharmaceutical

products and solutions in mainland China.

Intangible assets are stated

at cost less accumulated amortization.

The license is amortized using the straight-line method over the estimated useful economic life

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.

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 years ended June 30, 2025 and 2024,

respectively.

Deferred offering costs

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These costs include legal fees related to the registration

drafting and counsel, consulting fees related to the registration preparation, audit fees, SEC filing and print related costs, exchange

listing costs, and road show related costs.

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.

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

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 (see Note 21).

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (cont.)

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.

commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company

Operating Leases

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Finance 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.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (cont.)

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

Finance lease ROU assets are amortized over the shorter of their estimated useful lives or the terms of the respective

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

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Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

Non-controlling interest

The non-controlling interests

are presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company.

Non-controlling interests

in the operating results of the Company are presented on the face of the consolidated statements of income (loss) and comprehensive income

(loss) as an allocation of the total income or loss between non-controlling interest holders and the shareholders of the Company.

As of June 30, 2023, non-controlling interests represent 49 % non-controlling shareholders’ interests in ABL Wuhan.

On August 4, 2023, ABL Wuhan ceased to be the Company’s subsidiary and became the Company’s investment in other entity.

Therefore, the Company did not have non-controlling interest as of June 30, 2024.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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.

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The carrying value of cash,

accounts receivable from third parties and related parties, amount due from related parties, due to shareholders, other receivables, contract

assets, accounts payable, other payables, dividend payable and accrued expenses and other current liabilities approximate fair value due

to their short-term nature.

For lease liabilities and loans payable, their carrying value approximate the fair value at the year-end,

as the interest rates used to discount the host contracts approximate market rates.

The Company noted no transfers between levels during

any of the periods presented.

The Company did not have any instruments that were measured at fair value on a recurring nor non-recurring basis

as of June 30, 2024.

Revenue recognition

were presented under ASC 606 and all subsequent ASUs that modified ASC 606 for the years ended June 30, 2024 and

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:

the contract (s) with a customer

accounts receivable from third parties and related parties, due to shareholders, other receivables, other receivable from related parties,

contract assets, loan receivable balance from a third party, loan receivable from related parties, accounts payable, convertible debts

- current, loan payable 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 and loans payable, their carrying

value approximate the fair value at the year-end, as the interest rates used to discount the host contracts approximate market rates.

The Company noted no transfers between levels during any of the periods presented.

The Company did not have any instruments that were

measured at fair value on a recurring nor non-recurring basis as of June 30, 2025 and June 30, 2024.

Convertible debts

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 with the conversion feature and

the detachable warrant under the guidance of ASC 470-20, “Debt with Conversion and Other Options, as amended by ASU 2020-06”

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.

Following the

adoption of ASU 2020-06, the Notes are recorded as a single unit within liabilities in the consolidated balance sheets as the conversion

features within the Notes are not derivatives that require bifurcation and the Notes do not involve a substantial premium.

The Convertible

debt is subsequently accounted for at amortized cost in accordance with the interest method described in ASC 835-30 (see Note 12).

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.

debt issuance costs are presented as a direct reduction of debt on the consolidated balance sheets.

Approximately $ 138,994 and $ nil

were amortized to interest expense during the year ended June 30, 2025 and 2024, respectively.

LAKESIDE HOLDING LIMITED

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ACCOUNTING POLICIES (cont.)

Revenue recognition (cont.)

Identify the performance obligations in the contract

the transaction price

the transaction price to the performance obligations in the contract

revenue when (or as) the entity satisfies a performance obligation

The Company generates revenue

from providing cross-border ocean and airfreight solutions.

No practical expedients were used when adoption ASC606.

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.

Revenue recognition

policies are as follow:

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:

contract (s) with a customer

performance obligations in the contract

Determine the

transaction price

transaction price to the performance obligations in the contract

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

13 unchanged sentences

of transporting goods from one location to another.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, the Company determines that the performance period for revenue recognition is between the container

or cargo space confirmed date and the date of arrival at destination for customer orders with cargo space booking service.

For customers

shipping goods overseas, the Company determines that the performance period for revenue recognition is between pickup date and the date

when the goods are departed from airport or port for customer orders without cargo space booking service..

The performance period may

be estimated if the date of completing delivery or the departure date or arrival date has not occurred by the reporting date.

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.

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.

The Company has determined that revenue recognition over

the time in transit provides a reasonable estimate of the transfer of services to its customers as it depicts the pattern of the Company’s

performance under the contracts with its customers.

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.

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.

Revenue from distribution of pharmaceutical

During the year ended June 30, 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

Revenue is recognized at a point in time when control of goods is transferred to the customers upon goods delivered to the

customers and accepted by the customers.

Principal and agent considerations

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.

GAAP requires us to evaluate, using a control

model, whether the Company itself promises to provide services to the customers (as a principal) or to arrange for services to be provided

by another party (as an agent).

Based on the Company’s evaluation using a control model, the Company determined that in all of

its major business activities, it serves as a principal rather than an agent within their revenue arrangements.

Revenue and the associated

purchased transportation costs are both reported on a gross basis within the consolidated statements of income (loss) and comprehensive

income (loss).

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.

GAAP requires us to evaluate, using a control model, whether the Company itself

promises to provide services to the customers (as a principal) or to arrange for services to be provided by another party (as an agent).

Based on the Company’s evaluation using a control model, the Company determined that in all of its major business activities, it

serves as a principal rather than an agent within their revenue arrangements.

Revenue and the associated purchased transportation costs

are both reported on a gross basis within the consolidated statements of income (loss) and comprehensive income (loss).

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 under the fact that the Company controls the goods before they are transferred to customers, bears inventory risk, and has

discretion in establishing pricing.

As a principal, the Company recognizes revenue on a gross basis within the consolidated statements

of income (loss) and comprehensive income (loss).

LAKESIDE HOLDING LIMITED

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ACCOUNTING POLICIES (cont.)

Revenue recognition (cont.)

Disaggregation of revenues

The Company disaggregates its

revenue from types of services providing and the customer geographic of its customers, as the Company believes it best depicts how the

nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors.

The Company disaggregates

its revenue from types of services providing and the customer geographic of its customers, as the Company believes it best depicts how

the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors.

The Company’s disaggregation

of revenues for years ended June 30, 2025 and 2024 is disclosed as below:

By service type

By service/product type

For the years ended

Cross-border ocean freights solutions

Cross-border airfreights solutions

Distribution of pharmaceutical products

Total revenue

For the years ended

Timing of revenue recognition:

Service transferred over time

Product sales at a point in time

Total revenue

By customer geographic location

For the years ended

Asia-based customers

1 unchanged sentence

Total revenue

By customer geographic

Contract assets

Contract assets represent

estimated amounts for which the Company has the right to consideration for the services provided while a delivery is still in-transit

and has not yet invoiced the customer.

Upon completion of the performance obligations, which can vary in duration based upon the method

of transport and billing the customer, these amounts become classified within accounts receivable.

Contract assets increased by $ 84,766

or 189.5 % from $ 44,740 as of June 30, 2023 to $ 129,506 as of June 30, 2024.

The increase was mainly due to more in-transit deliveries

that has not yet invoiced the customers near the period ended June 30, 2024.

Cost of revenues

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.

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.

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 we provided.

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.

As of June 30,

2025 and 2024, the Company recorded contract assets of $ 119,054 and $ 129,506 respectively.

LAKESIDE HOLDING LIMITED

2 unchanged sentences

ACCOUNTING POLICIES (cont.)

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 June 30, 2025 and 2024,

the Company recorded contract liabilities of $ 15,355 and $ nil , which will be recognized as revenue upon delivery of the products and the

acceptance by the customers.

For the year ended June 30, 2025 and 2024, the amounts transferred from contract liabilities to revenue at

the beginning of the fiscal period were nil and nil .

Refund liabilities and right of returned assets

Refund liabilities represent

the estimated amount of consideration expected to be refunded to customers and are recorded at the time revenue is recognized.

allowances are recorded as a reduction in sales with corresponding refund liabilities, and the estimated cost of refunded inventory is

recorded as a reduction to cost of sales and an increase of right of return assets.

The estimate is based on historical refund patterns,

current trends, and contractual terms.

If actual results differ from the estimates, the Company revises its estimated refund liabilities

Each period end, the Company reviews and reassesses the adequacy of its recorded refund liabilities and adjusts the amount

as necessary.

