CTNT Cheetah Net Supply Chain Service Inc. - 10-K

Item 1A. Risk Factors.

Economic, Political, and Market Risks

We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflicts between Russia and Ukraine and in the Middle East and the increasingly strained relationship between the U.S. and China. Our business, financial condition, and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflicts in Ukraine and the Middle East or any other geopolitical tensions.

U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the military conflicts between Russia and Ukraine and in the Middle East. Although the length and impact of the ongoing military conflicts is highly unpredictable, the conflicts could lead to continuing market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

The military conflict in Ukraine has led to sanctions and other penalties being levied by the United States, European Union, and other countries against Russia. Additional potential sanctions and penalties have also been proposed or threatened. Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets, potentially making it more difficult for us to obtain additional funds. Although our business has not been materially impacted by the ongoing military conflicts between Russia and Ukraine and in the Middle East to date, it is impossible to predict the extent to which our operations, or those of our suppliers and manufacturers, will be impacted in the short and long term, or the ways in which the conflict may impact our business. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions may also magnify the impact of other risks described in this annual report.

In addition, the U.S.-PRC relationship has recently faced a daunting challenge, contributing to geopolitical instability worldwide. Because our sales to the PRC market represent a significant part of our revenue, our business relies on a stable economic and political relationship between the U.S. and the PRC. However, the tensions between the two countries have intensified since the COVID-19 pandemic, exemplified by the ongoing trade conflicts between U.S. and the PRC, and there is significant uncertainty about the future relationship between the two countries with respect to trade policies, treaties, government regulations, and tariffs. A deteriorating relationship between the U.S. and the PRC, or a prolonged stalemate between them, could materially adversely affect international logistics, as well as our business, results of operations, and financial condition.

Availability and demand for our products and services may be adversely impacted by economic conditions and other factors.

Our success depends on the demand for our logistics and warehousing services. Fluctuations in economic conditions, periods of recession, reduced consumer spending, or volatility in fuel prices can significantly diminish demand for our services. Additionally, changes in political policies, currency exchange rates, and regulatory requirements may disrupt transportation processes, affecting customers’ willingness to engage our services. If we are unable to adapt business strategies or maintain adequate financial and operational flexibility in response to fluctuations caused by these events, our business, financial condition, and results of operations could be materially and adversely affected.

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We are in the competitive logistics and warehousing industry, and we may not be able to compete successfully against existing or new competitors, which could reduce our market share and adversely affect our competitive position and financial performance.

The logistics and warehousing industry in the U.S. is competitive and rapidly evolving, with many new companies joining the competition in recent years. We compete directly with other local, regional, national, and international logistics providers on the following bases:

service pricings;

quality of services;

transportation speed; and

service offerings.

Convenience and reliability are a major concern for logistics and warehousing services users; customers tend to select a brand with a relatively large market share and proven reputation. In addition, our experience in expanding non-vehicle logistics and warehousing revenue is limited, and our success in these areas will depend on our ability to develop and scale an effective salesforce to market these services to international trading companies in the U.S. and the PRC. Our competitors may operate with different business models, have different cost structures, and may ultimately prove to be more successful or more adaptable to new regulatory, technological, and other developments. They may in the future achieve greater market acceptance and recognition and gain a greater market share. It is also possible that potential competitors may emerge and acquire a significant market share. If existing or potential competitors develop or offer services that provide significant performance, price, creative optimization, or other advantages over those offered by us, our business, results of operations, and financial condition would be negatively affected. Our existing and potential competitors may enjoy competitive advantages over us, such as longer operating history, greater brand recognition, larger client base, and better value-added services. We may lose clients if we fail to compete successfully, which could adversely affect our financial performance and business prospects. We cannot guarantee that our strategies will remain competitive or successful in the future. Increasing competition may result in pricing pressure and loss of our market share, either of which could have a material adverse effect on our financial condition and results of operations.

We may be adversely affected by the effects of inflation and a potential recession in the U.S. and by a weakening economy in the PRC.

Inflation has the potential to adversely affect our liquidity, business, financial condition, and results of operations by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices we charge our customers. The existence of inflation in the U.S. economy has resulted in, and may continue to result in, higher interest rates and capital costs, shipping costs, supply shortages, increased costs of labor, weakening exchange rates, and other similar effects. As a result of inflation, we have experienced and may continue to experience cost increases. In addition, poor economic and market conditions in the U.S. and the PRC, including a potential recession, may negatively impact market sentiment, decreasing the demand for automobiles, which would adversely affect our operating income and results of operations. If we are unable to take effective measures in a timely manner to mitigate the impact of inflation as well as a potential recession, our business, financial condition, and results of operations could be adversely affected.

Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.

The value of Renminbi (“RMB”), PRC’s legal currency, against the USD may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar, and the RMB appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the RMB and the U.S. dollar remained within a narrow band. In August 2015, the People’s Bank of China (the “PBOC”) changed the way it calculates the mid-point price of the RMB against the USD, requiring the market-makers who submit for reference rates to consider the previous day’s closing spot rate, foreign-exchange demand and supply, as well as changes in major currency rates. In 2019, the RMB appreciated by approximately 1.9% against the U.S. dollar. In 2020, RMB appreciated by approximately 6.9% against the U.S. dollar. In 2021, RMB depreciated approximately 2.6% against the U.S. dollar. During the year ended December 31, 2022, RMB

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rapidly depreciated against the U.S. dollar by approximately 9.0%. It is difficult to predict how market forces or PRC or U.S. government policy, including any interest rate increases by the Federal Reserve, may impact the exchange rate between the RMB and the USD in the future. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, including from the U.S. government, which has threatened to label China as a “currency manipulator,” which could result in greater fluctuation of the RMB against the USD. However, the PRC government may still at its discretion restrict access to foreign currencies for capital account or current account transactions in the future. Therefore, it is difficult to predict how market forces or government policies may impact the exchange rate between the RMB and the USD in the future. In addition, the PBOC regularly intervenes in the foreign exchange market to limit fluctuations in RMB exchange rates and achieve policy goals. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to hedge our exposure adequately or at all. As of the date of this annual report, we settle all our transactions in USD. Our clients who need to convert RMB into USD for payment may choose not to engage us due to exchange rate considerations. If that occurs, or if the exchange rate between the RMB and USD fluctuates in an unanticipated manner, our business, financial condition, and results of operations could be materially adversely affected.

Operational Risks

We have discontinued our parallel-import vehicle sales business and are transforming our operations to focus on logistics and warehousing services, which could have a material and adverse effect on our business, financial condition, and results of operations.

We have shifted our business focus from parallel-import vehicle sales to logistics and warehousing services. Since the second half of 2022, our parallel-import vehicle business has been negatively impacted by the COVID-19 pandemic, lockdowns in the PRC, and weaker customer demand in the PRC due to deteriorating macroeconomic conditions. On March 3, 2025, our board of directors formally approved the discontinuation of the parallel-import vehicle business. As a result of the discontinuation of this business line, we will no longer generate revenue from vehicle sales and will rely primarily on our logistics and warehousing services for future revenue In February 2024, we acquired Edward to expand our logistics and warehousing service operations. Beginning in the second quarter of 2024, we increased our marketing staff to pursue new business opportunities and to focus on international trades between the PRC and the U.S. In December 2024, we acquired TWEW to further expand our logistics services. Our transformation has significantly altered, and will continue to alter, our revenue composition, cost structure, operational focus, and risk profile. If we are unable to successfully execute our business transformation, integrate acquired businesses, or achieve anticipated operational efficiencies and synergies, our business, financial condition, and results of operations could be materially and adversely affected.

As we are located in California, we may be subject to catastrophic events, which could have a material adverse impact on our business, financial condition, and results of operations.

We are located in California, a state prone to natural disasters and other catastrophic events due to its coastal location. A disruption or failure of our systems or operations resulting from earthquakes, severe weather, actual or threatened terrorist attacks, strikes, civil unrest, pandemics, or similar catastrophic occurrences could delay our ability to deliver services and carry out other critical functions. Such disruptions could have a materially adverse effect on our business, financial condition, and results of operations.

Service disruption experienced by our warehouse and office may adversely affect our business operations.

Our daily operations rely heavily on the orderly performance of our regional warehouse in Gardena, California, which manages our storage and shipments, and our administrative office in Irvine, California, which oversees our operational activities. Service disruptions due to automated facility failures, insufficient capacity during peak freight periods, force majeure events, third-party interference or disputes, employee misconduct, strikes, government inspections, orders, mandates, and temporary or permanent shutdowns could cause our shipments to be canceled or delayed and increase our storage costs, both of which could have a materially adverse effect on our business, financial condition, and results of operations.

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If our clients are able to reduce their logistics and supply chain costs or increase utilization of their internal solutions, our business and results of operations may be materially and adversely affected.

