Lakeside Holding Ltd

Previous wording

Founded in Chicago, Illinois in 2018, we are an Asian American-owned business rooted in the U.S. with in-depth understanding of both the U.S. and Asian international trading and logistics service markets. Our customers are typically Asia- and U.S.-based logistics service companies serving large e-commerce platforms, social commerce platforms and manufacturers to sell and transport consumer and industrial goods made in Asia into the U.S. Since inception and as of September 30, 2024, we had served over 300 customers to fulfill over 45,000 cross-border supply chain solution orders.

Current wording

Founded in Chicago, Illinois in 2018, we are an Asian American-owned business rooted in the U.S. with in-depth understanding of both the U.S. and Asian international trading and logistics service markets. Our customers are typically Asia- and U.S.-based logistics service companies serving large e-commerce platforms, social commerce platforms and manufacturers to sell and transport consumer and industrial goods made in Asia into the U.S. Since inception and as of December 31, 2024, we had served over 300 customers to fulfill over 48,000 cross-border supply chain solution orders.

Previous wording

We have established an extensive collaboration network of service providers, including global freight carriers for our cross-border freight consolidation and forwarding services as well as domestic ground transportation carriers for our U.S. domestic transportation services. Since inception and as of September 30, 2024, we had collaborated with almost all major global ocean and air carriers to forward 32,800 TEU of container loads and 55,100 tons of air cargo. As of September 30, 2024, we had also cooperated with over 200 domestic ground transportation carriers, including almost all major U.S. domestic ground transportation carriers, on a long-term, short-term or order basis, as the case may be.

Current wording

We have established an extensive collaboration network of service providers, including global freight carriers for our cross-border freight consolidation and forwarding services as well as domestic ground transportation carriers for our U.S. domestic transportation services. Since inception and as of December 31, 2024, we had collaborated with almost all major global ocean and air carriers to forward 33,800 TEU of container loads and 59,600 tons of air cargo. As of December 31, 2024, we had also cooperated with over 200 domestic ground transportation carriers, including almost all major U.S. domestic ground transportation carriers, on a long-term, short-term or order basis, as the case may be.

Previous wording

We operate three massive and hyper-busy regional warehousing and distribution centers in the U.S., in Illinois and Texas. With an aggregate gross feet area of approximately 142,484 square feet and 52 docks, our regional warehousing and distribution centers have an aggregate daily floor load of up to 3,000 cubic meters of freight. In addition to our self-operated regional centers, we maintain close contact with over 150 warehouses and distribution terminals in almost all transportation hubs in the U.S. which we have cooperated in the past to support the warehousing and distributing services of our cross-border freight in case such freight requires storage, fulfilment, transloading, palletizing, packaging or distribution in states other than Illinois and Texas. As of September 30, 2024, we had assisted with the customs clearance, in conjunction with our other service offerings, of cross-border freight of an aggregate assessed value of over $42.6 million.

Current wording

We operate three massive and hyper-busy regional warehousing and distribution centers in the U.S., in Illinois and Texas. With an aggregate gross feet area of approximately 142,484 square feet and 52 docks, our regional warehousing and distribution centers have an aggregate daily floor load of up to 3,000 cubic meters of freight. In addition to our self-operated regional centers, we maintain close contact with over 150 warehouses and distribution terminals in almost all transportation hubs in the U.S. which we have cooperated in the past to support the warehousing and distributing services of our cross-border freight in case such freight requires storage, fulfilment, transloading, palletizing, packaging or distribution in states other than Illinois and Texas. As of December 31, 2024, we had assisted with the customs clearance, in conjunction with our other service offerings, of cross-border freight of an aggregate assessed value of over $46.5 million.

Previous wording

Leveraging our strong cross-border supply chain service capabilities, extensive service provider network of cross-border freight carriers and U.S. domestic ground transportation carriers, massive and hyper-busy regional warehousing and distribution centers as well as deep understanding of the Asian market, we have been able to build up our brand and reputation and have achieved fast growth since our inception. For the three months ended September 30, 2024 and 2023, our revenues amounted to $4.1 million and $4.1 million, respectively, and our gross profit amounted to $0.5 million and $0.6 million during the same periods, respectively. As of September 30, 2024, we had fulfilled over 45,000 cross-border supply chain solution orders for freight of an aggregate assessed value of $1.0 billion, delivered to thousands of business and residential addresses in approximately 48 U.S. states.