As of June 30, 2025 and 2024, the Company recorded refund liabilities of $ 77,235 and $ nil respectively on the consolidated

balance sheet.

As of June 30, 2025 and 2024, the Company recorded right of return asset of $ 141,687 and $ nil respectively on the consolidated

balance sheet.

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.

Selling expenses

Selling expenses primarily

include salaries expense, advertising 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

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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.

expenses of warehouses used for administrative purpose and office premises, travelling and entertainment, bank charges, legal and

professional fees, insurance expenses and other office expenses.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (cont.)

401(k) benefit plan

8 unchanged sentences

plan from April 2022.

The expense related to matching employees’ contributions for the years ended June 30, 2024 and 2023

was $ 30,616 and $ 32,896 , respectively.

The expense related to matching employees’ contributions was $ 31,146 and $ 30,616 for the years ended

June 30, 2025 and 2024, respectively.

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

The Company has no legal obligation for the benefits beyond the contributions.

The total amount was expensed as incurred.

the years ended June 30, 2025 and 2024, employee welfare contribution expenses amounted to approximately $ 31,429 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

3 unchanged sentences

For the years ended June 30, 2025 and 2024, the Company recognized rental income amounted to $ 381,480 and $ 327,235 , respectively,

included in other income, net on the consolidated statements of income (loss) and comprehensive income (loss).

Before the Reorganization,

12 unchanged sentences

The franchise tax is not applicable for the Company.

After the Reorganization, the Company is

subjected to U.S.

federal income tax at 21 % and the 7.0 % state tax and the 2.5 % replacement tax in the state of Illinois.

Income tax expense is the total

of the current year income tax due or refundable and the change in deferred tax assets and liabilities.

Deferred tax assets and liabilities

are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities computed

using enacted tax rates.

After the Reorganization, the Company’s

subsidiaries 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

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (cont.)

Income taxes (cont.)

The Company’s PRC subsidiaries

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.

the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”)

are usually subject to 25 % enterprise income tax rate.

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.

Company accounts for uncertain tax positions in accordance with FASB ASC Topic No.

The Company accounts for uncertain

tax positions in accordance with FASB ASC Topic No.

740, Accounting for Uncertainty in Income Taxes.

tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in

a tax examination, with a tax examination being presumed to occur.

The amount recognized is the largest amount of tax benefit that is

greater than 50 % likely of being realized on examination.

For tax positions not meeting the “more likely than not” test,

no tax benefit is recorded.

As of June 30, 2024 and June 30, 2023, the Company did not have a liability for unrecognized tax benefits.

It is the Company’s policy to includes penalties and interest expense related to income taxes as a component of other expense and

interest expense, respectively, as necessary.

The Company’s historical tax years will remain open for examination by the local

authorities until the statute of limitations has passed.

HOLDING LIMITED

A tax position is recognized as a

benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination

being presumed to occur.

The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized

on examination.

For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

As of June 30,

2025 and 2024, the Company did not have a liability for unrecognized tax benefits.

It is the Company’s policy to include 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.

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

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.

The statutory reserve as determined pursuant

to PRC statutory laws totaled approximately $ 63,416 and nil as of June 30, 2025 and 2024, respectively.

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

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12 unchanged sentences

or decrease loss per share) are excluded from the calculation of diluted EPS.

For the year ended June 30, 2025 and 2024, the Company reported

As a result, all potentially dilutive securities, including the convertible debenture, were excluded from the calculation

of diluted loss per share because their inclusion would have been antidilutive.

Foreign currency transactions

Our reporting currency is the

The functional currency of our operations, except for ABL Wuhan, is the U.S.

The functional currency of ABL

Wuhan is the RMB.

The assets, liabilities, revenues, and expenses of ABL Wuhan are remeasured in accordance with ASC 830.

year ended June 30, 2023, assets and liabilities of ABL Wuhan are translated into U.S.

dollars based upon exchange rates prevailing

at the end of each period.

Revenues and expenses of ABL Wuhan are translated at average exchange rates during the reporting period.

resulting translation adjustment is included in accumulated other comprehensive loss.

During the year ended June 30, 2024, ABL Wuhan ceased

to be the Company’s subsidiary after August 4, 2023.

There is no translated adjustment regarding ABL Wuhan since the date of deconsolidation.

Our reporting currency is

The functional currency of our operations, except for Sichuan Hupan and Hupan Pharmaceutical, is the U.S.

The functional currency of Sichuan Hupan and Hupan Pharmaceutical is the RMB.

The assets, liabilities, revenues, and expenses of Sichuan

Hupan and Hupan Pharmaceutical are remeasured in accordance with ASC 830.

For the year ended June 30, 2025, assets and liabilities

of Sichuan Hupan and Hupan Pharmaceutical are translated into U.S.

dollars based upon exchange rates prevailing at the end of the

Revenues and expenses of Sichuan Hupan 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 consolidated financial statements in this report:

Balance sheet items, except for equity accounts

US$ 1 =RMB 7.1636

Items in the statements of income and cash flows

US$ 1 =RMB 7.2143

Balance sheet items, except for equity accounts

US$ 1 =RMB 7.2672

Items in the statements of income and cash flows

US$ 1 =RMB 7.2248

Commitments and contingencies

11 unchanged sentences

remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

Segment reporting

Company follows ASC 280, “ Segment Reporting.” The Company’s Chief Executive Officer or chief operating

decision-maker reviews the consolidated financial results when making decisions about allocating resources and assessing the performance

of the Company as a whole and hence, the Company has only one reportable segment.

The Company operates and manages its business as a

single segment.

As the Company’s long-lived assets are substantially all located in the United States and substantially

all the Company’s revenues are derived from within the United States.

LAKESIDE HOLDING LIMITED

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Concentrations and risks

Concentration

of credit risk

The Company estimates credit

losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless

that obligation is unconditionally cancellable by the Company.

Assets that potentially subject the Company to significant concentration

of credit risk primarily consist of cash and cash equivalents, accounts receivable, contract assets, other receivable and amounts due

from related parties.

The Company has designed their credit policies with an objective to minimize their exposure to credit risk.

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, other receivable from related parties, loan receivable balance from a third party and loans

receivable from related parties.

The Company has designed their credit policies with an objective to minimize their exposure to credit

The maximum exposure of such

assets to credit risk is their carrying amounts at the balance sheet dates.

The Company maintains majority of the bank accounts at financial

institutions in the United States, where there is $ 250,000 standard deposit insurance coverage limit per depositor, per FDIC-insured bank

and per ownership category.

As of June 30, 2024 and 2023, the cash deposited of $ 123,550 and $ 174,018 is within the insurance coverage

limit, respectively.

To limit the exposure to credit risk relating to deposits, the Company primarily places cash deposits with large

financial institutions in the United States.

Company has adopted a credit policy of dealing with creditworthy counterparties to mitigate the credit risk from defaults.

management team conducts credit evaluations of its customers, and generally does not require collateral or other security from them.

The Company establishes an accounting policy to provide for allowance for credit loss based on the individual customer’s

financial condition, credit history, and the future economic conditions.

Due from related parties’ balances are monitored on

an ongoing basis with the result that the Company’s exposure to impairment is not significant.

As of June 30, 2024 and 2023,

none of the Company’s due from related parties are impaired.

exchange risk

ABL Wuhan which ceased to be

our subsidiary on August 4, 2023 has functional currency in RMB.

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 June 30,

2025, four banks account exceeded the insured limit.

As of June 30, 2024, the Company did not have any bank accounts in mainland China.

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 June 30, 2025 and 2024, no bank balance exceeded the insured 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.

Other receivable

and loan receivable from related parties are monitored on an ongoing basis with the result that the Company’s exposure to impairment

is not significant.

As of June 30, 2025 and 2024, none of the Company’s other receivable and loan receivable from related parties

are impaired.

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

RMB is not freely convertible into foreign currencies.

The value of the Chinese Yuan against the U.S.

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exchange risk and have not used any derivative financial instruments to hedge exposure to such risk.

Also, by considering the volume of

ABL Wuhan’s business, the impact of foreign exchange risk is limited.

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.

Also, considering the volume of its

business, the impact of foreign exchange risk is limited.

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, convertible debenture 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.

risk arises through the excess of financial obligations over available financial assets due at any point in time.

Our objective in managing

liquidity risk is to maintain sufficient readily available reserves in order to meet our liquidity requirements at any point in time.