Clients often rely on logistics companies because developing in-house logistics and supply chain capabilities is costly, requires specialized expertise, and can lead to operational inefficiencies. However, if our clients are able to establish their own logistics and supply chain solutions, increase utilization of their internal resources, reduce their logistics spending, or otherwise choose to discontinue our services, our business, financial condition, and results of operations may be materially and adversely affected.

We face risks from fuel price fluctuation.

Transportation costs are a major expense in the logistics industry, and fuel is a key component of such expense. As an NVOCC, we depend on international shipping partners to transport our goods. If fuel prices rise significantly, our partners may increase their service fees, thereby passing on higher costs to us.

We face risks associated with the freight handled through our network.

We handle a large volume of freights and face challenges with respect to the protection and examination of freights. Freights within our network may be stolen, damaged, or lost for various reasons, and we or third-party transportation providers or both may be perceived or found liable for such incidents. In addition, we may fail to screen freight and detect unsafe, prohibited, or restricted items. Unsafe items, such as flammables, explosives, toxic, radioactive, or corrosive items and materials, may damage other freights within our network, injure recipients, and harm the personnel and assets of us and/or third-party transportation providers. Furthermore, if we fail to prevent prohibited or restricted items from entering into our network and if we participate in the transportation and delivery of such items, we may be subject to administrative or even criminal penalties, and if any personal injury or property damage is concurrently caused, we may be further liable for civil compensation.

The transportation of freight also involves inherent risks. We are subject to risks associated with transportation safety, and the insurance maintained by us may not fully cover the damages caused by transportation related injuries or loss. From time to time, our vehicles and personnel may be involved in transportation accidents, and the freight carried by them may be lost or damaged. In addition, frictions or disputes may occasionally arise from the direct interactions between our pickup and delivery personnel with freight senders and recipients. Personal injuries or property damages may arise if such incidents escalate.

Any of the foregoing could disrupt our services, cause us to incur substantial expenses, and divert the time and attention of our management. We and third-party transportation providers may face claims and incur significant liabilities if found liable or partially liable for any of injuries, damages, or losses. Claims against us may exceed the amount of our insurance coverage or may not be covered by insurance at all. Governmental authorities may also impose significant fines on us or require us to adopt costly preventive measures. Furthermore, if our services are perceived to be insecure or unsafe by our clients, our business volume may be significantly reduced, and our business, financial condition, and results of operations may be materially and adversely affected.

Failure to renew our current Ocean Transportation Intermediary (“OTI”) License or any delay in doing so could have a material adverse impact on our operations.

We depend on our OTI license to maintain our NVOCC status and maintain our logistics operations. We intend to renew the license before it expires on May 31, 2027; however, there is no guarantee that we will obtain such renewal in a timely manner. Delays or complications in the renewal process may arise due to regulatory changes, unexpected administrative hurdles, or additional requirements imposed by the licensing authority. If we fail to renew such license before the current term ends, or if any delays happen, we may be compelled to temporarily suspend our logistics business. Such an interruption could lead to substantial disruptions in our operations and materially and adversely affect our financial condition and results of operations.

Our business, financial condition, and results of operations may be materially and adversely affected if our third-party transportation providers are unable to provide high-quality services to our clients.

As an NVOCC, we rely on partnerships with various ocean carriers to transport goods. If these partners fail to meet the expected standards of service, such as causing damage to goods during transit, introducing significant delivery delays, or handling goods improperly, both their reputation and ours could be adversely affected. Such incidents may undermine our customers’ confidence in our

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ability to provide reliable logistics services, which in turn could have a material and adverse effect on our business and financial condition, and results of operations.

Our business relies on a few customers each accounting for more than 10% of our total purchases, and interruption in any of their operations will have an adverse effect on our business, financial condition, and results of operations.

During the year ended December 31, 2024, we derived most of our revenue from a few customers. For the year ended December 31, 2024, our two largest clients accounted 87.7% and 12.3% of our total revenue, respectively. We can lose a major customer due to a variety of factors, including our inability to provide satisfying logistics and warehousing services. We cannot guarantee that we will continue to maintain business cooperation with these major customers at the same level or at all. Some of these major customers are engaged in the parallel-import vehicle business with us, a business we have discontinued. If any significant customer terminates its relationship with us, or if we are unable to find replacements for those who no longer work with us due to our business strategy shift, our business, financial condition, and results of operations could be materially and adversely affected.

We started providing our logistics and warehousing services in February 2024 ; we may not be successful in this new line of business, which may adversely affect our business, financial condition, and results of operations.

We started providing our own logistics and warehousing services in February 2024 after completing the acquisition of Edward. We have a relatively limited operating history and experience regarding these new services, and we may encounter difficulties as we advance our business operations, such as in marketing, selling, and maintaining our logistics and warehousing systems, and keeping pace with new technological trends and advances in the logistics and warehousing management.

The logistics and warehousing industry is highly competitive. See “— Economic, Political, and Market Risks —We are in the competitive logistics and warehousing industry, and we may not be able to compete successfully against existing or new competitors, which could reduce our market share and adversely affect our competitive position and financial performance.” We may develop an online platform to facilitate our logistics and warehousing services, enabling us to automate and digitalize key steps of supply chain for our customers. These efforts, however, are costly and time-consuming, and may divert our management’s attention. There can be no guarantee that these efforts will be successful and generate the expected return.

We have primarily funded our working capital needs from financing activities historically, and there is no assurance that we will always maintain positive cash flow in the near future or at all.

As of December 31, 2025 and 2024, we had working capital of approximately $7.7 million and $10.2 million, respectively. As of the date of this annual report, we have funded our working capital needs primarily from financing activities. Given that our logistics and warehousing business typically requires significant amounts of working capital, there is no assurance that we will always maintain positive cash flow in the near future or at all, as we expect to continually expand our logistics and warehousing business. Failure to maintain positive cash flow for the near term may adversely affect our ability to raise needed capital for our business on reasonable terms, diminish customer willingness to enter into transactions with us, and have other adverse effects that may decrease our long-term viability.

Our business and results of operations may be harmed by the misconduct of authorized employees that have access to assets of our Company such as inventory, bank accounts, credit cards, and confidential information.

During the course of our business operations, some of our employees have access to certain valuable assets of our Company, such as cargo inventory, bank accounts, and confidential information. In the event of misconduct by such authorized employees, our Company could suffer significant losses. Employee misconduct may include misappropriating cargo inventory or bank accounts, falsifying inventory records or bank accounts, improper use or disclosure of confidential information to the public or our competitors, and failure to comply with our code of conduct or other policies or with federal or state laws or regulations regarding the use and safeguarding of classified or other protected information, import-export controls, and any other applicable laws or regulations. Although we have implemented policies, procedures, and controls to prevent and detect these activities, these precautions may not prevent all intentional or negligent misconduct, and as a result, we could face unknown risks or losses. Furthermore, such unethical, unprofessional, or even criminal behavior by employees could damage our reputation, result in fines, penalties, restitution, or other damages, and lead to the loss of current and future customers, all of which would adversely affect our business, financial condition, and results of operations.

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Our insurance does not fully cover all of our operational risks, and changes in the cost of insurance or the availability of insurance could materially increase our insurance costs or result in a decrease in our insurance coverage.

We currently have insurance on our real property, vehicles, and personal property, general liability insurance, workers compensation, and employer liability insurance. In certain instances, our insurance may not fully cover an insured loss depending on the magnitude and nature of the claim. Additionally, changes in the cost of insurance or the availability of insurance in the future could substantially increase our costs to maintain our current level of coverage or could cause us to reduce our insurance coverage and increase the portion of our risks that we self-insure.

Any negative publicity about us, our products and services, and our management may materially and adversely affect our reputation and business.

We may from time to time receive negative publicity about us, our management, or our business. Certain of such negative publicity may be the result of malicious harassment or unfair competitive acts by third parties. We may even be subject to government or regulatory investigations as a result of such third-party conduct and may be required to spend significant time and incur substantial costs to defend ourselves against such third-party conduct, and we may not be able to conclusively refute each of the allegations within a reasonable period of time, or at all. Harm to our reputation and confidence of our customers can also arise for other reasons, including misconduct of our employees or any third-party business partners with whom we conduct business, including purchasing agents and logistics service providers. Our reputation may be materially and adversely affected as a result of any negative publicity, which in turn may cause us to lose market share, customers, industry partners, and other business partnerships.

Cybersecurity incidents could disrupt our business operations, result in the loss of critical and confidential information, adversely impact our reputation, and harm our business.

Cybersecurity threats and incidents directed at us could range from uncoordinated individual attempts to gain unauthorized access to information technology systems to sophisticated and targeted measures aimed at disrupting business or gathering personal data of customers. In the ordinary course of our business, we collect and store business information about our customers such as their names, addresses, and business licenses in Google Drive, a file storage platform developed by Google. The systems of third-party providers, such as Google, may experience material interruptions or failures due to a variety of events beyond our control. See “—We may experience operational system failures or interruptions that could materially harm our ability to conduct our operations.”

