Quanome Technologies, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. LAKESIDE HOLDING LIMITED INDEX TO THE CONSOLIDATED FINANCIAL STATEMETNS Page Independent Registered Public Accounting Firm (PCAOB ID: 6413 ) F-2 Consolidated Balance Sheets as of June 30, 2025 and 2024 F-3 Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Years Ended June 30, 2025 and 2024 F-4 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended June 30, 2025 and 2024 F-5 Consolidated Statements of Cash Flows for the Years Ended June 30, 2025 and 2024 F-6 Notes to Consolidated Financial Statements F-7 – F-44 F- 1 Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Lakeside Holding Limited Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Lakeside Holding Limited and its subsidiaries (the Company) as of June 30, 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 as of June 30, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. / s / ZH CPA, LLC We have served as the Company’s auditor since 2023. Denver, Colorado October 14, 2025 999 18 th Street, Suite 3000, Denver, CO, 80202 USA Phone: 1.303.386.7224 Fax: 1.303.386.7101 Email: admin@zhcpa.us F- 2 LAKESIDE HOLDING LIMITED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2025 AND 2024 As of June 30, 2025 As of June 30, 2024 ASSETS CURRENT ASSETS Cash $ 4,956,060 $ 123,550 Accounts receivable – third parties, net of credit loss allowance of $ 87,728 and $ 39,955 2,895,580 2,082,152 Accounts receivable – related party, net of credit loss allowance of $ nil and $ 14,111 396,331 763,285 Note receivable 65,152 - Prepayment and other receivable – third parties 449,977 - Other receivable – related party 869,430 441,279 Contract assets 119,054 129,506 Inventories, net 96,534 - Right of return asset 141,687 - Loan receivable from related parties 277,741 - Loan receivable from a third party 11,380 - Total current assets 10,278,926 3,539,772 NON-CURRENT ASSETS Investment in other entity 15,741 15,741 Property and equipment at cost, net of accumulated depreciation 389,421 344,883 Intangible assets, net 365,440 - Right of use operating lease assets 3,158,202 3,471,172 Right of use financing lease assets 93,797 37,476 Deferred tax asset - 89,581 Deferred offering costs - 1,492,798 Deposit and prepayment 103,934 202,336 Total non-current assets 4,126,535 5,653,987 TOTAL ASSETS $ 14,405,461 $ 9,193,759 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payables – third parties $ 2,494,217 $ 1,161,858 Accounts payables – related parties 65,237 227,722 Accrued liabilities and other payables 2,119,994 1,335,804 Current portion of obligations under operating leases 2,323,290 1,186,809 Current portion of obligations under financing leases 47,035 37,619 Loans payable, current 1,300,112 746,962 Contract liabilities 15,355 - Dividend payable - 98,850 Tax payable 312,903 79,825 Due to shareholders - 1,018,281 Convertible debts - current 910,675 - Refund liabilities 77,235 - Total current liabilities 9,666,053 5,893,730 NON-CURRENT LIABILITIES Loans payable, non-current 60,398 136,375 Loan payable to a related party 124,176 - Deferred tax liabilities 83,100 - Obligations under operating leases, non-current 1,559,782 2,506,402 Obligations under financing leases, non-current 66,267 17,460 Total non-current liabilities 1,893,723 2,660,237 TOTAL LIABILITIES $ 11,559,776 $ 8,553,967 Commitments and Contingencies EQUITY Common stocks, $ 0.0001 par value, 200,000,000 shares authorized, 10,500,000 and 6,000,000 issued and outstanding as of June 30, 2025 and 2024, respectively 1,050 600 Subscription receivable - ( 600 ) Additional paid-in capital 8,084,275 642,639 Statutory reserve 63,416 - Deficits ( 5,315,371 ) ( 5,819 ) Accumulated other comprehensive income 12,315 2,972 Total equity 2,845,685 639,792 TOTAL LIABILITIES AND EQUITY $ 14,405,461 $ 9,193,759 The accompanying notes are an integral part of these consolidated financial statements. F- 3 LAKESIDE HOLDING LIMITED CONSOLIDATED STATEMENT OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED JUNE 30, 2025 AND 2024 For the Years Ended June 30, 2025 2024 Revenue from cross-border freight solutions – third party $ 13,122,145 $ 16,450,908 Revenue from cross-border freight solutions – related parties 1,905,815 1,864,247 Revenue from distribution of pharmaceutical products – third parties 2,762,465 - Total revenue 17,790,425 18,315,155 Cost of revenue from cross-border freight solutions – third party 12,019,710 12,316,374 Cost of revenue from cross-border freight solutions – related party 1,679,938 2,282,824 Cost of revenue from pharmaceutical products – third parties 1,212,318 - Total cost of revenue 14,911,966 14,599,198 Gross profit 2,878,459 3,715,957 Operating expenses: Selling expenses 393,290 2,500 General and administrative expenses 7,410,906 4,138,190 Loss from deconsolidation of a subsidiary - 73,151 Provision of allowance for expected credit loss 33,432 28,157 Total operating expenses 7,837,628 4,241,998 Loss from operations ( 4,959,169 ) ( 526,041 ) Other income (expense) Other income, net 416,192 338,435 Interest expense ( 401,282 ) ( 108,008 ) Total other (expense) income 14,910 230,427 Loss before income taxes ( 4,944,259 ) ( 295,614 ) Income tax expense (credit) 301,877 ( 67,337 ) Net loss ( 5,246,136 ) ( 228,277 ) Less: net loss attributable to non-controlling interest - ( 3,025 ) Net loss attributable to the Company ( 5,246,136 ) ( 225,252 ) Other comprehensive (loss) income: Foreign currency translation gain 9,343 3,122 Comprehensive (loss) income ( 5,236,793 ) ( 225,155 ) Less: comprehensive loss attributable to non-controlling interest - ( 3,119 ) Comprehensive loss attributable to the Company $ ( 5,236,793 ) $ ( 222,036 ) Loss per share – basic and diluted- $ ( 0.69 ) $ ( 0.04 ) Weighted Average Shares Outstanding – basic and diluted 7,557,534 6,000,000 The accompanying notes are an integral part of these consolidated financial statements. F- 4 LAKESIDE HOLDING LIMITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED JUNE 30, 2025 AND 2024 Common Shares Amount Subscription Receivable Additional Paid in Capital Statutory Reserves Retained Earning (Deficits) Accumulated Other Comprehensive Income (Loss) Non- controlling Interest Total Balance at June 30, 2023 6,000,000 $ 600 $ ( 600 ) $ — $ — $ 862,072 $ ( 244 ) $ ( 7,068 ) $ 854,760 Net loss — — — — — ( 225,252 ) ( 3,025 ) ( 228,277 ) Termination of S Corporation upon reorganization — — — 642,639 — ( 642,639 ) — — — Deconsolidation of a subsidiary — — — — — — 10,187 10,187 Foreign currency translation adjustment — — — — — 3,216 ( 94 ) 3,122 Balance at June 30, 2024 6,000,000 $ 600 $ ( 600 ) $ 642,639 $ — $ ( 5,819 ) $ 2,972 — $ 639,792 Paid in capital — — 600 — — — — — 600 Net loss — — — — — ( 5,246,136 ) — — ( 5,246,136 ) Statutory reserve — — — — 63,416 ( 63,416 ) — — — Initial public offering, net of share issuance costs 1,500,000 150 — 4,300,152 — — — — 4,300,302 Issuance of Convertible debts with detachable warrants — — 141,784 — — — — 141,784 Issuance of common shares through a private placement 3,000,000 300 — 2,999,700 — — — — 3,000,000 Foreign currency translation adjustment — — — — — 9,343 — 9,343 Balance at June 30, 2025 10,500,000 $ 1,050 $ — $ 8,084,275 $ 63,416 $ ( 5,315,371 ) $ 12,315 — $ 2,845,685 The accompanying notes are an integral part of these consolidated financial statements. F- 5 LAKESIDE HOLDING LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2025 AND 2024 For the Years Ended June 30, 2025 2024 Cash flows from operating activities: Net loss $ ( 5,246,136 ) $ ( 228,277 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation – G&A 