The Company monitors and analyze its cash flow position, its ability to generate sufficient revenue sources in the future and its operating

and capital expenditure commitments.

The Company is historically funded the working capital needs primarily from operations, loans, as

well as shareholder advances to the Company.

We have not been exposed to material risks due to the fact that our leasing obligations’ interest rate and the 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.

LAKESIDE HOLDING LIMITED

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ACCOUNTING POLICIES (cont.)

Concentrations and risks (cont.)

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

The Company typically funds the working capital needed primarily from operations, loans, shareholder advances to the Company,

as well as the external financing activities.

Significant customers and suppliers

The Company had one

third-party customer generated over 10% of the Company’s total revenue for the year ended June 30, 2025.

The Company had no

related-party customer generated over 10% of the Company’s total revenue for the year ended June 30, 2025.

The Company had

three third-party customers generated over 10% of the Company’s accounts receivable as of June 30, 2025.

The Company had no

related-party customer generated over 10% of the Company’s accounts receivable as of June 30, 2025.

The Company had three third-party

customers generated over 10% of the Company’s total revenue for the year ended June 30, 2024.

The Company had one related-party

customer generated over 10% of the Company’s total revenue for the year ended June 30, 2024.

The Company had one third-party customer

generated over 10% of the Company’s accounts receivable as of June 30, 2024.

The Company had one related-party customer generated

over 10% of the Company’s accounts receivable as of June 30, 2024.

The Company had one third-party supplier represented over 10%

of the Company’s cost of revenue for the year ended June 30, 2025.

The Company had no related-party supplier represented over 10%

of the Company’s cost of revenue for the year ended June 30, 2025.

The Company had one third-party supplier represented over 10%

of the Company’s accounts payable as of June 30, 2025.

The Company had no related-party supplier represented over 10% of the Company’s

accounts payable as of June 30, 2025.

The Company had one third-party supplier represented over 10% of the Company’s cost of revenue

for the year ended June 30, 2024.

The Company had one related-party supplier represented over 10% of the Company’s cost of revenue

for the year ended June 30, 2024.

The Company had one third-party supplier represented over 10% of the Company’s accounts payable

as of June 30, 2024.

The Company had one related-party supplier represented over 10% of the Company’s accounts payable as of June

Recent accounting pronouncements

The Company considers the applicability

and impact of all accounting standards updates (“ASUs”).

Management periodically reviews new accounting standards that are

In August 2020, the FASB

issued ASU No.

2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and

Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts

in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required

under current U.S.

This ASU also removes certain settlement conditions that are required for equity-linked contracts

to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas.

standard will become effective for us beginning January 1, 2024, using either a modified retrospective or a fully retrospective method

of transition and early adoption is permitted.

Management is currently evaluating the impact of the new standard on our financial statements.

In June 2022, the FASB

issued ASU No.

2022-03, “ Fair Value Measurements (Topic 820):

Fair Value Measurement of Equity Securities Subject to

Contractual Sale Restrictions ,” which clarifies and amends the guidance of measuring the fair value of equity securities subject

to contractual restrictions that prohibit the sale of the equity securities.

The guidance will be effective for fiscal years beginning

after December 15, 2023 and interim periods within those fiscal years.

The Company does not expect the adoption to have a material

impact on the consolidated financial statements.

The Company considers the

applicability and impact of all accounting standards updates (“ASUs”).

Management periodically reviews new accounting standards

that are issued.

In August 2020, the FASB issued

ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s

Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

Under ASU 2020-06,

the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that

are not required to be accounted for as derivatives under Derivatives and Hedging (Topic 815), or that do not result in substantial premiums

accounted for as paid-in capital.

Consequently, a convertible debt instrument will be accounted for as a single liability measured at

its amortized cost, as long as no other features require bifurcation and recognition as derivatives.

The guidance also requires the if-converted

method to be applied for all convertible instruments.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with

early adoption permitted.

Adoption of the standard requires using either a retrospective or a retrospective approach.

The Company has

adopted ASU 2020-06 using the retrospective approach during the year ended June 30,2025.

In April 2024, the Company adopted ASU 2023-07, “Segment Reporting

Improvements to Reportable Segment Disclosures,” which improves reportable segment disclosure requirements.

The amendments

require the disclosure of (1) significant segment expenses that are regularly provided to the CODM and included within each reported measure

of segment profit or loss;

(2) an amount for other segment items by reportable segment and a description of its composition;

title and position of the CODM and an explanation of how the CODM uses the reported measure(s).

The amendments also provide disclosure

requirements for interim periods and entities that have a single reportable segment.

Details of segment reporting are set out in Note

2 and Note 18.

In December 2023, the Financial

Accounting Standards Board (“FASB”) issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures”,

which improves income tax disclosures.

The amendments require the disclosure of specific categories in rate reconciliation and additional

information for reconciling items that meet a quantitative threshold.

The amendments also require disaggregated information about the

amount of income taxes paid (net of refunds received), Income (or loss) from continuing operations before income tax expense (or benefit)

and Income tax expense (or benefit) from continuing operations.

The new guidance is required to be applied either prospectively or retrospectively.

This guidance is effective for the Company for the year ending June 30, 2026.

Early adoption is permitted.

The Company is evaluating the

impact of the adoption of this guidance.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES (cont.)

Recent accounting pronouncements (cont.)

In November 2024, the FASB issued ASU 2024-03, “Income Statement

– Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement

Expenses” and issued subsequent amendment within ASU 2025-01.

The amendments require disaggregation disclosure for certain expense

captions presented on the face of income statement, as well as additional disclosure about selling expenses.

This guidance is effective

for the Company for the year ending June 30, 2028 and interim reporting periods during the year ending December 31, 2029.

Early adoption

is permitted.

The Company is evaluating the impact of the adoption of this guidance on its disclosures.

In November 2024, 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.

of the ASU should be applied retrospectively to all prior periods presented in the financial statements.

Early adoption is also permitted.

This ASU will likely result in us including the additional required disclosures when adopted.

Management is currently evaluating the provisions

of this ASU and expect to adopt them for the year ending December 31, 2024.

In December 2023, the FASB

issued ASU No.

2023-09, “Improvements to Income Tax Disclosures” (Topic 740).

The ASU requires disaggregated information about

a reporting entity’s effective tax rate reconciliation as well as additional information on income tax paid.

The ASU is effective

on a prospective basis for annual periods beginning after December 15, 2024.

Early adoption is also permitted for annual financial statements

that have not yet been issued or made available for issuance.

This ASU will likely result in the required additional disclosures being

included in the Company’s consolidated financial statements, once adopted.

issued ASU 2024-04, “Debt - Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments,”

which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as

an induced conversion.

The amendments also clarify some specific applications of induced conversion guidance and that the guidance applies

to a convertible debt instrument that is not currently convertible as long as it had a substantive conversion feature as of both its issuance

date and the date the inducement offer is accepted.

The new guidance is required to be applied either prospectively or retrospectively.

This guidance is effective for the Company for the year ending June 30, 2027.

Early adoption is permitted.

The Company is evaluating the

impact of the adoption of this guidance.

In May 2025, the FASB issued

ASU 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810):

Determining the Accounting Acquirer in the Acquisition

of a Variable Interest Entity,” which requires an entity involved in an acquisition transaction effected primarily by exchanging

equity interests when the legal acquiree is a VIE that meets the definition of a business to consider specific factors to determine the

accounting acquirer and removes the requirement that the primary beneficiary always is the acquirer for certain transactions.

amendments, acquisition transactions in which the legal acquiree is a VIE will, in more instances, result in the same accounting outcomes

as economically similar transactions in which the legal acquiree is a voting interest entity.

The amendments do not change the accounting

for a transaction determined to be a reverse acquisition or a transaction in which the legal acquirer is not a business and is determined

to be the accounting acquiree.

The new guidance is required to be applied prospectively to any acquisition transaction that occurs after

the initial application date.

This guidance is effective for the Company for the year ending June 30, 2028.

Early adoption is permitted.

The Company is evaluating the impact of the adoption of this guidance.

In September 2025, the Financial Accounting Standards Board (FASB)

issued Accounting Standards Update (ASU) 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic

Scope Refinements.

This update clarifies the application of derivative accounting to certain contracts and refines the guidance

for share-based noncash consideration received from customers.

Specifically, ASU 2025-07 introduces a scope exception for contracts that

are not exchange-traded and whose underlying is tied to operations or activities specific to one party.

