CHEETAH NET SUPPLY CHAIN SERVICE INC.

Previous wording

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. This business contributed significantly to our revenue since our inception. 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 a reduction in net income by 87.5% compared to 2022. The decline accelerated further in 2024. Vehicle sales dropped sharply from 82 units in the first quarter of 2023 to 13 units in the first quarter of 2024. For year ended December 31, 2024, vehicle sales decreased from 303 units in 2023 to 14 units in 2024, resulting in a 95.7% drop in revenue from $38.3 million in 2023 to $1.6 million in 2024. In addition, the financial strain on the Company’s customers made it increasingly difficult to collect outstanding receivables. While the Company successfully recovered $4.0 million in 2024 and collected additional $2.5 million from the five aged accounts as of March 31, 2025, the remaining $1.6 million from two customers was determined to be uncollectible. As a result, the management recorded a credit loss of $1.6 million for the year ended December 31, 2024.

Current wording

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.

Previous wording

As market conditions continued to deteriorate and sales activity in the parallel-import vehicle segment ceased, on March 3, 2025, our board of directors approved the discontinuation of our parallel-import vehicle business. In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, we determined that the parallel-import vehicle segment met the conditions for reporting as a discontinued operation. As a result, 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.

Current wording

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.

Previous wording

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

Current wording

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 quarterly report, Cheetah BVI has not commenced operations.

Previous wording

The following table provides a summary of our consolidated results of operations for the three months ended March 31, 2025 and 2024, highlighting the financial impact of both continuing and discontinued operations:

Current wording

The following table provides a summary of our consolidated results of operations for the three and six months ended June 30, 2025 and 2024, highlighting the financial impact of both continuing and discontinued operations:

Previous wording

For the three months ended March 31, 2025, we reported revenue of $479,799 from logistics and warehousing services segment, including $62,515, or 13.0%, of our total revenue from Edward, and $417,284, or 87.0%, of our total revenue from TWEW (See also Note 8- Intangible Asset and Goodwill).

Current wording

For the three months ended June 30, 2025, we reported revenue of $354,126 from logistics and warehousing services segment, including $52,684, or 14.9%, of our total revenue from Edward, which we acquired in February 2024, and $301,442, or 85.1%, of our total revenue from TWEW, which we acquired in December 2024.

Previous wording

For the three months ended March 31, 2025, total cost of revenues increased to $423,543 from $42,500 for the same period in 2024, representing an increase of $381,043, or 896.6%, primarily due to the contribution from TWEW. Cost of revenues attributable to TWEW was $381,733, representing 90.1% of total cost of revenues in the first quarter of 2025.

Current wording

For the three months ended June 30, 2025, total cost of revenues increased to $319,226 from $45,598 for the same period in 2024, representing an increase of $273,628, or 600.1%, primarily due to the contribution from TWEW. Cost of revenues attributable to TWEW was $293,429, representing 91.9% of total cost of revenues in the second quarter of 2025.

Previous wording

Cost of revenues from Edward was $41,810, or 9.9% of total cost of revenues for the three months ended March 31, 2025, compared to $42,500 for the same period in 2024, representing a slight decrease of $690, or 1.6%, consistent with the corresponding decline in revenue from Edward.

Current wording

Cost of revenues from Edward was $25,797, or 8.1% of total cost of revenues for the three months ended June 30, 2025, compared to $45,598 for the same period in 2024, representing a decrease of $19,801, or 43.4%, consistent with the corresponding decline in revenue from Edward.

Previous wording

General and administrative expenses for our continuing operations increased by $0.2 million, or 30.3%, to $1.0 million for the three months ended March 31, 2025 from $0.8 million for the three months ended March 31, 2024, primarily due to (i) an increase of $0.1 million in personnel-related expenses, which was attributed to the hiring of additional staff to support the newly launched logistics and warehousing segment, (ii) an increase of $0.1 million in rental and leases following the acquisition of Edward and a new office workspace in California in July 2024, (iii) an increase of $22,547 in travel and entertainment expenses as part of business development efforts and client engagement, (iv) an increase of $27,067 in depreciation and amortization expenses, primarily due to the acquisition of new fixed assets and recorded intangible assets from Edward and TWEW acquisitions, as detailed in Notes 6 – Property, Plant, and Equipment, Net, and Note 8 - Intangible Asset and Goodwill, (v) an increase of 14,716 in other miscellaneous general and administration expenses during the three months ended March 31, 2025, partially offset by a decrease of $51,911 in legal and accounting fees due to additional professional fees for preparing a registration statement on Form S-1 during the first quarter of 2024 and a decrease of $19,237 in insurance expenses resulting from a change in our insurance provider.

Current wording

General and administrative expenses for the Company’s continuing operations decreased by $60,050, or 6.9%, to $805,305 for the three months ended June 30, 2025 from $865,354 for the three months ended June 30, 2024. The decrease was mainly due to (i) a decrease of $111,188 in legal and accounting fees as we incurred additional professional fees for preparing a registration statement on Form S-1 during the quarter ended June 30, 2024, (ii) $33,786 in payroll and benefits expense due to staff optimization and cost-saving measures following the initial hiring to support the newly launched logistics and warehousing segment, (iii) a decrease of $17,662 in insurance expenses resulting from a change in our insurance provider, (iv) a decrease of $76,145 in recruiting expenses during the three months ended June 30, 2025, as the prior-year period included significant hiring efforts associated with the launch of our logistics and warehousing segment, partially offset by (iv) an increase of 126,782 in rental and leases following the acquisition of Edward and the relocation of our headquarters to California in July 2024, (v) an increase of $12,055 in travel and entertainment expenses as part of business development efforts and client engagement, (vi) an increase of $20,476 in other miscellaneous general and administration expenses during the three months ended June 30, 2025, and (vii) an increase of $19,418 in depreciation and amortization expenses, primarily due to the acquisition of new fixed assets and recorded intangible assets from Edward and TWEW acquisitions.

Previous wording

Share-based compensation expenses were $16,185 and nil for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Share-based compensation expenses were $10,444 and nil for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

On August 16, 2024, our board of directors approved the adoption of the Amended and Restated 2024 Stock Incentive Plan (the “Plan”). Subsequently, on September 30, 2024, our stockholders approved the Plan. The total number of shares granted by the compensation committee of our board of directors on September 30, 2024 were 150,000, including 118,750 shares of Class A common stock and 31,250 shares of Class B common stock. Share-based compensation expenses of $16,185 were recognized during the three months ended March 31, 2025. See Note 11 – Stock Based Compensation for more details.

Current wording

On August 16, 2024, our board of directors approved the adoption of the Amended and Restated 2024 Stock Incentive Plan (the “Plan”). Subsequently, on September 30, 2024, our stockholders approved the Plan. The total number of shares granted by the compensation committee of our board of directors on September 30, 2024 was originally reported as 150,000, including 118,750 shares of Class A common stock and 31,250 shares of Class B common stock, in our quarterly report for the quarter ended March 31, 2025. During the quarter ended June 30, 2025, we identified an error and noted that the correct allocation shall be 112,500 shares of Class A common stock and 31,250 shares of Class B common stock, for a total of 143,750 shares granted as of the date of this quarterly report. The error was due to the forfeiture, on January 17, 2025, of 6,250 shares of Class A common stock that had been granted under the Plan on November 30, 2024. Share-based compensation expenses of $10,444 were recognized during the three months ended June 30, 2025. See Note 11 – Stock Based Compensation for more details.

Previous wording

Interest income from continuing operations was $208,090 for the three months ended March 31, 2025, compared to $28,930 for the three months ended March 31, 2024, representing an increase of $179,160, or 619.3%. The significant increase was primarily driven by interest earned on short-term loan receivables and certificates of deposit, funded by the net proceeds from our IPO, the May Offering, and the July Offering.

Current wording

Interest income from continuing operations was $272,228 for the three months ended June 30, 2025, compared to $28,241 for the three months ended June 30, 2024, representing an increase of $243,987, or 863.9%. The significant increase was primarily driven by interest earned on short-term loan receivables and certificates of deposit, funded by the net proceeds from the Company’s public offerings closed in May and July 2024.

Previous wording

Our income tax provision for continuing operations were $5,355 for the three months ended March 31, 2025, compared with income tax benefits of approximately $245,714 for the same period in 2024.

Current wording

Our income tax provision for continuing operations was nil for the three months ended June 30, 2025, compared with income tax benefits of approximately $247,275 for the same period in 2024.

Previous wording

As a result of the above factors, we had a net loss of $753,909 from our continuing operations for the three months ended March 31, 2025, compared to net loss of $608,930 for the same period of 2024.

Current wording

As a result of the above factors, we had a net loss of $512,528 from our continuing operations for the three months ended June 30, 2025, compared to net loss of $550,022 for the same period of 2024.

Previous wording

As disclosed in Note 5 – Discontinued Operations, our Board approved the discontinuation of our parallel-import vehicle business on March 3, 2025. The Company fully exited its parallel-import vehicle business during the year ended December 31, 2024. In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, the following discussion provides an overview of the operating results of discontinued operations during the first quarter of 2024.

Current wording

As disclosed in Note 5 – Discontinued Operations, our Board approved the discontinuation of our parallel-import vehicle business on March 3, 2025. The Company fully exited its parallel-import vehicle business during the year ended December 31, 2024. In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, the following discussion provides an overview of the operating results of discontinued operations during the second quarter of 2024.

Previous wording

Total selling expenses for the discontinued parallel-import vehicle business was $78,840 for the three months ended March 31, 2024.

Current wording

Total selling expenses for the discontinued parallel-import vehicle business was $19,422 for the three months ended June 30, 2024.

Previous wording

Net loss for the discontinued operations was approximately $142,582 for the three months ended March 31, 2024.

Current wording

Net loss for the discontinued operations was approximately $62,858 for the three months ended June 30, 2024.

Previous wording

Interest expense incurred from our continuing operations was $8,812 for the three months ended March 31, 2025, which increased by $507, or 6.1%, from $8,305 for the three months ended March 31, 2024, mainly due to increased Premium Finance interest for D&O Insurance.

Current wording

Interest expense incurred from our continuing operations was $16,872 for the six months ended June 30, 2025, which slightly increased by $265, or 1.6%, from $16,607 for the six months ended June 30, 2024, mainly due to an increased Premium Finance interest for D&O Insurance, partially offset by the decreased interest for long-term loans.

Previous wording

During the three months ended March 31, 2024, we generated revenue of $1.4 million from the parallel-vehicle business. Only 13 units of vehicles were sold following the significant downturn of parallel-import vehicle business as stated in “—Business Overview and Recent Developing Trends.”

Current wording

During the six months ended June 30, 2024, we generated revenue of $1.6 million 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.”

Previous wording

We also reported cost of revenue of $1.4 million, mainly the fulfillment expenses, and a gross loss of $9,283 of the discontinued business for the three months ended March 31, 2024.

Current wording

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 six months ended June 30, 2024.

Previous wording

Total interest expenses on LC financing and Line of Credit charges was $54,459 for the three months ended March 31, 2024.

Current wording

Total interest expenses on LC financing and line of credit charges were $82,358 for the six months ended June 30, 2024.

Previous wording

As of March 31, 2025, we had current assets of $10.2 million, consisting of cash and cash equivalents of $0.3 million, $9.1 million in loan receivables, $0.5 million of other receivables, $0.1 million of accounts receivable, and $0.2 million in prepaid expenses other current assets from continuing operations. Our current liabilities, all of which related to continuing operations, totaled approximately $0.9 million, consisting of $0.5 million of operating lease liabilities, $0.3 million of other payables, and $0.1 million of loan payable, including the current portion of long-term borrowings.

Current wording

As of June 30, 2025, we had current assets of $9.9 million, consisting of cash and cash equivalents of $0.2 million, $8.7 million in loan receivables, $0.8 million of other receivables, and $0.1 million in prepaid expenses and other current assets from continuing operations. Our current liabilities, all of which related to continuing operations, totaled approximately $0.9 million, consisting of $0.6 million of operating lease liabilities, $0.3 million of other payables, and 36,412 of the current portion of long-term borrowings. The Company also had $590,352 of long-term borrowings payable, and $950,372 of operating lease liabilities, long-term portion.

Previous wording

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

Current wording

The following table summarizes our cash flows for the six months ended June 30, 2025 and 2024, with continuing operations and discontinued operations presented separately:

Previous wording

Net cash used in operating activities from continuing operations was $0.8 million for the three months ended March 31, 2025. The negative cash flow was primarily due to (i) a net loss of $0.8 million during the three months ended March 31, 2025, and (ii) an increase of $0.2 million in other receivables, partially offset by (iii) an increase of $0.1 million in amortization of operating lease right-of-use assets and intangible assets, and (iv) $0.1 million in prepaid expenses.

Current wording

Net cash used in operating activities from continuing operations was $1.2 million for the six months ended June 30, 2025. The negative cash flow was primarily due to (i) a net loss of $1.3 million during the six months ended June 30, 2025, and (ii) an increase of $0.5 million in other receivables, partially offset by (iii) an increase of $0.2 million in amortization of operating lease right-of-use assets and intangible assets, and (iv) $0.2 million in prepaid expenses.

Previous wording

Net cash used in operating activities from continuing operations was $1.5 million for the three months ended March 31, 2024. This was primarily attributable to (i) a net loss of $0.6 million, (ii) a deferred tax benefit of $0.2 million, (iii) an increase of $0.7 million in other receivables, partially offset by non-cash adjustments including, (iv) $38,560 in amortization of operating lease right-of-use assets, (v) $8,714 in amortization of intangible assets, and (vi) $41,152 increase in other payables.

Current wording

Net cash used in operating activities from continuing operations was $2.3 million for the six months ended June 30, 2024. This was primarily attributable to (i) a net loss of $1.0 million, (ii) a deferred tax benefit of $0.5 million, (iii) an increase of $0.7 million in other receivables, partially offset by non-cash adjustments including, (iv) $77,801 in amortization of operating lease right-of-use assets, (v) $21,786 in amortization of intangible assets, and (vi) an increase of $30,474 in other payables.

Previous wording

Net cash provided by operating activities from discontinued operations was $2.5 million for the three months ended March 31, 2025, primarily due to the collection of $2.5 million in accounts receivable resulting from vehicle sales.

Current wording

Net cash provided by operating activities from discontinued operations was $2.5 million for the six months ended June 30, 2025, primarily due to the collection of $2.5 million in accounts receivable resulting from vehicle sales.

Previous wording

Net cash provided by operating activities from discontinued operations was $3.2 million for the three months ended March 31, 2024. This was primarily attributable to (i) the collection of $1.6 million in accounts receivable resulting from vehicle sales, (ii) a $1.3 million decrease in vehicle inventory, (iii) a $0.2 million decrease in other receivables from vehicle deposit and sales tax return, and (iv) a $0.1 million increase in other payables.

Current wording

Net cash provided by operating activities from discontinued operations was $3.2 million for the six months ended June 30, 2024. This was primarily attributable to (i) the collection of $1.4 million in accounts receivable resulting from vehicle sales, (ii) a $1.5 million decrease in vehicle inventory, (iii) a $0.2 million decrease in other receivables from vehicle deposit and sales tax return, and (iv) a $0.1 million increase in other payables.

Previous wording

Net cash used in investing activities from continuing operations was approximately $3.0 million for the three months ended March 31, 2025, including (i) $3.0 million in short-term loans receivable from third parties, and offset by (ii) $49,000 proceeds of repayment from these loans.

Current wording

Net cash used in investing activities from continuing operations was approximately $2.7 million for the six months ended June 30, 2025, including (i) $3.5 million in short-term loans receivable from third parties, and offset by (ii) $0.8 in proceeds of repayment from these loans.

Previous wording

For the three months ended March 31, 2024, net cash used in investing activities was $47,617, including (i) $220,117 cash paid in the Edward acquisition, offset by (ii) $172,500 proceeds of repayment from pledged loan made to third parties.

Current wording

For the six months ended June 30, 2024, net cash used in investing activities was $0.9 million, including (i) $0.2 million in cash paid in the Edward acquisition, (ii) $0.4 million in cash paid in the purchase of property and equipment, (iii) $1.0 million in cash in short-term loans receivable from third parties, offset by (iii) $0.7 million in proceeds of repayment from pledged loans and short-term loans made to third parties.

Previous wording

There were no investing activities related to discontinued operations for the three months ended March 31, 2025 and 2024.

Current wording

There were no investing activities related to discontinued operations for the six months ended June 30, 2025 and 2024.

Previous wording

Net cash used in financing activities from continuing operations was $68,539 for the three months ended March 31, 2025, which consisted of (i) net repayment of premium finance of $59,590, and (ii) net repayment of long-term borrowings of $8,949.

Current wording

Net cash used in financing activities from continuing operations was $138,294 for the six months ended June 30, 2025, which consisted of (i) net repayment of premium finance of $120,461, and (ii) net repayment of long-term borrowings of $17,833.

Previous wording

Net cash used in financing activities from continuing operation of $173,329 for the three months ended March 31, 2024, consisted of (i) cash paid for warrant termination of $78,125, (ii) repayments of premium finance of $73,713, (iii) repayments of long-term borrowing of $8,068, and (iv) repayment of $13,423 to a related party.

Current wording

Net cash provided by financing activities from continuing operation of $7.1 million for the six months ended June 30, 2024, consisted of (i) cash received from public offering proceeds of $7.3 million, offset by (ii) cash paid for warrant termination of $78,125, (iii) repayments of premium finance of $148,621, (iv) repayments of long-term borrowing of $15,676, and (v) repayment of $13,423 to a related party.

Previous wording

There were no financing activities related to discontinued operations for the three months ended March 31, 2025.

Current wording

There were no financing activities related to discontinued operations for the six months ended June 30, 2025.

Previous wording

Net cash used in financing activities from discontinued operations was $1.0 million for the three months ended March 31, 2024, which was the repayment of LC financing.

Current wording

Net cash used in financing activities from discontinued operations was $1.1 million for the six months ended June 30, 2024, which was the repayment of LC financing.