106,853 71,980 Depreciation – cost of revenue 91,674 72,657 Amortization of intangible asset 53,427 - Straight line lease expense of operating leases 2,042,946 1,005,686 Depreciation of right-of-use finance assets 32,681 30,712 Amortization of discount and bond issuance cost 138,994 - Provision of allowance for expected credit loss 33,432 28,157 Interest expense of convertible debenture 39,804 - Deferred tax expense 68,022 ( 114,333 ) Interest income ( 28,120 ) - Loss from derecognition of shares in subsidiary - 73,151 Loss on disposal of property and equipment 21,540 - Changes in operating assets and liabilities: Accounts receivable – third parties ( 856,634 ) ( 722,522 ) Accounts receivable – related parties 376,728 ( 732,769 ) Note receivable ( 65,152 ) Contract assets 10,452 ( 84,766 ) Inventories, net ( 96,534 ) - Right of return assets ( 141,687 ) - Other receivable – related parties ( 24,028 ) 328,820 Prepayment and other deposit – third parties ( 241,567 ) ( 12,377 ) Accounts payables – third parties 1,332,359 699,644 Accounts payables – related parties ( 162,485 ) ( 137,691 ) Contract liabilities 15,355 - Accrued expense and other payables 1,072,789 468,284 Refund liabilities 77,235 - Tax payable 233,078 46,996 Operating lease liabilities ( 1,540,032 ) ( 846,992 ) Net cash used in operating activities ( 2,655,006 ) ( 53,640 ) Cash flows from investing activities: Purchase of property and equipment ( 49,816 ) - Payment for leasehold improvement ( 101,088 ) - Total cash payment for asset acquisition ( 552,721 ) - Cash acquired from assets acquisition 276,365 - Loan to related parties ( 277,741 ) - Interest received from loan to a third party 16,740 Payment made for investment in other entity - ( 29,906 ) Net cash outflow from deconsolidation of a subsidiary (Appendix A) - ( 48,893 ) Net cash used in investing activities ( 688,261 ) ( 78,799 ) Cash flows from financing activities: Proceeds from loans 1,017,919 400,000 Repayment of loans ( 533,440 ) ( 214,986 ) Net proceeds from issuance of convertible debts 1,170,513 - Repayment of principal of convertible debts ( 296,852 ) - Proceeds from a loan from a related party 124,176 - Repayment of equipment and vehicle loans ( 115,699 ) ( 119,964 ) Principal payment of finance lease liabilities ( 30,779 ) ( 29,628 ) Payment for deferring offering cost - ( 170,000 ) Proceeds from initial public offering, net of share issuance costs 5,351,581 - Proceeds from a private placement, net of share issuance costs 2,999,700 - Advances to related parties ( 715,309 ) ( 23,969 ) Proceeds from shareholders - 237,302 Repayment to shareholders ( 805,345 ) - Net cash provided by financing activities 8,166,465 78,755 Effect of exchange rate changes on cash 9,312 3,216 Net increase (decrease) in cash 4,832,510 ( 50,468 ) Cash, beginning of the year 123,550 174,018 Cash, end of the year $ 4,956,060 $ 123,550 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for income tax $ 2,415 $ — Cash paid for interest $ 176,679 $ 31,161 SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES Deferred offering costs within due to shareholders $ — $ 860,979 Deferred offering costs within accrued expense and other payables $ — $ 541,819 Property additions included in loan payable $ 102,235 — Property disposal through loan payable $ 93,770 — Right of use assets obtained in exchange for operating lease obligations $ 1,451,938 $ 2,094,498 Right of use assets obtained in exchange for finance lease obligation $ 89,003 $ 19,982 Additions to property and equipment through accounts payable and other payable $ 20,552 — Additions to leasehold improvement through accounts payable and other payable $ 84,794 — Due to shareholder offset against loan receivables related parties $ 311,185 — Due to shareholder offset against loan receivables from a third party $ 243,982 — APPENDIX A – Net cash outflow from deconsolidation of a subsidiary Working capital, net $ 29,812 Investment in other entity recognized ( 15,741 ) Elimination of NCl at deconsolidation of a subsidiary 10,187 Loss from deconsolidation of a subsidiary ( 73,151 ) Cash $ ( 48,893 ) The accompanying notes are an integral part of these consolidated financial statements. F- 6 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION Lakeside Holding Limited (the “Company”), is a holding company established on August 28, 2023 under the laws of the State of Nevada. The Company, acting through its subsidiary, is primarily engaged in providing customized cross-border ocean freight solutions and airfreight solutions. On July 1, 2024, the Company closed its initial public offering (“IPO”) of 1,500,000 shares of its common stock at an IPO price of $ 4.50 per share for aggregate gross proceeds of approximately $ 6.75 million from the offering (Note 16). In connection with the offering, the Company’s common shares began trading on the Nasdaq Capital Market under the trading symbol “LSH.” As of June 30, 2025, the Company’s subsidiaries are as follows: Name Date of Incorporation/ Acquisition Jurisdiction of Formation Percentage of direct/indirect Economic Ownership Principal Activities Parent Company Lakeside Holding Limited August 28, 2023 Nevada 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 * On July 10, 2024, the Company incorporated a wholly-owned subsidiary, Sichuan Hupan Jincheng Enterprise Management Co., Ltd, in China. The Company is actively exploring the potential business opportunities in mainland China. ** On November 5, 2024, Sichuan Hupan entered into an equity transfer agreement (the “Equity Transfer Agreement”), through which the Company acquired 100 % of the equity interests in Hupan Pharmaceutical, a comprehensive pharmaceutical distribution and supply chain service provider, for a total net consideration of $ 0.3 million (see Note 20). The transaction was completed on November 21, 2024. *** On April 8, 2025 and May 12, 2025, Hupan New Energy and Wuhan Ruixinda were deregistered, respectively. F- 7 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”). The Reorganization involved the incorporation of Lakeside Holding Limited and the transfer the shares of American Bear Logistics Corp (“ABL Chicago”) to the Company. Prior to the Reorganization, Mr. Henry Liu, the Chief Executive Officer (“CEO”), and Mr. Shuai Li, the President, each owned 50 % equity interest of the ABL Chicago (collectively, the “Controlling Group”). On September 23, 2023, the Controlling Group transferred their 100 % equity interest in ABL Chicago to the Company for a consideration of $ 1,000 . Upon this Reorganization, the Company ultimately owns 100 % equity interest of ABL Chicago. As part of the series of reorganization transactions to be completed before the offering, a 120-for-1 share split was conducted by the Company on March 29, 2024. After the share split, the issued share capital of the Company consists of $ 600 divided into 6,000,000 common shares, par value of $ 0.0001 each. Before and after the Reorganization, the Company, together with its subsidiaries, is effectively controlled by the same Controlling Group, and therefore the Reorganization is considered as a recapitalization of entities under common control in accordance with Accounting Standards Codification (“ASC”) 805-50-25. The consolidation of the Company and its subsidiaries have been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements in accordance with ASC 805-50-45-5. On July 1, 2024, the Company closed its IPO of 1,500,000 shares of its common stock at an IPO price of $ 4.50 per share for aggregate gross proceeds of approximately $ 6.75 million from the offering. The total net