It also clarifies that share-based

noncash consideration from a customer should initially be accounted for under Topic 606 until the right to receive or retain such consideration

becomes unconditional, at which point financial instruments guidance may apply.

The amendments are effective for the Company for the year

ending June 30, 2028, including interim periods within those fiscal years.

Early adoption is permitted.

The Company is currently evaluating

the impact of ASU 2025-07 on its consolidated financial statements and related disclosures.

The Company does not believe

1 unchanged sentence

consolidated balance sheets, statements of income (loss) and comprehensive income (loss) and statements of cash flows.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 — ACCOUNTS RECEIVABLE, NET

6 unchanged sentences

Total accounts receivable, net

Approximately $ 2.8 million

or 95.8 % of the accounts receivable balance as of June 30, 2024 has been collected as of the report date.

The movement of allowance for

credit loss for the years ended June 30, 2024 and 2023 is as follows:

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 — ACCOUNTS RECEIVABLE, NET (cont.)

Approximately $ 2.3 million or 77.1 % of the accounts receivable from

third party customers have been collected as of October 8, 2025.

All the accounts receivable from related party customers have been

collected as of October 8, 2025.

The movement of allowance

for credit loss for the years ended June 30, 2025 and 2024 is as follows:

Beginning balance

Addition (reversal) of provision

Provision of expected credit loss allowance

Effect of foreign exchange translation

Ending balance

The Company recorded addition of allowance for

credit loss of $ 28,157 and reversal of allowance for credit loss of $ 93,742 for the years ended June 30, 2024 and 2023, respectively.

The Company recorded addition

of allowance for credit loss of $ 33,432 and $ 28,157 for the years ended June 30, 2025 and 2024, respectively.

NOTE 4 — INVENTORIES, NET

Inventories, net consists of the following:

Finished goods

inventory allowance

Inventories, net

The Company recorded inventory

allowance of $ nil for the year ended June 30, 2025.

NOTE 5 — LOAN TO A THIRD PARTY

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 $ 11,380 as of June 30, 2025.

The Company recognized

interest income of $ 28,120 in connection with this loan to a third

LAKESIDE HOLDING LIMITED

1 unchanged sentence

NOTE 6 — PROPERTY AND EQUIPMENT, NET

Property, plant and equipment, net consists of the

Property and equipment, net consists of the following:

Furniture and Fixtures

5 unchanged sentences

in general and administrative expense was $ 106,853 and $ 71,980 for the years ended June 30, 2025 and 2024, respectively.

expense recorded in cost of revenue was $ 72,657 and $ nil for the years ended June 30, 2024 and 2023, respectively.

expense recorded in cost of revenue was $ 91,674 and $ 72,657 for the years ended June 30, 2025 and 2024, respectively.

year ended June 30, 2025, the Company disposed of a vehicle with a net book value of $ 115,310 .

The vehicle previously held by the Company

under a financing arrangement was repossessed by the lender.

As a result of the repossession, the Company was relieved of its obligation

to settle the remaining outstanding balance on the related loan.

The Company recognized a loss on disposal of $ 21,540 , which is included

in general and administrative expenses in the consolidated statement of income (loss) and comprehensive income (loss) under this arrangement.

NOTE 7 — INTANGIBLE ASSETS, NET

Net intangible assets consists of the following:

accumulated amortization

Intangible asset, net

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 Note 21), adjusted by deferred taxes impact on temporary tax differences in an asset acquisition using the simultaneous equations

The transaction was closed on November 21, 2024.

No impairment expense was recognized for the year ended June 30, 2025.

expense of $ 53,427 was recognized for the year ended June 30, 2025.

NOTE 8 — LEASES

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residual value guarantees or material restrictive covenants.

As of June 30, 2024, the Company

recognized additional operating lease liabilities of $ 1,358,796 compared to the June 30, 2023 balance of $ 2,334,415 , as result of entering

into a new operating lease agreement.

The ROU asset was recognized at the discount rate of 8.50 %, resulting in $ 2,094,498 on the commencement

As of June 30, 2024, the Company

recognized additional finance lease liabilities of $ 19,982 , as result of entering into a new finance lease agreement.

The ROU asset was

recognized at the discount rate of 8.50 %, resulting in $ 19,982 on the commencement date.

The Company entered into three

new operating lease agreements for the year ended June 30, 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., of 4.42 % for another lease with a lease term of 2 years in China, and of 4.42 % for another

lease with a lease term of 5 years in China, resulting in a total of $ 1,451,938 on the commencement date.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 — LEASES

For the year ended June 30,

2025, the Company entered into two new finance lease agreements for the year ended June 30, 2025.

The ROU asset was recognized at the

discount rate of 9.75 % and 10.75 % respectively for two leases with the lease term of 5 years and 5 years respectively in the U.S., resulting

in a total of $ 89,003 on the commencement date.

Total operating lease expenses

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on warehouse machinery and equipment for the years ended June 30, 2025 and 2024 were $ 38,540 and $ 32,525 , respectively.

of finance lease right-of-use assets were $ 30,712 and $ 31,780 for the years ended June 30, 2024 and 2023, respectively.

following table includes supplemental cash flow and non-cash information related to leases:

Depreciation of

finance lease right-of-use assets were $ 32,681 and $ 30,712 for the years ended June 30, 2025 and 2024, respectively.

The following table includes

supplemental cash flow and non-cash information related to leases:

For the years ended,

Cash paid of amounts included in the measurement of lease liabilities:

3 unchanged sentences

Right-of-use assets obtained in exchange for lease obligations:

Operating lease liabilities

Finance lease liabilities

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 — LEASES

Operating lease liabilities

The weighted average remaining

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Finance lease 9.32 % 6.51 %

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 — LEASES

The following is a schedule

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Total finance lease liabilities

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 — ACCRUED LIABILITIES AND OTHER PAYABLES

3 unchanged sentences

Payroll liabilities

Accrued expense

Other payables (a)

The balance mainly

consists of payable related to initial offering cost of $ 541,819 and $ nil as of June 30, 2024 and 2023, respectively.

Accrued expense (a)

Other payables

mainly consists of accrued interest of $ 220,823 and $ 175,019 , accrued insurance expense of $ 10,080 and nil , and accrued professional

fee of $ 526,282 and $ 260,000 as of June 30, 2025 and 2024, respectively.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 — LOANS PAYABLE

2 unchanged sentences

The loan balance consists of the following:

Equipment loans

Vehicle loans

Equipment loans (a)

Vehicle loans (b)

loan payable, current

( 1,300,112 )

Loan payable, non-current

Equipment loans

On December 7, 2020, the

Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 48,033 at a fixed interest rate of 3.99 %

per annum with a maturity date of December 1, 2025 .

The loan balance was $ 15,427 and $ 25,211 as of June 30, 2024 and 2023, respectively.

On December 3, 2020, the

Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 3,150 at a fixed interest rate of 6.75 %

per annum with a maturity date of December 2, 2023 .

The loan balance was $ nil and $ 570 for as of June 30, 2024 and 2023, respectively.

March 11, 2021, the Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 3,150 at a

fixed interest rate of 6.75 % per annum with a maturity date of March 10, 2024 .

The loan balance was $ nil and $ 848 as of June 30,

2024 and 2023, respectively.

(a) Equipment loans

Company made the total principal repayments of $ 49,712 and $ 63,981 in connection with the equipment loans during the years ended

June 30, 2025 and 2024, respectively.

Interest expenses for the above-mentioned equipment loans amounted to $ 5,235 and $ 9,168

during the years ended June 30, 2025 and 2024, respectively.

The Company did not have any new equipment loan during the year

ended June 30, 2025.

(b) Vehicle loans

During the year ended June

30, 2025, the Company entered into a new 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 .

During the year ended June 30, 2025, the lender repossessed a vehicle previously

held by the Company under a financing arrangement.

As a result of the repossession, the Company was relieved of its obligation to settle

the remaining outstanding balance on the related loan.

The Company recognized a loss on disposal of $ 21,540 , which is included in general

and administrative expenses in the consolidated statement of income (loss) and comprehensive income (loss) under this arrangement.

Company made the total principal repayments of $ 65,987 and $ 55,981 in

connection with the above vehicle loans during the years ended June 30, 2025 and 2024, respectively.

Interest expenses for the above-mentioned above

vehicle loans amounted to $ 11,037 and $ 6,188 during the years ended June 30, 2025 and 2024, respectively.