In addition, our business is reliant on the uninterrupted functioning of our freight forwarding software, GoFreight. The secure processing, maintenance, and transmission of information are critical to our operations, especially the processing and tracking of good orders. Although we employ measures designed to prevent, detect, address, and mitigate these threats (including access controls, data encryption, vulnerability assessments, and maintenance of backup and protective systems), cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption, or unavailability of critical data and confidential or proprietary information (our own or that of third parties, including potentially sensitive personal information of our customers) and the disruption of business operations. Any such compromises to our security could cause harm to our reputation, which could cause customers to lose trust and confidence in us or could cause purchasing agents to stop working for us. In addition, we may incur significant costs for remediation that may include liability for stolen assets or information, repair of system damage, and compensation to customers and business partners. We may also be subject to legal claims, government investigation, and additional state and federal statutory requirements.

The potential consequences of a material cybersecurity incident include regulatory violations of applicable U.S. and international privacy and other laws, reputational damage, loss of market value, litigation with third parties (which could result in our exposure to material civil or criminal liability), diminution in the value of the services we provide to our customers, and increased cybersecurity protection and remediation costs (that may include liability for stolen assets or information), which in turn could have a material adverse effect on our competitiveness and results of operations.

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Our business, financial condition, and reputation may be substantially harmed by security breaches, interruptions, delays, and failures in our systems and operations.

We currently rely on our freight forwarding software, GoFreight, to manage our logistics and warehousing operations. Our current and future systems and operations are vulnerable to natural disasters, such as earthquakes, fires, floods, power outages, telecommunication failures, break-ins, sabotage, computer viruses, and intentional acts of vandalism. Such events could lead to service disruptions, increased operational costs, litigation, and damage to our reputation, all of which could materially adversely affect our financial condition and operating results.

Our business and financial condition may be substantially harmed by inventory losses caused by theft, vandalism, or accidents during transportation and/or warehousing.

We store customers’ goods in our warehouse in California. See “Item 1. Business.” We bear the risk of damage or loss before delivering these goods to the destination designated by our customers or to the port for shipment. Despite our efforts to enhance security measures, we remain subject to inventory losses caused by theft, vandalism, or accidents during transportation and/or warehousing. In addition, force majeure events such as flooding, fires, or hail may impact a large volume of stocked products. Such events could result in substantial losses, deprive us of a significant portion of our inventory, and reduce customer satisfaction if they prevent us from delivering commonly ordered products or sold automobiles. If any of the foregoing occurs, our business, financial condition, and results of operations may be adversely affected.

We may experience operational system failures or interruptions that could materially harm our ability to conduct our operations.

We rely on the capacity, reliability, and security of third-party systems and software to support our operations. For example, we employ Google Drive to process, transmit, and store critical information. The systems of third-party providers may experience material interruptions or failures due to a variety of events beyond our control, including but not limited to, natural disasters, telecommunications failures, employee or customer error or misuse, targeted attacks, unauthorized access, fraud, computer viruses, denial of service attacks, terrorism, firewall or encryption failures, and other security problems. If any of the systems do not operate properly, are compromised, or are disabled, we could suffer adverse impact on our operations.

If we fail to execute our strategies and future plans effectively, we may not be able to take advantage of market opportunities or meet the demand of our customers.

Our shift from parallel-import vehicles to logistics and warehousing increases the complexity of our operations and may cause strain on our managerial, operational, and financial resources. We must continue to hire, train, and effectively manage new employees. In the event that our new hires fail to perform as expected, or if we fail to hire, train, manage, and integrate new employees, our business, financial condition, and results of operations may be materially adversely affected. The expansion of our services will also require us to maintain consistency in the quality of our services so that our market reputation is not damaged by any deviations in quality, whether actual or perceived.

Our future results of operations also depend largely on our ability to execute our future plans successfully. In particular, our future plans may subject us to the following additional challenges and constraints:

we face challenges in ensuring the productivity of newly hired employee, training, and retaining highly skilled personnel, including areas of sales and marketing and information technology for our operations;

we face challenges in responding to evolving industry standards and government regulation that impact our business and the logistics and warehousing industry in general;

we have limited experience in logistics and warehousing services, and our expansion into this segment may not be profitable;

the technological or operational challenges may arise from the new services;

the execution of our future plans will be subject to the availability of funds to support the relevant capital investment and expenditures; and

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the successful execution of our strategies is subject to factors beyond our control, such as general market conditions, and economic and political developments in the U.S. and globally.

All of these endeavors involve risks and will require significant management, financial, and human resources. We cannot assure you that we will be able to implement our strategies successfully. There is no assurance that the investment to be made by our Company as contemplated under our future plans will be successful and generate the expected return. If we are not able to execute our strategies effectively, or at all, our business, results of operations, and prospects may be materially and adversely affected.

If we fail to attract, recruit, or retain our key personnel, including our executive officers, senior management, and key employees, our ongoing operations and growth could be affected.

Our success depends, to a large extent, on the efforts of our key personnel, including Huan Liu, our founder and Chief Executive Officer, our other executive officers, senior management, and other key employees who have valuable experience, knowledge, and connections in cross-border trade as well as the automobile dealership industry. There is no assurance that these key personnel will not voluntarily terminate their employment with us. We do not carry, and do not intend to procure, key person insurance on any of our senior management team. The loss of any of our key personnel could be detrimental to our ongoing operations. Our success will also depend on our ability to attract and retain qualified personnel to manage our existing operations as well as our future growth. We may not be able to successfully attract, recruit, or retain key personnel, and this could adversely impact our financial condition, operating results, and business prospects.

Our ongoing operations and growth may be affected by the high percentage of foreign employees who do not have permanent work permits in the U.S., which may increase our turnover ratio.

The successful operation of our business depends on our ability to attract, motivate, and retain a sufficient number of skilled employees. From time to time, there may be a shortage of skilled labor in the logistics and warehousing industry in which we operate. As of December 31, 2025, we had 12 full-time employees, including four foreign employees who currently do not have permanent work permits in the U.S. In the event that some of our employees’ temporary work permits expire, we may face increased turnover rates and labor shortages, which could result in higher labor costs. In this case, if we are unable to recruit and retain sufficiently qualified individuals, our business, results of operations, financial condition, and growth prospects could be materially and adversely affected.

Future acquisitions may have an adverse effect on our ability to manage our business.

We may acquire businesses, technologies, services, or products that are complementary to our logistics and warehousing business. Future acquisitions may expose us to potential risks, including risks associated with the integration of new operations, services, and personnel, unforeseen or hidden liabilities, the diversion of resources from our existing business and technology, our potential inability to generate sufficient revenue to offset new costs, the expenses of acquisitions, or the potential loss of or harm to relationships with both employees and customers resulting from our integration of new businesses.

Any of the potential risks listed above could have a material adverse effect on our ability to manage our business, revenue, and net income. We may need to raise additional debt funding or sell additional equity securities to make such acquisitions. The raising of additional debt funding by our Company, if required, would result in increased debt service obligations and could result in additional operating and financing covenants, or liens on our assets, that would restrict our operations. The sale of additional equity securities could result in additional dilution to our stockholders.

Legal, Regulatory, and Compliance Risks

We are subject to logistics and warehousing and other laws and regulations in the U.S., which, if we are found to have violated, may adversely affect our business and results of operations.

A number of U.S. federal and state laws and regulations affect our business and conduct, including, but not limited to, our sales, operations, financing, insurance, and employment practices. The regulatory bodies that regulate our business include the Federal Maritime Commission, the Consumer Financial Protection Bureau, the Federal Trade Commission, the United States Department of Transportation, the Occupational Safety and Health Administration, the Department of Justice, the Federal Communications Commission, various state consumer protection agencies, and various state financial regulatory agencies. For example, the exportation

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aspect of our business is subject to the Code of Federal Regulation’s requirements for exportation under 19 CFR § 192.2 and the inspection of Customs. Moreover, the Federal Maritime Commission issues licenses to qualified OTIs in the U.S. and requires that all OTIs be bonded or provide other proof of financial responsibility. See “Item 1. Business—Governmental Regulations.” Edward, a subsidiary of our Company, is currently the holder of an OTI license and is authorized to conduct business as an NVOCC, facilitating the transportation of cargo by water via common carriers between the U.S., its territories or possessions, and foreign countries. As we develop our logistics and warehousing services, Edward is required to renew this license every three years. Moreover, we may also be subject to laws and regulations involving taxes, tariffs, pricing, content protection, electronic contracts and communications, mobile communications, consumer protection, and information-reporting requirements, as well as privacy laws, anti-money laundering laws, and federal and state wage-hour, anti-discrimination, and other employment practices laws. We are also subject to laws and regulations affecting public companies, including securities laws and exchange listing rules. Any failure to comply with these laws and regulations may result in the assessment of administrative, civil or criminal penalties, the imposition of investigatory remedial obligations or the issuance of injunctions limiting or prohibiting our operations.