proceeds to the Company from the IPO, after deducting discounts, expense allowance, deferred IPO cost and expenses, were approximately $ 5.35 million (Note 16). NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and principles of consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and have been consistently applied. The accompanying consolidated financial statements include the financial statements of Lakeside Holding Limited and its subsidiaries. All inter-company balances and transactions have been eliminated upon consolidation. F- 8 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Use of estimates and assumptions In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant accounting estimates required to be made by management include allowance for credit losses, 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 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 in RMB. Accounts receivable, net Accounts receivables are carried at the original invoiced amount less an estimated allowance for expected credit losses based on the probability of future collection. The Company reviews its accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. The Company grant credit to customers, without collateral, under normal payment terms. The Company uses a loss rate method to estimate 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. F- 9 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) 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 assets. 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 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, 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 Property and equipment are stated at cost less accumulated depreciation. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows: Useful life Furniture and fixtures 3 – 7 years Machinery equipment 3 – 5 years Vehicles 5 years Software 3 years Leasehold improvement Lesser of the lease term or estimated useful lives of the assets Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in other income or expenses in the consolidated statements of income (loss) and other comprehensive income (loss). F- 10 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT 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 of 5 years. Accounts payable The account payables are derived from logistics and forwarding service providers and from the pharmaceutical products supplier. Balances due to logistics service providers are typically settled within 7 to 30 days, while payables to pharmaceutical product suppliers are generally settled within 60 days. 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 Pursuant to ASC 340-10-S99-1, incremental offering costs directly attributable to an offering of equity securities are deferred and would be charged against the gross proceeds of the offering as a reduction of additional paid-in capital. These costs include legal fees related to the registration drafting and counsel, consulting fees related to the registration preparation, audit fees, SEC filing and print related costs and exchange listing costs. The deferred offering costs are offset against additional paid-in capital upon receipts of the capital raised at IPO closing date. Asset acquisition When an acquisition is related to a single asset or a group of similar assets, or does not meet the definition of a business combination, as the acquired entity does not have an input and a substantive process that together significantly contribute to the ability to create outputs, we account for the acquisition as an asset acquisition. In an asset acquisition, any direct acquisition-related transaction costs are capitalized as part of the purchase consideration. Deferred taxes are recorded on temporary book/tax differences in an asset acquisition using the simultaneous equations method and adjusted the assigned value of the non-monetary assets acquired to include the deferred tax liability (see Note 21). F- 11 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Leases The Company evaluates the contracts it entered into to determine whether such contracts contain leases at inception. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee. Operating Leases A lease for which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lease as an operation lease. Operating leases are included in the line items right-of-use (ROU) asset, lease liabilities, current, and lease liabilities, non-current in the consolidated balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. For operating leases, the Company measures its lease liabilities based on the present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the lease or its incremental borrowing rate, which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. The Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. The Company measures ROU assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Company begins recognizing lease expense when the lessor makes the underlying asset available to the Company. Lease expenses for lease payments are recognized on a straight-line basis over the lease term. For leases with lease term less than one year (short-term leases), the Company has elected not to recognize a lease liability or ROU asset on its consolidated balance sheet. Instead, it recognizes the lease payments as expenses on a straight-line basis over the lease term. Short-term lease costs are immaterial to its consolidated statements of operations and cash flows. Finance leases Leases that transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. Lease cost for finance leases where the Company is the lessee includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation of right-of-use finance asset” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense”. Finance lease ROU assets are amortized over the shorter of their estimated useful lives or the terms of the respective leases. If the Company is reasonably certain to exercise the option to purchase the underlying asset at the end of lease term, the finance lease ROU assets are amortized to the end of useful life of the assets on a straight-line basis. Related parties The Company adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. F- 12 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 the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value: Level 1 — Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities Level 2 — Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 — Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The carrying value of cash, accounts receivable from third parties and related parties, 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. All 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. F- 13 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) 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 The Company adopted ASC Topic 606 “Revenue from Contracts with Customers” and all subsequent ASUs that modified ASC 606. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the Company applies the following steps: Step 1: Identify the contract (s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The Company generates revenue from providing cross-border ocean and airfreight solutions and distribution of pharmaceutical products. No practical expedients were used when adoption ASC606. Revenue recognition policies are as follows: Revenue from cross-border freights solutions The Company provides comprehensive services in the United States for customers to transport goods from overseas to the United States and from the United States to overseas. Operating under service contracts, for goods entering the United States, after the goods arrive at a U.S. seaports or airports, the Company offers customs clearance, container unloading, storage, unpacking, packing, and transportation services to the locations specified by the customers. For customers shipping goods overseas, the Company provides cargo space arrangements, storage, packing, export customs clearance, and arranges transportation to seaports or airports for loading. The transaction price is determined based on the range of services provided and the volume of goods. The Company considers these comprehensive services as one performance obligation since these promises are not distinct within the context of the contract, and the bundle of integrated services represents a combined output. This performance obligation is satisfied over time as customers receive the benefits of these services during the process of transporting goods from one location to another. F- 14 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 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 products 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 locations. 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 In the Company’s transportation business, the Company utilizes independent contractors and third-party carriers and related party carriers in the performances of some transportation services as and when needed. U.S. GAAP requires us to evaluate, using a control model, whether the Company itself promises to provide services to the customers (as a principal) or to arrange for services to be provided by another party (as an agent). Based on the Company’s evaluation using a control model, the Company determined that in all of its major business activities, it serves as a principal rather than an agent within their revenue arrangements. Revenue and the associated purchased transportation costs are both reported on a gross basis within the consolidated statements of income (loss) and comprehensive income (loss). 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). F- 15 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT 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’s disaggregation of revenues for years ended June 30, 2025 and 2024 is disclosed as below: By service/product type For the years ended June 30, 2025 2024 Cross-border ocean freights solutions $ 5,781,180 $ 7,873,835 Cross-border airfreights solutions 9,246,780 10,441,320 Distribution of pharmaceutical products 2,762,465 - Total revenue $ 17,790,425 $ 18,315,155 For the years ended June 30, 2025 2024 Timing of revenue recognition: Service transferred over time $ 15,027,960 $ 18,315,155 Product sales at a point in time 2,762,465 - Total revenue $ 17,790,425 $ 18,315,155 By customer geographic location For the years ended June 30, 2025 2024 Asia-based customers $ 14,819,977 $ 13,081,165 U.S.-based customers 2,970,448 5,233,990 Total revenue $ 17,790,425 $ 18,315,155 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. 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. F- 16 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Contract liabilities Contract liabilities represent estimated advances received from customers. The contract liabilities are reported in a net position on a customer-by-customer basis at the end of each reporting period. Contract liabilities are recognized when the Company receives prepayment from customers resulting from purchase order. Contract liabilities will be recognized as revenue when the products are delivered. As of 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. Refund 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 accordingly. 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 General and administrative expenses primarily include salaries and staff benefits, repair and maintenance expense, depreciation on property and equipment, lease 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. F- 17 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) 401(k) benefit plan 401(k) benefit plan covers substantially all employees and allows voluntary employee contributions up to the annually adjusted Inland Revenue Service (“IRS”) dollar limit. These voluntary contributions are matched equal to 100 % of the first 3 % of the employee’s compensation contributed and 50 % of contributions exceeding 3 % of eligible compensation, not to exceed 5 % of the total eligible compensation. The employees’ voluntary contributions and the Company’s matching contributions are 100 % vested immediately. The Company adopted the 401(k) benefit plan from April 2022. The expense related to matching employees’ contributions was $ 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 salaries. The Company has no legal obligation for the benefits beyond the contributions. The total amount was expensed as incurred. For 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 The Company subleased portion of its offices area, warehouse and parking lots to third parties and related parties. The Company recognizes rental income over the sublease period. For the years ended June 30, 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). Income taxes Before the Reorganization, the Company has elected to be taxed as an S Corporation for federal and state income tax purposes. As an S Corporation, the Company is not subject to federal income tax and state tax in Illinois. However, Illinois allows subchapter S corporations to elect to pay the Pass-through Entity (PTE) tax at entity level for tax years ending on or after December 31, 2021 and beginning prior to January 1, 2026. The PTE tax rate is equal to 4.95 % of the taxpayer’s net income for the taxation year. The S corporation making the election is liable for paying the PTE tax, and the shareholders will receive credit for the amount of PTE tax credit paid but shall be liable to pay any remaining tax based on their share of the pass-through entity’s income and credits. Illinois also taxes 1.5 % replacement tax on S corporation’s net taxable income and franchise tax based on the corporation’s paid-in-capital for the 12 months prior to the annual report filing date. The franchise tax is not applicable for the Company. After the Reorganization, the Company’s U.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 of Illinois. F- 18 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. Under 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. The Company accounts for uncertain tax positions in accordance with FASB ASC Topic No. 740, Accounting for Uncertainty in Income Taxes. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. As of June 30, 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 company. These reserves can only be used for specific purposes and are not transferable to the Company in form of loans, advances, or cash dividends. There is no such regulation of providing statutory reserve in United States. 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) Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under GAAP are recorded as an element of equity but are excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies. F- 19 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Basic and diluted earnings (loss) per share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the year ended June 30, 2025 and 2024, the Company reported a net loss. 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 U.S. dollar. The functional currency of our operations, except for Sichuan Hupan and Hupan Pharmaceutical, is the U.S. dollar. 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 year. 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: June 30, 2025 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 June 30, 2024 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 In the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. If the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingency liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. F- 20 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Concentrations and risks a. Concentration of credit risk The Company estimates credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash, 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 risk. The maximum exposure of such assets to credit risk is their carrying amounts at the balance sheet dates. The Company maintains majority of bank accounts in mainland China, where there is a RMB 500,000 deposit insurance limit for a legal entity’s aggregated balance at each bank. As of 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. To limit the exposure to credit risk relating to deposits, the Company primarily places cash deposits with large financial institutions in the United States. The Company has adopted a credit policy of dealing with creditworthy counterparties to mitigate the credit risk from defaults. The management team conducts credit evaluations of its customers, and generally does not require collateral or other security from them. The Company establishes an accounting policy to provide for allowance for credit loss based on the individual customer’s financial condition, credit history, and the future economic conditions. 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. b. Foreign exchange risk Our subsidiaries in PRC have functional currency in RMB. PRC subsidiaries’ expense transactions are denominated in RMB and their assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. The value of the Chinese Yuan against the U.S. dollar is affected by the changes in China and United States economic conditions. We do not believe that we currently have any significant direct foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk. Also, considering the volume of its business, the impact of foreign exchange risk is limited. c. Interest rate risk The interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Our exposure to interest rate risk primarily relates to the interest rates from our lessors, 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 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. F- 21 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Concentrations and risks (cont.) d. Liquidity risk Liquidity risk arises through the excess of financial obligations over available financial assets due at any point in time. Our objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet our liquidity requirements at any point in time. The Company monitors and analyzes its cash flow position, its ability to generate sufficient revenue sources in the future and its operating and capital expenditure commitments. The Company typically funds the working capital needed primarily from operations, loans, shareholder advances to the Company, as well as the external financing activities. e. 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 30, 2024. Recent accounting pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. In August 2020, the FASB issued ASU 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 (Topic 280): 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; and (3) the 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. F- 22 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 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. Under the 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 606): 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 other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of income (loss) and comprehensive income (loss) and statements of cash flows. NOTE 3 — ACCOUNTS RECEIVABLE, NET Accounts receivable, net consists of the following: June 30, 2025 June 30, 2024 Accounts receivable – third-party customers $ 2,983,308 $ 2,122,107 Less: allowance for credit loss – third-party customers ( 87,728 ) ( 39,955 ) Accounts receivable from third-party customers, net $ 2,895,580 $ 2,082,152 Accounts receivable – related party customers $ 396,331 $ 777,396 Less: allowance for credit loss – related party customers - ( 14,111 ) Total accounts receivable, net $ 396,331 $ 763,285 F- 23 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: June 30, 2025 June 30, 2024 Beginning balance $ 54,066 $ 25,909 Provision of expected credit loss allowance 33,432 28,157 Effect of foreign exchange translation 230 - Ending balance $ 87,728 $ 54,066 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: June 30, 2025 June 30, 2024 Finished goods $ 96,534 $ - Less: inventory allowance - - Inventories, net $ 96,534 $ - The Company recorded inventory allowance of $ nil for the year ended June 30, 2025. NOTE 5 — LOAN TO A THIRD PARTY On October 8, 2024, the Company entered into a loan agreement with a third party for a principal amount up to $ 2 million at a fixed interest rate of 4.35 % per annum with a maturity date of twelve months. There is no pledge and guarantee from the third party and the loan is on demand and can be called by the Company. The loan balance was $ 11,380 as of June 30, 2025. The Company recognized interest income of $ 28,120 in connection with this loan to a third party. F- 24 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 — PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following: June 30, 2025 June 30, 2024 Furniture and Fixtures $ 75,901 $ 49,887 Machinery equipment 290,818 281,230 Vehicles 324,267 324,267 Software 5,386 - Leasehold improvement 267,933 82,050 Subtotal 964,305 737,434 Less: accumulated depreciation ( 574,884 ) ( 392,551 ) Property and equipment, net $ 389,421 $ 344,883 Depreciation expense recorded in general and administrative expense was $ 106,853 and $ 71,980 for the years ended June 30, 2025 and 2024, respectively. Depreciation expense recorded in cost of revenue was $ 91,674 and $ 72,657 for the years ended June 30, 2025 and 2024, respectively. During the 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: June 30, 2025 June 30, 2024 License $ 418,867 $ - Less: accumulated amortization ( 53,427 ) - Intangible asset, net $ 365,440 $ - 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 method. The transaction was closed on November 21, 2024. No impairment expense was recognized for the year ended June 30, 2025. Amortization expense of $ 53,427 was recognized for the year ended June 30, 2025. NOTE 8 — LEASES The Company has multiple lease agreements for warehouses, warehouse machinery and equipment and offices. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. 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. F- 25 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 — LEASES (cont.) 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 on offices, warehouses, and warehouse equipment for the years ended June 30, 2025 and 2024 were $ 2,042,946 and $ 1,005,686 , respectively. Total finance lease expenses on warehouse machinery and equipment for the years ended June 30, 2025 and 2024 were $ 38,540 and $ 32,525 , respectively. 