LAKESIDE HOLDING LIMITED

1 unchanged sentence

NOTE 10 — LOANS PAYABLE (cont.)

On March 9, 2021, the

Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 12,700 at a fixed interest rate of 3.99 %

per annum with a maturity date of July 6, 2025 .

The loan balance was $ 3,642 and $ 6,867 as of June 30, 2024 and 2023, respectively.

On April 7, 2021, the

Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 12,700 at a fixed interest rate of 3.99 %

per annum with a maturity date of July 6, 2025 .

The loan was guaranteed by Mr.

Henry Liu, the Chairman of the Board and CEO.

loan balance was $ 3,642 and $ 6,867 as of June 30, 2024 and 2023, respectively.

On June 4, 2021, the Company

entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 26,800 at a fixed interest rate of 3.79 % per

annum with a maturity date of June 3, 2025 .

The loan balance was $ 7,085 and $ 13,907 as of June 30, 2024, and 2023, respectively.

On June 14, 2021, the

Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 20,724 at a fixed interest rate of 6 %

per annum with a maturity date of August 06, 2024 .

The loan balance was $ 1,252 and $ 8,504 as of June 30, 2024 and 2023, respectively.

On July 13, 2021, the

Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 8,465 at a fixed interest rate of 6 %

per annum with a maturity date of June 30, 2024 .

The loan balance was $ 256 and $ 3,234 as of June 30, 2024 and 2023, respectively.

On September 28, 2021,

the Company entered into another equipment loan with Toyota Commercial Finance for a principal amount of $ 23,600 at a fixed interest rate

of 3.54 % per annum with a maturity date of June 30, 2024 .

The loan balance was $ 690 and $ 8,812 as of June 30, 2024 and 2023,

respectively.

On February 21, 2023,

the Company entered into an equipment loan with Toyota Commercial Finance for a principal amount of $ 29,705 at a fixed interest rate of

7.90 % per annum with a maturity date of February 20, 2027 .

The loan balance was $ 20,823 and $ 27,571 as of June 30, 2024 and

2023, respectively.

On June 10, 2021, the

Company entered into an equipment loan with Amur Equipment Finance for a principal amount of $ 41,239 at a fixed interest rate of 13.92 %

per annum with a maturity date of June 9, 2026 .

The loan is personally guaranteed by Henry Liu, the Chairman of the Board and CEO.

loan term was 5 years .

The loan balance was $ 18,972 and $ 27,077 as of June 30, 2024 and 2023, respectively.

(a) The Company entered a loan of $ 300,000 with a third party on March 1,

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 .

the Company entered into an equipment loan with Hatachi Capital America Corp.

for a principal amount of $ 28,450 at a fixed interest rate

of 9.49 % per annum with a maturity date of March 15, 2026 .

The loan balance was $ 12,569 and $ 18,871 as of June 30, 2024 and

2023, respectively.

The Company made the total

principal repayments of $ 73,149 and $ 68,230 in connection with the above equipment loans during the years ended, 2024 and 2023, respectively.

Interest expenses for the above-mentioned equipment loans amounted to $ 9,168 and $ 11,511 for years ended, 2024 and 2023, respectively.

Vehicle loans

On May 20, 2020, the Company

entered into a vehicle loan with BMW Financial Services for a principal amount of $ 77,844 at a fixed interest rate of 0.9 % per annum with

a maturity date of June 4, 2025 .

The loan balance was $ 15,853 and $ 31,567 as of June 30, 2024 and 2023, respectively.

On July 29, 2021, the

Company entered into a vehicle loan with AutoNation Honda O’Hare for a principal amount of $ 41,851 at a fixed interest rate of 1.90 %

per annum with a maturity date of August 10, 2025 .

The loan was guaranteed by Mr.

Henry Liu, the Chairman of the Board and CEO.

loan balance was $ 12,540 and $ 23,076 as of June 30, 2024 and 2023, respectively.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 — LOANS PAYABLE (cont.)

On June 3, 2022, the Company

entered into a vehicle loan with Tesla, Inc.

for a principal amount of $ 101,050 at a fixed interest rate of 3.24 % per annum with a maturity

date of June 18, 2027 .

The loan balance was $ 62,630 and $ 82,203 as of June 30, 2024 and 2023, respectively.

On January 23, 2023, the

Company entered into a vehicle loan with Tesla, Inc.

for a principal amount of $ 68,540 at a fixed interest rate of 5.34 % per annum with

a maturity date of February 9, 2029 .

The loan balance was $ 55,259 and $ 65,418 as of June 30, 2024 and 2023, respectively.

The Company made the total

principal repayments of $ 62,169 and $ 52,233 in connection with the above vehicle loans during the years ended, 2024 and 2023, respectively.

Interest expenses for the above-mentioned above vehicle loans amounted to $ 6,188 and $ 5,352 for years ended, 2024 and 2023, respectively.

(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.

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 year ended June 30, 2025.

(b) The Company entered a loan of $ 150,000 with an unrelated

party on January 28, 2022.

The loan is personally guaranteed by Henry Liu, the Chairman of the Board and CEO, with a fixed interest

of 9.99 % per annum for 18 months period and matured on August 14, 2023 .

The monthly payment is $ 9,014 blending of interest

and principal.

party on July 26, 2021.

(b) The Company entered a loan of $ 200,000 with a third party on July 26,

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

The loan is unsecured, with no interest bearing for a 6-month period and matured on September 7, 2024 .

(d) The Company entered a loan agreement of 50,000 with an employee

on October 27, 2021.

The 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.

On June 27, 2025,

the Company entered another loan of $ 50,000 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 year ended June 30, 2025.

The loan is non-interest bearing, for a 12-month period, and matured on October 26, 2022.

On October 26, 2022, both parties agreed to extend the

loan term to on demand.

(e) The Company entered a loan agreement of $ 100,000 with an

unrelated party on July 3, 2023.

The loan is non-interest bearing, for a 6-month period and both parties agreed to extend the

remaining principal balance of $ 100,000 payment term to on demand.

On April 10, 2024, the Company entered another loan agreement

of $ 75,000 with same party.

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 a third 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,

(f) The Company entered a loan of $ 125,000 with an unrelated

party on August 17, 2023.

The loan is personally guaranteed by Henry Liu, the Chairman of the Board and CEO, with a fixed interest

The Company made repayment of $ 80,000

during the year ended June 30, 2025.

Both parties agreed to extend the remaining principal balance of $ 95,000 payment term to on demand.

(e) The Company entered a loan

of $ 125,000 with a third 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 .

1 unchanged sentence

and principal.

(f) On October 16, 2024, the

Company entered a loan of $ 150,000 with a third 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 a third 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 a third party on January 21, 2025.

The loan is unsecured, with no interest bearing for 6 months period and matured on

July 21, 2025.

(i) The Company entered a loan

of $ 350,000 with a third party on May 17, 2025.

The loan is personally guaranteed by Henry Liu, the CEO, and Shuai Li, the Shareholder,

with a fixed interest of 45.7 % per annum and payable on weekly basis, for 52 weeks and matured on May 16, 2026 .

The monthly payment

is $ 8,413 blending of interest and principal.

LAKESIDE HOLDING LIMITED

1 unchanged sentence

NOTE 10 — LOANS PAYABLE (cont.)

The Company made the total

principal repayments of $ 228,978 and $ 125,949 in connection with the above other loans during the years ended, 2024 and 2023, respectively.

Interest expenses for the above-mentioned other loans amounted to $ 76,967 and $ 104,528 for years ended, 2024 and 2023, respectively.

The repayment schedule for the Company’s loans

is as follows:

(j) The Company entered a loan

of $ 10,000 with a third party on April 18, 2025.

The loan is unsecured, with no interest bearing for 6 months period and matured on October

(k) The Company entered a loan of $ 100,000 with an unrelated party on June

The loan is unsecured, with no interest bearing for 6 months period and matured on December 30, 2025.

(l) The Company entered a loan of $ 67,003 with a third party on April 10,

The loan is unsecured, with no interest bearing for 6 months period and matured on October 10, 2025.

The Company has made repayment

of $ 17,000 during the year ended June 30, 2025.

(m) The Company entered a loan

of $ 23,347 (RMB 167,250 ) with a third party on August 9, 2024.

The loan is unsecured, with no interest bearing and repayable on demand

(n) The Company entered a loan

of $ 139,595 (RMB 1,000,000 ) with a third party on June 6, 2025.