Non-compliance with laws and regulations on the part of any third parties with which we conduct business could expose us to legal expenses, compensation to third parties, penalties, and disruptions of our business, which may adversely affect our results of operations and financial performance.

Third parties with which we conduct business, including ocean carriers, trucking companies, and our customers may be subject to regulatory penalties or punishments because of their regulatory compliance failures or infringement upon other parties’ legal rights, which may, directly or indirectly, disrupt our business. We cannot be certain whether such third parties have violated any regulatory requirements or infringed or will infringe on any other parties’ legal rights, which could expose us to legal expenses or compensation to third parties, or both.

We, therefore, cannot rule out the possibility of incurring liabilities or suffering losses due to any non-compliance by third parties. There is no assurance that we will be able to identify irregularities or non-compliance in the business practices of third parties with which we conduct business, or that such irregularities or non-compliance will be corrected in a prompt and proper manner. Any legal liabilities and regulatory actions affecting third parties involved in our business may affect our business activities and reputation, and may in turn affect our business, results of operations, and financial performance.

Moreover, regulatory penalties or punishments against our business stakeholders, whether or not resulting in any legal or regulatory implications upon us, may nonetheless cause business interruptions or even suspension of these business stakeholders, which could in turn disrupt our usual course of business and result in material negative impact on our business operations, results of operation and financial condition.

Third parties may claim that we infringe their proprietary intellectual property rights, which could cause us to incur significant legal expenses and prevent us from promoting our services.

We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate trademarks, patents, copyrights, know-how, or other intellectual property rights held by third parties. We may from time to time in the future be subject to legal proceedings and claims relating to the intellectual property rights of others. In addition, there may be third-party trademarks, patents, copyrights, know-how, or other intellectual property rights that are infringed by our products and services. There could also be existing intellectual property of which we are not aware that our products and services may inadvertently infringe.

If any third-party infringement claims are brought against us, we may be forced to divert management’s time and other resources from our business and operations to defend against these claims, regardless of their merits. Additionally, the application and interpretation of intellectual property right laws and the procedures and standards for granting trademarks, patents, copyrights, know-how, or other intellectual property rights are evolving and may be uncertain, and we cannot assure you that courts or regulatory authorities would agree with our analysis. Such claims, even if they do not result in liability, may harm our reputation. If we were found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own. As a result, our business and financial performance may be materially and adversely affected.

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We may from time to time be subject to claims, controversies, lawsuits, and legal proceedings, which could adversely affect our business, prospects, results of operations, and financial condition.

We may from time to time become subject to or involved in various claims, controversies, lawsuits, and legal proceedings. However, claims and threats of lawsuits are subject to inherent uncertainties, and we are uncertain whether any of these claims would develop into a lawsuit. Lawsuits, or any type of legal proceeding, may cause our Company to incur defense costs, utilize a significant portion of our resources, and divert management’s attention from our day-to-day operations, any of which could harm our business. Any settlements or judgments against our Company could have a material adverse impact on our financial condition, results of operations, and cash flows. In addition, negative publicity regarding claims or judgments made against our Company may damage our reputation and may result in a material adverse impact on us.

We may be the subject of allegations, harassment, or other detrimental conduct by third parties, which could harm our reputation and cause them to lose market share and customers.

We may be subject to allegations by third parties or purported former employees, negative Internet postings, and other adverse public exposure on our business, operations, and staff compensation. We may also become the target of harassment or other detrimental conduct by third parties or disgruntled former or current employees. Such conduct may include complaints, anonymous or otherwise, to regulatory agencies, media, or other organizations. We may be subject to government or regulatory investigation or other proceedings as a result of such third-party conduct and may be required to spend significant time and incur substantial costs to address such third-party conduct, and there is no assurance that we will be able to conclusively refute each of the allegations within a reasonable period of time, or at all. Additionally, allegations, directly or indirectly against our Company, may be posted on the Internet, including social media platforms by anyone on an anonymous basis. Any negative publicity on our Company or our management can be quickly and widely disseminated. Social media platforms and devices immediately publish the content of their users’ posts, often without filters or checks on the accuracy of the content posted. The information posted may be inaccurate and adverse to our Company, and it may harm our reputation, business, or prospects. The harm may be immediate without affording us an opportunity for redress or correction. Our reputation may be negatively affected as a result of the public dissemination of negative and potentially false information about our business and operations, which in turn may cause us to lose market shares and customers.

Any adverse change in political relations between the U.S. and other countries or regions (particularly the PRC), such as the ongoing U.S.-China trade conflicts, may negatively affect our business.

As of the date of this annual report, our primary business is assisting U.S. customers in shipping goods to the PRC. Our business relies heavily on stable political and economic relations between the PRC and the U.S. If there is any significant deterioration in U.S.-PRC relations, our customers may refrain from selling their merchandise to the PRC market. Additionally, any potential executive actions or legislation related to international trade that may be enacted could adversely affect the profitability and feasibility of Sino-American trade, which, in turn, could negatively impact our business.

Beginning in March 2025, following increases in U.S. tariffs on certain Chinese imports, the PRC government announced and implemented retaliatory measures against U.S.-origin goods. Effective March 10, 2025, the PRC imposed additional tariffs on a range of U.S. products, including agricultural commodities and other merchandise. In April 2025, China further escalated its response by increasing certain retaliatory tariff rates and implementing additional non-tariff measures, such as export controls, trade restrictions, and regulatory actions affecting U.S. companies and products. In October 2025, the U.S. and the PRC announced a temporary trade understanding under which certain retaliatory tariffs and non-tariff measures were suspended or paused. However, these measures remain subject to change, and there can be no assurance that previously suspended tariffs will not be reinstated or that additional trade restrictions will not be imposed in the future. We are currently evaluating the overall impact of the recently imposed additional tariffs, including whether these regulations could materially and negatively affect our business.

The evolving regulatory landscape and potential for further tariff adjustments or trade restrictions create uncertainty. Compliance with tariff-related regulations, including classification and valuation requirements, may increase operational complexity and costs. Any escalation in trade tensions or additional tariffs could disrupt our operations and negatively impact our ability to meet customer demand, posing significant risks to our business.

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Trading Risks

A possible “short squeeze” due to a sudden increase in demand of our Class A common stock that largely exceeds supply may lead to further price volatility in our Class A common stock.

Investors may purchase our Class A common stock to hedge existing exposure in our Class A common stock or to speculate on the price of our Class A common stock. Speculation on the price of our Class A common stock may involve long and short exposures. To the extent aggregate short exposure exceeds the number of shares of our Class A common stock available for purchase in the open market, investors with short exposure may have to pay a premium to repurchase our Class A common stock for delivery to lenders of our Class A common stock. Those repurchases may, in turn, dramatically increase the price of our Class A common stock until investors with short exposure are able to purchase additional Class A common stock to cover their short position. This is often referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in our common stock that are not directly correlated to the performance or prospects of our Company and once investors purchase the shares of Class A common stock necessary to cover their short position the price of our Class A common stock may decline.

Future equity offerings or other equity issuances of us could further dilute our Class A common stock .

We may in the future issue additional shares of our Class A common stock or other securities convertible into or exchangeable for shares of our Class A common stock. These issuances may occur at times or on terms that could be disadvantageous to our existing stockholders. Our stockholders’ percentage ownership and voting power may be diluted, and they may experience a reduction in the value of their investment. Additionally, such issuances, if substantial, could negatively affect the market price of our Class A common stock.

If we fail to maintain an effective system of internal controls, we may fail to meet our reporting obligations or be unable to accurately report our results of operations or prevent fraud, and investor confidence and the market price of our Class A common stock may be materially and adversely affected.

We are a public company in the United States subject to the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). Section 404 of the Sarbanes-Oxley Act requires that we include a report of management on our internal control over financial reporting in our annual report on 10-K beginning with our annual report for the year ended December 31, 2024. In addition, once we cease to be an “emerging growth company,” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management has concluded that our internal controls and procedures were ineffective at the reasonable assurance level as of December 31, 2025.

Our management team cannot guarantee that our internal controls and disclosure controls and procedures will prevent all possible errors. Because of the inherent limitations in all control systems, no system of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the possibility that judgments in decision-making can be faulty and subject to simple error or mistake. Furthermore, controls can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, measures of control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

We may not be able to maintain the listing of our Class A common stock on the Nasdaq Capital Market.

Our Class A common stock is listed on the Nasdaq Capital Market. There can be no assurance that we will be able to maintain the listing standards of that exchange, which includes requirements that we maintain our stockholders’ equity, total value of shares held by unaffiliated stockholders, and market capitalization above certain specified levels. If we fail to conform to the Nasdaq listing requirements on an ongoing basis, our Class A common stock may cease to trade on the Nasdaq Capital Market exchange, and may move to the OTCQB or OTC Pink Markets operated by OTC Markets Group, Inc. These quotation services are generally considered to be markets that are less efficient and that provide less liquidity in the shares than the Nasdaq Capital Market.