Current wording

Leveraging our strong cross-border supply chain service capabilities, extensive service provider network of cross-border freight carriers and U.S. domestic ground transportation carriers, massive and hyper-busy regional warehousing and distribution centers as well as deep understanding of the Asian market, we have been able to build up our brand and reputation and have achieved fast growth since our inception. As of December 31, 2024, we had fulfilled over 48,000 cross-border supply chain solution orders for freight of an aggregate assessed value of $1.0 billion, delivered to thousands of business and residential addresses in approximately 48 U.S. states.

Previous wording

Our results of operations are dependent upon our ability to expand and maintain our customer base. Since inception and as of September 30, 2024, we had served over 300 customers to fulfill over 45,000 cross-border supply chain solution orders. We will continue to expand our customer base to achieve a sustainable business growth. We aim to attract new customers and maintain our existing customers. We plan to improve the quality and expand the variety of our services to obtain more customers.

Current wording

Our results of operations are dependent upon our ability to expand and maintain our customer base. Since inception and as of December 31, 2024, we had served over 300 customers to fulfill over 48,000 cross-border supply chain solution orders. We will continue to expand our customer base to achieve a sustainable business growth. We aim to attract new customers and maintain our existing customers. We plan to improve the quality and expand the variety of our services to obtain more customers.

Previous wording

Cost of Revenues. Our cost of revenues mainly comprises transportation and delivery costs, warehouse service charges, custom declaration and terminal charges, freight arrangement charges and other overhead cost allocation which includes operating and financing lease-related costs, depreciation expenses of property and equipment and other miscellaneous expenses.

Current wording

Cost of Revenues. Our cost of revenues from customized cross-border ocean and air freight solutions mainly comprises transportation and delivery costs, warehouse service charges, custom declaration and terminal charges, freight arrangement charges and other overhead cost allocation which includes operating and financing lease-related costs, depreciation expenses of property and equipment and other miscellaneous expenses.

Previous wording

General and Administrative Expenses. Our general and administrative expenses primarily include salaries and staff benefits, repair and maintenance expense, depreciation on property and equipment, lease expenses, travelling and entertainment, bank charges, legal and professional fees, insurance expenses and other office expenses.

Current wording

General and Administrative Expenses. Our general and administrative expenses primarily include salaries and staff benefits, repair and maintenance expenses, depreciation on property and equipment, lease expenses, travelling and entertainment expenses, bank charges, legal and professional fees, insurance expenses and other office expenses.

Previous wording

The following table summarizes the results of condensed consolidated statements of operations and comprehensive income (unaudited) for the three months ended September 30, 2024 and 2023 in U.S. dollars.

Current wording

The following table summarizes the results of condensed consolidated statements of operations and comprehensive income (unaudited) for the three and six months ended December 31, 2024 and 2023 in U.S. dollars.

Previous wording

Revenues from our cross-border airfreight solutions decreased by $0.2 million or 8.2%, from $2.4 million in the three months ended September 30, 2023, to $2.2 million in the three months ended September 30, 2024. The decrease was primarily due to a decrease in the volume of cross-border air freight processed, from approximately 7,816 tons for the three months ended September 30, 2023, to approximately 7,273 tons for the three months ended September 30, 2024.

Current wording

Revenues from our cross-border airfreight solutions decreased by $1.1 million or 35.5%, from $3.1 million in the three months ended December 31, 2023, to $2.0 million in the three months ended December 31, 2024. The decrease was primarily due to a decrease in the volume of cross-border air freight processed, from approximately 8,217 tons for the three months ended December 31, 2023, to approximately 4,459 tons for the three months ended December 31, 2024. Some of our customers reduced their orders and uncertainty in political regulations regarding tariffs, leading to a significant decline in our revenue.