The loan is unsecured, with no interest bearing for 12 months period and

matured on May 31, 2026 .

(o) The Company entered a loan of $ 99,928 with a third party on June 27,

The loan is at a fixed interest of 8.99 % per annum and payable on monthly basis, for 11 months period and matured on May

The monthly payment is $ 9,498 blending of interest and principal.

Company made the total principal repayments of $ 553,440 and $ 214,986 in connection with the above other loans during the years ended

June 30, 2025 and 2024, respectively.

Interest expenses for the above-mentioned other loans amounted to $100,096 and

$ 79,697 during the years ended June 30, 2025 and 2024,

respectively.

The repayment schedule for the Company’s

loans is as follows:

Twelve months ending June 30,

1 unchanged sentence

imputed interest

8 — GENERAL AND ADMINISTRATIVE EXPENSES

NOTE 11 — LOAN FROM A RELATED

On March 1, 2025, the Company

entered into a loan agreement with a related party – ABL Shenzhen (see Note 14) 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 .

The loan balance was $ 124,176 as of June

30, 2025, respectively, and interest expense in connection with the loan for the years ended June 30, 2025 was $ 2,418 .

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 — CONVERTIBLE DEBTS

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).

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 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.

of common shares to be converted shall be calculated by the monthly payment divided by the Conversion Price.

The Conversion Price is the

lesser of (i) the initial fixed conversion price of $ 1.9098 and (ii) 95 % of the average of the four lowest daily VWAPs during the 20 trading

day period immediately preceding the applicable payment date, provided that such price shall not be less than the Floor Price of $ 0.234 .

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

On April 22, 2025, the Second

Closing of the First Tranche was consummated.

The Company issued Investor Warrants to purchase 202,082 shares of common stock at an initial

exercise price of $ 1.929 per share, subject to certain adjustments set forth therein.

The Company evaluated the

Note with conversion features and the detachable warrant under the guidance of ASC 470-20, “Debt with Conversion and Other Options,

as amended by ASU 2020-06” and ASC 815, “Derivatives and Hedging.” The Company determined that the warrant met the criteria

for equity classification under ASC 815-40.

Accordingly, the relative fair value of the warrant was recorded as a component of additional

paid-in capital on the issuance date.

The Company determined that embedded derivative

meets the definition of derivative instruments under ASC 815, Derivatives and Hedging.

Following the adoption of ASU 2020-06, the Notes

are recorded as a single unit within liabilities in the consolidated balance sheets as the conversion features within the Notes are not

derivatives that require bifurcation and the Notes do not involve a substantial premium.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 — CONVERTIBLE DEBTS

The Company accounted for

the host debt as a liability recorded at amortized cost under ASC 470-10, net of issuance costs and any discount that allocated to debt

The debt discount and issuance

cost will be amortized to interest expense over the term of the Note using the effective interest method.

The Company recorded $ 667,068 ,

net of the discount and debt issuance cost of $ 215,867 , as the balance of the debt component and $ 88,444 , net of the discount and debt

issuance cost of $ 28,621 , as the equity for the warrants at the inception point of the first Closing date by assessing the fair value

of each component.

The Company recorded $ 361,661 ,

net of the discount and debt issuance cost of $ 74,075 , as the balance of the debt component and $ 53,340 , net of the discount and debt

issuance cost of $ 10,924 , as the equity for the warrants at the inception point of the second Closing date by assessing the fair value

of each component.

The relative fair value of

warrants of first closing of the first tranche was estimated using the Black-Scholes pricing model with the following weighted-average

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 46.09 %;

and expected future dividends of nil .

The relative fair value of

warrants of second closing of the first tranche was estimated using the Black-Scholes pricing model with the following weighted-average

market value of underlying share of $ 0.93 , risk free rate of 3.98 %, expected term of 5 years;

exercise price of the warrants

of $ 1.929 , volatility of 46.37 %;

and expected future dividends of nil .

The Company applied the relative

fair value method to allocate the proceeds from the issuance of convertible debt.

The Note’s original issue discount and incurred

total issuance costs were allocated to the note payable and warrants on the relative fair value basis in accordance with ASC 835-30 and

The debt discount and issuance cost allocated to the loan component will be amortized to interest expense over the term of

the Convertible Debts using the effective interest method.

The initial purchaser’s

discount and debt issuance costs primarily consisted of underwriting fees, lawyers fee, investor legal fee, auditor fee and SEC registration

These costs were allocated to the debt and equity component based on the allocation of the proceeds as follows:

Initial purchaser’s debt discount

Debt issuance cost

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 — CONVERTIBLE DEBTS

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 13

and 15 months term.

The effective interest rate on the liability component of the Notes for the period from date of issuance is 86.52 %

and 60.80 % for the first closing and second closing, which remains unchanged from the date of issuance.

Long term debt

Outstanding principal

Unamortized Initial Purchaser’s debt discount and debt issuance cost

Accrued interest

Net carrying amount

Convertible debts, current

Convertible debts, non-current

Company recognized interest expense of $ 229,254 for the year ended June 30, 2025, which includes $ 138,994 related to the amortization

of the debt discount and issuance costs.

NOTE 13 — GENERAL AND ADMINISTRATIVE EXPENSES

For the years ended

Payroll expense

Staff benefit expense

Office expense

Professional expense

Travelling and entertainment

Repair and maintenance

Office expense

Lease expense

Depreciation expense

Other expense

Repair and maintenance

Depreciation on plant property and equipment

Rent expense of short-term leases

Motor expense

Management fee

Amortization on intangible assets

LAKESIDE HOLDING LIMITED

2 unchanged sentences

The relationship of related parties is summarized

Name of Related Party Relationship to the Company

Henry Liu Chairman of the Board, CEO, and an ultimate shareholder of the Company

Shuai Li President, COO, and an ultimate shareholder of the Company

Name of Related Party Relationship with the Company

Henry Liu CEO, and an ultimate shareholder of the Company

Shuai Li President, and an ultimate shareholder of the Company

Weship Transport Inc.

2 unchanged sentences

(“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.

of balances with related parties

Due from related parties consist of mainly rent

receivables from the following:

Due from Weship

Due from Intermodal

The Company has collected approximately $ nil from

Weship as of the report date, and is planning to collect the remaining receivable balance from three related parties by the end of December 2024.

(“ABL LAX”) Controlled by Mr.

Henry Liu and Mr.

receivable from related parties

Other receivable from related parties consists of balances with the

parties listed below, arising from interest receivable, storage income, rental income, contractor salaries charged by related parties,

other expenses paid on their behalf:

Other receivable from Weship

Other receivable from Intermodal

Other receivable from ABL LAX

Other payable to ABL Shenzhen

The Company has fully collected receivable from ABL LAX and collected

approximately $ 59,000 from Weship and $ 54,000 from Intermodal as of the October 8, 2025, and is planning to collect the remaining receivable

balance from three related parties by the end of December 2025.

of balances payable to related parties

3 unchanged sentences

of balances receivable from related parties

Account receivable from Weship

Account receivable from ABL Wuhan

Accounts receivable from Weship

Accounts receivable from ABL Shenzhen

Accounts receivable from ABL Wuhan

The Company has fully collected

the accounts receivables from the related parties as of October 8, 2025.

LAKESIDE HOLDING LIMITED

1 unchanged sentence

NOTE 14 — RELATED PARTY TRANSACTIONS (cont.)

receivable from related parties

Loan receivable from Weship

Loan receivable from ABL LAX

During the fiscal year ended

June 30, 2025, the Company entered into a loan agreement with related parties to support working capital needs.

The loan bears interest

at an annual rate of 8.99 %, with the outstanding principal not exceeding US$ 1.0 million.

The loan matures within twelve months from the

date of execution.

As of June 30, 2025, the total loan receivable from related parties was $ 0.3 million.

of related parties’ transactions

For the years ended

Revenue from Weship

Revenue from ABL Wuhan

Cost of revenue charged by Weship

Rental income from Weship

Cost of revenue charged by Intermodal

Cost of revenue charged by ABL Wuhan

Revenue from Weship (a)

Revenue from ABL Wuhan (a)

Revenue from ABL Shenzhen (a)

Revenue from ABL LAX

Cost of revenue charged by Weship (b)

Rental income from Weship (c)

Rental income from Intermodal (d)

Cost of revenue charged by Intermodal (e)

Cost of revenue charged by ABL Wuhan (f)

Cost of revenue charged by ABL LAX (g)

Interest expense charge by ABL Shenzhen (see Note 11)

During the years ended June 30, 2025 and 2024, the Company had the

following transactions with its related parties — Weship, ABL Wuhan and Intermodal

(a) The Company provides logistic forwarding services to Weship

and ABL Wuhan and charges Weship and ABL Wuhan at its regular market rate for the services provided.