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If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding our Class A common stock, the price of our Class A common stock and trading volume could decline.

Any trading market for our Class A common stock may depend in part on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade us, the price of our Class A common stock would likely decline. If one or more of these analysts cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our Class A common stock and the trading volume to decline.

Anti-takeover provisions in our certificate of incorporation and our bylaws may discourage, delay, or prevent a change in control.

Some provisions of our certificate of incorporation and our bylaws, which became effective on February 2, 2026, may discourage, delay, or prevent a change in control of our Company or management that stockholders may consider favorable, including, among other things, the following:

provisions that authorize our board of directors to issue shares with preferred stock in one or more series and to fix the designation, voting powers, preferences, or other special rights or restrictions without any further vote or action by our stockholders; and

provisions that restrict the ability of our stockholders to call special meetings and that limit the business that may be conducted at special meetings to the matters described in the meeting notice.

We are an “emerging growth company” and a “smaller reporting company” under the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies will make our common stock less attractive to investors.

We are an “emerging growth company” and a “smaller reporting company” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” and “smaller reporting companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period for complying with new or revised accounting standards.

We will remain an “emerging growth company” until December 31, 2028, the last day of the fiscal year following the fifth anniversary of the date of the first sale of our Class A common stock pursuant to our registration statement on Form S-1 (File No. 333-271185), although we will lose that status sooner if our revenue exceeds $1.235 billion, if we issue more than $1 billion in non-convertible debt in a three-year period, or if the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the last day of our most recently completed second fiscal quarter.

We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) the market value of our common stock held by non-affiliates is equal to or less than $250 million as of the last business day of the most recently completed second fiscal quarter, or (ii) our annual revenue is equal to or less than $100 million during the most recently completed fiscal year and the market value of our common stock held by non-affiliates is equal to or less than $700 million as of the last business day of the most recently completed second fiscal quarter.

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We cannot predict if investors will find our Class A common stock less attractive because we may rely on these exemptions. If some investors find our Class A common stock less attractive as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile. In addition, taking advantage of reduced disclosure obligations may make comparison of our financial statements with other public companies difficult or impossible. If investors are unable to compare our business with other companies in our industry, we may not be able to raise additional capital as and when we need it, which may materially and adversely affect our financial condition and results of operations.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this annual report. Some of the information contained in this discussion and analysis or set forth elsewhere in this annual report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Business Overview and Recent Developing Trends

We are a provider of logistics and warehousing services, historically in connection with the sale of parallel-import vehicles sourced in the U.S. to be sold in the PRC market, and more recently for the transportation of other goods between the U.S. and the PRC. Parallel-import vehicles in the PRC refer to automobiles purchased directly from overseas markets and imported for sale outside of the brand manufacturers’ official distribution networks.

Between 2016 and the first half of 2022, the Company experienced growth in sales volume and gross profit due to favorable market conditions. Beginning in the second half of 2023, the business was negatively affected by a decline in customer demand due to weakening macroeconomic conditions, price competition from luxury automakers in the PRC, and a shift in consumer preference toward domestic EVs. These market challenges led to a decline in parallel-import vehicle sales by 30.5% in 2023, and 95.7% in 2024, with vehicle sales declining to 14 units in 2024 from 303 units in 2023. In addition, the Company recorded a credit loss of $1.6 million for the year ended December 31, 2024, due to the increasing difficulty in collecting outstanding receivables.

On March 3, 2025, the Company’s board of directors approved the discontinuation of the Company’s parallel-import vehicle business. In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, all financial results associated with this business have been reclassified as discontinued operations in the accompanying consolidated financial statements for all periods presented. For additional financial details regarding discontinued operations, refer to NOTE 5 – Discontinued Operations.

The Company shifted its business focus since February 2024 by acquiring Edward to provide services related to international trades between the PRC and the U.S., and relocating its headquarter in July 2024 to Irvine, California, to utilize the ports of Los Angeles and Long Beach. The Company further expanded into labor and logistics service by acquiring TWEW in December 2024.

Additionally, on December 19, 2024, we acquired 100% membership interest of NexTrade, a Delaware limited liability company for the consideration of $1. As of the date of this annual report, NexTrade has not been engaged in any business operations.

Further, on March 28, 2025, we incorporated a wholly owned subsidiary, Cheetah BVI, in the British Virgin Islands. The incorporation of Cheetah BVI is intended to support our future international business development and facilitate potential global partnerships. As of the date of this annual report, Cheetah BVI has not commenced operations.

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Reverse Stock Split

On September 30, 2024, our stockholders approved our fourth amended and restated articles of incorporation, which authorizes a reverse stock split of the issued shares of our common stock, par value $0.0001 per share, at a ratio ranging from 1-for-10 to 1-for-30, as determined at the discretion of our board of directors. On October 7, 2024, our board of directors approved a reverse stock split of our common stock at a ratio of 1-for-16. On October 21, 2024, we effectuated a reverse stock split of our common stock at a ratio of 1-for-16. Following such reverse split, each 16 shares of our common stock outstanding were automatically combined into one new share of common stock. No fractional shares were issued in connection with the reverse split; any fractional shares resulting from the reverse split were rounded up to the nearest whole share. The par value per share of our common stock remained unchanged. Our Class A common stock started trading on a post-split basis on October 24, 2024, at which time the Class A common stock was assigned a new CUSIP number (16307X202). On November 7, 2025, the Company’s stockholders approved the Company’s Fifth Amended and Restated Articles of Incorporation to affect a reverse stock split of the issued shares of the Company’s common stock at a ratio within a range from 1-for-5 to 1-for-20, as determined by the board of directors in its sole discretion. As of the date of this report, the board of directors has not yet determined the specific ratio or the timing of the implementation of such reverse stock split.

Dissolution of Subsidiaries

During the quarter ended June 30, 2025, the Company dissolved two wholly owned subsidiaries, Cheetah Net Logistics LLC and Pacific Consulting LLC, as part of an internal corporate restructuring. Both entities were previously organized under the laws of the State of New York and were formally dissolved on June 24, 2025.

Recent Development

On February 2, 2026, the Company completed its reincorporation from the State of North Carolina to the State of Delaware, and the rights of the Company’s stockholders became governed by Delaware law and the Company’s Delaware Certificate of Incorporation and Bylaws.

Risks and Uncertainties

The Company is undergoing a business transformation of our business model. As a company located in the U.S. and doing business with the PRC, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the U.S. and the PRC, as well as by the general state of the U.S. and the PRC economies. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in the U.S. and the PRC.

Risks and uncertainties related to the Company’s business include, but are not limited to, the following:

The business shift from parallel-import vehicle sales to logistics and warehousing services may depend on factors from the business environment to operation management and market expansion;

The government policies on ocean freight business and tariff policy may reduce the market demand for the freight, logistics and warehousing business, and thus negatively affect our business and growth prospects;

Our logistics and warehousing business depend highly on the limited customers and third-party transportation and labor providers;

Any adverse change in political relations between the PRC and the U.S., including the ongoing trade conflicts between the U.S. and the PRC, may negatively affect its business; and

The competition of logistics and warehousing industry dependent on factors such as service quality, speed reliability, and pricing may limit our expanding non-vehicle logistics warehousing revenue, and our success in these areas will depend on our ability to develop and scale an effective salesforce to market these services to international trading companies in the U.S. and the PRC.

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The Company’s business, financial condition, and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics, and other catastrophic incidents, which could significantly disrupt the Company’s operations.

Results of Operations

The following discussion analyzes our results of operations for the year ended December 31, 2025, compared to the year ended December 31, 2024. In 2025, as we fully exited our parallel-import vehicle business, all financial results related to this segment have been reclassified as discontinued operations in accordance with ASC 205-20, Presentation of Financial Statements — Discontinued Operations. For further details, please refer to NOTE 5 — Discontinued Operations. Logistics and warehousing services business now represents our sole operating segment reported under continuing operations. The following table provides a summary of our consolidated results of operations for the years ended December 31, 2025 and 2024, highlighting the financial impact of both continuing and discontinued operations:

Years Ended December 31,

Change

Amount

Revenue

Cost of Revenue

Gross Profit

General and administration expenses

Impairment loss expenses

Share-based compensation expenses

Interest income, net

Other income, net

(Loss) from continuing operations before tax provision

Income tax (benefits)

(Loss) from continuing operations

(Loss) income from discontinued operations, net of tax

Net (Loss) income

Our total revenue from continuing operations was $1,288,536 in 2025, reflecting our transition into the logistics and warehousing business. Meanwhile, the parallel-import vehicle business was discontinued during the year ended December 31, 2024, and its financial results are presented separately as discontinued operations in accordance with ASC 205-20. For further details, please refer to NOTE 5 – Discontinued Operations.