Previous wording

Revenues from our cross-border ocean freight solutions increased by $0.1 million, or 7.8%, from $1.7 million in the three months ended September 30, 2023, to $1.8 million in the three months ended September 30, 2024. This growth was primarily due to an increase in the volume of cross-border ocean freights processed and forwarded, rising from 1,290 TEU in the three months ended September 30, 2023, to 1,430 TEU in the three months ended September 30, 2024.

Current wording

Revenues from our cross-border ocean freight solutions decreased by $0.4 million, or 24.2%, from $1.8 million in the three months ended December 31, 2023, to $1.4 million in the three months ended December 31, 2024. This reduction was primarily due to a decrease in the volume of cross-border ocean freights processed and forwarded, dropping from 1,330 TEU in the three months ended December 31, 2023, to 1,046 TEU in the three months ended December 31, 2024. Additionally, a slowdown in consumer spending and business investments, impacted by overall economic downturn, reduced the demand for imported goods, leading to lower container volumes.

Previous wording

Revenues from the Asia-based customers increased by $1.1 million, or 65.8%, from $1.7 million in the three months ended September 30, 2023, to $2.8 million in the three months ended September 30, 2024. Revenues from the U.S.-based customers decreased by $1.2 million, or 48.2%, from $2.5 million in the three months ended September 30, 2023 to $1.3 million in the same period in 2024.

Current wording

Revenues from cross-border freight solutions for the Asia-based customers increased by $0.1 million, or 5.7%, from $2.6 million in the three months ended December 31, 2023, to $2.8 million in the three months ended December 31, 2024. Revenues from cross-border freight solutions for the U.S.-based customers decreased by $1.7 million, or 72.9%, from $2.3 million in the three months ended December 31, 2023 to $0.6 million in the same period in 2024.

Previous wording

The decrease in revenue from the U.S.-based customers in the three months ended September 30, 2024, compared to the same period in 2023, was primarily due to our strategic shift toward Asia-based e-commerce customers. Additionally, special projects with larger shipment volumes from U.S. customers were completed in the three months ended September 30, 2023, with no comparable projects in the same period in 2024.

Current wording

The decrease in revenue from the U.S.-based customers in the three months ended December 31, 2024, compared to the same period in 2023, was primarily due to our strategic shift toward Asia-based e-commerce customers, in addition to the overall decline in revenue discussed earlier. Additionally, one-off special projects with larger shipment volumes from U.S. customers were completed in the three months ended December 31, 2023, with no comparable projects in the same period in 2024.

Previous wording

Our cost of revenues increased by $0.1 million, or 1.7%, from $3.5 million in the three months ended September 30, 2023, to $3.6 million in the three months ended September 30, 2024. The increase in cost of revenues was mainly due to the combined effects of:

Current wording

Our cost of revenues from cross-border freight solutions decreased by $0.3 million, or 8.7%, from $3.9 million in the three months ended December 31, 2023, to $3.5 million in the three months ended December 31, 2024. The increase in cost of revenues was mainly due to the combined effects of:

Previous wording

Our salaries and employee benefits expenses increased by $0.3 million, or 116.9%, from $0.5 million in the three months ended September 30, 2023, to $0.8 million in the three months ended September 30, 2024. Our salaries and employee benefits expenses represented 50.3% and 66.8% of our total general and administrative expenses for the three months ended September 30, 2024 and 2023, respectively. The increase was mainly due to the recruitment of additional sales, customer services, and back-office support personnel to support our business growth. For our salaries and employee benefits expenses, (i) our payroll expenses increased by $0.3 million, or 63.6%, from $0.5 million in the three months ended September 30, 2023, to $0.8 million in the three months ended September 30, 2024, and (ii) our employee benefit expenses, which mainly consist of 401(k) company contribution, meal allowance and health insurance expenses, increased by $0.01 million, or 53.3%, from $0.1 million in the three months ended September 30, 2023, to $0.2 million in the three months ended September 30, 2024, representing 8.9% and 12.5% of our total general and administrative expenses for the three months ended September 30, 2024 and 2023, respectively. The increase was mainly due to rising employee health insurance premiums.