(b) Weship is one of the Company’s vendors for truck delivery

for rental income.

following transactions with its related parties — Weship, ABL Wuhan, ABL Shenzhen, ABL LAX 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.

The Company subleased its warehouse in Chicago to Weship in July 2023 and again for the period from January 2024 to June 2025.

The Company also subleased another warehouse in Los Angeles beginning in August 2023.

(d) Intermodal is one of the Company’s vendors for truck

delivery service.

(e) ABL Wuhan provides labor force and certain cross-border freight

consolidation and forwarding services and is one of our cross-border freight consolidation and forwarding service providers.

The Company also subleased another warehouse with monthly rent of $ 6,500 from August 01, 2023 to October 31, 2024.

(d) The Company subleased portion of its warehouse space to Intermodal for four months and another warehouse for twelve months.

Intermodal is one of the

Company’s vendors, providing truck delivery service and provides labour forces.

(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.

(g) ABL LAX provides

service of arranging goods in and out of warehouse.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 — RELATED PARTY TRANSACTIONS (cont.)

to shareholders

1 unchanged sentence

$ ( 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 $ 986,923 and $ 90,000 and Shuai Li of $ 31,358

and $ nil as of June 30, 2024 and 2023, respectively.

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 June 30, 2025 and 2024, respectively.

payable to shareholders

1 unchanged sentence

Dividend payable to Mr.

No non-taxable dividend

was declared to shareholders for the year ended June 30, 2024.

During the year ended June 30, 2023, ABL Chicago declared non-taxable dividend

of total $ 200,000 to its two shareholders from its accumulated retained earnings, of which $ 101,150 of dividends declared was offset

against balances due from shareholders.

HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 — RELATED PARTY TRANSACTIONS (cont.)

No dividend was declared to

shareholders for the years ended June 30, 2025.

As of June 30, 2025, non-taxable dividends payable of $ 98,850 were offset against balances

due from shareholders.

and employee benefits paid to major shareholders

For the years ended

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 — TAXES

15 unchanged sentences

The Company terminated its

status as a Subchapter S Corporation as of June 30, 2024, in connection with its Reorganization.

status as a Subchapter S Corporation as of September 23, 2023, in connection with its Reorganization.

As a C Corporation, the Company

4 unchanged sentences

is applicable.

The Company’s PRC subsidiary,

Wuhan ABL, which ceased to a subsidiary since August 4, 2023, is governed by the income tax laws of the PRC and is qualified as small

and micro-sized enterprises with annual taxable income less than RMB 3 million and is subjected to 5 % of the preferential tax

Under the PRC Enterprise Income

Tax Law (the “EIT Law”), the standard enterprise income tax rate for domestic enterprises and foreign invested enterprises

In conjunction with the termination

7 unchanged sentences

tax assets to $ 89,581 and an decrease to the provision for income taxes of $ 186,485 during the year ended June 30, 2024.

of June 30, 2024 and 2023, the Company did not have an accrued liability for uncertain tax positions and does not anticipate recognition

of any significant liabilities for uncertain tax positions during the next 12 months.

For the years ended June 30, 2024 and 2023,

no amounts were incurred for income tax uncertainties or interest and penalties.

The Company is

currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position.

The Company’s tax years since its formation remain subject to possible income tax examination by its major taxing authorities

for all periods.

As of June 30, 2025 and 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 June 30, 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.

provision for income tax for the years ended June 30, 2025 and 2024 consists of the following:

For the years ended

Current income tax expense

Deferred income tax expense

Total income tax expense

LAKESIDE HOLDING LIMITED

1 unchanged sentence

NOTE 15 — TAXES (cont.)

The provision for income tax for the years ended

June 30, 2024 and 2023 consists of the following:

Current income tax expense

Deferred income tax expense

Total income tax (credit) provision

The following table reconciles the statutory tax

rate to the Company’s effective tax for the years ended June 30, 2024 and 2023:

Income (loss) before tax

The following table reconciles

the statutory tax rate to the Company’s effective tax the years ended June 30, 2025 and 2024:

For the years ended

Loss before tax

$ ( 4,944,259 )

$ ( 295,614 )

Statutory state tax rate

Income tax (credit) expense at the federal statutory rate

Illinois state tax/PET tax

Illinois replacement tax

Income tax recovery at the federal statutory rate

( 1,038,294 )

Illinois state tax/PET tax recovery

Illinois replacement tax recovery

Non-deductible expense

Federal income tax

Non-capital loss not utilized adjustment

Income tax provision

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 — TAXES (cont.)

The Company’s deferred tax assets and liabilities

consist of the following:

Change in valuation allowance

Foreign tax rate differential

Total income tax expense

The Company’s deferred

tax assets and liabilities consist of the following:

Deferred tax assets:

2 unchanged sentences

Lease liability – financing

Non-capital loss carried forward

Valuation allowance

( 1,816,352 )

Total deferred tax assets

Deferred tax liabilities:

Property and equipment

Right of use assets – operating

1 unchanged sentence

Right of use assets – financing

Intangible asset – license

Total deferred tax liabilities

( 1,000,481 )

Deferred tax assets (liabilities), net

( 1,070,137 )

Deferred tax (liability) assets, net

As of June 30, 2025, the accumulated tax losses of subsidiaries incorporated

of approximately $ 4,673,000 , are allowed to be carried forward to offset against future taxable profits.

The carry forward

of non-capital losses in the U.S.

generally has no time limit, but the loss could be only offset up to 80 % of taxable income in a given

The carry forward of net operating loss generated by the subsidiaries incorporated in the PRC, subject to the agreement of the PRC

tax authorities, of approximately $ 637,000 as of June 30, 2025 can be carried forward for 5 years.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 — STOCKHOLDERS’ EQUITY

6 unchanged sentences

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 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.

On June 24, 2025, the Company

entered into a Securities Purchase Agreement with certain investors for the issuance and sale of an aggregate of 3,000,000 shares of its

common stock, par value $ 0.0001 per share (the “Shares”), through a private offering.

The Shares were sold at a purchase price

of $ 1.00 per share, resulting in total gross proceeds of approximately $ 3,000,000 .

Upon closing of the private offering, the Company issued

3,000,000 common shares and recorded as an increase to common stock of $ 300 and additional paid-in capital of $ 2,999,700 on the consolidated

balance sheet.

As of June 30, 2025 and 2024,

10,500,000 and 6,000,000 common shares were issued and outstanding, respectively, with par value of $ 0.0001 .

Additional Paid-in Capital

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.

The Company has 6,000,000

common stock issued and outstanding before the IPO with the amount of $ 642,639 .

For the period ended June 30, 2025, the Company closed

its IPO and net proceed from offering, deducted by the deferred IPO cost and par value with the amount of $ 4,300,152 was transferred to

additional paid-in capital.

On the issuance date of the

Notes, the Company recorded the fair value of the warrant of $ 141,784 after allocation of discount and issuance cost (see Note12) as

a component of additional paid-in capital, using the Black-Scholes pricing model.

On June 24, 2025, the Company

entered into a Securities Purchase Agreement with certain investors for the issuance and sale of an aggregate of 3,000,000 shares of its

common stock, par value $ 0.0001 per share (the “Shares”), through a private offering.

The Shares were sold at a purchase price

of $ 1.00 per share, resulting in total gross proceeds of approximately $ 3,000,000 .

Upon closing of the private offering, the Company issued

3,000,000 common shares and recorded as an increase to common stock of $ 300 and additional paid-in capital of $ 2,999,700 on the consolidated

balance sheet.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 — EARNINGS PER SHARE

For the years ended June

30, 2024 and 2023, the Company has no stock options and warrants issued and no impact on diluted earnings per share.

NOTE 16 — STOCKHOLDERS’ EQUITY (cont.)

Representative’s

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’

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:

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

and expected future dividends of nil .

As of June 30, 2025, 75,000

warrants in connection with IPO funding was outstanding, with an exercise price of $ 4.5 and remaining life of 4.0 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 June 30, 2025, 318,827

warrants in connection with the first closing of the first tranche of the Notes were outstanding, with an exercise price of $ 1.9098 and

remaining life of 4.68 years.

As of June 30, 2025, 202,082

warrants in connection with the second closing of the first tranche of the Notes were outstanding, with an exercise price of $ 1.929 and

remaining life of 4.81 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 $ 63,416

and nil as of June 30, 2025 and 2024, respectively.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 — LOSS PER SHARE

For the year ended June 30,

2025, all potentially dilutive securities, including the convertible debenture and warrants, were excluded from the calculation of diluted

loss per share because the Company was in a loss position.

Their inclusion would have been antidilutive.

For the year ended June 30,

2024, all potentially dilutive securities, including warrants, were excluded from the calculation of diluted loss per share because the

Company was in a loss position.

Their inclusion would have been antidilutive.

For the years ended

Net (loss) income attributable to the Company

Net loss attributable to the Company

$ ( 5,246,136 )

$ ( 225,252 )

Weighted average number of common shares outstanding – Basic and Diluted

(Loss) earnings per share – Basic and Diluted

NOTE 13 — CONCENTRATIONS AND CREDIT RISK

The Company had three and one

third-party customers and one and no related-party customer individually generated over 10% of the Company’s total revenue for the

years ended June 30, 2024 and 2023, respectively.

As of June 30, 2024 and 2023, the Company had one and two third-party customers and

no and one related-party customer individually represented over 10% of account receivables, respectively.

The Company had one and no

third-party suppliers and one and one related-party suppliers individually represented over 10% of the Company’s cost of revenue

for the years ended June 30, 2024 and 2023, respectively.

The Company had one and no third-party supplier and one and one related-party

supplier represented over 10% of the Company’s accounts payable as of June 30, 2024 and 2023, respectively.

Loss per share – Basic and Diluted

NOTE 18 — SEGMENT REPORTING

The Company follows Financial

Accounting Standards Board (FASB”) Accounting Standards codification “ASC”) Topic 280, Segment Reporting, as amended

by Accounting Standards Update (“ASU”) No.2023-07.

Segment Reporting Topic 280:

Improvements to Reportable Segment Disclosures,

the Company continually monitors the reportable segments for changes in fact and circumstances to determine whether changes in the identification

or aggregation of operating segments are necessary.

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.

The Company’s chief

operating decision maker (“CODM”) is Mr.

Henry Liu, the CEO .

The CODM regularly reviews financial information, including segment

revenue, gross profit, significant segment expenses (selling expenses and general and administrative expenses), segment net income (loss),

and segment assets to evaluate segment performance and allocate resources accordingly.

Based on internal management

reporting and assessment, the Company concludes that it has two reporting segments listed as below for the year ended June 30, 2025 and

one reporting segment for the year ended June 30, 2024.

The Company and its subsidiaries are located either in the U.S.

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.

Segment net income (loss) excludes general corporate administrative expenses and selling expenses including corporate

functional costs relating to professional expenses, payroll expense of management, and interest expenses in connection with convertible

debt that are managed centrally at the corporate level and are excluded from the measure of segment performance reviewed by the CODM

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18 — SEGMENT REPORTING (cont.)

The summary of key information

by segments for the year ended June 30, 2025 was as follows:

Pharmaceutical

Revenue from external customers

Revenue from related parties

Cost of revenue

Selling expense

General and administrative expense

Depreciation & amortization

Income tax provision (credit)

Capital expenditure

Long-lived assets

Segment assets

Segment profit (loss)

$ ( 3,317,353 )

$ ( 2,596,275 )

$ ( 5,246,136 )

NOTE 19 — COMMITMENTS AND CONTINGENCIES

7 unchanged sentences

Equipment loans

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 — COMMITMENTS AND CONTINGENCIES (cont.)

Convertible debts

Loan payable to a related party

Contingencies

8 unchanged sentences

a material adverse effect on the Company’s consolidated financial position or results of operations or liquidity as of June 30,

2024 and 2023.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 — 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:

Total consideration in cash

Assets acquired and liabilities assumed:

Cash acquired

Original paid in capital paid to Hupan Pharmaceutical

Intangible assets – license of pharmaceutical distribution

Other payables

Deferred tax liabilities

Total assets acquired

The Company recorded impairment

of intangible assets of nil for the year ended June 30, 2025.

NOTE 21 — SUBSEQUENT EVENTS

The Company evaluated all events

and transactions that occurred after June 30, 2024 up through the date the Company issued these consolidated financial statements, for

disclosure or recognition in the consolidated financial statements of the Company as appropriate.

Incorporation of A Subsidiary

On July 10, 2024, the Company

incorporated a wholly-owned subsidiary, Sichuan Hupan Jincheng Qiye Guanli Limited, in China, with registered capital of RMB 50 million

(approximately $ 6.9 million).

Initial Public Offering

The Company evaluated all events and transactions that occurred after

June 30, 2025 up through the date the consolidated financial statements were issued, and unless disclosed below, there are not any material

subsequent events that require disclosure in these consolidated financial statements.

Exercise of Convertible Debt

Subsequent to the year ended June 30, 2025, the holders of convertible

debts exercised its right to convert the outstanding principal into shares of the Company’s common stock.

In September 2025, the

Company issued an aggregate of 550,872 shares of common stock in accordance with the terms of the note agreement, resulting in the full

conversion of the note with a principal amount of $ 441,024 .

The conversion did not result

in any gain or loss and had no impact on the Company’s consolidated statement of operations for the year ended June 30, 2025.

LAKESIDE HOLDING LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 21 — SUBSEQUENT EVENTS

Securities Purchase Agreement (cont.)

On July 16, 2025, the Company

closed its IPO of 1,500,000 shares of its common stock at an IPO price of $ 4.50 per share for aggregate gross proceeds of approximately

$ 6.75 million from the offering.

The total net proceeds to the Company from the IPO, after deducting discounts, expense allowance, and

expenses, were approximately $ 5.79 million.

Pursuant to the terms and conditions of the underwriting agreement, dated as of June 28, 2024,

by and between The Benchmark Company, LLC and Axiom Capital Management, Inc., (the “Representative”) and the Company (the

“Underwriting Agreement”), the underwriters had an overallotment option, exercisable for 30 days by July 30, 2024, to purchase

up to an additional 225,000 shares from the Company at the offering price less of $ 4.50 the underwriting discount and commissions to cover

over-allotments.

As of the reporting date, no such option has been exercised.

Representative’s Warrants

Pursuant to the Underwriting

Agreement, the Company issued to the Representative and its designee warrants (the “Representative’s Warrants”) to purchase

75,000 shares of common stock.

The Representative’s Warrants are exercisable at a per share exercise price of $ 4.50 equal to IPO

price and are exercisable at any time and from time to time, in whole or in part, during the period commencing on December 30, 2024 and

terminating on June 30, 2029.

Neither the Representative’s Warrants nor any of the shares issued upon exercise of the Representative’s

Warrants may be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or

call transaction that would result in the effective economic disposition of such securities by any person, for a period of six months

immediately following the commencement of sales of the offering.

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

entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain investors named therein (the

“Investors”), for the issuance and sale by the Company of an aggregate of 2,000,000 shares of Common Stock, par value $ 0.0001

per share (the “Shares”) in an offering (the “Private Placement”).

The closing of the Private Placement occurred

on July 17, 2025.

The Securities Purchase Agreement includes customary representations, warranties and covenants by the parties to the

Pursuant to the Securities Purchase Agreements, the Investors have agreed to purchase the Shares at a purchase price of $ 0.75

per share for an aggregate purchase price of approximately $2,000,000 .

The Company expects to use the net proceeds from the Private Placement

for general corporate purposes.

On August 4, 2025, the Company

entered into another Securities Purchase Agreement with Investors, for the issuance and sale by the Company of an aggregate of 1,807,229

shares of Common Stock, par value $ 0.0001 per share (the “Shares”) in an offering (the “Private Placement”).

The Securities Purchase Agreement

includes customary representations, warranties and covenants by the parties to the agreements.

Pursuant to the Securities Purchase Agreements,

the Investors have agreed to purchase the Shares at a purchase price of $ 0.83 per share.

The Company expects to use the net proceeds from

the Private Placement for general corporate purposes.

Changes in and Disagreements With Accountants on Accounting

and Financial Disclosure.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data