Logistics and Warehousing Services

Revenues

In 2025, our logistics and warehousing revenue came from the two acquired businesses, Edward and TWEW. The following table provides a breakdown of revenues from each entity:

For the Years Ended December 31,

Change

Amount

USD

USD

Revenues

Revenues from Edward

Revenues from TWEW

Total revenues

For the year ended December 31, 2025, we reported revenue of $1,288,536 from logistics and warehousing services segment, including $214,810, or 16.7% of our total revenue from Edward, which we acquired in February 2024, and $1,073,726, or 83.3% of our total revenue, from TWEW, which we acquired in November 2024 (See also NOTE 8).

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Revenue from Edward decreased by 32.2% to $214,810 for the year ended December 31, 2025, compared to $316,852 for the year 2024. The decrease was primarily due to the lingering impact of trade war between China and the U.S., which resulted in reduced customer demand and shipment volume during the second half of 2025. Although trade flows stabilized following the resumption of trade negotiations between the two countries, shipment volume in 2025 did not return to the prior-year level due to continued uncertainty surrounding U.S.-China trade policy and more conservative ordering patterns by customers. The Company has taken proactive measures to navigate the business by increasing labor and logistics service business during the year 2025.

Revenue from TWEW increased substantially to $1,073,726 for the year ended December 31, 2025, compared to $138,953 for the year ended December 31, 2024. The increase was primarily attributable to a full year of logistics and warehousing services provided by TWEW in 2025. As TWEW was acquired in November 2024, only a limited amount of revenue was recognized in 2024 following the acquisition date.

We will continue to focus on improving operational efficiencies and expanding our market presence of the two acquired businesses in the California area.

Cost of Revenues

For the Year Ended December 31,

Change

Amount

USD

USD

Cost of Revenues

Cost of Revenues from Edward

Cost of Revenues from TWEW

Total cost of revenues

For the year ended December 31, 2025, total cost of revenues increased to $1,121,761 from $277,293 for the year ended December 31, 2024, representing an increase of $844,468, or 304.5%, primarily due to the contribution from TWEW. Cost of revenues attributable to TWEW was $996,662, representing 88.8% of total cost of revenues in year 2025.

Cost of revenues from Edward was $125,099, or 11.2% of total cost of revenues for the year ended December 31, 2025, compared to $148,588 for the same period in 2024, representing a decrease of $23,489, or 15.8%, consistent with the corresponding decline in revenue from Edward.

Cost of revenues is mainly labor costs for TWEW and ocean freight service costs for Edward.

Operating Expenses

General and Administrative Expenses

Years Ended December 31,

​Change

Amount

General and Administrative Expenses

Payroll and Benefits

Rental and Leases

Travel and Entertainment

Legal and Accounting Fees

Recruiting Fees

Bank charges and fees

Insurance Expenses

Depreciation and Amortization Expenses

Others

Total General and Administrative Expenses

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General and administrative expenses for our continuing operations decreased by $14,287, or 0.4%, for the year ended December 31, 2025, primarily due to (i) a decrease of $138,319 in recruiting expenses as the prior-year period included significant hiring expenses associated with the launch of our logistics and warehousing segment, (ii) a decrease of $78,351 in insurance expenses resulting from a less expensive insurance provider, (iii) a decrease of $66,290 in legal and accounting fees as we incurred additional professional fees for preparing registration statements on Form S-3 and Form S-8 during the year ended December 31, 2024, (iv) a decrease of $14,657 in travel and entertainment expenses related to business development efforts and client engagement, and (v) a decrease of $10,776 in other miscellaneous general and administration expenses during the year ended December 31, 2025, partially offset by (vi) an increase of $201,375 in rental and leases, which was primarily due to the relocation of our headquarters to California in July 2024, (vii) an increase of $66,926 in depreciation and amortization expenses, primarily due to the acquisition of new fixed assets and additional intangible assets, as detailed in NOTES 6 & 8, and (ⅷ) an increase of $30,938 in payroll and benefits expense, which was reflecting the full-year impact in 2025 of personnel hired during mid-2024 to support the Company’s newly launched logistics and warehousing and labor services segments.

Impairment loss expenses

The Year Ended December 31,

Change

Amount

Impairment loss expenses

Edward-Customer Relationships

Edward-Trade Names

Edward-Goodwill

Total impairment loss expenses

Management conducted an impairment assessment of goodwill and intangible assets associated with the Edward acquisition in accordance with ASC 350, Intangibles—Goodwill and Other. The Company utilized a DCF model to estimate the fair value of the reporting unit, taking into consideration projected revenues, operating margins, terminal value assumptions, and a discount rate reflecting the risks of the underlying cash flows.

For the year ended December 31, 2025, impairment loss expenses related to customer relationships, trade names, and goodwill amounted to $135,346, $27,429, and $568,532, respectively, resulting in total impairment losses of $731,307. No impairment losses were recorded for the year ended December 31, 2024. See NOTE 8 – Intangible Asset and Goodwill for more details.

Share-based compensation expenses

Years Ended December 31,

Amount

Share-based compensation expenses

Share-based compensation expenses were $387,618 and $277,345 for the years ended December 31, 2025 and 2024, respectively, representing an increase of $110,273, or 39.8%.

Share-based compensation expenses of $387,618 were recognized during the year ended December 31, 2025, consisting of (i) $77,875 resulting from 43,750 shares granted and vested immediately on September 30, 2025, (ii) $39,023 related to the employee incentive plan shares granted on September 30, 2024, and (iii) $270,720 resulting from the newly issued 144,000 shares granted and vested immediately on October 15, 2025.

For the year ended December 31, 2024, share-based compensation expenses were $277,345, consisting of $261,666 from (i) the 150,000 shares granted and vested immediately on September 30, 2024, and (ii) $15,679 related to the employee incentive plan shares granted on September 30, 2024.

See NOTE 11 – Stock Based Compensation for more details.

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Other Income (Expenses), net

Years Ended December 31,

Amount

Interest income

Interest expenses:

Loan Interest expense

Credit Card Interest

Interest expense on Tax

Premium Finance Interest

Total Interest expenses

Other income, net

Total other income(expense), net

Interest income from continuing operations was $924,224 for the year ended December 31, 2025, compared to $320,472 for the year ended December 31, 2024, representing an increase of $603,752, or 188.4%. The significant increase was primarily driven by interest earned on short-term loan receivable and certificates of deposit, funded by the net proceeds from the Company’s public offerings closed in May and July 2024.

Interest expense incurred from our continuing operations was $33,198 for the year ended December 31, 2025, a decrease of $2,753, or 7.7%, from $35,951 in 2024, mainly due to decreased loan interest expense.

Other income, net was $54,763 for the year ended December 31, 2025, compared to $8,009 for the year ended December 31, 2024, representing an increase of $46,754, or 583.8%. The increase was primarily attributable to higher rental income recognized during the year ended December 31, 2025.

Income Tax (Benefits)

Our income tax provision for continuing operations was $15,916 for the year ended December 31, 2025, compared with income tax benefits of $215,822 for the same period in 2024.

Net Loss

As a result of the above factors, we had a net loss of $3.6 million from our continuing operations for the year ended December 31, 2025, compared to a net loss of $3.2 million for the same period of 2024.

Parallel- Import vehicle Business (Discontinued Operations)

As disclosed in NOTE 5 – Discontinued Operations, we fully exited our parallel-import vehicle business in 2024, and its financial results have been classified as discontinued operations in our accompanying consolidated financial statements. The following discussion provides an overview of the financial impact of discontinued operations and related expense items.

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Financial Impact of Discontinued Operations

The following table summarizes the financial results of our discontinued operations for the year ended December 31, 2024:

For the Year Ended December 31,

Revenue

U.S. domestic market

Overseas market

Total Revenue

Cost of Revenue

Cost of vehicle

Fulfilment expense

Total Cost of Revenue

Gross (loss) profit

Revenue from discontinued operations was $1.6 million for the year ended December 31, 2024 from the parallel-vehicle business. Only 14 units of vehicles were sold following the significant downturn of parallel-import vehicle business as described in “—Business Overview and Recent Developing Trends.”

We also reported cost of revenue of $1.7 million, mainly the fulfillment expenses, and a gross loss of $24,820 of the discontinued business for the year ended December 31, 2024.

Selling, General, and Administrative Expenses for Discontinued Operations

The following table presents selling, general, and administrative expenses (“SGA Expenses”) for the discontinued operations:

For the Year Ended December 31,

SGA Expenses

Selling expenses

Allowance of credit loss of accounts receivables

Forfeited vehicle deposit expense

Credit Loss on vehicle sale tax receivable

Total SGA Expenses

Total SGA Expenses for the discontinued parallel-import vehicle business were approximately $1.8 million for the year ended December 31, 2024.