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, 2025 2024 Cash paid of amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,540,032 $ 846,992 Operating cash flows from finance leases $ 5,859 $ 1,813 Financing cash flows from finance leases $ 30,779 $ 29,628 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities $ 89,003 $ 19,982 Operating lease liabilities $ 1,451,938 $ 2,094,498 The weighted average remaining lease terms and discount rates for all of operating lease and finance leases is as follows: June 30, 2025 June 30, 2024 Weighted-average remaining lease term (years): Operating lease 2.44 years 3.05 years Finance lease 3.19 years 1.31 years Weighted average discount rate: Operating lease 7.00 % 6.30 % Finance lease 9.32 % 6.51 % F- 26 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 — LEASES (cont.) The following is a schedule of maturities of operating and finance lease liabilities as of June 30, 2025: Operating leases Twelve months ending June 30, Repayment 2026 $ 2,500,558 2027 574,730 2028 594,275 2029 567,260 2030 22,823 Total future minimum lease payments 4,259,646 Less: imputed interest ( 376,574 ) Total operating lease liabilities $ 3,883,072 Financing leases Twelve months ending June 30, Repayment 2026 $ 53,409 2027 24,810 2028 21,656 2029 21,656 2030 7,219 Total future minimum lease payments 128,750 Less: imputed interest ( 15,448 ) Total finance lease liabilities $ 113,302 NOTE 9 — ACCRUED LIABILITIES AND OTHER PAYABLES Accrued liabilities and other payables comprise the following amounts relating to the operation of the Company June 30, 2025 June 30, 2024 Credit card payables $ 370,766 $ 235,673 Payroll liabilities 378,358 120,379 Accrued expense (a) 806,324 435,019 Other payables 564,546 544,733 Total $ 2,119,994 $ 1,335,804 Note (a): The balance 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. F- 27 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 — LOANS PAYABLE The Company obtained multiple loans to finance the purchase of vehicles and warehouse machinery and obtained other loans to support its working capital needs. The loan balance consists of the following: June 30, 2025 June 30, 2024 Equipment loans (a) $ 34,645 $ 84,357 Vehicle loans (b) 88,762 146,283 Other loans 1,237,103 652,697 Total 1,360,510 883,337 Less: loan payable, current ( 1,300,112 ) ( 746,962 ) Loan payable, non-current $ 60,398 $ 136,375 (a) Equipment loans The 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. The 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. Other loans June 30, 2025 June 30, 2024 Loan A $ 120,000 $ 150,000 Loan B 50,000 200,000 Loan C 50,000 50,000 Loan D 95,000 175,000 Loan E 12,009 77,697 Loan F 50,000 — Loan G 19,995 — Loan H 99,975 — Loan I 317,252 — Loan J 10,000 — Loan K 100,000 — Loan L 50,003 — Loan M 23,347 — Loan N 139,595 — Loan O 99,927 — Total $ 1,237,103 $ 652,697 F- 28 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 — LOANS PAYABLE (cont.) (a) The Company entered a loan of $ 300,000 with a third party on March 1, 2022. The loan is unsecured, with a fixed interest of 15 % per annum and payable on monthly basis, for 6 months period and matured on September 1, 2022 . On September 1, 2022, both parties agreed to extend the loan’s principal payment term to on demand. The Company has made repayment of $ 30,000 during the year ended June 30, 2025. (b) The Company entered a loan of $ 200,000 with a third party on July 26, 2021. The loan is unsecured, with no interest bearing for 6 months period and matured on January 25, 2022 . The Company paid a principal of $ 100,000 during the year ended June 30, 2021 and both parties agreed to extend the remaining principal balance of $ 100,000 payment term to on demand. On April 8, 2024, the Company entered another loan of $ 100,000 with the same party. 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. (c) The Company entered a loan agreement of $ 50,000 with an employee on October 27, 2021. The loan is non-interest bearing, for a 12-month period, and matured on October 26, 2022. On October 26, 2022, both parties agreed to extend the loan term to on demand. (d) The Company entered a loan agreement of $ 100,000 with 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, 2024 . 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 . The monthly payment is $ 6,120 blending of interest and principal. (f) On October 16, 2024, the Company entered a loan of $ 150,000 with 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. F- 29 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 — LOANS PAYABLE (cont.) (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 18, 2025. (k) The Company entered a loan of $ 100,000 with an unrelated party on June 30, 2025. 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, 2025. 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, 2025. 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 27, 2025 . The monthly payment is $ 9,498 blending of interest and principal. The 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, Vehicle loans Equipment loans Others Total 2026 $ 37,167 30,977 1,311,400 1,379,544 2027 35,353 5,790 — 41,143 2028 13,406 — — 13,406 2029 8,937 — — 8,937 Total undiscounted borrowings 94,863 36,767 1,311,400 1,443,030 Less: imputed interest ( 6,101 ) ( 2,122 ) ( 74,297 ) ( 82,520 ) Total $ 88,762 34,645 1,237,103 1,360,510 NOTE 11 — LOAN FROM A RELATED PARTY 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 . F- 30 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). The Company and the Investor may also, pursuant to the Securities Purchase Agreement, choose to consummate a second tranche and a third tranche of financing, subject to certain closing conditions. Pursuant to the Securities Purchase Agreement, the Company agreed to issue, upon the consummation of the closing of each tranche, common stock purchase warrants (“Warrants”) to the Investor, in each case to purchase a number of shares of common stock determined by dividing 40 % of the applicable principal amount of the corresponding Note by the VWAP (as defined in the Securities Purchase Agreement) immediately prior to the applicable closing date. In the First Closing of the First Tranche, the Company issued Investor Warrants to purchase 318,827 shares of common stock at an initial exercise price of $ 1.9098 per share, subject to certain adjustments set forth therein. The Note 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. The number 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 date. 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. F- 31 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 12 — CONVERTIBLE DEBTS (cont.) 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 component. 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 assumptions: market value of underlying share of $ 1.21 , risk free rate of 4.08 %, expected term of 5 years; exercise price of the warrants of $ 1.9098 , volatility of 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 assumptions: 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 ASC 470-20. 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 fee. These costs were allocated to the debt and equity component based on the allocation of the proceeds as follows: Amount Equity Component Debt Component Initial purchaser’s debt discount $ 105,000 $ 12,693 $ 92,307 Debt issuance cost 224,488 26,852 197,636 Total $ 329,488 $ 39,545 $ 289,943 F- 32 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 12 — CONVERTIBLE DEBTS (cont.) 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. June 30, 2025 Long term debt Outstanding principal $ 1,021,819 Unamortized Initial Purchaser’s debt discount and debt issuance cost ( 150,948 ) Accrued interest 39,804 Net carrying amount $ 910,675 Convertible debts, current $ 910,675 Convertible debts, non-current - Total $ 910,675 The 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 June 30, 2025 2024 Payroll expense $ 3,335,113 $ 2,328,547 Staff benefit expense 539,026 407,894 Professional expense 1,387,960 381,932 Travelling and entertainment 487,684 188,679 Office expense 438,372 394,630 Lease expense 349,550 91,670 Insurance 271,311 38,470 Other expense 240,157 27,943 Repair and maintenance 117,826 151,358 Depreciation on plant property and equipment 106,853 71,980 Advertising 46,354 29,537 Rent expense of short-term leases 7,390 Motor expense 18,680 24,433 Bank charges 3,039 1,117 Management fee 8,164 — Amortization on intangible assets 53,427 — Total $ 7,410,906 $ 4,138,190 F- 33 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 14 — RELATED PARTY TRANSACTIONS The relationship of related parties is summarized as follows: Name of Related Party Relationship with the Company Mr. Henry Liu CEO, and an ultimate shareholder of the Company Mr. Shuai Li President, and an ultimate shareholder of the Company Weship Transport Inc. (“Weship”) Controlled by Mr. Henry Liu American Bear Logistics (Wuhan) Co., Ltd. (“ABL Wuhan”) The Company owns 5% of equity interest American Bear Logistics (Shenzhen) Co., Ltd. (“ABL Shenzhen”) 100% owned subsidiary of ABL Wuhan LLL Intermodal Inc. (“Intermodal”) Controlled by Mr. Henry Liu ABL LAX LLC. (“ABL LAX”) Controlled by Mr. Henry Liu and Mr. Shuai Li a) Other 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: June 30, 2025 June 30, 2024 Other receivable from Weship $ 753,116 $ 422,742 Other receivable from Intermodal 99,635 18,537 Other receivable from ABL LAX 18,291 — Other payable to ABL Shenzhen ( 1,612 ) — Total $ 869,430 $ 441,279 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. b) Summary of balances payable to related parties June 30, 2025 June 30, 2024 Account payable to Weship $ 35,003 $ 175,172 Account payable to ABL Wuhan 9,012 52,000 Account payable to Intermodal 21,222 550 Total $ 65,237 $ 227,722 c) Summary of balances receivable from related parties June 30, 2025 June 30, 2024 Accounts receivable from Weship $ 8,853 $ 32,435 Accounts receivable from ABL Shenzhen 129,588 — Accounts receivable from ABL Wuhan 257,890 744,961 Total $ 396,331 $ 777,396 The Company has fully collected the accounts receivables from the related parties as of October 8, 2025. F- 34 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 14 — RELATED PARTY TRANSACTIONS (cont.) d) Loan receivable from related parties June 30, 2025 June 30, 2024 Loan receivable from Weship $ 148,000 $ - Loan receivable from ABL LAX 129,741 - Total $ 277,741 $ - 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. d) Summary of related parties’ transactions For the years ended June 30, 2025 2024 Revenue from Weship (a) $ 8,241 $ 28,870 Revenue from ABL Wuhan (a) $ 1,196,119 $ 1,835,377 Revenue from ABL Shenzhen (a) $ 698,371 - Revenue from ABL LAX $ 3,084 - Cost of revenue charged by Weship (b) $ 869,975 $ 1,555,680 Rental income from Weship (c) $ 331,665 $ 288,185 Rental income from Intermodal (d) $ 20,021 - Cost of revenue charged by Intermodal (e) $ 673,823 $ 564,519 Cost of revenue charged by ABL Wuhan (f) $ 133,403 $ 162,625 Cost of revenue charged by ABL LAX (g) $ 2,737 Interest expense charge by ABL Shenzhen (see Note 11) $ 2,418 - During the years ended June 30, 2025 and 2024, the Company had the 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. (c) The Company subleased portion of its warehouse space to Weship for rental income. The Company subleased its warehouse in Chicago to Weship in July 2023 and again for the period from January 2024 to June 2025. 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. (e) 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. F- 35 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 14 — RELATED PARTY TRANSACTIONS (cont.) e) Due to shareholders June 30, 2025 June 30, 2024 Due to shareholders, end $ — $ ( 1,018,281 ) The balance with the shareholders is unsecured, interest free, and due on demand. The Company had balance of due to shareholder Henry Liu of $ nil and $ 986,923 and Shuai Li of $ nil and $ 31,358 as of June 30, 2025 and 2024, respectively. f) Dividend payable to shareholders June 30, 2025 June 30, 2024 Dividend payable to Mr. Henry Liu $ — $ ( 27,056 ) Dividend payable to Mr. Shuai Li — ( 71,794 ) Total $ — $ ( 98,850 ) 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. g) Salaries and employee benefits paid to major shareholders For the years ended June 30, 2025 2024 Mr. Henry Liu $ 110,205 $ 97,597 Mr. Shuai Li 115,282 104,628 Total $ 225,487 $ 202,225 F- 36 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 15 — TAXES Corporate Income Taxes Before the Reorganization, the Company was elected to be taxed as an “S Corporation” under the provisions of the Internal Revenue Code and comparable state income tax law. As an S Corporation, the Company is not subject to Federal income tax and Illinois State tax. Taxable income “pass through” to the personal tax returns of the owners. However, Illinois allows subchapter S corporations to elect to pay the Pass-through Entity (“PTE”) tax at entity level for tax years ending on or after December 31, 2021 and beginning prior to January 1, 2026. The PTE tax rate is equal to 4.95 % of the taxpayer’s net income for the taxable year. The S corporation making the election is liable for paying the PTE tax, and the shareholders will receive credit for the amount of PTE tax credit paid but shall be liable to pay any remaining tax based on their share of the pass-through entity’s income and credits. Illinois also taxes 1.5 % replacement tax on S corporation’s net taxable income. The Company terminated its status as a Subchapter S Corporation as of September 23, 2023, in connection with its Reorganization. As a C Corporation, the Company combined statutory income tax rate is 28 % in each period, representing a U.S. federal income tax rate of 21.0 % and 7 % state income tax for Illinois. Also, as a C Corporation, the Company is subjected to Illinois State replacement tax at rate of 2.5 % and no PTE tax is applicable. Under the PRC Enterprise Income Tax Law (the “EIT Law”), the standard enterprise income tax rate for domestic enterprises and foreign invested enterprises is 25 %. In conjunction with the termination of the Subchapter S corporation status, the C Corporation deferred tax assets and liabilities were estimated for future tax consequences attributable to difference between the financial statement carrying amounts of the Company’s existing assets and liabilities and their respective tax bases. The deferred tax assets and liabilities were measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of the change in tax rates resulting from becoming a C Corporation was recognized as a $ 72,152 decrease to the net deferred tax assets to $ 89,581 and an decrease to the provision for income taxes of $ 186,485 during the year ended June 30, 2024. As of June 30, 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. The provision for income tax for the years ended June 30, 2025 and 2024 consists of the following: For the years ended June 30, 2025 2024 Current income tax expense $ 233,855 $ 46,996 Deferred income tax expense 68,022 ( 114,333 ) Total income tax expense $ 301,877 $ ( 67,337 ) F- 37 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 15 — TAXES (cont.) 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 June 30, 2025 2024 Loss before tax $ ( 4,944,259 ) $ ( 295,614 ) Statutory state tax rate 21 % 21 % Income tax recovery at the federal statutory rate ( 1,038,294 ) ( 62,079 ) Illinois state tax/PET tax recovery ( 354,369 ) ( 2,171 ) Illinois replacement tax recovery ( 126,560 ) ( 74 ) Non-deductible expense 32,864 - Federal income tax - 32,358 Change in valuation allowance 1,783,509 ( 35,371 ) Foreign tax rate differential 4,727 - Total income tax expense $ 301,877 $ ( 67,337 ) The Company’s deferred tax assets and liabilities consist of the following: June 30, 2025 June 30, 2024 Deferred tax assets: Allowance for credit loss $ 24,940 $ 16,490 Lease liability – operating 1,105,147 1,126,429 Lease liability – financing 34,557 16,799 Non-capital loss carried forward 1,569,089 - Valuation allowance ( 1,816,352 ) - Total deferred tax assets $ 917,381 $ 1,159,718 Deferred tax liabilities: Right of use assets – operating ( 880,513 ) ( 1,058,707 ) Right of use assets – financing ( 28,608 ) ( 11,430 ) Intangible asset – license ( 91,360 ) - Total deferred tax liabilities ( 1,000,481 ) ( 1,070,137 ) Deferred tax (liability) assets, net $ ( 83,100 ) $ 89,581 As of June 30, 2025, the accumulated tax losses of subsidiaries incorporated in the U.S. 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 year. 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. F- 38 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 16 — STOCKHOLDERS’ EQUITY Common Stocks The Company was incorporated under the laws of the State of Nevada on August 28, 2023. In accordance with the Company’s Articles of Incorporation, the Company is authorized to issue 50,000 shares of common stock with par value of $ 0.0001 . 50,000 shares of common stocks of the Company were issued on August 28, 2023. On October 25, 2023, the Company amended its Articles of Incorporation to increase its number of authorized common stocks from 50,000 shares to 200,000,000 shares. On March 29, 2024, a 120-for-1 share split was conducted by the Company. After the share split and as of the date of this report, the issued share capital of the Company consists of $ 600 divided into 6,000,000 common shares, par value of $ 0.0001 each. On July 1, 2024, the Company closed its IPO of 1,500,000 shares of its common stock at an IPO price of $ 4.50 per share for aggregate gross proceeds of approximately $ 6.75 million from the offering. The total net proceeds to the Company from the IPO, after deducting discounts, expense allowance, and issuance expenses of a total of $ 1.0 million, were approximately $ 5.35 million. 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 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. F- 39 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 16 — STOCKHOLDERS’ EQUITY (cont.) Representative’s Warrants Pursuant to the Underwriting Agreement, the Company issued to the Representative and its designee warrants (the “Representative’s Warrants”) to purchase 75,000 shares of common stock. The Representative’s Warrants are exercisable at a per share exercise price of $ 4.50 equal to IPO price and are exercisable at any time and from time to time, in whole or in part, during the period commencing on December 30, 2024 and terminating on June 30, 2029. Neither the Representative’s Warrants nor any of the shares issued upon exercise of the Representative’s Warrants may be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities by any person, for a period of six months immediately following the commencement of sales of the offering. Management determined that these warrants meet the requirements for equity classification under ASC 815-40 because they are indexed to their own shares and meet the requirements for equity classification. The warrants were recorded at their fair value on the date of grant as a component of shareholders’ equity. The fair value of these warrants was $ 159,000 , which was considered a direct cost of IPO and included in additional paid-in capital. The fair value has been estimated using the Black-Scholes pricing model with the following weighted-average assumptions: market value of underlying share of $ 4.00 , risk free rate of 4.3 %, expected term of five years ; exercise price of the warrants of $ 4.5 , volatility of 61 %; and expected future dividends of nil . As of 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. F- 40 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 June 30, 2025 2024 Net loss attributable to the Company $ ( 5,246,136 ) $ ( 225,252 ) Weighted average number of common shares outstanding – Basic and Diluted 7,557,534 6,000,000 Loss per share – Basic and Diluted $ ( 0.69 ) $ ( 0.04 ) 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. or China. The Company is primarily engaged in the business of providing customized cross-border freight solutions in the U.S. and distribution of pharmaceutical products in China. 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 F- 41 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: Cross-border freight solutions (U.S.) Pharmaceutical distribution (China) Others Total for year ended June 30, 2025 Revenue from external customers $ 13,122,145 $ 2,762,465 $ – $ 15,884,610 Revenue from related parties $ 1,905,815 $ – $ – $ 1,905,815 Cost of revenue $ 13,699,648 $ 1,212,318 $ – $ 14,911,966 Gross profit $ 1,328,312 $ 1,550,147 $ – $ 2,878,459 Selling expense $ – $ 309,249 $ 84,041 $ 393,290 General and administrative expense $ 4,766,407 $ 314,975 $ 2,329,524 $ 7,410,906 Depreciation & amortization $ 182,718 $ 14,476 $ 54,760 $ 251,954 Income tax provision (credit) $ 89,581 $ 225,653 $ ( 13,357 ) $ 301,877 Capital expenditure $ 79,728 $ 65,522 $ 5,654 $ 150,904 Long-lived assets $ 3,290,286 $ 380,407 $ 455,842 $ 4,126,535 Segment assets $ 6,810,674 $ 2,730,023 $ 4,864,764 $ 14,405,461 Segment profit (loss) $ ( 3,317,353 ) $ 667,492 $ ( 2,596,275 ) $ ( 5,246,136 ) NOTE 19 — COMMITMENTS AND CONTINGENCIES Contractual Commitments As of June 30, 2025, the Company’s contractual obligations consist of the following: Contractual Obligations Total Less than 1 year 1 – 3 years 3 – 5 years More than 5 years Operating lease obligations $ 4,259,646 $ 2,500,558 $ 1,169,005 $ 590,083 $ — Finance lease obligations 128,750 53,409 46,466 28,875 — Vehicle loans 94,863 37,167 48,759 8,937 — Equipment loans 36,767 30,977 5,790 — — Other loans 1,311,400 1,311,400 — — — Convertible debts 1,152,692 1,152,692 — — — Loan payable to a related party 124,176 - 124,176 — — Total $ 7,108,294 $ 5,086,203 $ 1,394,196 $ 627,895 $ — Contingencies The Company may be involved in certain legal proceedings, claims and disputes arising from the commercial operations, which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. Although the Company can give no assurances about the resolution of pending claims, litigation or other disputes and the effect such outcomes may have on the Company, the Company believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on the Company’s consolidated financial position or results of operations or liquidity as of June 30, 2025. F- 42 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: Amount Total consideration in cash $ 552,730 Assets acquired and liabilities assumed: Cash acquired 9 Original paid in capital paid to Hupan Pharmaceutical 276,365 Intangible assets – license of pharmaceutical distribution 418,867 Other payables ( 37,794 ) Deferred tax liabilities ( 104,717 ) Total assets acquired $ 552,730 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, 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. F- 43 LAKESIDE HOLDING LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 21 — SUBSEQUENT EVENTS (cont.) Securities Purchase Agreement (cont.) On July 16, 2025, the Company 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 agreements. 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. F- 44 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.