Current wording

Our salaries and employee benefits expenses increased by $0.4 million, or 64.1%, from $0.6 million in the three months ended December 31, 2023, to $1.1 million in the three months ended December 31, 2024. Our salaries and employee benefits expenses represented 55.8% and 66.0% of our total general and administrative expenses for the three months ended December 31, 2024 and 2023, respectively. The increase was mainly due to the recruitment of additional sales, customer services, and back-office support personnel to support our business growth in first half of 2024, along with the salary expenses associated with the two new subsidiaries in China. For our salaries and employee benefits expenses, (i) our payroll expenses increased by $0.4 million, or 70.7%, from $0.6 million in the three months ended December 31, 2023, to $1.0 million in the three months ended December 31, 2024, and (ii) our employee benefit expenses, which mainly consist of 401(k) company contribution, employee defined contribution plan in China, meal allowance and health insurance expenses, increased by $21,914, or 23.9%, from $91,674 in the three months ended December 31, 2023, to $113,588 in the three months ended December 31, 2024, representing 5.9% and 9.3% of our total general and administrative expenses for the three months ended December 31, 2024 and 2023, respectively. The increase was mainly due to rising employee health insurance premiums.

Previous wording

Our professional fee increased by $0.3 million, or 1,839.6%, from $17,535 in the three months ended September 30, 2023, to $340,114 in the three months ended September 30, 2024. Our professional fee represented 18.5% and 2.0% of our total general and administrative expenses for the three months ended September 30, 2024 and 2023, respectively. The increase was primarily due to audit fee, legal fee, consulting expense, investor-related expenses and financial reporting service fees for the three months ended September 30, 2024. In the three months ended September 30, 2023, most of the expenses directly related to offering that were not included in professional fees, as they were accounted for as deferred initial public offering assets.

Current wording

Our professional fee increased by $0.2 million, or 1,359.3%, from $14,802 in the three months ended December 31, 2023, to $216,012 in the three months ended December 31, 2024. Our professional fee represented 11.3% and 1.5% of our total general and administrative expenses for the three months ended December 31, 2024 and 2023, respectively. The increase was primarily due to audit fee, legal fee, consulting expense, investor-related expenses and financial reporting service fees for the three months ended December 31, 2024. In the three months ended December 31, 2023, most of the expenses directly related to offering that were not included in professional fees, as they were accounted for as deferred initial public offering assets.

Previous wording

We had loss before income taxes of $1.2 million for the three months ended September 30, 2024, compared to loss before income taxes of $0.3 million for the three months ended September 30, 2023. We were in a loss position before income taxes for the three months ended September 30, 2024, primarily attributable to the net effects of: (i) the decrease in gross profit, (ii) the rise in operating expenses; and (iii) the increase in other income for the three months ended September 30, 2024 as mentioned above.

Current wording

We had loss before income taxes of $1.9 million for the three months ended December 31, 2024, compared to income before income taxes of $92,408 for the three months ended December 31, 2023. We were in a loss position before income taxes for the three months ended December 31, 2024, primarily attributable to the net effects of: (i) the decrease in gross profit, (ii) the rise in operating expenses; and (iii) the increase in other income for the three months ended December 31, 2024 as mentioned above.

Previous wording

We had income tax expense of $89,581 and income tax recovery of $2,059 in the three months ended September 30, 2024 and 2023, respectively. We did not have current income tax provision in the three months ended September 30, 2024, due to net operating loss, and we recognized a deferred income tax asset of $373,897 due to temporary differences recognized and net operating loss carried forward. We also recognized a valuation allowance of $463,478 to write off our deferred tax asset since we are uncertain that we will be able to utilize the deferred tax asset to offset future taxable income, resulting in a net deferred tax expense of $89,581 in the three months ended September 30, 2024. We did not have current income tax provision in the three months ended September 30, 2023, due to net operating loss, and we recognized a deferred income tax asset of $2,059, due to temporary differences recognized and a deferred income tax expense of $373,897 due to the change from an S Corporation to a C Corporation upon the completion of our reorganization on September 23, 2023. Since our transition to a C Corporation on September 23, 2023, ABL Chicago, our subsidiary in the U.S. is now obligated to pay federal tax at a rate of 21% and Illinois state tax at a rate of 7.5%. This tax obligation was previously exempt for us as an S Corporation.

Current wording

We had income tax expense of $nil and $28,184 in the three months ended December 31, 2024 and 2023, respectively. We did not have current income tax provision in the three months ended December 31, 2024, due to net operating loss, and we recognized a net deferred income tax asset of $585,197 due to temporary differences recognized and net operating loss carried forward. We also recognized a valuation allowance of $585,197 to write off our deferred tax asset since we are uncertain that we will be able to utilize the deferred tax asset to offset future taxable income, resulting in a net income tax expense of $nil in the three months ended December 31, 2024.

Previous wording

Our gross profit decreased by $0.1 million, or 19.3%, from $0.6 million in the three months ended September 30, 2023, to $0.5 million in the three months ended September 30, 2024. Our gross margin was 12.8% for the three months ended September 30, 2024, compared to 15.6% for the three months ended September 30, 2023. The decline in gross margin was primarily attributable to (i) reduced revenue from the airfreight solution, and (ii) an increase in our cost of revenue in warehouse services, custom declaration and terminal charges, frights arrange charge and overhead costs allocated, as discussed above.

Current wording

Our overall gross profit decreased by $1.2 million, or 71.9%, from $1.7 million in the six months ended December 31, 2023, to $0.5 million in the six months ended December 31, 2024. Our gross margin of cross-border freight solution was 5.1% for the six months ended December 31, 2024, compared to 18.9% for the six months ended December 31, 2023. The decline in gross margin was primarily attributable to (i) revenue from the airfreight and ocean freight solution decreased to a greater extend to decrease in our cost of revenue, such as transportation and delivery cost, warehouse services, custom declaration and terminal charges, and (ii) increased overhead costs allocated, as discussed above.

Previous wording

Our general and administrative expenses increased by $1.0 million, or 114.7%, from $0.9 million in the three months ended September 30, 2023, to $1.8 million in the three months ended September 30, 2024. These expenses represented 45.0% and 20.6% of our total revenues for the three months ended September 30, 2024 and 2023, respectively. The increase was primarily attributed to higher salary and employee benefit expenses, professional fee, office expense and traveling, insurance expense and entertainment expense:

Current wording

Our general and administrative expenses increased by $1.9 million, or 103.7%, from $1.8 million in the six months ended December 31, 2023, to $3.7 million in the six months ended December 31, 2024. These expenses represented 48.8% and 20.3% of our total revenues for the six months ended December 31, 2024 and 2023, respectively. The increase was primarily attributed to higher salary and employee benefit expenses, professional fee, office expense and traveling, insurance expense and entertainment expense:

Previous wording

Our insurance expense increased by $68,937, or 1,452.6%, from $4,746 in the three months ended September 30, 2023, to $73,683 in the three months ended September 30, 2024. The increase was primarily due to purchasing insurance premiums for our directors and officers, as we became a public company in July 2024.

Current wording

Our insurance expense increased by $0.1 million, or 1,701.0%, from $6,948 in the six months ended December 31, 2023, to $125,131 in the six months ended December 31, 2024. The increase was primarily due to purchasing insurance premiums for our directors and officers, as we became a public company in July 2024.

Previous wording

Our traveling and entertainment expense represented 6.9% and 8.4% of our total general and administrative expenses for three months ended September 30, 2024 and 2023, respectively. The increase was mainly due to higher entertainment and gift expenses related to networking with our business partners.

Current wording

Our traveling and entertainment expense represented 11.0% and 8.7% of our total general and administrative expenses for six months ended December 31, 2024 and 2023, respectively. The increase was mainly due to higher entertainment and gift expenses related to networking with our business partners as well as more business trips during recent quarter.

Previous wording

Our other income, net, increased by $62,839, or 133.8%, from $46,949 in the three months ended September 30, 2023, to $109,788 in the three months ended September 30, 2024. The increase was primarily due to renting out part of our office space to our related party, Weship, for an additional two months during the three months ended September 30, 2024.

Current wording

Our other income, net, increased by $0.1 million, or 127.9%, from $0.1 million in the six months ended December 31, 2023, to $0.2 million in the six months ended December 31, 2024. The increase was primarily due to renting out part of our warehouse space to our related party, Weship, for an additional five months during the six months ended December 31, 2024.

Previous wording

As a result of the foregoing, we had a net loss of $1.3 million and $0.3 million for the three months ended September 30, 2024 and 2023, respectively.

Current wording

As a result of the foregoing, we had a net loss of $3.3 million and $0.2 million for the six months ended December 31, 2024 and 2023, respectively.

Previous wording

As of September 30, 2024, we had a cash and cash equivalent balance of $2.7 million. Our current assets were $5.8 million, and our current liabilities were $4.4 million, resulting in a current ratio of 1.3:1 and a positive working capital of $1.4 million. Total stockholders’ equity as of September 30, 2024 was $3.6 million.

Current wording

As of December 31, 2024, we had a cash and cash equivalent balance of $1.1 million. Our current assets were $4.4 million, and our current liabilities were $5.4 million, resulting in a current ratio of 0.81:1 and a negative working capital of $1.1 million. Total stockholders’ equity as of December 31, 2024 was $1.6 million.

Previous wording

As of September 30, 2024 and June 30, 2023, we had accounts receivable net of allowance of $2.3 million and $2.8 million, respectively. We periodically review our accounts receivable and allowance level to ensure our methodology for determining allowances is reasonable and to accrue additional allowances if necessary. For the accounts receivable, as of September 30, 2024 and June 30, 2023, we provided a credit loss allowance of $66,903 and $54,066, respectively.

Current wording

As of December 31, 2024 and June 30, 2024, we had accounts receivable net of allowance of $1.9 million and $2.8 million, respectively. We periodically review our accounts receivable and allowance level to ensure our methodology for determining allowances is reasonable and to accrue additional allowances if necessary. For the accounts receivable, as of December 31, 2024 and June 30, 2024, we provided a credit loss allowance of $56,022 and $54,066, respectively.

Previous wording

In assessing our liquidity, we monitor and analyze our cash on hand, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. Historically, we have funded our working capital needs primarily through operations, loans, and working capital loans from stockholders. Since our offering closed in July 2024, we plan to use the proceeds to meet our ongoing working capital requirements. Our working capital requirements are influenced by the efficiency of our operations, the volume and dollar value of our revenue contracts, the progress or execution of customer contracts, and the timing of accounts receivable collections.

Current wording

In assessing our liquidity, we monitor and analyze our cash on hand, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. Historically, we have funded our working capital needs primarily through operations, loans, and working capital loans from stockholders. Our working capital requirements are influenced by the efficiency of our operations, the volume and dollar value of our revenue contracts, the progress or execution of customer contracts, and the timing of accounts receivable collections.

Previous wording

Net cash used in operating activities was $1,402,784 in the three months ended September 30, 2024, including net loss of $1,335,407, adjusted for non-cash items for $612,895 and changes in working capital of negative $680,272. The non-cash items primarily included $466,723 amortization of operating lease assets, $36,159 depreciation included in G&A and cost of revenue, $7,595 depreciation of right-of-use finance assets and $12,837 from provision of allowance for expected credit loss and a decrease of $89,581 from deferred tax asset due to recognition of valuation allowance. The adjustments for changes in working capital mainly included a decrease of $402,895 and $156,850 in accounts payable — third parties and related parties, respectively, an increase of $77,812 in due from related parties because of rental income recognized for the three months ended September 30, 2024, a decrease of $470,260 in operating lease liabilities and a decrease of $24,876 in accrued expense and other payable, partially offset by a decrease of $282,864 and $257,924 in accounts receivable — third parties and related parties, respectively, due to a decrease of revenues near period end.

Current wording

Net cash used in operating activities was $1,933,000 in the six months ended December 31, 2024, including net loss of $3,282,227, adjusted for non-cash items for $1,183,152 and changes in working capital of positive $166,075. The non-cash items primarily included $989,003 amortization and interest expense of operating lease assets, $87,132 depreciation included in G&A and cost of revenue, $15,480 depreciation of right-of-use finance assets and $1,956 from provision of allowance for expected credit loss and a decrease of $89,581 from deferred tax asset due to recognition of valuation allowance. The adjustments for changes in working capital mainly included a decrease of $424,648 and $565,766 in accounts receivable — third parties and related parties, respectively, due to a decrease of revenues near period end and an increase of $312,722 in accrued expense and other payable, partially offset by an increase in prepayment of $112,620, a decrease of $742,649 in operating lease liabilities and a decrease of $156,165 in accounts payable — related parties.

Previous wording

Net cash provided by operating activities was $40,357 for the three months ended September 30, 2023, including net loss of $307,285, adjusted for non-cash items for $386,277, and changes in working capital of negative $38,635. The non-cash items primarily included $219,571 amortization of operating lease assets, $36,160 depreciation included in G&A and cost of revenue, $52,122 from provision of allowance for expected credit loss, and impacted by a loss of $73,151 from deconsolidation of a subsidiary. The adjustments for changes in working capital mainly included a decrease of $225,023 in operating lease liabilities, a decrease of $49,182 in due from related parties , an increase of $65,995 in accounts receivable — related parties and an increase of $138,491 in accounts receivable — third parties reflecting the impact of revenue growth combined with the timing of payments to third party providers, related parties and collections from clients on net working capital, partially offset by an increase of $133,904 in accounts payable — third parties, an increase of $141,213 in accounts payable — related parties, an increase of $37,739 in accrued expenses and other payables, and a decrease of $26,213 in contract assets.

Current wording

Net cash provided by operating activities was $257,836 for the six months ended December 31, 2023, including net loss of $243,061, adjusted for non-cash items for $674,713, and changes in working capital of negative $173,816. The non-cash items primarily included $439,142 non-cash operating lease expense, $72,319 depreciation and amortization, $49,591 from provision of allowance for expected credit loss, and impacted by a loss of $73,151 from deconsolidation of a subsidiary. The adjustments for changes in working capital mainly included (i) an increase of $192,609 in accounts receivable — related parties, (ii) an increase of $479,056 in accounts receivable — third parties reflecting the impact of revenue growth combined with the timing of payments to third party providers, related parties and collections from clients on net working capital and (iii) an increase of $27,169 in contract assets, partially offset by (i) an increase of $539,542 in accounts payable — third parties, (ii) an increase of $241,721 in accounts payable — related parties and (iii) an increase of $122,547 in accrued expenses and other payables.

Previous wording

The $1,443,141 increase in cash used in operating activities in the three months ended September 30, 2024 compared to the prior year was primarily due to an increase in net loss of $1,028,122 in the three months ended September 30, 2024 compared to same period in the prior year, together with an increase of $641,637 in cash outflow from working capital due to timing of vendor payments, client payments and related parties payment.

Current wording

The $2,190,836 increase in cash used in operating activities in the six months ended December 31, 2024 compared to the prior year was primarily due to an increase in net loss of $3,039,166 in the six months ended December 31, 2024 compared to same period in the prior year, partly offset by an increase of $339,891 in cash flow from working capital due to timing of vendor payments, client payments and related parties payment.

Previous wording

Net cash used in investing activities was $38,279 and $78,799 for the three months ended September 30, 2024 and 2023, respectively. Net cash used in investing activities for the three months ended September 30, 2024, was primarily attributable to our purchases of property and equipment and the prepayment for the installation of a security system which was still in progress as of the period ended. On August 4, 2023, we reduced our unpaid registered capital contribution in our investee company in China, namely ABL Wuhan, and concurrently, the third-party shareholders increased their registered capital contribution accordingly. Following this change, the third-party shareholders own 80% of equity interest and we own 20% of equity interest in ABL Wuhan. Consequently, ABL Wuhan ceased to be the Company’s subsidiary after August 4, 2023. Therefore, we had cash outflow of $48,893 upon deconsolidation of a subsidiary and payment for registered capital of $29,906 during the three months ended September 30, 2023.

Current wording

Net cash used in investing activities was $1,350,498 and $78,799 for the six months ended December 31, 2024 and 2023, respectively. Net cash used in investing activities for the six months ended December 31, 2024, was primarily attributable to net cash payment of $552,721 for intangible assets through acquisition of 100% equity interest in Hupan Pharmaceutical and we had a loan of $686,697 to a third party. We also purchased property and equipment, conducted office renovation for our operation of subsidiaries in Mainland China. On August 4, 2023, we reduced our unpaid registered capital contribution in our investee company in China, namely ABL Wuhan, and concurrently, the third-party shareholders increased their registered capital contribution accordingly. Following this change, the third-party shareholders own 80% of equity interest and we own 20% of equity interest in ABL Wuhan. Consequently, ABL Wuhan ceased to be the Company’s subsidiary after August 4, 2023. Therefore, we had cash outflow of $48,893 upon deconsolidation of a subsidiary and payment for registered capital of $29,906 during the six months ended December 31, 2023.

Previous wording

Net cash provided by financing activities was $4,044,402 and $66,760 in the three months ended September 30, 2024 and 2023, respectively. The increase in net cash provided by financing activities was mainly due to the net proceeds of approximately $5,351,281 from the offering, partly offset by repayment of $879,574 to shareholders, loans repayment of $265,456 and advancement to related party of $126,227 during the three months ended September 30, 2024. The net cash provided by financing activities for the three months ended September 30, 2023, was primarily attributable proceeds from net proceed of loans of $102,863.

Current wording

Net cash provided by financing activities was $4,295,361 for the six months ended December 31, 2024, compared to net cash used in financing activities of $15,538 for same period in prior year, respectively. The increase in net cash provided by financing activities was mainly due to the net proceeds of $5,351,281 from the offering and proceeds from loan borrowing of $195,000 and a loan from a third party of $276,365, partly offset by repayment of $805,345 to shareholders and loans repayment of $339,914 during the six months ended December 31, 2024. The net cash provided by financing activities for the six months ended December 31, 2023, mainly due to the proceeds from loans of $225,000 that we borrowed, and net proceeds from shareholders by $158,455, partially offset by repayment of loans, vehicle loans and equipment loans of $245,564, and the payment for deferred offering cost of 140,000.

Previous wording

Our capital expenditures are incurred primarily in connection with the purchase of fixed assets, including machinery and equipment, furniture and fixtures, leasehold improvement and vehicles. Our capital expenditures amounted to $38,279 and $nil in the three months ended September 30, 2024 and 2023, respectively.

Current wording

Our capital expenditures are incurred primarily in connection with the purchase of fixed assets, including machinery and equipment, furniture and fixtures, leasehold improvement and vehicles. Our capital expenditures amounted to $256,314 and $nil in the six months ended December 31, 2024 and 2023, respectively.

Previous wording

We expect that our capital expenditures will increase in the future as our business continues to develop and expand. We intend to fund our future capital expenditures with our existing cash balance, proceeds of loans, working capitals loans from stockholders and the proceeds from our IPO which was closed in July 2024.

Current wording

We expect that our capital expenditures will increase in the future as our business continues to develop and expand. We intend to fund our future capital expenditures with our existing cash balance, proceeds of loans, working capitals loans from stockholders.

Previous wording

There were no off-balance sheet arrangements as of and for the three months ended September 30, 2024 and 2023, that have, or that in the opinion of management are likely to have, a current or future material effect on our financial condition or results of operations.

Current wording

There were no off-balance sheet arrangements as of and for the six months ended December 31, 2024 and 2023, that have, or that in the opinion of management are likely to have, a current or future material effect on our financial condition or results of operations.