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Allowance of credit loss of accounts receivables

Total allowance of credit loss of accounts receivable for the discontinued parallel-import vehicle business was $1,589,546 for the year ended December 31, 2024.

Interest Expenses

The table below presents interest expenses for the year ended December 31, 2024:

December 31,

Interest Expenses

LC Financing

Line of Credit

Total interest expenses

Total interest expenses for the discontinued operations were $88,788 for the year ended December 31, 2024.

Liquidity and Capital Resources

Historically, our primary uses of cash have been to finance working capital needs. We believe that we will be able to fund current operations and other commitments for at least the next 12 months from operating cash flow and proceeds from the capital infusion, which were held in our cash and cash equivalents.

We may, however, require additional cash resources due to changes in business conditions or other future developments. If these sources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked securities could result in additional dilution to stockholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financial covenants that would restrict operations. Financing may not be available in amounts or on terms acceptable to us, or at all.

As of December 31, 2025, we had current assets of $9.1 million, consisting of cash and cash equivalents of $0.2 million, $7.4 million in loan receivable, $1.2 million of other receivables, $0.2 million in prepaid expenses and other current assets from continuing operations. As of December 31, 2025, our current liabilities, all of which related to continuing operations, totaled approximately $1.3 million, consisting of $0.6 million of operating lease liabilities, $0.6 million of other payables, and $0.1 million of loans payable, including the current portion of long-term borrowings.

The following table summarizes our cash flows for the years ended December 31, 2025 and 2024, with continuing operations and discontinued operations presented separately:

Years ended December 31,

Net cash provided by (used in) operating activities

Cash outflows from operations-continuing operations

Cash inflows from operations-discontinued operations

Net cash used in investing activities

Cash outflows from operations-continuing operations

Net cash provided by (used in) financing activities

Cash inflows (outflows) from operations-continuing operations

Cash outflows from operations-discontinued operations

Net increase (decrease) in cash

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Operating Activities

Net cash used in operating activities from continuing operations was $2.5 million for the year ended December 31, 2025. The negative cash flow was primarily due to (i) a net loss of $3.6 million during the year ended December 31, 2025, (ii) an increase of $0.8 million in other receivables, and (iii) a decrease of $0.3 million in operating lease liabilities, partially offset by (iv) an increase of $0.7 million in allowance of impairment loss of goodwill and intangible assets, (v) an increase of $0.5 million in amortization of operating lease right-of-use assets, (vi) $0.4 million in share-based compensation expenses; and (vii) an increase of $0.4 million in other payables and other current liabilities.

Net cash used in operating activities from continuing operations was $3.5 million for the year ended December 31, 2024. The negative cash flow was primarily due to (i) a net loss of $3.2 million during the year ended December 31, 2024; (ii) an increase of $0.3 million in deferred income tax benefits; and (iii) an increase of $0.3 million in other receivables and a decrease of $0.2 million in operating lease liabilities, partially offset by (iv) an increase of $0.3 million in amortization of operating lease right-of-use assets, and $0.3 million in share-based compensation expenses.

Net cash provided by operating activities from discontinued operations was $2.5 million in 2025, primarily due to the collection of $2.5 million in accounts receivable resulting from vehicle sales.

Net cash provided by operating activities from discontinued operations was $3.7 million in 2024. The decline was primarily attributable to (i) a decrease of $1.5 million in inventory; (ii) a decrease of $3.9 million in accounts receivable; offset by a decrease of $1.7 million in loans payable.

Investing Activities

Net cash used in investing activities from continuing operations was approximately $1.3 million for the year ended December 31, 2025, including (i) $3.4 million in short-term loans lent to third parties, and offset by (ii) $2.1 million proceeds of repayment from short-term loans lent to third parties.

Net cash used in investing activities from continuing operations was approximately $6.1 million for the year ended December 31, 2024, including (i) approximately $0.3 million in cash paid for the Edward and TWEW acquisitions, net of cash acquired, (ii) purchase of fixed assets of $0.4 million, (iii) $6.3 million in short-term loans lent to third parties, and offset by (iv) $0.9 million proceeds of repayment from short-term loans lent to third parties.

There were no investing activities related to discontinued operations for the years ended December 31, 2025 and 2024.

Financing Activities

Net cash used in financing activities from continuing operations was $73,854 for the year ended December 31, 2025, which consisted of (i) net proceeds from premium finance of $196,300, partially offset by (ii) net repayments of premium finance of approximately $234,111, and (iii) repayments of long-term borrowings of $36,043.

Net cash provided by financing activities from continuing operations was $8.8 million for the year ended December 31, 2024, which consisted of (i) net proceeds from the July Offering of approximately $1.1 million, (ii) net proceeds from the May Offering of approximately $7.3 million, (iii) proceeds of $0.6 million from the issuance of shares of common stock in private placements; partially offset by (iv) net repayments of premium finance of approximately $0.3 million.

There were no financing activities related to discontinued operations for the years ended December 31, 2025.

Net cash used in financing activities from discontinued operations was $1.7 million for the year ended December 31, 2024, primarily reflecting (i) net repayments of LC financing of $1.0 million; and (ii) net repayments of revolving lines of credit of $0.7 million.

As of December 31, 2025, the Company had cash and cash equivalents of approximately $0.2 million and a working capital balance of $7.7 million. In addition, the Company had loan receivable from third parties of approximately $7.4 million, which can be sufficient for the Company to support its ongoing business operations and meet the obligations in the future.

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Management has evaluated the Company’s ability to continue as a going concern in accordance with ASC 205-40, Presentation of Financial Statements – Going Concern. This evaluation considered the Company’s current financial condition, expected cash flows, obligations due within the next 12 months, and available sources of liquidity.

While management understands that the ability of the Company to continue as a going concern is dependent upon its ability to successfully execute its new business strategy and eventually attain profitable operations, management has concluded that there are no conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the issuance date of these consolidated financial statements. Accordingly, the Company’s consolidated financial statements as of December 31, 2025 have been prepared on a going concern basis.

Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet financing arrangements as defined under the rules and regulations of the SEC, or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. NOTE 2, “Summary of Significant Accounting Policies” of the Notes to in Part II, Item 8 of this annual report on Form 10-K describe the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements.

Revenues

ASC 606 establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. Under the new guidance, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the new guidance requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

In 2024, the Company generated revenue from the parallel-import vehicle dealership and logistics and warehousing services. Revenue from the parallel-import vehicle dealership business is generated from the sales of parallel-import vehicles to both domestic and overseas parallel-import car dealers. It purchases automobiles from the U.S. market through its team of professional purchasing agents, and mainly resells them to parallel-import vehicle dealers in the U.S. and the PRC. In accordance with ASC 606, the Company recognizes revenue at the point in time when the performance obligation has been satisfied and control of the vehicles has been transferred to the dealers. For sales to U.S. domestic parallel-import vehicle dealers, revenue is recognized when a vehicle is delivered, and its title has been transferred to the dealers. For overseas sales, the Company sells vehicles under Cost and Freight shipping point terms, and revenue is recognized when a vehicle is loaded on a cargo ship and its title has been transferred to the dealers. The Company accounts for the revenue generated from sales of vehicles on a gross basis as the Company is acting as a principal in these transactions, is subject to inventory risk, has latitude in establishing prices, and is responsible for fulfilling the promise to provide customers the specified goods, which the Company has control of the goods and has the ability to direct the use of goods to obtain substantially all the benefits. All of the Company’s contracts have one single performance obligation as the promise is to transfer the individual vehicle to parallel-import vehicle dealers, and there is no separately identifiable other promise in the contracts. The Company’s vehicles are sold with no right of

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return and the Company does not provide other credits or sales incentives to parallel-import car dealers. Historically, no customer returns have occurred. Therefore, the Company did not provide any sales return allowances for the years ended December 31, 2025 and 2024.

In 2025, the Company generates revenues from freight forwarding services provided by Edward and general labor and logistics provided by TWEW to corporate and retail clients, including transportation, cargo warehousing, freight forwarding, labor service, and cargo loading and unloading. Revenue for freight forwarding services, both export and import, is recognized when the services are provided. The Company’s role as the principal in these services involves managing the process up to the point where control is transferred based on contractual terms, allowing revenue recognition on a gross basis throughout the transit period. For warehousing services, revenue is primarily derived from storage fees, which are recognized based on the actual number of days the goods are stored in the warehouse while awaiting further transportation. Across all operations, the Company maintains a principal position, controlling the goods and services, bearing inventory and pricing risks, and fulfilling performance obligations directly. Each contract is typically structured with a single performance obligation without allowances for returns or sales incentives. There were no provisions for sales return allowances based on historical experiences of no returns.

Revenue from general labor and logistics services, provided through TWEW, is recognized upon services rendered, based on verified labor hours or project milestones outlined in client agreements, with billing tied to predefined service rates (e.g., per-hour fees or fixed-scope pricing). The Company recognizes revenue on a gross basis as the principal service provider, reflecting its contractual obligation to deliver labor solutions to clients, despite outsourcing workforce operations to third parties. Contracts generally consist of a single performance obligation (supplying labor resources), with revenue measured at the transaction price agreed upon in service agreements. No provisions for returns or sales incentives are included, as historical experience indicates no material rights of return or refunds.

General and Administration Expenses

The Company’s general and administrative expenses primarily include employee salaries and benefits, depreciation, office lease expenses, travelling and entertainment expenses, legal and consulting fees, insurance and other miscellaneous administrative expenses. For the years ended December 31, 2025 and 2024, general and administration expenses for the continuing expenses of $3,627,426 and $3,641,713, respectively.

Share-based compensation

The Company has adopted the Plan for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Company’s operations. Shareholders, directors, and employees of the Company receive remuneration in the form of share-based awards including option, restricted stock, restricted stock unit, dividend equivalent, or other awards that are permitted under the Plan, whereby the recipients render services as consideration for such share-based compensation.

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the cost over the period during which the employee is required to provide service in exchange for the award, which generally is the vesting period. The amount of cost recognized is adjusted to reflect any expected forfeitures prior to vesting. The fair value of stock award is measured at grant date’s per share closing price of the Company’s common stock, and the fair value of option is measured at grant date using the Black-Scholes pricing model, taking into account the terms and conditions upon which the share-based awards are granted. Where the employees have to meet vesting conditions before becoming unconditionally entitled to the share-based awards, the total estimated fair value of the share-based awards is spread over the vesting period, taking into account the probability that the share-based awards will vest, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date.

Income taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized as income in the period that includes the enactment date.

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The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

The Company assesses deferred tax assets to determine whether they are realizable. As of December 31, 2025, the Company recorded a full valuation allowance against deferred tax assets, as it has generated a three-year cumulative pretax book loss and is forecasting a loss for 2026. Based on this evidence, realization of deferred tax assets is not considered more-likely-than-not at this time.

The Company records uncertain tax positions in accordance with ASC 740, Income Taxes, on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company records interest and penalties related to an uncertain tax position, if and when required, as part of income tax expenses in the consolidated statements of operations. The Company does not believe that there were any uncertain tax positions as of December 31, 2025 and 2024.

The Company and its U.S. operating subsidiaries are subject to U.S. federal and state income tax laws. Prior to the corporate conversion in 2022, the Company was organized as a limited liability company (“LLC”) and elected to be treated as a corporation for U.S. federal income tax purposes for the tax years ended December 31, 2020 and 2021.

As of December 31, 2025, the Company’s consolidated U.S. federal income tax returns for the tax years ended December 31, 2021 through December 31, 2024 remained open to examination by the Internal Revenue Service and applicable state tax authorities.

(Loss) Earnings per share

The Company computes (loss) 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 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.

Related parties and transactions

The Company identifies related parties, and accounts for and discloses related party transactions in accordance with ASC 850, “Related Party Disclosures” and other relevant ASC standards.

Parties, which can be a corporation or individual, are considered related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Corporations are also considered to be related if they are subject to common control or common significant influence.

Transactions between related parties commonly occurring in the normal course of business are considered to be related party transactions. Transactions between related parties are also considered to be related party transactions even though they may not be given accounting recognition.

Segment reporting

The Company uses the management approach in determining reportable operating segments. The management approach considers the internal reporting used by the Company’s chief operating decision maker for making operating decisions about the allocation of resources of the segment and the assessment of its performance in determining the Company’s reportable operating segments. As of December 31, 2023, the Company operated as a single reportable segment, focused solely on the parallel-import vehicle business. In 2024, the Company expanded its operations and reported two operating segments: the parallel-import vehicle business and logistics and warehousing services. However, following the discontinuation of the parallel-import vehicles business, as of December 31, 2025, the Company transitioned back to a single reportable segment, now focused exclusively on logistics and warehousing services.

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Loan receivable

The Company’s loan receivable, which consist of loans to third parties, are recognized at the point of loan disbursement, initially measured at fair value, primarily reflecting the disbursed amount and associated transaction costs. Both secured and unsecured lending are encompassed in these receivables, with terms including varying interest rates and maturity dates. Subsequently, these receivables are measured at amortized cost using the effective interest method, which ensures the accurate recognition of interest income over the loan period. The interest rates for these loans may be subject to change based on the terms of loan agreements.

Credit Loss

Periodic reviews of the loan portfolio are conducted to assess impairment, utilizing the expected credit loss model. The Company estimates expected credit losses on its loan receivable based on an evaluation of the borrower’s financial condition and operating performance, the contractual terms and remaining maturity of the loan, historical credit loss experience, current economic conditions, and reasonable and supportable forward-looking information.

As of December 31, 2025, no allowance for credit losses were recorded related to its loan receivable.

Intangible assets, net

The Company recorded intangible assets with the acquisitions of Edward and TWEW during the year ended December 31, 2024. Intangible assets consist of developed technology, customer relationships, and trade names, which are amortized on a straight-line basis or over their respective useful lives using patterns that reflect the economic benefits the assets are expected to realize. The Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

The Company recognized impairment to intangible assets of $162,775 and nil for the years ended December 31, 2025 and 2024, respectively.

Fair value of financial instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of input used to measure fair value are as follows:

Level 1 —  inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 —  inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data.

Level 3 —  inputs to the valuation methodology are unobservable.

Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, loan receivable, loans payable, and other payables and other current liabilities, approximated the fair value of the respective assets and liabilities as of December 31, 2025 and 2024 based upon the short-term nature of the assets and liabilities.

The Company applied level 3 to obtain the fair value of intangible assets and goodwill. See NOTE 8 — Intangible Asset and Goodwill.

The Company applied level 3 to obtain the fair value of loan receivable. The Company believes that the carrying amount of long-term loans approximated fair value as of December 31, 2025 and 2024 reflected amortized cost net of an allowance for credit losses, based on expected credit loss analyses that consider borrower-specific risks, current conditions, and reasonable and supportable forward-looking information. See NOTE 4 — Loan Receivable.

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Leases

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 842, Leases (“Topic 842”). The Company leases office space, which is classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases, usually with an initial term of 12 months or less) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The ROU asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All ROU assets are reviewed for impairment annually. There was no impairment for ROU lease assets as of December 31, 2025 and 2024.

Goodwill

The Company records goodwill as the excess of the consideration transferred over the fair value of net assets acquired in business combinations. Goodwill is tested for impairment at the reporting unit level, which is an operating segment, or one level below. The Company has one reporting unit. The Company measures goodwill impairment, if any, as the amount by which the carrying amount of the reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill.

The review of goodwill impairment consists of either using a qualitative approach to determine whether it is more likely than not that the fair value of the assets is less than their respective carrying values or a one-step quantitative impairment test. In performing the qualitative assessment, the Company considers many factors in evaluating whether the carrying value of goodwill may not be recoverable, including declines in the Company’s stock price and market capitalization of the Company and macroeconomic conditions. If, based on the results of the qualitative assessment, it is concluded that it is not more likely than not that the fair value of a reporting unit exceeds its carrying value, additional quantitative impairment testing is performed. The quantitative test requires that the carrying value of each reporting unit be compared with its estimated fair value. If the carrying value of a reporting unit is greater than its fair value, a goodwill impairment charge will be recorded for the difference (up to the carrying value of goodwill). The Company uses the income approach and/or a market-based approach to determine the reporting units’ fair values, which are based on discounted cash flows. The determination of discounted cash flows of the reporting units and assets and liabilities within the reporting units requires significant estimates and assumptions. Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates.

For the year ended December 31, 2025, the Company recorded a goodwill impairment charge of $568,532. See NOTE 8 – Intangible assets and Goodwill.

Impairment of long-lived assets

The Company reviews long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If an impairment indicator is present, the Company evaluates recoverability by comparing the carrying amount of the asset group to the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset group. If the assets are impaired, an impairment loss is measured as the amount by which the carrying amount of the asset group exceeds the fair value of the asset. The Company estimates fair value using the expected future cash flows discounted at a rate consistent with the risks associated with the recovery of the asset.

For the years ended December 31, 2025 and 2024, the Company did not record any impairment.

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Recent accounting pronouncements

Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , requires disclosures about significant segment expenses and additional interim disclosure requirements. This standard also requires a single reportable segment to provide all disclosures required by Accounting Standards Codification Topic 280. This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The amendments should be applied retrospectively for all prior periods presented in the consolidated financial statements. We adopted this standard in our Annual Report on Form 10-K for the year ended December 31, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements.

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , establishes incremental disaggregation of income tax disclosures pertaining to the effective tax rate reconciliation and income taxes paid. This standard is effective for fiscal years beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively. The Company adopted ASU 2023-09 beginning January 1, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements.