QNME 10-K
Quanome Technologies, Inc. (QNME)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the fiscal year ended
or
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The aggregate market value of the voting and non-voting common equity
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As of October 10, 2025, the Registrant had
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
i
EXPLANATORY NOTE
As used in this Annual Report on Form 10-K, unless otherwise indicated or the context otherwise requires, references to:
| ● | “Lakeside,” “the Company,” “we,” “us,” and “our” refer to Lakeside Holding Limited together with its consolidated subsidiaries; |
| ● | “ABL” refer to American Bear Logistics Corp. |
| ● | “Sichuan Hupan” refer to Sichuan Hupan Jincheng Enterprise Management Co., Ltd., a PRC limited liability company in China and a wholly owned subsidiary of Lakeside; |
| ● | “Hupan Pharmaceutical” refer to Hupan Pharmaceutical (Hubei) Co., Ltd., a PRC limited liability company in China and a wholly owned subsidiary of Sichuan Hupan; |
| ● | “RMB” and “Renminbi” refer to the legal currency of China; |
| ● | “US$,” “U.S. dollars,” “$,” and “dollars” refer to the legal currency of the United States. |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this report, including statements regarding guidance, our future results of operations or financial condition, our future stock repurchase programs or stock dividends, business strategy and plans, user growth and engagement, product initiatives, objectives of management for future operations, and advertiser and partner offerings, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “going to,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. We caution you that the foregoing may not include all of the forward-looking statements made in this report.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Annual Report on Form 10-K primarily on our current expectations and projections about future events and trends, including our financial outlook, macroeconomic uncertainty, geo-political conflicts, and pandemics, that we believe may continue to affect our business, financial condition, results of operations, and prospects. These forward-looking statements are subject to risks, uncertainties, and other factors, including among other things:
| ● | changes in the competitive environment, due to macroeconomic conditions or otherwise, or damage to our reputation; |
| ● | fluctuations in currency exchange, interest or inflation rates that could impact our financial condition or results; |
| ● | changes in our accounting estimates and assumptions on our financial statements; |
| ● | the impact of, and potential challenges in complying with, laws and regulations of the jurisdictions in which we operate, particularly given the possibility of differing or conflicting laws and regulations, or the application or interpretation thereof, across such jurisdictions; |
| ● | failure to protect intellectual property rights or allegations that we have infringed on the intellectual property rights of others; |
| ● | the failure to retain, attract and develop experienced and qualified personnel; |
| ● | the effects of natural or man-made disasters, including the effects of the COVID-19 and other health pandemics and the impacts of climate change; |
| ● | any system or network disruption or breach resulting in operational interruption or improper disclosure of confidential, personal, or proprietary data, and resulting liabilities or damage to our reputation; |
| ● | our ability to develop, implement, update and enhance new technology; |
| ● | the actions taken by third parties that perform aspects of our business operations and client services; and |
| ● | our ability to continue, and the costs and risks associated with, growing and developing our business, and entering into new lines of business or products. |
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Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report on Form 10-K. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Annual Report on Form 10-K. And while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this report to reflect events or circumstances after the date of this report or to reflect new information or the occurrence of unanticipated events, including future developments related to geo-political conflicts, pandemics, and macroeconomic conditions, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, dispositions, joint ventures, restructurings, legal settlements, or investments.
Investors and others should note that we may announce material business and financial information to our investors using our filings with the U.S. Securities and Exchange Commission, or SEC, and press releases. We encourage investors and others interested in our company to review the information that we make available through the aforementioned channels.
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PART I
Item 1. Business.
Overview
We are a U.S.-based integrated cross-border supply chain solution provider with a strategic focus on the Asian market including China and South Korea. We primarily provide customized cross-border ocean freight solutions and airfreight solutions in the U.S. that specifically cater to our customers’ requirements and needs in transporting goods into the U.S. We offer a wide variety of integrated services under our cross-border ocean freight solutions and cross-border airfreight solutions, including (i) cross-border freight consolidation and forwarding services, (ii) customs clearance services, (iii) warehousing and distribution services and (iv) U.S. domestic ground transportation services. For the year ended June 30, 2025, we also operate a new business segment through Hupan Pharmaceutical, a comprehensive pharmaceutical distribution and supply chain service provider headquartered in Wuhan, China with verticals in brand promotion and healthcare technology support. We have partnered with some pharmaceutical manufacturers to supply infusion fluids, which are our major pharmaceutical products sold and distributed during this quarter.
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.
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.
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 June 30, 2025, 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 $54.0 million.
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 June 30, 2025, we had fulfilled over 55,000 cross-border supply chain solution orders for freight of an aggregate assessed value of $1.0 billion, among which, 14,000 orders were completed during the year ended June 30, 2025. Our orders were delivered to thousands of business and residential addresses in approximately 48 U.S. states.
During the year ended June 30, 2025, we had a new business segment through Hupan Pharmaceutical, a comprehensive pharmaceutical distribution and supply chain service provider headquartered in Wuhan, China with verticals in brand promotion and healthcare technology support. We acquired the acquired 100% equity interest of Hupan Pharmaceutical in late 2024. We have partnered with some pharmaceutical manufacturers to supply infusion fluids, which are our major pharmaceutical products sold and distributed during the year.
Our Solutions and Services
We primarily offer cross-border ocean freight solutions and airfreight solutions in the U.S. that are specifically tailored to our customers’ requirements and needs in transporting goods into the U.S.
Services under our cross-border ocean freight solutions and cross-border airfreight solutions typically include (i) cross-border freight consolidation and forwarding services, (ii) customs clearance services, (iii) warehousing and distribution services and (iv) U.S. domestic ground transportation.
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Cross-border Freight Consolidation and Forwarding Services
As a licensed non-vessel operating common carrier, or NVOCC and indirect air carrier, we provide cross-border ocean and air freight consolidation and forwarding services either as a freight consolidator or agent for an ocean or air shipping carrier. Solutions under our cross-border freight consolidation and forwarding services include ocean freight consolidation and forwarding and airfreight consolidation and forwarding. We collaborate with major global ocean carriers and air to cater to their shipping and space needs throughout the year, including during peak periods.
Customs Clearance Services
We provide customs clearance services to our customers in conjunction with our other service offerings. We typically collaborate with licensed customs brokerage experts to help our customers clear shipments importing into the U.S. through customs by preparing and filing required documentation, calculating and providing for payment of duties, taxes and fees on behalf of our customers as well as arranging for any required inspections by governmental agencies. Our customs clearance services include screening commercial documentation for assessed value, country of origin, application for special trade programs and classification.
Warehousing and Distribution Services
For cross-border freight we pick up at ocean ports and airports that require storage, fulfilment, trans-loading, palletizing, packaging or distribution, we offer ancillary warehousing and distribution services at our two regional warehousing and distribution centers in Illinois and Texas, adjacent to the O’Hare International Airport and Dallas Fort Worth International Airport, respectively, and are connected to almost all major U.S. domestic railroads and/or ports. With an aggregate gross feet area of approximately 98,220 square feet and 39 docks, our regional warehousing and distribution centers have an aggregate daily operation capacity of up to 3,000 cubic meters of freight for storage, packaging and other fulfilment services. Our regional warehousing and distribution centers are generally utilized by multiple customers at a time so that such customers may benefit from cost savings related to shared space, labor, equipment and other efficiencies.
U.S. Domestic Ground Transportation Services
We provide full-truckload and less-than-truckload ground transportation of cross-border freight to businesses and residences in the U.S. either directly from port to door, or from our regional warehousing and distribution centers to such domestic addresses. Our U.S. domestic ground transportation services are offered through an extensive network in collaboration with our ground transportation service providers.
Pharmaceutical Distribution Service
We also provide comprehensive pharmaceutical distribution and supply chain services through our subsidiary, Hupan Pharmaceutical. We have obtained a specialized license of pharmaceutical distribution in Mainland China. Partnering with pharmaceutical manufacturers and end customers, we order, purchase and pick up pharmaceutical products from manufacturers and distribute such products to a variety of customers to their designated locations.
Service Providers and Suppliers
We have established an extensive and long-standing service provider network of (i) global freight carriers and (ii) U.S. domestic ground transportation carriers. As of June 30, 2025, we had collaborated with almost all major global ocean and air carriers to forward cross-border shipments consisting of over 35,900 TEU of container loads and 69,300 tons of air cargo. We had also cooperated with over 200 domestic ground transportation carriers including almost all major U.S. domestic ground transportation carriers with a domestic ground transportation network of approximately 60,000 drivers and 150 terminals as of June 30, 2025, on a long-term, short-term or order basis, as the case may be. We also collaborate with licensed customs brokerage experts to help our customers clear shipments.
We use a consistent approach in selecting and managing the service suppliers across all of our solution and service offerings, beginning with a rigorous qualification and risk-based diligence process. We only select and engage compliance-focused, efficiently-run and growth-oriented service providers with superior service quality based upon defined value elements and are intentional in our relationship and performance management activities. We consider our current working relationships with these service providers to be satisfactory. However, changes in the financial stability and operating capabilities and capacity of asset-based carriers, capacity allotments available from carriers, governmental regulation or deregulation efforts, modernization of the regulations governing customs brokerage, and/or changes in governmental restrictions, quota restrictions or trade accords could affect our business in unpredictable ways.
For our pharmaceutical distribution services, we source products of approximately 6.5 million units from approximately 7 suppliers and deliver them to 47 customers during the year ended June 30, 2025. We believe that competitive sources are readily available for substantially all of the products we require for our pharmaceutical distribution businesses. As such, we believe that we can change suppliers without any material interruption to our business. To date, we have not experienced any significant difficulty in sourcing our suppliers.
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Technology
One of the ways in which we deliver superior service to our customers is by empowering our employees with technology. Our industry is evolving, and customers tend to de-risk their supply chains by forming relationships with reliable service providers that have invested in innovation.
We have built a highly scalable proprietary technology platform on the cloud - the American Bear Logistics Data Tool Management Platform, which streamlines our variety of service offerings and promotes our overall operating efficiency. Our technology platform, powered by sophisticated analytics of the massive amounts of route and price data derived from the past provision of our solutions and services, (i) optimizes the route-building and pricing for both our cross-border freight forwarding and domestic ground transportation services, (ii) allows for automated, real-time fee quotes for our cross-border ocean freight solutions and airfreight solutions between almost any origin and destination ports at any time and (iii) provides for automatic contractual account management, document generation and recordkeeping.
In addition, for our two regional warehousing and distribution centers, we developed an intelligent warehousing system which allows us to manage our storage remotely, prevents stockouts and overstocking and enables intelligent replenishment and order fulfilment. For example, this warehousing system automatically sends alerts when inventory levels reach predetermined thresholds, ensuring timely restocking and promoting operational efficiency.
We have developed reliable and stable network infrastructure to ensure high availability and a low risk of downtime. We primarily utilize third-party cloud service providers to host our network infrastructure for core operational functionality, data backup, and intelligence application.
We process a large amount of freight-related data on our platform. We take the privacy of personal data and confidential information seriously and have implemented an internal data security management policy. We also utilize a system of firewalls to prevent unauthorized access to our internal systems. Our technology department monitors the performance of our websites, technology systems and network infrastructure and responds promptly to potential problems. We also review, improve and iterate our data privacy policies and security foundation on a continued basis.
Competition
The market for integrated cross-border supply chain solution providers is a highly fragmented market with fierce competition. We face competition with other cross-border supply chain solution providers, particularly those with a focus on the Asian market.
We compete primarily on the following factors:
| ● | customer relationships; |
| ● | caliber and quality of services; |
| ● | modes of transportation; |
| ● | technology infrastructure and capabilities; and |
| ● | industry experience and expertise. |
We are well-positioned to effectively compete based on the factors listed above. However, some of our current or future competitors may have greater financial or operational resources, greater brand recognition, or a longer operating history, which could enable them to respond more quickly to changes in market dynamics and customer demands and preferences, devoting greater resources towards seizing this market than we can.
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Sales and Marketing
We believe brand recognition is critical to our ability to acquire or retain our existing or new customers, and our general marketing efforts are designed to enhance our brand awareness and reputation among them. We primarily attract new customers with testimonials of our cross-border supply chain solutions and referrals by our existing customers. We also approach prospective customers by attending international trade fairs, exhibitions and conferences as well as events held by local chambers of commerce. We regularly conduct key performance indicator reviews with our customers and take measures to maintain close rapport with them.
Intellectual Property
Our ability to obtain and maintain intellectual property protection for our proprietary technology platform, preserve the confidentiality of our trade secrets, and operate without violating the intellectual property rights of others is important to our success. We have adopted a number of measures to protect our intellectual property and brand, including trademarks, confidentiality procedures, non-disclosure agreements and employee non-disclosure agreements, to establish and protect our proprietary rights. Despite these efforts, there can be no assurance that we will adequately protect our intellectual property.
As of June 30, 2025, we had obtained the trademark registration for our key trademark, American Bear Logistics. In addition, we have registered domain names for websites that we use in our business, such as www.americanbearlogistics.com.
Insurance
We maintain insurance for commercial automobile and trucker’s liability, commercial general liability and cargo legal liability, as well as property coverage with coverage limits, deductibles and self-insured retention levels that we believe are reasonable given the varying historical frequency, severity and timing of claims.
Seasonality
Our revenue and profitability in the fourth quarter are typically higher than those during the first, second and third quarters of the calendar year. We believe the surge in the fourth quarter of the calendar year is in part due to the increase in demand experienced by many of our customers as a result of the increased purchases during the holiday season, which leads to higher need for our supply chain solutions and services. It is not possible to reliably predict whether our historical revenue and profitability trends will continue to occur in future periods.
Employees
Our people are key to our success. As of June 30, 2025, we had a workforce of 94 full-time employees across various functions. None of our employees are represented by labor unions or work under any collective bargaining agreements. We have not experienced any work stoppages, and we believe that our employee relations are strong.
We work diligently to create an equitable and inclusive work environment for our diverse group of people who are young, energetic, highly educated and multi-lingual. We provide equal opportunities for growth, success, promotion, learning and development, and aim to achieve parity in the way we organize and manage operations. We are focused on building support across all functions and individuals, ensuring everyone has a voice, and treats each other with respect.
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Government Regulations
As a U.S.-based integrated cross-border supply chain solution provider offering customized ocean freight solutions and airfreight solutions in the U.S. that specifically cater to customers’ requirements and needs in transporting goods into the U.S., our operations are substantially governed by U.S. laws and regulations. We are required to obtain certain licenses, permits and approvals from the relevant governmental authorities in order to operate our business, including but not limited to licenses of an ocean transportation intermediary (sometimes referred to as an NVOCC), an indirect air carrier, a container freight station, and licenses issued by the International Air Transport Association. To the extent material to our understanding, as of the date of this report, we believe that we have obtained all licenses, permits and approvals from the relevant governmental authorities necessary for our business operations in the U.S. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, and the promulgation of new laws and regulations and amendment to the existing ones, we may be required to obtain additional licenses, permits, registrations, filings or approvals for our business operations in the future. We cannot assure you that we will be able to obtain, in a timely manner or at all, or maintain such licenses, permits or approvals, and we or the affiliated entities may also inadvertently conclude that such permissions or approvals are not required. Any lack of or failure to maintain requisite approvals, licenses or permits applicable to us or the affiliated entities may have a material adverse impact on our business, results of operations, financial condition and prospects and cause the value of any securities we offer to significantly decline or become worthless.
This section provides an overview of the key regulations and legal considerations in the U.S. pertaining to our cross-border ocean freight solutions and cross-border airfreight solutions. To the extent material to our understanding, we do not believe any current foreign governmental regulations impose material restraints on our business operations as of the date of this report. We further acknowledge that in the course of our operations, we are committed to complying with applicable data protection laws and regulations that govern the privacy and security of data it handles, which are increasingly global in scope due to the nature of cross-border supply chain solutions.
Regulations Relating to Labor and Employment
Pursuant to federal and state laws, we adhere to labor and employment laws at the federal and state levels. This includes fair employment practices, wage and hour regulations, worker safety, and anti-discrimination law. We are committed to providing a fair and inclusive workplace environment that respects the rights of our employees and fosters a culture of diversity and equality.
Regulations Regarding Cross-border Freight Forwarding Services
Interstate and international transportation of freight is highly regulated under U.S. law, and failure to comply with these regulations can have significant consequences, including substantial fines or the revocation of operating permits and authorities for both transportation intermediaries and their shipper customers. As a freight forwarder in operating the cross-border freight forwarding services by collaboration with the shipping carriers, the regulations that currently impact our operations and those that may affect us in the future are as follows.
Air Freight Forwarding Services
In accordance with the Federal Aviation Act enforced by the Federal Aviation Administration within the U.S. Department of Transportation, and the Transportation Security Administration (the “TSA”) within the Department of Homeland Security (the “DHS”), an air freight forwarder is classified as an indirect air cargo carrier. Even if air freight forwarders enjoy exemptions from the majority of the Federal Aviation Act’s requirements through compliance with the Economic Aviation Regulations, the industry remains under the constant scrutiny of evolving regulatory and legislative developments, and these developments have the potential to significantly impact the industry’s economic landscape, necessitating adjustments to operational practices and exerting influence on both service demands and associated costs. Regarding our involvement in the air transportation sector within the United States, we are subject to regulatory oversight by the TSA within the DHS as an indirect air carrier. All indirect air carriers operating in the United States must adhere to mandated security protocols and undergo periodic audits conducted by the TSA. According to Federal Code 71 FR 33255, each indirect air carrier must allow the TSA, at any time or place, to make any inspections or tests, including copying records, to determine compliance of an airport operator, aircraft operator, foreign air carrier, and indirect air carrier. At the request of the TSA, each indirect air carrier also has to provide evidence of compliance with this subchapter and its indirect air carrier security program, including copies of records. The TSA may enter and be present with in areas where security measures required by the TSA are carried out without access media or identification media issued or approved by the indirect air carrier, an airport operator, or aircraft operator, in order to inspect or test compliance, or perform other such duties as the TSA may direct.
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Ocean Freight Forwarding Services/NVOCC
As a licensed NVOCC, we fall within the regulatory purview of the FMC, a regulatory authority that oversees and licenses ocean forwarding operations. This oversight includes compliance with FMC tariff filing and surety bond mandates, as well as adherence to the Shipping Act of 1984, which contains provisions that specifically prohibit rebating practices.
Pursuant to FMC rules, all NVOCCs based in the U.S. and all international ocean freight forwarding agencies and their branches are required to obtain a license from the FMC’s Bureau of Certification and Licensing by filing Form FMC-18. Entities engaging in international freight forwarding operations or conducting business as NVOCCs who do not complete or maintain the filing may result in denial, revocation or suspension of an ocean transportation intermediary license. We hold the license as an Ocean Transportation Intermediary (“OTI”), which is sometimes interchangeably referred to as an NVOCC, and persons who operate without the proper license may be subject to civil penalties not to exceed $9,000 for each violation. Additionally, the FMC has also established precise criteria for shipping agents, inclusive of specific surety bonding prerequisites, and it is responsible for the economic regulation of OTI/NVOCC activity originating or terminating in the United States as well. In order to comply with these economic regulations, OTI/NVOCC entities, such as our company, are mandated to electronically submit tariffs, delineating the rates applicable to the transportation of specified commodities to and from the United States, and the FMC possesses the authority to enforce these regulations, including the imposition of penalties for non-compliance.
Freight Forwarder Liability
Generally, the limitation of liability of freight forwarders is identical to the international agreements that are applicable to carriers. There are multiple conventions that restrict the carriers’ liability such as by setting as specific monetary limit per package or weight. For instance, ocean carriers can incorporate the Carriage of Goods by Sea Act into their Bills of Lading to limit their liability to $500 per unit. The Montreal Convention imposes a limit on the air carrier’s liability, capping it at a maximum of 22 special drawing rights per gross kilogram of the cargo that has been lost or damaged.
Freight forwarder’s liability also depends on their insurance coverage. In situations where goods get damaged or lost during transportation without an All Risk Cargo Policy or if the shipper chooses not to initiate a claim, the shipper will seek damages from all parties engaged in the transportation of goods, including carriers, warehouse operators, and the freight forwarders. If the insurance coverage is “All Risk,” then the shipper will recover through the insurance. However, if the losses exceed the amount recovered, shippers will go after the outstanding parties.
Furthermore, the extent of a freight forwarder’s liability is determined by the roles it assumes. When a freight forwarder issues a House Bill of Lading stating itself as the carrier, it assumes the role of principal, subjecting itself to the laws, regulations, and limitations applicable to carriers. When a freight forwarder issues a House Bill of Lading designating the common carrier (not the freight forwarder) as the carrier, the freight forwarder takes on the role of a broker or agent. In this scenario, the freight forwarder is often exempted from legal liabilities.
Forwarding agents must comply with the Export Administration Regulations (the “EAR”), a set of United States export guidelines and prohibitions that regulate the export restrictions of sensitive goods. It is essential to note that regardless of whether they are freight forwarders or other agents, their involvement in various tasks does not exempt them from their compliance obligations. Agents are accountable for the representations they make when filing export data. No individual, including an agent, may engage in any transaction if they have knowledge that it violates the EAR, has the potential to violate it, or is intended to do so. Pursuant to the Supplement No. 1 to Part 732 of the EAR, agents and exporters must assess the presence of red flags, exercise due diligence in investigating them, and ensure they do not overlook suspicious circumstances. Neglecting these responsibilities could result in a violation of the EAR. Additionally, it’s worth noting that the primary responsibility for EAR compliance rests with the principal parties in interest (the “PPI”) involved in a transaction. The EAR stipulates that the U.S. PPI must provide the foreign PPI and its agent with the correct Export Control Classification Number (the “ECCN”) or sufficient technical information to determine it, upon request. The U.S. PPI is obligated to furnish any information that could impact the determination of licensing authority as well. Under the Foreign Trade Regulations (15 C.F.R. Part 30), the U.S. PPI must supply specific data to the agent for electronic export information filing purposes.
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Further, in a routed export transaction, the U.S. agent representing the foreign PPI is considered the “exporter” under the EAR. They are responsible for determining licensing authority and obtaining the necessary license or authorization for the export. In such cases, the agent representing the foreign PPI must obtain a power of attorney or written authorization to act on their behalf. However, if the U.S. PPI fails to obtain the required authorization from the foreign PPI, they become the “exporter” and must handle licensing authority and obtain the appropriate license, even in the context of a routed export transaction for electronic export information filing. However, in a non-routed transaction, if the U.S. PPI authorizes an agent to prepare and file the export declaration on their behalf, the U.S. PPI assumes the role of the “exporter” under the EAR. In this scenario, the U.S. PPI is obliged to: (i) provide the agent with necessary information for the Automated Export System (the “AES”) submission, which is a system the U.S. exporters use to electronically declare their international exports, known as the Electronic Export Information (the “EEI”), to the Census Bureau to help compile U.S. export and trade statistics; (ii) authorize the agent to complete the AES submission through a power of attorney or written authorization; and (iii) maintain documentation supporting the information provided to the agent for the AES submission.
If authorized by either the U.S. or foreign PPI, the agent bears responsibility for: (i) preparing the AES submission based on information from the U.S. PPI; (ii) maintaining documentation supporting the AES submission information; and (iii) furnishing a copy of the AES filing to the U.S. PPI upon request. It is crucial to highlight that both the agent and the authorized PPI share responsibility for the accuracy of entries in an AES submission. Agents should exercise caution in using “No License Required” designations and avoid unsupported entries. In cases where agents lack technical expertise for commodity classifications, they should obtain supporting documentation for ECCNs.
Regarding documentation requirements in EAR’s Part 762, which applies to all transactions subject to the EAR, it outlines records that must be maintained, those exempt from maintenance, requirements for producing records, and the retention period. Additionally, various other recordkeeping requirements apply, including those from Customs (19 CFR Part 163), the Department of State (ITAR and 22 CFR Part 122.5), the Census Bureau (15 CFR 30.66(c)), and Treasury’s OFAC (31 CFR Part 501). Further details on EAR rules and regulations applicable to freight forwarders can be consulted in Sections 758.1 through 758.6, 748.4, and 750.7(d) within the EAR.
Regulations Relating to Cargo Examinations
One of the integral functions performed by freight forwarders is to handle customs examinations. Regulations enforced by CBP mandate that all cargo entering the U.S. from any foreign territories undergo physical examination by the U.S. government to ensure compliance with U.S. laws and regulations. Under the Title 19 of the United State Code (19 U.S.C.), CBP is authorized to inspect, examine and search all goods entering the U.S., including but not limited to cargo transported by air, sea, land, or mail. CBP facilitates this process through the use of an electronic system, allowing importers, brokers, and other trade partners to submit data and documentation, as well as providing the cargo information, including entry summaries and customs declarations to CBP. Additionally, the TSA established rules for air cargo security, mandating screening and inspection to mitigate the potential threats. Pursuant to 49 CFR part 1549, TSA-certified cargo screening facilities across the United States to screen cargo before it is transported on passenger flights. Certified facilities must adhere to strict security programs and chain of custody requirements to secure cargo from screening until it is loaded onto passenger aircraft.
Regulations Regarding Warehousing and Distribution Services
Container Freight Stations (“CFS”) Regulations
Our operations encompass warehousing and distribution services conducted within our regional warehousing and distribution centers. We own a CFS, which is licensed and certified by U.S. Customs. CFS facilities are an integral part of the logistics and shipping industry, where cargo containers are consolidated, deconsolidated, and temporarily stored during the import and export process. Besides consolidation and storage, CFS provide aspect rum of supplementary services, including documentation, custom examination, export clearance procedure. CFS facilities often handle imported and exported goods, so they must comply with customs regulations specific to the country or region in which they are located. This can include procedures for customs clearance, documentation, and security measures to prevent smuggling and ensure compliance with trade laws.
Pursuant to 19 CFR Part 19, the establishment of a container station, independent of the importing carrier, is subject to application submission and approval by the port director. Additionally, a Customs Form 301 must be filed, featuring bond conditions as stipulated in § 113.63 of such chapter, with the bond amount determined by the port director. Any alterations to or relocation of a container station require permission from the relevant port director. Furthermore, an application fee will be assessed by customs, with charges based on the average time required by customs officers to perform the service.
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For containerized cargo, whether it needs transportation from the point of unloading to a designated container station or is received directly at the container station from a bonded carrier following in-bond transportation, an entry of merchandise must be filed. Permission is sought for the purpose of breaking bulk and redelivery of the cargo. In addition, concerning the transfer of containers, our container station operator must file an application for the transfer of merchandise with the customs authorities or customs inspector at the location where the container is unloaded, or for merchandise transported in-bond, at the designated facility of the bonded carrier as determined by the port director. Such filings must adhere to the prescribed format as per regulations. As outlined in 39 FR 4876, when the container station operator utilizes their own vehicle to transfer merchandise to their station, the merchandise may only be transferred by a bonded cartman or bonded carrier. The station operator, cartman, or carrier must issue a receipt for the merchandise on both copies of the application.
Regulations of Transportation Security Administration
Pursuant to 49 CFR part 1548, we, as an indirect air carrier, must adopt and carry out a TSA-approved security program that meets current TSA requirements and is renewed annually. TSA principal security inspectors are the primary point of contact for the application process and approval of certification. Moreover, the TSA requires us to conduct known shipper programs and as the TSA’s known shipper management system requires, we must comply with a range of specific security requirements to qualify our clients as known shippers.
Regulations Relating to Intellectual Property, Data Protection and Security
In the rapidly digitizing landscape of supply chains, data protection has emerged as a significant challenge for the logistics sector. The Privacy Act of 1974 and the General Data Protection Regulation (the “GDPR”) have been enacted to ensure data privacy, regulatory frameworks and laws in order to safeguard this valuable information. Companies like us now shoulder the added responsibility of overseeing the proper collection and utilization of the vast volumes of customer data circulating within the logistics supply chain.
The Privacy Act of 1974, with amendments up to the present day, including Statutory Notes (5 U.S.C.552a), plays a vital role in protecting records about individuals, retrieved by personal identifiers such as names, social security numbers, or other identifying information. It dictates how federal agencies collect and use data related to individuals in their records systems. The act unequivocally bars agencies from disclosing personal information without written consent from the individual, except under specific circumstances, such as for statistical purposes by the Census Bureau. Individuals also retain the right to access their records, request corrections if inaccuracies exist, and demand protection against unwarranted invasions of their privacy. Additionally, we also recognize the importance of data privacy and security and comply with applicable regulations, including the GDPR, where applicable. Companies implement measures to safeguard customer and employee data, ensuring proper collection, storage, and usage practices. Non-compliance with these regulations carries the potential for legal consequences that could impact the company’s operations and financial performance. We are unwavering in our commitment to upholding the highest standards of regulatory compliance to ensure the long-term success and sustainability of our business operations.
Third-Party Logistics Providers, or 3PLs, like us, commonly find themselves privy to sensitive or confidential information about shippers or carriers, often protected by statutes or contractual agreements. Even in cases where no negligence is involved, 3PLs can be held accountable for disclosing such private and safeguarded information. Given their substantial involvement in a shipper’s operations while providing logistics services, contracts between shippers and 3PLs often incorporate confidentiality provisions. These provisions are essential safeguards to protect the integrity of sensitive data in the complex landscape of logistics, where trust and security are paramount.
Regulations Relating to Distribution of Pharmaceutical Products in China
According to the “Regulations on the Supervision and Administration of the Quality of Pharmaceutical Operation and Use” implemented by the State Administration for Market Regulation of China in January 2024, the entity which is engaged in pharmaceutical wholesale or retail activities within the territory of the People’s Republic of China should obtain the Pharmaceutical Operation License. The local departments of the National Medical Products Administration pharmaceutical and the State Administration for Market shall supervise the daily operation of those entities through regular and casual inspections. Those inspections are aiming at the whether the purchase, storage, sales and other operating activities of the pharmaceutical selling entities are compliant with the related regulations. In August 2025, Hubei Pharmaceutical has passed an on-site inspection from Hubei Administration for Market.
Available Information
Our website address is www.lakeside-holding.com and our subsidiary’s website address is www.americanbearlogistics.com. The information on, or that can be accessed through, our websites is not part of this report and is not incorporated by reference herein. We have included our websites address as inactive textual reference only.
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Item 1A. Risk Factors.
We are a smaller reporting company and are not required to provide the information required under this item. For risks relating to our Company and our operations, see the section titled “Risk Factors” contained in our prospectus dated April 21, 2025, filed with the Securities and Exchange Commission, or the SEC, pursuant to Rule 424(b)(4) under the Securities Act.
Item 1B. Unresolved Staff Comments.
We are a smaller reporting company and are not required to provide the information required under this item.
Item 1C. Cybersecurity.
Risk Management and strategy
As part of our broader risk
management system and processes, we maintain procedures for identifying, assessing, and managing material risks from cybersecurity threats
that is designed to protect the confidentiality,
We track and log security incidents across our company and our customers to remediate and resolve any such incidents. Significant incidents, if any, shall be reviewed by chief executive officer and chief operating officer, with the assistance from our information technology department, to assess and determine its materiality or potentiality of becoming material. Our senior management makes the final materiality determinations and disclosure and other compliance decisions.
As of the date of this annual report, we have not experienced any material cybersecurity incidents or identified any material cybersecurity threats that have affected or are reasonably likely to materially affect us, our business strategy, results of operations or financial condition.
Governance
Our board of directors does not have a standing risk management committee, but rather directly administers its oversight function as a whole. Our board of directors will (i) lead in a direction that minimizes the risk of unauthorized and malicious use, disclosure, potential theft, alteration or damaging effects of our operations while concurrently enabling the sharing of information in cyberspace, and (ii) ensure that risks to the confidentiality, integrity or availability of Company-owned information assets are managed appropriately, and (iii) review disclosure concerning cybersecurity matters in our annual report on 10-K presented by our chief executive officer, chief financial officer, and other personnel in charge of cybersecurity matters.
Item 2. Properties.
We lease approximately 65,981 square feet in Itasca, Illinois, including approximately 8,838 square feet for our U.S. headquarters and 57,143 square feet for a regional warehousing and distribution center. The lease of our facility in Itasca, Illinois expires in April 2026 with an option to extend the lease for an additional five-year term. We also lease approximately 46,657 square feet in Irving, Texas, where we operate another regional warehousing and distribution center. The lease of this facility expires in May 2029 with an option to extend the lease for an additional five-year term. We also lease approximately 56,264 square feet in Bensenville, Illinois, including 12,000 square feet for our ocean operation office and 44,264 square feet for another regional warehousing and distribution center. The lease of this facility expires in April 2026.
We lease two premises with a gross floor area of approximately 565 square meter in Wuhan, Hubei Province in China, for our pharmaceutical distribution and supply chain service. The lease term of the warehouse, with a floor area of 176 square meters, is from April 1, 2025 to March 31, 2026. As of June 30, 2025, this warehouse has not yet been put into use. The other lease covers an office unit with a floor area of 389 square meters, with a lease term from January 1, 2025 to December 31, 2029.
We have two lease agreements for premises with a total floor area of approximately 468 square meters in Chengdu, Sichuan Province, China. The lease term of the office, with a floor area of 352 square meters, is from September 10, 2024 to September 10, 2026. The other lease covers a residential unit with a floor area of 116 square meters, which is used as employee dormitories, with a lease term from February 12, 2025 to February 11, 2026.
We may add additional offices as we expand our business to other states and countries. We believe that our facilities are sufficient for our current needs and that, should it be needed, additional facilities will be available to accommodate the expansion of our business.
Item 3. Legal Proceedings.
From time to time, we may be subject to legal proceedings, investigations and claims incidental to the conduct of our business. We are currently not a party to, nor are we aware of, any legal proceedings, investigations or claims which, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition or results of operations.
Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock trades on the Nasdaq Capital Market under the symbol “LSH.”
Holders of Record
As of October 10, 2025, we had approximately 20 holders of record of our common stock.
Dividend Policy
We have never declared or paid, and do not anticipate declaring or paying, any cash dividends on our capital stock. Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors that our board of directors may deem relevant.
Securities Authorized for Issuance under Equity Compensation Plans
None.
Performance Graph
We are a smaller reporting company and are not required to provide the information required under this item.
Recent Sale of Unregistered Securities and Use of Proceeds
None.
Use of Proceeds from Initial Public Offering of Common Stock
On July 1, 2024, we completed our IPO of 1,500,000 shares of common stock, at a price of $4.50 per share, before underwriting discounts and commissions. The offering was registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-278416), which was declared effective by the SEC on June 27, 2024. As of the date of this report, with the proceeds of the IPO, we used approximately $3.3 million for in marketing activities and business expansion and used approximately $2.4 million for working capital needs. There has been no material change in the planned use of proceeds from the IPO as described in the Prospectus.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
There were no purchases of the issuer’s securities by the issuer or affiliated purchasers, as defined in Rule 10b-18(a) (3) the Exchange Act, during the fourth quarter of the fiscal year ended June 30, 2025.
Item 6. [Reserved]
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. All amounts included herein with respect to the fiscal years ended June 30, 2025 and 2024 are derived from our audited consolidated financial statements included elsewhere in this Report. Our financial statements have been prepared in accordance with the U.S. GAAP.
Overview
We are a U.S.-based integrated cross-border supply chain solution provider with a strategic focus on the Asian market including China and South Korea. We primarily provide customized cross-border ocean freight solutions and airfreight solutions in the U.S. that specifically cater to our customers’ requirements and needs in transporting goods into the U.S. We offer a wide variety of integrated services under our cross-border ocean freight solutions and cross-border airfreight solutions, including (i) cross-border freight consolidation and forwarding services, (ii) customs clearance services, (iii) warehousing and distribution services and (iv) U.S. domestic ground transportation services.
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. As of June 30, 2025, we had served over 400 customers to fulfill over 55,000 cross-border supply chain solution orders.
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. As of June 30, 2025, we had collaborated with almost all major global ocean and air carriers to forward 35,900 TEU of container loads and 69,300 tons of air cargo. As of June 30, 2025, 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.
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 June 30, 2025, 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 $54.0 million.
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 June 30, 2025, we had fulfilled over 55,000 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.
During the year ended June 30, 2025, we had a new business segment through acquired 100% equity interest of Hupan Pharmaceutical, a comprehensive pharmaceutical distribution and supply chain service provider headquartered in Wuhan, China with verticals in brand promotion and healthcare technology support. We have partnered with some pharmaceutical manufacturers to supply infusion fluids, which are our major pharmaceutical products sold and distributed during the year.
For the year ended June 30, 2025 and 2024, our revenues amounted to $17.8 million and $18.3 million, respectively, and our gross profit amounted to $2.9 million and $3.7 million during the same periods, respectively.
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Key Factors Affecting Our Results of Operations
We believe the most significant factors that affect our business and results of operations include the following:
Our Ability to Expand Our Customer Base
Our results of operations are dependent upon our ability to expand and maintain our customer base. As of June 30, 2025, we had served over 400 customers to fulfill over 55,500 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.
During fiscal year 2025, we introduced a new revenue stream through the distribution of pharmaceutical and medical products. Under this model, we purchase products directly from manufacturers, store them in designated warehouses, and deliver them to customers’ warehouses or other specified locations. While this business expansion creates opportunities to reach new customers in the healthcare sector. It also exposes us to additional risks compared with our traditional cross-border logistics services. These risks include heightened regulatory and compliance requirements for the handling and distribution of medical products, increased working capital exposure from holding inventory, and greater operational complexity in maintaining product quality and safety. Successfully expanding our customer base in this new segment will depend on our ability to manage these risks effectively while maintaining high service standards and compliance with applicable regulations.
Our Ability to Control Costs
Our results of operations are affected by our ability to control costs including transportation and delivery costs, warehouse service charges, custom declaration and terminal charges, freight arrangement charges and other overhead cost allocation, which may be subject to factors, including, among other things, fluctuations in wage rates, fuel prices, toll fees, and leasing costs. Effective cost-control measures have a direct impact on our financial condition and results of operations. For example, our cross-border freight carrier and U.S. domestic ground transportation carrier services providers use large quantities of fuel to operate vehicles, and therefore, hence the higher fuel cost incurred by them may causes our higher fee rates cost charged on us by such the service providers. The availability and price of fuel and third-party transportation capacity are subject to political, economic, and market factors that are beyond our control. We also incur a significant amount of costs in relation to transportation and labor. Any unexpected increase in these costs, which is subject to factors beyond our control, could adversely impact our profitability. We have adopted, and expect to adopt, additional cost control measures. However, the measures we have adopted or will adopt in the future may not be as effective as expected. If we are not able to effectively control our costs and adjust the level of fee rates based on operating costs and market conditions, our profitability and cash flow may be adversely affected.
With the introduction of our new pharmaceutical and medical product distribution business in fiscal year 2025, our cost structure has become more complex. Unlike our traditional cross-border logistics services, which are largely variable in nature, the new business requires us to hold inventory, maintain specialized warehouse conditions, and comply with more stringent product handling standards. These factors may increase fixed operating costs, including storage, insurance, and quality control expenses. Consequently, our ability to control costs in this new business segment will depend not only on fuel and labor trends but also on our efficiency in managing inventory turnover and compliance-related expenses.
We have implemented, and expect to continue adopting, additional cost-control measures to mitigate these risks. However, such measures may not always be as effective as anticipated. If we are unable to effectively control our operating costs or adjust our pricing in response to changing market conditions, our profitability and cash flows may be adversely affected.
Our Ability to Provide High-quality Services
Our results of operations depend on our ability to maintain and further enhance our service quality. Together with our network of service providers, we provide integrated cross-border ocean and air freight supply chain solutions and services to our customers. If we or our service providers are unable to provide express delivery services in a timely, reliable, safe and secure manner, our reputation and customer loyalty could be negatively affected. In additional, if our customer service personnel fail to satisfy customer needs or respond effectively to customer complaints, we may lose potential or existing customers and experience a decrease in customer orders, which could have a material adverse effect on our business, financial condition and results of operations.
As we expand into pharmaceutical and medical product distribution, maintaining high-quality service standards becomes even more critical. This new business line involves additional operational requirements, such as temperature-controlled storage, specialized handling, and compliance with healthcare product regulations. Any lapse in these areas could result in regulatory penalties, product spoilage, or loss of customer trust. Compared to our existing logistics operations, the consequences of service failures in this segment could be more severe, given the sensitive nature of medical products and the higher expectations of healthcare customers. Ensuring consistent service quality will therefore require enhanced employee training, strengthened supplier oversight, and continuous monitoring of compliance procedures.
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Strategic Acquisitions and Investments
Our results of operations also depend on our ability to pursue strategic acquisitions and investments in expanding our global footprints, diversifying our service offerings, and advancing our technologies. We may selectively pursue mergers, acquisitions, investments, joint ventures and partnerships that we believe are strategic and complementary to our operations and technology. However, we cannot assure you that we will make prudent decisions at all times. Our ability to successfully execute or effectively operate, integrate, leverage and grow these investments or strategic partnerships could impact our results of operations and financial conditions.
In response to governmental directives and recommended safety measures, we have implemented personal safety measures at all of our facilities. However, these measures may not be sufficient to mitigate the risk of infection by COVID-19. If a significant number of our employees, or third parties performing key functions, including our chief executive officer and members of our board of directors, become ill, our business may be further adversely impacted.
The impact of COVID-19 pandemic on us in the future will depend on future developments which are highly unpredictable and beyond our control, such as the frequency, duration and severity of the resurgence of COVID-19 and the emergence of new variants, as well as the measures that may be taken by governments around the world in response to these developments, the impact of the pandemic on the global economy and the measures taken by governments to stimulate the general economy. Therefore, we cannot guarantee that the pandemic will not continue to have an adverse effect on our business and results of operations in the future, which may be material.
We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state, local or foreign authorities, or that we determine are in the best interests of our employees, customers, service providers and stockholders.
Uncertainty and Impacts on the Recent U.S. Tarriff Policies and Regulations
Our results of operations also depend on our ability to respond with the recent tariff and other restrictions placed on imports. Since February 2025, trade between the U.S. and China has remained under tight restrictions and elevated trade barriers. While some temporary relief measures and exemptions were granted, most U.S. tariffs on Chinese goods remain in place, particularly affecting key sectors such as agriculture, automobiles, industrial materials, and consumer goods. These trade measures have significantly disrupted U.S.-China commerce, reducing exports in certain categories and forcing companies on both sides to adjust supply chains, pricing, and sourcing strategies. Despite some ongoing negotiations, the overall trade environment remains challenging and uncertain, with cross-border business continuing to face heightened costs and operational complexities.
In May 2025, the US and China agreed to a truce to lower import taxes on goods being traded between the two countries for 90 days. Under the terms of the agreement, both countries committed to pausing the imposition of new tariffs and partially rolling back existing duties on select goods, primarily in the technology, agricultural, and consumer product sectors. Although the agreement marks a major de-escalation of the trade war between the two countries, there is still a high degree of uncertainty surrounding U.S. tariff policy, how it will be implemented, and how other countries will react to it. It also remains uncertain whether increased tariffs and trade tensions will create further disruptions and uncertainties to the international trade and lead to a downturn in the global economy.
As of August 29, 2025, the United States has permanently eliminated the $800 de minimis threshold that previously allowed low-value shipments to enter the country duty-free. This change applies to all international shipments, regardless of value, origin, or shipping method. The decision was made to strengthen trade enforcement and address concerns over illicit trade practices. All imports, including those valued under $800, are now subject to applicable duties and taxes. These changes increase the complexity of customs processing, slow clearance times, and reduce the volume of low-value parcels traditionally handled by freight forwarders.
Moreover, increasing trade protectionism may cause an increase in (i) the cost of goods exported from regions globally, particularly from the Asia-Pacific region, (ii) the length of time required to transport goods and (iii) the risks associated with exporting goods. Such increases may further reduce the quantity of goods to be shipped, extend shipping schedules, increase voyage costs, and other associated costs, which could have an adverse impact on our customers’ business, operating results and financial condition and could thereby affect their ability to make timely payments to us and their order quantities. This could have a material adverse effect on our business, operating results, cash flows and financial condition.
We will continue to actively monitor the situation and consider strategic adaptation to maintain service levels and profitability.
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Key Components of Results of Operations
Revenues. We generate revenues primarily by providing customized cross-border ocean freight solutions and airfreight solutions to customers that specifically cater to their requirements and needs in transporting goods into the U.S. Under the service agreements with our customers, we offer a wide variety of integrated services under our cross-border ocean freight solutions and cross-border airfreight solutions, including (i) cross-border freight consolidation and forwarding services, (ii) customs clearance services, (iii) warehousing and distribution services and (iv) U.S. domestic ground transportation services.
From December 2024, we started to generate revenues from the distribution of pharmaceutical and medical products. We order from the manufacturer, receive and carry the products at a designated warehouse, and deliver the products to the customers’ warehouses or designated locations.
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.
Our cost of revenues from the distribution of pharmaceutical and medical products comprises cost of pharmaceutical products from manufacturers.
Selling Expenses. Our selling expenses primarily include salaries expense, advertising expenses, and traveling expense of sales team engaged in developing potential customers and maintaining customer relationships and transportation cost for selling pharmaceutical products.
General and Administrative Expenses. Our general and administrative expenses primarily include salaries and staff benefits, repair and maintenance expenses, depreciation on property and equipment, amortization on intangible assets, lease expenses warehouses used for administrative purpose and office premises, travelling and entertainment expenses, bank charges, legal and professional fees, insurance expenses and other office expenses.
Other Income. Our other income primarily consists of rental income.
Interest Expenses. Our interest expenses primarily consist of the interest expenses incurred for finance leases, convertible debts, equipment loans, vehicle loans and other loans and interest for late credit card payment.
Income Tax Expenses. Our income tax expenses consist primarily of U.S. federal, state income taxes, replacement tax in the state of Illinois and PRC enterprise income tax.
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Results of Operations
The following table summarizes the results of consolidated statements of operations and comprehensive income (loss) for the years ended June 30, 2025 and 2024 in U.S. dollars.
| For the years ended June 30, | ||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||
| Amount | As % of revenue | Amount | As % of revenue | Amount Increase (Decrease) | Percentage Increase (Decrease) | |||||||||||||||||||
| Revenue from cross border freight solutions | $ | 15,027,960 | 84.5 | % | $ | 18,315,155 | 100.0 | % | $ | (3,287,195 | ) | (17.9 | )% | |||||||||||
| Revenue from distribution of pharmaceutical products | 2,762,465 | 15.5 | % | — | — | 2,762,465 | N/A | |||||||||||||||||
| Total revenue | 17,790,425 | 100.0 | % | 18,315,155 | 100.0 | % | (524,730 | ) | (2.9 | )% | ||||||||||||||
| Cost of revenue from cross border freight solutions | 13,699,648 | 77.0 | % | 14,599,198 | 79.7 | % | (899,550 | ) | (6.2 | )% | ||||||||||||||
| Cost of revenue from pharmaceutical products | 1,212,318 | 6.8 | % | — | — | 1,212,318 | N/A | |||||||||||||||||
| Total cost of revenue | 14,911,966 | 83.8 | % | 14,599,198 | 79.7 | % | 312,768 | 2.1 | % | |||||||||||||||
| Gross profit from cross border freight solutions | 1,328,312 | 8.8 | % | 3,715,957 | 20.3 | % | (2,387,645 | ) | (64.3 | )% | ||||||||||||||
| Gross profit from pharmaceutical products | 1,550,147 | 56.1 | % | — | — | 1,550,147 | N/A | |||||||||||||||||
| Gross profit | 2,878,459 | 16.2 | % | 3,715,957 | 20.3 | % | (837,498 | ) | (22.5 | )% | ||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| Selling expenses | 393,290 | 2.2 | % | 2,500 | — | 390,790 | 15,631.6 | % | ||||||||||||||||
| General and administrative expenses | 7,410,906 | 41.7 | % | 4,138,190 | 22.6 | % | 3,272,716 | 79.1 | % | |||||||||||||||
| Loss from deconsolidation of a subsidiary | — | 73,151 | 0.4 | % | (73,151 | ) | NA | |||||||||||||||||
| Provision of allowance for expected credit loss | 33,432 | 0.2 | % | 28,157 | 0.2 | % | 5,275 | 18.7 | % | |||||||||||||||
| Total operating expenses | 7,837,628 | 44.1 | % | 4,241,998 | 23.2 | % | 3,595,630 | 84.8 | % | |||||||||||||||
| Loss from operations | (4,959,169 | ) | (27.9 | )% | (526,041 | ) | (2.9 | )% | (4,433,128 | ) | 842.7 | % | ||||||||||||
| Other income (expenses) | ||||||||||||||||||||||||
| Other income, net | 416,192 | 2.3 | % | 338,435 | 1.8 | % | 77,757 | 23.0 | % | |||||||||||||||
| Interest expense | (401,282 | ) | (2.3 | )% | (108,008 | ) | (0.6 | )% | (293,274 | ) | 271.5 | % | ||||||||||||
| Total other (expenses) income, net | 14,910 | 0.1 | % | 230,427 | 1.3 | % | (215,517 | ) | (93.5 | )% | ||||||||||||||
| Loss before income taxes | (4,944,259 | ) | (27.8 | )% | (295,614 | ) | (1.6 | )% | (4,648,645 | ) | 1,572.5 | % | ||||||||||||
| Income taxes expense (credit) | 301,877 | 1.7 | % | (67,337 | ) | (0.4 | )% | 369,214 | (548.3 | )% | ||||||||||||||
| Net loss | $ | (5,246,136 | ) | (29.5 | )% | $ | (228,277 | ) | (1.2 | )% | $ | (5,017,859 | ) | 2,198.1 | % | |||||||||
15
Year Ended June 30, 2025 Compared to Year Ended June 30, 2024
The following table summarizes our consolidated results of operations and percentages of certain items in relation to total revenues for the years ended June 30, 2025 and 2024, and provides information regarding the dollar and percentage increase or (decrease) during such periods. The operating results in any historical period are not necessarily indicative of the results that may be expected for any future period.
| For the years ended June 30, | ||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||
| Revenues | Amount | % of total Revenues | Amount | % of total Revenues | Amount Increase (Decrease) | Percentage Increase (Decrease) | ||||||||||||||||||
| Revenue from cross-border freight solutions | ||||||||||||||||||||||||
| Cross-border ocean freight solutions | $ | 5,781,180 | 32.5 | % | $ | 7,873,835 | 43.0 | % | $ | (2,092,655 | ) | (26.6 | )% | |||||||||||
| Cross-border airfreight solutions | 9,246,780 | 52.0 | % | 10,441,320 | 57.0 | % | (1,194,540 | ) | (11.4 | )% | ||||||||||||||
| Subtotal | 15,027,960 | 84.5 | % | 18,315,155 | 100.0 | % | (3,287,195 | ) | (17.9 | )% | ||||||||||||||
| Revenue from distribution of pharmaceutical products | 2,762,465 | 15.5 | % | - | - | 2,762,465 | ||||||||||||||||||
| Total revenues | 17,790,425 | 100.0 | % | 18,315,155 | 100.0 | % | (524,730 | ) | (2.9 | )% | ||||||||||||||
| Cost of revenues – cross-border freight solution | 13,699,648 | 77.0 | % | 14,599,198 | 79.7 | % | (899,550 | ) | (6.2 | )% | ||||||||||||||
| Cost of revenues – pharmaceutical products | 1,212,318 | 6.8 | % | - | - | 1,212,318 | N/A | |||||||||||||||||
| Total cost of revenues | 14,911,966 | 83.8 | % | 14,599,198 | 79.7 | % | 312,768 | 2.1 | % | |||||||||||||||
| Gross profit – cross-border freight solution | 1,328,312 | 8.8 | % | 3,715,957 | 20.3 | % | (2,387,645 | ) | (64.3 | )% | ||||||||||||||
| Gross profit – pharmaceutical products | 1,550,147 | 56.1 | % | 1,550,147 | N/A | |||||||||||||||||||
| Total gross profit | $ | 2,878,459 | 16.2 | % | $ | 3,715,957 | 20.3 | % | $ | (837,498 | ) | (22.5 | )% | |||||||||||
Revenues
Our total revenues from cross-border freight solutions decreased by $3.3 million, or 17.9%, from $18.3 million for the year ended June 30, 2024, to $15.0 million for the year ended June 30, 2025. The decrease was primarily driven by a decline in the volume of shipments we handled from both of our cross-border ocean freight solution and airfreight solutions due to the U.S. policy changes: first, the termination of the $800 de minimis rule eliminated duty-free entry for low-value shipments; second, new tariffs—ranging from $50 to $150 or up to 120% of the item value—were imposed on small packages, further discouraging direct-to-consumer exports; and third, expedited customs clearance modes like T86 were discontinued, requiring more complex documentation and longer processing times. Together, these changes have led to a sharp decline in shipment volume and forced freight solution providers to rethink their logistics strategies. Additionally, a slowdown in consumer spending and business investments, caused by the overall economic downturn and high interest and inflation rates, reduced the demand for imported goods, leading to lower container volumes.
Revenues from our cross-border ocean freight solutions decreased by $2.1 million, or 26.6%, from $7.9 million for the year ended June 30, 2024, to $5.8 million for the year ended June 30, 2025. This reduction was primarily due to a decrease in the volume of cross-border ocean freight processed and forwarded, dropping from 5,458 TEU in the year ended June 30, 2024, to 4,609 TEU for the year ended June 30, 2025.
16
Revenues from our cross-border airfreight solutions decreased by $1.2 million or 11.4%, from $10.4 million for the year ended June 30, 2024, to $9.2 million for the year ended June 30, 2025. The decrease was primarily due to a decrease in the volume of cross-border air freight processed, from approximately 26,160 tons for the year ended June 30, 2024, to approximately 21,511 tons for the year ended June 30, 2025. Some of our customers reduced their orders due to the uncertainty in trade policies and higher tariffs since March 4, 2025, leading to a decline in our revenue.
Starting from December 2024, we established a new revenue stream through the distribution of pharmaceutical products. We procured pharmaceuticals—primarily pharmaceutical solutions—directly from manufacturers and supplied them to distributors, hospitals, and clinics. For the year ended June 30, 2025, our total revenue from pharmaceutical product distribution amounted to $2.8 million. We did not generate any revenue from this segment in the same period of the prior year.
Looking ahead, there remains significant uncertainty regarding future tariff policies, trade regulations between the U.S. and China, and the regulatory environment affecting e-commerce platforms in the U.S. We expect these factors to continue influencing cross-border freight activity in the near term. These policies may significantly reduce the volume of goods imported into the U.S. and moving through e-commerce channels due to increased import costs. Despite these headwinds, we remain committed to exploring new customer opportunities while maintaining strong relationships with our existing clients.
Revenues by Customer Geographic
| For the years ended June 30, | ||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||
| Revenues | Amount | % of total Revenues | Amount | % of total Revenues | Amount Increase (Decrease) | Percentage Increase (Decrease) | ||||||||||||||||||
| Revenue from cross-border freight solutions | ||||||||||||||||||||||||
| Asia-based customers | $ | 12,057,512 | 67.8 | % | $ | 13,081,165 | 71.4 | % | $ | (1,023,653 | ) | (7.8 | )% | |||||||||||
| U.S.-based customers | 2,970,448 | 16.7 | % | 5,233,990 | 28.6 | % | (2,263,542 | ) | (43.2 | )% | ||||||||||||||
| 15,027,960 | 84.5 | % | 18,315,155 | 100.0 | % | (3,287,195 | ) | (17.9 | )% | |||||||||||||||
| Revenue from distribution of pharmaceuticals | ||||||||||||||||||||||||
| Asia-based customers | 2,762,465 | 15.5 | % | - | - | 2,762,465 | N/A | |||||||||||||||||
| Total revenues | $ | 17,790,425 | 100.0 | % | $ | 18,315,155 | 100.0 | % | $ | (524,730 | ) | (2.9 | )% | |||||||||||
Revenues from cross-border freight solutions for the Asia-based customers decreased by $1.0 million, or 7.8%, from $13.1 million for the year ended June 30, 2024, to $12.1 million for the year ended June 30, 2025. Revenues from cross-border freight solutions for the U.S.-based customers decreased by $2.2 million, or 43.2%, from $5.2 million for the year ended June 30, 2024 to $3.0 million for the same period in 2025.
The decrease in revenues from Asia-based customers for the year ended June 30, 2025, was due to a decrease in shipments volume from Asia-based customers serving large e-commerce platforms, driven by the discussions on the amendments to the de minimis rule and the imposition of higher tariffs on Chinese goods.
The decrease in revenue from the U.S.-based customers for the year ended June 30, 2025, compared to the same period in 2024, was primarily driven by a decrease in shipment volumes serving e-commerce platforms and concerns over a potential economic downturn and reduced consumer spending power in the U.S., which led to lower shipment volumes.
17
Our customers for the distribution of pharmaceutical products are located in China, as we specifically target the Chinese market. For the year ended June 30, 2025, our total revenue from pharmaceutical product distribution amounted to $2.8 million. We did not generate any revenue from this segment in the same period of the prior year.
Cost of Revenues
A breakdown of our cost of revenues for the years ended June 30, 2025 and 2024 is as follows:
| For years ended June 30, | Amount Increase | Percentage Increase | ||||||||||||||
| 2025 | 2024 | (Decrease) | (Decrease) | |||||||||||||
| Cost of revenue from cross-border freight solutions | ||||||||||||||||
| Transportation and delivery costs | $ | 5,590,995 | $ | 7,477,986 | $ | (1,886,991 | ) | (25.2 | )% | |||||||
| Warehouse service charges | 3,069,711 | 2,886,406 | 183,305 | 6.4 | % | |||||||||||
| Custom declaration and terminal charges | 2,266,938 | 2,374,101 | (107,163 | ) | (4.5 | )% | ||||||||||
| Freight arrangement charges | 492,810 | 486,357 | 6,453 | 1.3 | % | |||||||||||
| Overhead cost | 2,279,194 | 1,374,348 | 904,846 | 65.8 | % | |||||||||||
| Subtotal | 13,699,648 | 14,599,198 | (899,550 | ) | (6.2 | )% | ||||||||||
| Cost of revenue from distribution of pharmaceuticals | ||||||||||||||||
| Cost of goods sold | 1,212,318 | - | 1,212,318 | NA | ||||||||||||
| Total cost of revenue | $ | 14,911,966 | $ | 14,599,198 | $ | 312,768 | 2.1 | % | ||||||||
Our cost of revenues from cross-border freight solutions decreased by $0.9 million, or 6.2%, from $14.6 million for the year ended June 30, 2024, to $13.7 million for the year ended June 30, 2025. The decrease in cost of revenues was mainly due to the combined effects of:
| (i) | a decrease in transportation and delivery costs, including trucking, drayage, chassis rental, freight, and delivery costs during the year ended June 30, 2025, which was primarily due to a reduction in delivery services provided to customers. Initially, our transportation and delivery costs decreased to a less extent than our revenue due to high inflation in gasoline and labor costs, as well as operational efficiencies associated with airfreights forwarding services that require strict timelines and often prevent full truckload utilization. Subsequently, cost reduction outpaced the decline in revenue as we optimized our delivery scheduling and negotiated lower delivery rates with our major vendors, resulting in lower overall operating costs. Although there was a lag in adjusting transportation costs due to the factors noted above, we ultimately achieved a lower cost level in line with the reduced delivery volume. |
| (ii) | a decrease in customs declaration and terminal charges, consisting of customs fees, handling charges, and entry service fees charged by ports and terminals during the year ended June 30, 2025, resulting from a drop in the volume of cross-border freight we handled, particularly airfreight, during the same period; |
| (iii) |
an increase in warehouse service charges, primarily representing labor costs at our regional warehousing and distribution centers during the year ended June 30, 2025, was mainly driven by three factors. First, industry hourly wage rates increased during the year, leading to higher overall staffing expenses. Second, we adjusted our staffing structure by reducing regular part-time positions and increasing the use of contracted labor to improve operational flexibility in response to the lower shipping volume experienced in the current year. Third, more labor was required for unpacking shipments into smaller packages to meet customer requirements, which further contributed to the increase in warehouse labor costs. This more flexible staffing model positions us to adjust more efficiently to future changes in shipment volume, and if volume decreases further, we expect to be able to reduce labor costs more promptly; | |
| (iv) | an increase in freight arrangement charges, mainly representing scheduling and booking fees for cross-border ocean freight and airfreights from the U.S. to China, during the year ended June 30, 2025, primarily due to higher business volumes for export cross-border airfreights arrangement with higher unit cost, partially offset by a slight decrease in the volume of cross-border ocean arrangements, from the U.S. to China; and |
18
| (v) | an increase in overhead costs, mainly comprising warehouse and equipment lease expenses, utilities, depreciation of property and equipment, and other direct costs during the year ended June 30, 2025. The warehouse and equipment lease expenses increased significantly, from $1,195,808 for the year ended June 30, 2024, to $2,086,549 for the year ended June 30, 2025. The increase was primarily because we entered into two more warehouse lease agreements during the year ended June 30, 2025, compared to the same period last year. These agreements were negotiated before the significant decline in our revenue. To mitigate costs and improve our gross profit margin, we plan to sublease one of the warehouses in Chicago in the next fiscal year. |
Our cost of revenues from the distribution of pharmaceuticals was $1.2 million for the year ended June 30, 2025. We did not generate any revenue from this segment in the same period of the prior year.
Gross Profit
Our overall gross profit was $2.9 million for the year ended June 30, 2025, compared to $3.7 million in the same period of the prior year.
Our gross margin for cross-border freight solutions was 8.8% for the year ended June 30, 2025, compared to 20.3% for the year ended June 30, 2024. The significant decline in gross margin was primarily attributable to (i) a disproportionate decrease in our revenue from the airfreight and ocean freight solution compared to the decrease in our cost of revenue, such as transportation and delivery costs, customs declaration and terminal charges, and (ii) increased overhead costs allocated, as discussed above.
Our gross margin for the distribution of pharmaceutical was 56.1% for the year ended June 30, 2025. This comparatively high margin was primarily due to favorable purchase discounts offered by our suppliers, who extended these incentives to support the establishment of a long-term partnership as we entered this market as a new customer. Excluding the favorable purchase discounts of $489,625, the gross margin for pharmaceutical distribution would be approximately 38.4% for the current year. This is a new business segment in the current year and therefore no gross margin was reported in the same period of the prior year.
Selling Expenses
Our selling expenses amounted to $0.4 million for the year ended June 30, 2025, compared to a nominal amount for the same period in 2024. The increase was primarily driven by the salaries for our sales team and the advertising expense amounted to $138,000, both of which were incurred in connection with the launch of our new pharmaceutical distribution service during the year.
General and Administrative Expenses
Our general and administrative expenses increased by $3.3 million, or 79.1%, from $4.1 million for the year ended June 30, 2024, to $7.4 million for the year ended June 30, 2025. These expenses represented 41.7% and 22.6% of our total revenues for the years ended June 30, 2025 and 2024, respectively. The increase was primarily attributed to higher salary and employee benefit expenses and professional fees incurred in connection with operating as a listed company. Additionally, the launch of our new pharmaceutical distribution segment in the second quarter of the fiscal year ended June 30, 2025 contributed to the rise in operating costs.
Our salaries and employee benefits expenses increased by $1.2 million, or 41.6%, from $2.7 million for the year ended June 30, 2024, to $3.9 million for the year ended June 30, 2025. Our salaries and employee benefits expenses represented 52.3% and 66.1% of our total general and administrative expenses for the years ended June 30, 2025 and 2024, respectively. The increase was mainly due to the salary expenses associated with two new subsidiaries supporting operations in the new business segment beginning in the second quarter of the fiscal year in China. For our salaries and employee benefits expenses, (i) our payroll expenses increased by $1.0 million, or 43.2% from $2.3 million for the year ended June 30, 2024, to $3.3 million for the year ended June 30, 2025, and (ii) our employee benefit expenses, which mainly consist of 401(k) company contribution in U.S., employee defined contribution plan in China, meal allowance and health insurance expenses, increased by $0.1 million, or 32.1%, from $0.4 million for the year ended June 30, 2024, to $0.5 million for the year ended June 30, 2025, representing 7.3% and 9.9% of our total general and administrative expenses for the years ended June 30, 2025 and 2024, respectively. The increase was mainly due to rising employee health insurance premiums.
19
Our professional fees increased by $1.0 million, or 263.4%, from $0.4 million for the year ended June 30, 2024, to $1.4 million for the year ended June 30, 2025. Our professional fee represented 18.7% and 9.2% of our total general and administrative expenses for the years ended June 30, 2025 and 2024, respectively. The increase was primarily due to audit fees, legal fees, consulting expenses, investor-related expenses and financial reporting service fees for the year ended June 30, 2025. For the year ended June 30, 2024, most expenses directly related to offering that were not included in professional fees, as they were accounted for as deferred initial public offering assets.
Other Income, net
Our other income, net, increased by $0.1 million, or 23.0%, from $0.3 million for the year ended June 30, 2024, to $0.4 million for the year ended June 30, 2025. The increase was primarily due to renting out part of our warehouse space to our related party, Weship, for an additional five months and renting out part of our two warehouses to our related party, Intermodal, during the year ended June 30, 2025.
Interest Expenses
Our interest expenses increased by $0.3 million, or 271.5%, from $0.1 million for the year ended June 30, 2024, to $0.4 million for the year ended June 30, 2025. The increase in interest expense was mainly due to late credit card payments and interest expense in connection with the convertible note issued during the year ended June 30, 2025.
Loss Before Income Taxes
We had a net loss before income taxes of $4.9 million and $0.3 million for the years ended June 30, 2025 and 2024, respectively. We were in a loss position before income taxes for the year ended June 30, 2025, primarily attributable to the net effects of: (i) the decrease in gross profit, (ii) the rise in operating expenses, and (iii) the increase in interest expense for the year ended June 30, 2025 as mentioned above.
Income Tax Expense
We had income tax expenses of $0.3 million for the years ended June 30, 2025, and an income tax credit for the year ended June 30, 2024. A current income tax provision of $0.2 million was recognized for a subsidiary with net assessable income while no current income tax provision was recognized for subsidiaries in net operating loss for the year ended June 30, 2025.
In the prior fiscal year, the Company recognized deferred tax assets (DTAs) related to its net operating loss carryforwards, based on management’s assessment of future taxable income. However, during the current fiscal year ended June 30, 2025, the Company reassessed its ability to realize these DTAs and determined that it was no longer more likely than not that sufficient future taxable income would be available to utilize the deferred tax benefits. As a result, the Company recorded a full valuation allowance against its DTAs and did not recognize any deferred tax assets. This change in assessment led to the recognition of a deferred income tax expense of $89,581 in the current year. We recognized a recovery of deferred income tax credit of $13,357 due to amortization of intangible assets, resulting in a net income tax expense of $301,877 for the year ended June 30, 2025.
We recognized a current income tax provision of $46,996 for the fiscal year ended June 30, 2024, due to net assessable income, and a deferred income tax credit of $186,485 due to temporary differences recognized and a deferred income tax expense of $72,152 due to the change from an S Corporation to a C Corporation upon the completion of our reorganization on September 23, 2023.
Net loss
As a result of the foregoing, we had a net loss of $5.2 million and of $0.2 million for the years ended June 30, 2025 and 2024, respectively.
20
Liquidity and Capital Resources
As of June 30, 2025, we had a cash balance of $5.0 million. Our current assets were $10.3 million, and our current liabilities were $9.7 million, resulting in a current ratio of 1.06:1 and positive working capital of $0.6 million. Total stockholders’ equity as of June 30, 2025 was $2.8 million.
As of June 30, 2025 and June 30, 2024, we had accounts receivable net of allowance of $3.3 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 accounts receivable as of June 30, 2025 and June 30, 2024, we provided a credit loss allowance of $87,728 and $54,066, respectively.
In assessing our liquidity, we monitor and analyze our cash on hand, our ability to generate sufficient revenues sources in the future, and our operating and capital expenditure commitments. Historically, we have funded our working capital needs primarily through operations, issuances of convertible debts, private placements, loans, initial public offerings 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 in the execution of customer contracts, and the timing of accounts receivable collections.
Cash Flows
The following table sets forth summary of our cash flows for the periods indicated:
| For the years ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | (2,655,006 | ) | $ | (53,640 | ) | ||
| Net cash used in investing activities | (688,261 | ) | (78,799 | ) | ||||
| Net cash provided by financing activities | 8,166,465 | 78,755 | ||||||
| Effect of exchange rate changes on cash | 9,312 | 3,216 | ||||||
| Net increase in cash and cash equivalent | 4,832,510 | (50,468 | ) | |||||
| Cash, beginning of the year | 123,550 | 174,018 | ||||||
| Cash, end of the year | $ | 4,956,060 | 123,550 | |||||
Operating Activities
Net cash used in operating activities was $2,655,006 in the fiscal year ended June 30, 2025, which included a net loss of $5,246,136, adjusted for non-cash items of $2,601,253 and changes in working capital deficits of $10,123. The non-cash items primarily included $2,042,946 straight line lease expense of operating leases, $198,527 depreciation included in G&A and cost of revenue, $32,681 depreciation of right-of-use finance assets, $138,994 amortization of discount and bond issuance cost, $53,427 amortization of intangible assets, $39,804 interest expense on convertible debts, $28,120 interest income from a third party loan, $33,432 from provision of allowance for expected credit loss and a decrease of $68,022 from deferred tax asset due to recognition of valuation allowance. The adjustments for changes in working capital mainly included an increase of $856,634 in accounts receivable from third parties due to an increase of revenues near period end, an increase in inventory of $96,534, an increase of $141,687 in right of return asset, a decrease of $162,485 in accounts payable from related parties, an increase of $241,567 in prepayment and other receivable and a payment of $1,540,032 for operating lease liabilities, partially offset by an increase of $1,332,359 in accounts payable from third parties, a decrease of $376,728 in accounts receivable from related parties, an increase of $233,078 in tax payable, and an increase of $1,072,789 in accrued liabilities and other payables.
Net cash used in operating activities was $53,640 in the fiscal year ended June 30, 2024, which included a net loss of $228,277, adjusted for non-cash items of $1,168,010 and changes in working capital of negative $993,373. The non-cash items primarily included $1,005,686 non-cash operating lease expense, $144,637 depreciation, $30,712 depreciation of right-of-use finance assets and $28,157 from provision of allowance for expected credit loss, offset by an increase of $114,333 from deferred tax credit. The adjustments for changes in working capital mainly included an increase of $722,522 and $732,769 in accounts receivable — third parties and related parties, respectively, due to significant increase of revenues in the fiscal year ended June 30, 2024, and an increase of $846,992 in operating lease liabilities, partially offset by an increase of $468,284 in accrued liabilities and other payables due to unpaid IPO related expense, a decrease of $328,820 in other receivable — related parties because of settlement of rental income, an increase of $699,644 in accounts payable — third parties and an increase of $46,996 in tax payable.
21
The 2,601,366 increase in cash used in operating activities for the fiscal year ended June 30, 2025, compared to the prior year, was primarily due to an increase in net loss of $5,017,859 compared to the same period in the prior year, partly offset by a decrease of $983,250 in cash outflow from working capital due to the timing of vendor, client, and related parties payment.
Investing Activities
Net cash used in investing activities was $688,261 and $78,799 for fiscal years ended June 30, 2025 and 2024, respectively. Net cash used in investing activities for the year ended June 30, 2025, was primarily attributable to net cash outflow of $276,356 related to intangible assets through acquisition of 100% equity interest in Hupan Pharmaceutica. This amount comprises a total cash payment of $552,721, partially offset by $276,365 in cash acquired as part of assets acquisition. In addition, we provided a loan of $277,741 to two related parties, purchased property and equipment of $49,816 and conducted office renovation of $50,740 for our subsidiaries in Mainland China, and conducted warehouse renovation of $50,348 for our subsidiaries in U.S.
On August 4, 2024, 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 owned 80% of equity interest and we owned 20% of equity interest in ABL Wuhan. Consequently, ABL Wuhan ceased to be the Company’s subsidiary after August 4, 2024. Therefore, we had cash outflow of $48,893 upon deconsolidation of a subsidiary and payment for registered capital of $29,906 during the year ended June 30, 2024.
Financing Activities
Net cash provided by financing activities was $8,166,465 for the fiscal year ended June 30, 2025, compared to net cash provided by financing activities of $78,755 for the same period in prior year. The increase in net cash provided by financing activities was mainly due to the net proceeds of $5,351,581 from the offering, net proceeds of $2,999,700 from an offering of private placement, net proceeds of $1,170,513 from issuance of convertible debts, proceeds from loan borrowing of $1,017,919 and proceeds from a related-party loan of $124,176, partially offset by repayment of $805,345 to shareholders, advance to related parties of $715,309 and loans repayment of $533,440 during the fiscal year ended June 30, 2025. During the fiscal year ended June 30, 2024, the Company did not engage in any financing activities such as the issuance of convertible debentures, private placements, or initial public offerings. No proceeds were raised through equity or debt instruments,
Capital Expenditure
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 $150,904 and $nil for the fiscal years ended June 30, 2025 and 2024, respectively.
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 and issuance of convertible debts and private placement offering.
22
Critical Accounting Policies and Estimates
We prepare our condensed consolidated financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect our reported amounts of assets, liabilities, revenue, costs and expenses, and any related disclosures. Actual results could materially differ from those estimates. Critical accounting policy is both material to the presentation of financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on financial condition or results of operations. Accounting estimates and assumptions may become critical when they are material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and that have a material impact on financial condition or operating performance.
Critical accounting estimates are estimates that require us to make assumptions about matters that were highly uncertain at the time the accounting estimate were made and if different estimates that we reasonably could have used in the current period, or changes in the accounting estimate that are reasonably likely occur from period to period, have a material impact on the presentation of our financial condition, changes in financial condition or results of operations. The management of the Company believes the following critical accounting estimate is the most significantly affected by judgments and assumptions used in the preparation of our consolidated financial statements:
Common Stock Warrants Instruments
The Company accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own ordinary shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the instruments are outstanding. The Company determined, upon further review of the warrant agreement and the convertible debt agreement, that the common stock warrants are qualified for equity accounting treatment. The fair value of equity-classified warrants is estimated as of the date of issuance using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model includes various assumptions, including the fair market value of our common stock, expected life of stock options, the expected volatility and the expected risk-free interest rate, among others. These assumptions reflect our best estimates, but they involve inherent uncertainties based on market conditions generally outside our control.
Refer to Notes 2 to the consolidated financial statements included in this report for further discussion of our significant accounting policies and the effect on our consolidated financial statements.
Recent Accounting Pronouncements
The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued, see Note 2 - Summary Of Significant Accounting Policies in the note of financial statement
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company and are not required to provide the information required under this item.
23
Item 8. Financial Statements and Supplementary Data.
LAKESIDE HOLDING LIMITED
INDEX TO THE CONSOLIDATED FINANCIAL STATEMETNS
F-1
Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Lakeside Holding Limited
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Lakeside Holding Limited and its subsidiaries (the Company) as of June 30, 2025 and 2024, and the related consolidated statements of income (loss) and comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the two-year period ended June 30, 2025, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
| /s/ |
| We have served as the Company’s auditor since 2023. |
| October 14, 2025 |
999 18th Street, Suite 3000, Denver, CO, 80202 USA Phone: 1.303.386.7224 Fax: 1.303.386.7101 Email: [email protected]
F-2
LAKESIDE HOLDING LIMITED
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2025 AND 2024
| As of June 30, 2025 | As of June 30, 2024 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable – third parties, net of credit loss allowance of $ | ||||||||
| Accounts receivable – related party, net of credit loss allowance of $ and $ | ||||||||
| Note receivable | ||||||||
| Prepayment and other receivable – third parties | ||||||||
| Other receivable – related party | ||||||||
| Contract assets | ||||||||
| Inventories, net | ||||||||
| Right of return asset | ||||||||
| Loan receivable from related parties | ||||||||
| Loan receivable from a third party | ||||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Investment in other entity | ||||||||
| Property and equipment at cost, net of accumulated depreciation | ||||||||
| Intangible assets, net | ||||||||
| Right of use operating lease assets | ||||||||
| Right of use financing lease assets | ||||||||
| Deferred tax asset | ||||||||
| Deferred offering costs | ||||||||
| Deposit and prepayment | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payables – third parties | $ | $ | ||||||
| Accounts payables – related parties | ||||||||
| Accrued liabilities and other payables | ||||||||
| Current portion of obligations under operating leases | ||||||||
| Current portion of obligations under financing leases | ||||||||
| Loans payable, current | ||||||||
| Contract liabilities | ||||||||
| Dividend payable | ||||||||
| Tax payable | ||||||||
| Due to shareholders | ||||||||
| Convertible debts - current | ||||||||
| Refund liabilities | ||||||||
| Total current liabilities | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Loans payable, non-current | ||||||||
| Loan payable to a related party | ||||||||
| Deferred tax liabilities | ||||||||
| Obligations under operating leases, non-current | ||||||||
| Obligations under financing leases, non-current | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| Commitments and Contingencies | ||||||||
| EQUITY | ||||||||
| Common stocks, $ | ||||||||
| Subscription receivable | ( | ) | ||||||
| Additional paid-in capital | ||||||||
| Statutory reserve | ||||||||
| Deficits | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total equity | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
LAKESIDE HOLDING LIMITED
CONSOLIDATED STATEMENT OF INCOME (LOSS)
AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED JUNE 30, 2025 AND 2024
| For the Years Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue from cross-border freight solutions – third party | $ | $ | ||||||
| Revenue from cross-border freight solutions – related parties | ||||||||
| Revenue from distribution of pharmaceutical products – third parties | ||||||||
| Total revenue | ||||||||
| Cost of revenue from cross-border freight solutions – third party | ||||||||
| Cost of revenue from cross-border freight solutions – related party | ||||||||
| Cost of revenue from pharmaceutical products – third parties | ||||||||
| Total cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Selling expenses | ||||||||
| General and administrative expenses | ||||||||
| Loss from deconsolidation of a subsidiary | ||||||||
| Provision of allowance for expected credit loss | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Other income, net | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other (expense) income | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income tax expense (credit) | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Less: net loss attributable to non-controlling interest | ( | ) | ||||||
| Net loss attributable to the Company | ( | ) | ( | ) | ||||
| Other comprehensive (loss) income: | ||||||||
| Foreign currency translation gain | ||||||||
| Comprehensive (loss) income | ( | ) | ( | ) | ||||
| Less: comprehensive loss attributable to non-controlling interest | ( | ) | ||||||
| Comprehensive loss attributable to the Company | $ | ( | ) | $ | ( | ) | ||
| Loss per share – basic and diluted- | $ | ( | ) | $ | ( | ) | ||
| Weighted Average Shares Outstanding – basic and diluted | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
LAKESIDE HOLDING LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED JUNE 30, 2025 AND 2024
| Common Shares | Amount | Subscription Receivable | Additional Paid in Capital | Statutory Reserves | Retained Earning (Deficits) | Accumulated Other Comprehensive Income (Loss) | Non- controlling Interest | Total | ||||||||||||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Termination of S Corporation upon reorganization | — | ( | ) | |||||||||||||||||||||||||||||||||
| Deconsolidation of a subsidiary | — | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | ( | ) | |||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Paid in capital | — | |||||||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Statutory reserve | — | ( | ) | |||||||||||||||||||||||||||||||||
| Initial public offering, net of share issuance costs | ||||||||||||||||||||||||||||||||||||
| Issuance of Convertible debts with detachable warrants | — | |||||||||||||||||||||||||||||||||||
| Issuance of common shares through a private placement | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | |||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
LAKESIDE HOLDING LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2025 AND 2024
| For the Years Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation – G&A | ||||||||
| Depreciation – cost of revenue | ||||||||
| Amortization of intangible asset | ||||||||
| Straight line lease expense of operating leases | ||||||||
| Depreciation of right-of-use finance assets | ||||||||
| Amortization of discount and bond issuance cost | ||||||||
| Provision of allowance for expected credit loss | ||||||||
| Interest expense of convertible debenture | ||||||||
| Deferred tax expense | ( | ) | ||||||
| Interest income | ( | ) | ||||||
| Loss from derecognition of shares in subsidiary | ||||||||
| Loss on disposal of property and equipment | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable – third parties | ( | ) | ( | ) | ||||
| Accounts receivable – related parties | ( | ) | ||||||
| Note receivable | ( | ) | ||||||
| Contract assets | ( | ) | ||||||
| Inventories, net | ( | ) | ||||||
| Right of return assets | ( | ) | ||||||
| Other receivable – related parties | ( | ) | ||||||
| Prepayment and other deposit – third parties | ( | ) | ( | ) | ||||
| Accounts payables – third parties | ||||||||
| Accounts payables – related parties | ( | ) | ( | ) | ||||
| Contract liabilities | ||||||||
| Accrued expense and other payables | ||||||||
| Refund liabilities | ||||||||
| Tax payable | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Payment for leasehold improvement | ( | ) | ||||||
| Total cash payment for asset acquisition | ( | ) | ||||||
| Cash acquired from assets acquisition | ||||||||
| Loan to related parties | ( | ) | ||||||
| Interest received from loan to a third party | ||||||||
| Payment made for investment in other entity | ( | ) | ||||||
| Net cash outflow from deconsolidation of a subsidiary (Appendix A) | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from loans | ||||||||
| Repayment of loans | ( | ) | ( | ) | ||||
| Net proceeds from issuance of convertible debts | ||||||||
| Repayment of principal of convertible debts | ( | ) | ||||||
| Proceeds from a loan from a related party | ||||||||
| Repayment of equipment and vehicle loans | ( | ) | ( | ) | ||||
| Principal payment of finance lease liabilities | ( | ) | ( | ) | ||||
| Payment for deferring offering cost | ( | ) | ||||||
| Proceeds from initial public offering, net of share issuance costs | ||||||||
| Proceeds from a private placement, net of share issuance costs | ||||||||
| Advances to related parties | ( | ) | ( | ) | ||||
| Proceeds from shareholders | ||||||||
| Repayment to shareholders | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash, beginning of the year | ||||||||
| Cash, end of the year | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for income tax | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES | ||||||||
| Deferred offering costs within due to shareholders | $ | $ | ||||||
| Deferred offering costs within accrued expense and other payables | $ | $ | ||||||
| Property additions included in loan payable | $ | |||||||
| Property disposal through loan payable | $ | |||||||
| Right of use assets obtained in exchange for operating lease obligations | $ | $ | ||||||
| Right of use assets obtained in exchange for finance lease obligation | $ | $ | ||||||
| Additions to property and equipment through accounts payable and other payable | $ | |||||||
| Additions to leasehold improvement through accounts payable and other payable | $ | |||||||
| Due to shareholder offset against loan receivables related parties | $ | |||||||
| Due to shareholder offset against loan receivables from a third party | $ | |||||||
| APPENDIX A – Net cash outflow from deconsolidation of a subsidiary | ||||||||
| Working capital, net | $ | |||||||
| Investment in other entity recognized | ( | ) | ||||||
| Elimination of NCl at deconsolidation of a subsidiary | ||||||||
| Loss from deconsolidation of a subsidiary | ( | ) | ||||||
| Cash | $ | ( | ) | |||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION
Lakeside Holding Limited (the
“Company”), is a holding company established on August 28, 2023 under the laws of the State of Nevada. The Company, acting
through its subsidiary, is primarily engaged in providing customized cross-border ocean freight solutions and airfreight solutions.
On July 1, 2024, the Company closed its initial public offering (“IPO”) of
As of June 30, 2025, the Company’s subsidiaries are as follows:
| Name | Date of Incorporation/ Acquisition | Jurisdiction of Formation | Percentage of direct/indirect Economic Ownership | Principal Activities | ||||
| Parent Company | ||||||||
| Lakeside Holding Limited | Parent | |||||||
| Subsidiaries/companies with ownership | ||||||||
| American Bear Logistics Corp. (“ABL Chicago”) | ||||||||
| Sichuan Hupan Jincheng Enterprise Management Co., Ltd (“Sichuan Hupan”)* | ||||||||
| Hupan Pharmaceutical (Hubei) Co., Ltd (“Hupan Pharmaceutical”)** | ||||||||
| Wuhan Hupan New Energy Technology limited Co., Ltd (“Hupan New Energy”)*** | ||||||||
| Wuhan Ruixinda Technology Limited Co., Ltd (“Wuhan Ruixinda”)*** |
| * |
| ** |
|
| *** |
F-7
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION (cont.)
Reorganization
A reorganization of the legal structure was completed on September 23, 2023 (“The Reorganization”). The Reorganization involved the incorporation of Lakeside Holding Limited and the transfer the shares of American Bear Logistics Corp (“ABL Chicago”) to the Company.
Prior to the Reorganization,
Mr. Henry Liu, the Chief Executive Officer (“CEO”), and Mr. Shuai Li, the President, each owned
As part of the series of reorganization
transactions to be completed before the offering, a
Before and after the Reorganization, the Company, together with its subsidiaries, is effectively controlled by the same Controlling Group, and therefore the Reorganization is considered as a recapitalization of entities under common control in accordance with Accounting Standards Codification (“ASC”) 805-50-25. The consolidation of the Company and its subsidiaries have been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements in accordance with ASC 805-50-45-5.
On July 1, 2024, the Company closed its IPO of
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and have been consistently applied. The accompanying consolidated financial statements include the financial statements of Lakeside Holding Limited and its subsidiaries. All inter-company balances and transactions have been eliminated upon consolidation.
F-8
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Use of estimates and assumptions
In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant accounting estimates required to be made by management include allowance for credit losses, return liabilities, percentage of performance obligation completed at the reporting period, the measurements of convertible debts with accompanying warrants. The Company evaluates its estimates and assumptions on an ongoing basis and its estimates on historical experience, current and expected future conditions and various other assumptions that management believes are reasonable under the circumstances based on the information available to management at the time these estimates and assumptions are made. Actual results and outcomes may differ significantly from these estimates and assumptions.
Cash
Cash consists of unrestricted
balances held with banks and deposits at banks or other financial institutions, which are available for withdrawal or use and have original
maturities of three months or less. The Company maintains its bank accounts in the United States, which are insured by Federal Deposit
Insurance Corporation (“FDIC”) at a limit of $
As of June 30, 2025 and 2024, the Company had approximately $
Accounts receivable, net
Accounts receivables are carried
at the original invoiced amount less an estimated allowance for expected credit losses based on the probability of future collection.
The Company reviews its accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the
collectability of individual balances. The Company grant credit to customers, without collateral, under normal payment terms. The Company
uses a loss rate method to estimate allowance for credit losses for accounts receivable from cross-border freights solutions and aging
schedule to estimate the allowance for credit losses for accounts receivable from distribution of pharmaceutical products respectively.
Loss-rate approach is based on the historical loss rates. The Company evaluates the expected credit loss of accounts receivable based
on customer financial condition and historical collection information adjusted for current market economic conditions and forecasts of
future economic performance when appropriate. For those past due balances over
F-9
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Notes receivable, net
Notes receivable represents bank acceptance notes issued by financial institutions in the People’s Republic of China (“PRC”), typically received from customers as settlement for trade receivables. These notes are payable on demand or at a specified future date and are guaranteed by the issuing bank.
As of June 30, 2025 and 2024, the Company held
notes receivable totaling $
Inventories, net
Inventories are stated at the lower of cost or net realizable value, using the first-in, first out (FIFO) method. Costs include the cost of pharmaceutical products. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is estimated using selling price in the normal course of business less any costs to complete and sell products. As of June 30, 2025, the Company did not record any inventory provision.
Investment in other entity
The Company assesses its investment in ABL Wuhan and determines that no significant influence over investee existed, as defined in ASC 323-10-15-6, and therefore accounts for the investment used the measurement alternative under ASC 321-10-35-2. Under this approach, the investment is measured at cost, and adjusted for impairments, with changes recognized in net income. The investment in other entity that does not report net asset value is subject to qualitative assessment for indicators of impairments.
On August 4, 2023, ABL
Wuhan ceased to be the Company’s subsidiary and became the Company’s long-term investment. As of June 30, 2025 and 2024,
the Company’s investment in ABL Wuhan amounted to $
Property and equipment
Property and equipment are
stated at cost less accumulated depreciation.
| Useful life | ||
| Furniture and fixtures | ||
| Machinery equipment | ||
| Vehicles | ||
| Software | ||
| Leasehold improvement |
Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in other income or expenses in the consolidated statements of income (loss) and other comprehensive income (loss).
F-10
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Intangible Assets, net
Intangible assets consist primarily of business license acquired from asset acquisition. It grants the Company the right of selling and distributing pharmaceutical products and solutions in mainland China.
Intangible assets are stated
at cost less accumulated amortization. The license is amortized using the straight-line method over the estimated useful economic life
of
Accounts payable
The account payables are derived
from logistics and forwarding service providers and from the pharmaceutical products supplier. Balances due to logistics service providers
are typically settled within
Impairment of long-lived asset
Long-lived assets, including plant, property and equipment and intangible asset, are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than the Company had originally estimated. When these events occur, the Company evaluates the impairment by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Company recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. The Company reviews the impairment of its right-of-use assets and intangible asset consistent with the approach applied for its other long-lived assets. impairment charge was recognized for the years ended June 30, 2025 and 2024, respectively.
Deferred offering costs
Pursuant to ASC 340-10-S99-1, incremental offering costs directly attributable to an offering of equity securities are deferred and would be charged against the gross proceeds of the offering as a reduction of additional paid-in capital. These costs include legal fees related to the registration drafting and counsel, consulting fees related to the registration preparation, audit fees, SEC filing and print related costs and exchange listing costs. The deferred offering costs are offset against additional paid-in capital upon receipts of the capital raised at IPO closing date.
Asset acquisition
When an acquisition is related to a single asset or a group of similar assets, or does not meet the definition of a business combination, as the acquired entity does not have an input and a substantive process that together significantly contribute to the ability to create outputs, we account for the acquisition as an asset acquisition. In an asset acquisition, any direct acquisition-related transaction costs are capitalized as part of the purchase consideration. Deferred taxes are recorded on temporary book/tax differences in an asset acquisition using the simultaneous equations method and adjusted the assigned value of the non-monetary assets acquired to include the deferred tax liability (see Note 21).
F-11
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Leases
The Company evaluates the contracts it entered into to determine whether such contracts contain leases at inception. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee.
Operating Leases
A lease for which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lease as an operation lease. Operating leases are included in the line items right-of-use (ROU) asset, lease liabilities, current, and lease liabilities, non-current in the consolidated balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. For operating leases, the Company measures its lease liabilities based on the present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the lease or its incremental borrowing rate, which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. The Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. The Company measures ROU assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Company begins recognizing lease expense when the lessor makes the underlying asset available to the Company. Lease expenses for lease payments are recognized on a straight-line basis over the lease term.
For leases with lease term less than one year (short-term leases), the Company has elected not to recognize a lease liability or ROU asset on its consolidated balance sheet. Instead, it recognizes the lease payments as expenses on a straight-line basis over the lease term. Short-term lease costs are immaterial to its consolidated statements of operations and cash flows.
Finance leases
Leases that transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. Lease cost for finance leases where the Company is the lessee includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation of right-of-use finance asset” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense”. Finance lease ROU assets are amortized over the shorter of their estimated useful lives or the terms of the respective leases. If the Company is reasonably certain to exercise the option to purchase the underlying asset at the end of lease term, the finance lease ROU assets are amortized to the end of useful life of the assets on a straight-line basis.
Related parties
The Company adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.
F-12
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Fair value of financial instruments
ASC 820, “Fair Value Measurements” (ASC 820) and ASC 825, “Financial Instruments” (ASC 825), requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
| Level 1 — | Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities | |
| Level 2 — | Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. | |
| Level 3 — | Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. |
The carrying value of cash, accounts receivable from third parties and related parties, due to shareholders, other receivables, other receivable from related parties, contract assets, loan receivable balance from a third party, loan receivable from related parties, accounts payable, convertible debts - current, loan payable to a related party, other payables, dividend payable and accrued expenses and other current liabilities approximate fair value due to their short-term nature. For lease liabilities, loan payable to a related party and loans payable, their carrying value approximate the fair value at the year-end, as the interest rates used to discount the host contracts approximate market rates. The Company noted no transfers between levels during any of the periods presented. The Company did not have any instruments that were measured at fair value on a recurring nor non-recurring basis as of June 30, 2025 and June 30, 2024.
Convertible debts
In accordance with ASC 470,
Debt (“ASC 470”) the Company records its
Debt issuance costs
Direct and incremental costs
and original issue discounts and premiums incurred in connection with the issuance of long-term debt are deferred and amortized to interest
expense using the effective interest method or, if the amounts approximate the effective interest method, on a straight-line basis. All
debt issuance costs are presented as a direct reduction of debt on the consolidated balance sheets. Approximately $
F-13
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Common stock warrants
The Company evaluates common stock warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity. The Company assesses whether common stock warrants are freestanding financial instruments and whether they meet the criteria to be classified in stockholders’ equity, or classified as a liability. Where common stock warrants do not meet the conditions to be classified in equity, the Company assesses whether they meet the definition of a liability under ASC 815.
Revenue recognition
The Company adopted ASC Topic 606 “Revenue from Contracts with Customers” and all subsequent ASUs that modified ASC 606. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the Company applies the following steps:
Step 1: Identify the contract (s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
The Company generates revenue from providing cross-border ocean and airfreight solutions and distribution of pharmaceutical products. No practical expedients were used when adoption ASC606. Revenue recognition policies are as follows:
Revenue from cross-border freights solutions
The Company provides comprehensive services in the United States for customers to transport goods from overseas to the United States and from the United States to overseas. Operating under service contracts, for goods entering the United States, after the goods arrive at a U.S. seaports or airports, the Company offers customs clearance, container unloading, storage, unpacking, packing, and transportation services to the locations specified by the customers. For customers shipping goods overseas, the Company provides cargo space arrangements, storage, packing, export customs clearance, and arranges transportation to seaports or airports for loading.
The transaction price is determined based on the range of services provided and the volume of goods. The Company considers these comprehensive services as one performance obligation since these promises are not distinct within the context of the contract, and the bundle of integrated services represents a combined output. This performance obligation is satisfied over time as customers receive the benefits of these services during the process of transporting goods from one location to another.
F-14
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Revenue recognition (cont.)
Revenue from cross-border freights solutions (cont.)
For goods entering the United States, the Company determines that the performance period for revenue recognition is between the pickup date and the date of completing delivery. For customers shipping goods overseas with cargo space booking service, the Company determines that the performance period for revenue recognition is between the container or cargo space confirmed date and the date of arrival at destination. For customers shipping goods overseas without cargo space booking service, the Company determines that the performance period for revenue recognition is between pickup date and the date when the goods depart from airport or port. The performance period may be estimated if the date of completing delivery or the departure date or arrival date has not occurred by the reporting date. The Company has determined that revenue recognition over the time in transit provides a reasonable estimate of the transfer of services to its customers as it depicts the pattern of the Company’s performance under the contracts with its customers. Determining the performance period and the progress of the transportation as of the reporting date requires management’s estimation and judgement, which may impact the timing of revenue recognition.
For customers with goods entering the United States, we offer customs clearance, container unloading, storage, unpacking, packing, and transportation services to customer-specified locations after the goods arrive at a U.S. seaport or airport. For customers shipping goods overseas, we provide cargo space arrangement, storage, packing, export customs clearance, and transportation to the seaport or airport for loading. The performance obligation is satisfied over time as customers receive the benefits of these services during the process of transporting goods from one location to another. As a result, we recognize revenue over time. We believe that the methodology employed is comparable to that of other global logistics companies and offers faithful depiction of the services rendered to customers.
Revenue from distribution of pharmaceutical products
During the year ended June 30, 2025, the Company started to generate revenue from the distribution of pharmaceutical and medical products. The Company orders products from the manufacturer, receives and carries the product at a designated warehouse, and delivers the product directly to its customers’ warehouses or designated locations. Revenue is recognized at a point in time when control of goods is transferred to the customers upon goods delivered to the customers and accepted by the customers.
Principal and agent considerations
In the Company’s transportation business, the Company utilizes independent contractors and third-party carriers and related party carriers in the performances of some transportation services as and when needed. U.S. GAAP requires us to evaluate, using a control model, whether the Company itself promises to provide services to the customers (as a principal) or to arrange for services to be provided by another party (as an agent). Based on the Company’s evaluation using a control model, the Company determined that in all of its major business activities, it serves as a principal rather than an agent within their revenue arrangements. Revenue and the associated purchased transportation costs are both reported on a gross basis within the consolidated statements of income (loss) and comprehensive income (loss).
In the Company’s distribution of pharmaceutical products business, the Company determined that in all of its major business activities, it serves as a principal rather than an agent within their revenue arrangements under the fact that the Company controls the goods before they are transferred to customers, bears inventory risk, and has discretion in establishing pricing. As a principal, the Company recognizes revenue on a gross basis within the consolidated statements of income (loss) and comprehensive income (loss).
F-15
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Revenue recognition (cont.)
Disaggregation of revenues
The Company disaggregates its revenue from types of services providing and the customer geographic of its customers, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors.
The Company’s disaggregation of revenues for years ended June 30, 2025 and 2024 is disclosed as below:
By service/product type
| For the years ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cross-border ocean freights solutions | $ | $ | ||||||
| Cross-border airfreights solutions | ||||||||
| Distribution of pharmaceutical products | ||||||||
| Total revenue | $ | $ | ||||||
| For the years ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Timing of revenue recognition: | ||||||||
| Service transferred over time | $ | $ | ||||||
| Product sales at a point in time | ||||||||
| Total revenue | $ | $ | ||||||
By customer geographic location
| For the years ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Asia-based customers | $ | $ | ||||||
| U.S.-based customers | ||||||||
| Total revenue | $ | $ | ||||||
Contract assets
Contract assets represent estimated amounts for which the Company has
the right to consideration for the services provided while a delivery is still in-transit and has not yet invoiced the customer. The estimated
contract asset is based on the estimated completion percentage of the performance obligation. We believe that customers simultaneously
benefit from the comprehensive services we provided. Upon completion of the performance obligations, which can vary in duration based
upon the method of transport and billing the customer, these amounts become classified within accounts receivable. As of June 30,
2025 and 2024, the Company recorded contract assets of $
F-16
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Contract liabilities
Contract liabilities
represent estimated advances received from customers. The contract liabilities are reported in a net position on a customer-by-customer
basis at the end of each reporting period. Contract liabilities are recognized when the Company receives prepayment from customers resulting
from purchase order. Contract liabilities will be recognized as revenue when the products are delivered. As of June 30, 2025 and 2024,
the Company recorded contract liabilities of $
Refund liabilities and right of returned assets
Refund liabilities represent
the estimated amount of consideration expected to be refunded to customers and are recorded at the time revenue is recognized. Refund
allowances are recorded as a reduction in sales with corresponding refund liabilities, and the estimated cost of refunded inventory is
recorded as a reduction to cost of sales and an increase of right of return assets. The estimate is based on historical refund patterns,
current trends, and contractual terms. If actual results differ from the estimates, the Company revises its estimated refund liabilities
accordingly. Each period end, the Company reviews and reassesses the adequacy of its recorded refund liabilities and adjusts the amount
as necessary. As of June 30, 2025 and 2024, the Company recorded refund liabilities of $
Cost of revenues
In the Company’s transportation business, cost of revenue primarily consists of the transportation and delivery costs, warehouse service charges, custom declaration and terminal charges, freight arrangement charges and other overhead cost allocation, which includes operating and financing lease-related costs, the depreciation expenses of property and equipment, and others miscellaneous items.
In the Company’s distribution of pharmaceutical products business, cost of revenues primarily consists of cost of products.
Selling expenses
Selling expenses primarily include salaries expense, advertising expense, and traveling expense of sales team engaged in developing potential customers and maintaining customer relationships and transportation cost for selling pharmaceutical products.
General and administrative expenses
General and administrative expenses primarily include salaries and staff benefits, repair and maintenance expense, depreciation on property and equipment, lease expenses of warehouses used for administrative purpose and office premises, travelling and entertainment, bank charges, legal and professional fees, insurance expenses and other office expenses.
F-17
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
401(k) benefit plan
401(k) benefit plan covers
substantially all employees and allows voluntary employee contributions up to the annually adjusted Inland Revenue Service (“IRS”)
dollar limit. These voluntary contributions are matched equal to
Employee defined contribution plan
Full-time employees of the
Company in the PRC participate in a government-mandated multi-employer defined contribution plan pursuant to which certain pension benefits,
medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to them. Chinese labor regulations
require that the Company make contributions to the government for these benefits based on government prescribed percentage of the employee’s
salaries. The Company has no legal obligation for the benefits beyond the contributions. The total amount was expensed as incurred. For
the years ended June 30, 2025 and 2024, employee welfare contribution expenses amounted to approximately $
Value added tax (“VAT”)
Revenue represents the invoiced
value of goods and service, net of VAT. The VAT is based on gross sales price and VAT rates range up to
Rental income
The Company subleased portion
of its offices area, warehouse and parking lots to third parties and related parties. The Company recognizes rental income over the sublease
period. For the years ended June 30, 2025 and 2024, the Company recognized rental income amounted to $
Income taxes
Before the Reorganization,
the Company has elected to be taxed as an S Corporation for federal and state income tax purposes. As an S Corporation, the Company is
not subject to federal income tax and state tax in Illinois. However, Illinois allows subchapter S corporations to elect to pay the Pass-through Entity
(PTE) tax at entity level for tax years ending on or after December 31, 2021 and beginning prior to January 1, 2026. The
PTE tax rate is equal to
F-18
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Income taxes (cont.)
The Company’s PRC subsidiaries
is governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable
tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under
the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”)
are usually subject to
Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.
The Company accounts for uncertain tax positions in accordance with FASB ASC Topic No. 740, Accounting for Uncertainty in Income Taxes. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. As of June 30, 2025 and 2024, the Company did not have a liability for unrecognized tax benefits. It is the Company’s policy to include penalties and interest expense related to income taxes as a component of other expense and interest expense, respectively, as necessary. The Company’s historical tax years will remain open for examination by the local authorities until the statute of limitations has passed.
Statutory reserves
The Company’s PRC subsidiaries
are required to allocate at least
Comprehensive income (loss)
Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under GAAP are recorded as an element of equity but are excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies.
F-19
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Basic and diluted earnings (loss) per share
The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the year ended June 30, 2025 and 2024, the Company reported a net loss. As a result, all potentially dilutive securities, including the convertible debenture, were excluded from the calculation of diluted loss per share because their inclusion would have been antidilutive.
Foreign currency transactions
Our reporting currency is the U.S. dollar. The functional currency of our operations, except for Sichuan Hupan and Hupan Pharmaceutical, is the U.S. dollar. The functional currency of Sichuan Hupan and Hupan Pharmaceutical is the RMB. The assets, liabilities, revenues, and expenses of Sichuan Hupan and Hupan Pharmaceutical are remeasured in accordance with ASC 830. For the year ended June 30, 2025, assets and liabilities of Sichuan Hupan and Hupan Pharmaceutical are translated into U.S. dollars based upon exchange rates prevailing at the end of the year. Revenues and expenses of Sichuan Hupan and Hupan Pharmaceutical are translated at average exchange rates during the reporting period. The resulting translation adjustment is included in accumulated other comprehensive loss.
The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:
| June
30, 2025 | ||||
| Balance sheet items, except for equity accounts | US$ | |||
| Items in the statements of income and cash flows | US$ |
| June 30, 2024 |
||||
| Balance sheet items, except for equity accounts | US$ |
|||
| Items in the statements of income and cash flows | US$ |
Commitments and contingencies
In the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
If the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingency liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
F-20
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Concentrations and risks
a. Concentration of credit risk
The Company estimates credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash, accounts receivable, contract assets, other receivable, other receivable from related parties, loan receivable balance from a third party and loans receivable from related parties. The Company has designed their credit policies with an objective to minimize their exposure to credit risk.
The maximum exposure of such
assets to credit risk is their carrying amounts at the balance sheet dates. The Company maintains majority of bank accounts in mainland
China, where there is a RMB
The Company also has the bank
accounts at financial institutions in the United States, where there is $
The Company has adopted a credit policy of dealing with creditworthy counterparties to mitigate the credit risk from defaults. The management team conducts credit evaluations of its customers, and generally does not require collateral or other security from them. The Company establishes an accounting policy to provide for allowance for credit loss based on the individual customer’s financial condition, credit history, and the future economic conditions. Other receivable and loan receivable from related parties are monitored on an ongoing basis with the result that the Company’s exposure to impairment is not significant. As of June 30, 2025 and 2024, none of the Company’s other receivable and loan receivable from related parties are impaired.
b. Foreign exchange risk
Our subsidiaries in PRC have functional currency in RMB. PRC subsidiaries’ expense transactions are denominated in RMB and their assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. The value of the Chinese Yuan against the U.S. dollar is affected by the changes in China and United States economic conditions. We do not believe that we currently have any significant direct foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk. Also, considering the volume of its business, the impact of foreign exchange risk is limited.
c. Interest rate risk
The interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Our exposure to interest rate risk primarily relates to the interest rates from our lessors, convertible debenture and our private lenders. The shareholder loans bear no interest. We have not been exposed to material risks due to the fact that our leasing obligations’ interest rate and the private loan’s interest are fixed at commence date of the leases and loans and we have not used any derivative financial instruments to manage our interest risk exposure. However, we cannot provide assurance that we will not be exposed to material risks due to changes in market interest rate in the future.
F-21
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Concentrations and risks (cont.)
d. Liquidity risk
Liquidity risk arises through the excess of financial obligations over available financial assets due at any point in time. Our objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet our liquidity requirements at any point in time. The Company monitors and analyzes its cash flow position, its ability to generate sufficient revenue sources in the future and its operating and capital expenditure commitments. The Company typically funds the working capital needed primarily from operations, loans, shareholder advances to the Company, as well as the external financing activities.
e. Significant customers and suppliers
The Company had one third-party customer generated over 10% of the Company’s total revenue for the year ended June 30, 2025. The Company had no related-party customer generated over 10% of the Company’s total revenue for the year ended June 30, 2025. The Company had three third-party customers generated over 10% of the Company’s accounts receivable as of June 30, 2025. The Company had no related-party customer generated over 10% of the Company’s accounts receivable as of June 30, 2025.
The Company had three third-party customers generated over 10% of the Company’s total revenue for the year ended June 30, 2024. The Company had one related-party customer generated over 10% of the Company’s total revenue for the year ended June 30, 2024. The Company had one third-party customer generated over 10% of the Company’s accounts receivable as of June 30, 2024. The Company had one related-party customer generated over 10% of the Company’s accounts receivable as of June 30, 2024.
The Company had one third-party supplier represented over 10% of the Company’s cost of revenue for the year ended June 30, 2025. The Company had no related-party supplier represented over 10% of the Company’s cost of revenue for the year ended June 30, 2025. The Company had one third-party supplier represented over 10% of the Company’s accounts payable as of June 30, 2025. The Company had no related-party supplier represented over 10% of the Company’s accounts payable as of June 30, 2025.
The Company had one third-party supplier represented over 10% of the Company’s cost of revenue for the year ended June 30, 2024. The Company had one related-party supplier represented over 10% of the Company’s cost of revenue for the year ended June 30, 2024. The Company had one third-party supplier represented over 10% of the Company’s accounts payable as of June 30, 2024. The Company had one related-party supplier represented over 10% of the Company’s accounts payable as of June 30, 2024.
Recent accounting pronouncements
The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Derivatives and Hedging (Topic 815), or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. The guidance also requires the if-converted method to be applied for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. Adoption of the standard requires using either a retrospective or a retrospective approach. The Company has adopted ASU 2020-06 using the retrospective approach during the year ended June 30,2025.
In April 2024, the Company adopted ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which improves reportable segment disclosure requirements. The amendments require the disclosure of (1) significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss; (2) an amount for other segment items by reportable segment and a description of its composition; and (3) the title and position of the CODM and an explanation of how the CODM uses the reported measure(s). The amendments also provide disclosure requirements for interim periods and entities that have a single reportable segment. Details of segment reporting are set out in Note 2 and Note 18.
In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which improves income tax disclosures. The amendments require the disclosure of specific categories in rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The amendments also require disaggregated information about the amount of income taxes paid (net of refunds received), Income (or loss) from continuing operations before income tax expense (or benefit) and Income tax expense (or benefit) from continuing operations. The new guidance is required to be applied either prospectively or retrospectively. This guidance is effective for the Company for the year ending June 30, 2026. Early adoption is permitted. The Company is evaluating the impact of the adoption of this guidance.
F-22
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Recent accounting pronouncements (cont.)
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” and issued subsequent amendment within ASU 2025-01. The amendments require disaggregation disclosure for certain expense captions presented on the face of income statement, as well as additional disclosure about selling expenses. This guidance is effective for the Company for the year ending June 30, 2028 and interim reporting periods during the year ending December 31, 2029. Early adoption is permitted. The Company is evaluating the impact of the adoption of this guidance on its disclosures.
In November 2024, the FASB issued ASU 2024-04, “Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments,” which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The amendments also clarify some specific applications of induced conversion guidance and that the guidance applies to a convertible debt instrument that is not currently convertible as long as it had a substantive conversion feature as of both its issuance date and the date the inducement offer is accepted. The new guidance is required to be applied either prospectively or retrospectively. This guidance is effective for the Company for the year ending June 30, 2027. Early adoption is permitted. The Company is evaluating the impact of the adoption of this guidance.
In May 2025, the FASB issued ASU 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity,” which requires an entity involved in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business to consider specific factors to determine the accounting acquirer and removes the requirement that the primary beneficiary always is the acquirer for certain transactions. Under the amendments, acquisition transactions in which the legal acquiree is a VIE will, in more instances, result in the same accounting outcomes as economically similar transactions in which the legal acquiree is a voting interest entity. The amendments do not change the accounting for a transaction determined to be a reverse acquisition or a transaction in which the legal acquirer is not a business and is determined to be the accounting acquiree. The new guidance is required to be applied prospectively to any acquisition transaction that occurs after the initial application date. This guidance is effective for the Company for the year ending June 30, 2028. Early adoption is permitted. The Company is evaluating the impact of the adoption of this guidance.
In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Scope Refinements. This update clarifies the application of derivative accounting to certain contracts and refines the guidance for share-based noncash consideration received from customers. Specifically, ASU 2025-07 introduces a scope exception for contracts that are not exchange-traded and whose underlying is tied to operations or activities specific to one party. It also clarifies that share-based noncash consideration from a customer should initially be accounted for under Topic 606 until the right to receive or retain such consideration becomes unconditional, at which point financial instruments guidance may apply. The amendments are effective for the Company for the year ending June 30, 2028, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025-07 on its consolidated financial statements and related disclosures.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of income (loss) and comprehensive income (loss) and statements of cash flows.
NOTE 3 — ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consists of the following:
| June 30, 2025 | June 30, 2024 | |||||||
| Accounts receivable – third-party customers | $ | $ | ||||||
| Less: allowance for credit loss – third-party customers | ( | ) | ( | ) | ||||
| Accounts receivable from third-party customers, net | $ | $ | ||||||
| Accounts receivable – related party customers | $ | $ | ||||||
| Less: allowance for credit loss – related party customers | ( | ) | ||||||
| Total accounts receivable, net | $ | $ | ||||||
F-23
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 — ACCOUNTS RECEIVABLE, NET (cont.)
Approximately $
All the accounts receivable from related party customers have been collected as of October 8, 2025.
The movement of allowance for credit loss for the years ended June 30, 2025 and 2024 is as follows:
| June 30, 2025 | June 30, 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Provision of expected credit loss allowance | ||||||||
| Effect of foreign exchange translation | ||||||||
| Ending balance | $ | $ | ||||||
The Company recorded addition
of allowance for credit loss of $
NOTE 4 — INVENTORIES, NET
Inventories, net consists of the following:
| June 30, 2025 | June 30, 2024 | |||||||
| Finished goods | $ | $ | ||||||
| Less: inventory allowance | ||||||||
| Inventories, net | $ | $ | ||||||
The Company recorded inventory allowance of $ for the year ended June 30, 2025.
NOTE 5 — LOAN TO A THIRD PARTY
On
October 8, 2024, the Company entered into a loan agreement with a third party for a principal amount up to $
F-24
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 — PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following:
| June 30, 2025 | June 30, 2024 | |||||||
| Furniture and Fixtures | $ | $ | ||||||
| Machinery equipment | ||||||||
| Vehicles | ||||||||
| Software | ||||||||
| Leasehold improvement | ||||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense recorded
in general and administrative expense was $
NOTE 7 — INTANGIBLE ASSETS, NET
Net intangible assets consists of the following:
| June 30, 2025 | June 30, 2024 | |||||||
| License | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ||||||
| Intangible asset, net | $ | $ | ||||||
On November 5, 2024, the Company
purchased a license of pharmaceutical distribution in Mainland China through its acquisition of
NOTE 8 — LEASES
The Company has multiple lease agreements for warehouses, warehouse machinery and equipment and offices. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The Company entered into three
new operating lease agreements for the year ended June 30, 2025. The ROU asset was recognized at the discount rate of
F-25
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 — LEASES (cont.)
For the year ended June 30,
2025, the Company entered into two new finance lease agreements for the year ended June 30, 2025. The ROU asset was recognized at the
discount rate of
Total operating lease expenses
on offices, warehouses, and warehouse equipment for the years ended June 30, 2025 and 2024 were $
Total finance lease expenses
on warehouse machinery and equipment for the years ended June 30, 2025 and 2024 were $
The following table includes supplemental cash flow and non-cash information related to leases:
| For the years ended, | ||||||||
| 2025 | 2024 | |||||||
| Cash paid of amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
| Operating cash flows from finance leases | $ | $ | ||||||
| Financing cash flows from finance leases | $ | $ | ||||||
| Right-of-use assets obtained in exchange for lease obligations: | ||||||||
| Finance lease liabilities | $ | $ | ||||||
| Operating lease liabilities | $ | $ | ||||||
The weighted average remaining lease terms and discount rates for all of operating lease and finance leases is as follows:
| June 30, 2025 | June 30, 2024 | |||||||
| Weighted-average remaining lease term (years): | ||||||||
| Operating lease | ||||||||
| Finance lease | ||||||||
| Weighted average discount rate: | ||||||||
| Operating lease | % | % | ||||||
| Finance lease | % | % | ||||||
F-26
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 — LEASES (cont.)
The following is a schedule of maturities of operating and finance lease liabilities as of June 30, 2025:
Operating leases
| Twelve months ending June 30, | Repayment | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Total future minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total operating lease liabilities | $ | |||
Financing leases
| Twelve months ending June 30, | Repayment | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Total future minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total finance lease liabilities | $ | |||
NOTE 9 — ACCRUED LIABILITIES AND OTHER PAYABLES
Accrued liabilities and other payables comprise the following amounts relating to the operation of the Company
| June 30, 2025 | June 30, 2024 | |||||||
| Credit card payables | $ | $ | ||||||
| Payroll liabilities | ||||||||
| Accrued expense (a) | ||||||||
| Other payables | ||||||||
| Total | $ | $ | ||||||
| Note | (a): |
F-27
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 — LOANS PAYABLE
The Company obtained multiple loans to finance the purchase of vehicles and warehouse machinery and obtained other loans to support its working capital needs.
The loan balance consists of the following:
| June 30, 2025 | June 30, 2024 | |||||||
| Equipment loans (a) | $ | $ | ||||||
| Vehicle loans (b) | ||||||||
| Other loans | ||||||||
| Total | ||||||||
| Less: loan payable, current | ( | ) | ( | ) | ||||
| Loan payable, non-current | $ | $ | ||||||
(a) Equipment loans
The
Company made the total principal repayments of $
(b) Vehicle loans
During the year ended June
30, 2025, the Company entered into a new vehicle loan with Tesla, Inc. for a principal amount of $
The
Company made the total principal repayments of $
Other loans
| June 30, 2025 | June 30, 2024 | |||||||
| Loan A | $ | $ | ||||||
| Loan B | ||||||||
| Loan C | ||||||||
| Loan D | ||||||||
| Loan E | ||||||||
| Loan F | ||||||||
| Loan G | ||||||||
| Loan H | ||||||||
| Loan I | ||||||||
| Loan J | ||||||||
| Loan K | ||||||||
| Loan L | ||||||||
| Loan M | ||||||||
| Loan N | ||||||||
| Loan O | ||||||||
| Total | $ | $ | ||||||
F-28
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 — LOANS PAYABLE (cont.)
| (a) | The Company entered a loan of $ |
| (b) | The Company entered a loan of $ |
| (c) | The Company entered a loan agreement of $ |
On October 26, 2022, both parties agreed to extend the loan term to on demand.
| (d) | The Company entered a loan
agreement of $ |
On April 10, 2024, the Company entered
another loan agreement of $
The Company made repayment of $
| (e) | The Company entered a loan
of $ |
| (f) | On October 16, 2024, the
Company entered a loan of $ |
| (g) | The Company entered a loan
of $ |
| (h) | The Company entered a loan
of $ |
| (i) | The Company entered a loan
of $ |
F-29
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 — LOANS PAYABLE (cont.)
| (j) | The Company entered a loan
of $ |
| (k) | The Company entered a loan of $ |
| (l) | The Company entered a loan of $ |
| (m) | The Company entered a loan
of $ |
| (n) | The Company entered a loan
of $ |
| (o) | The Company entered a loan of $ |
The
Company made the total principal repayments of $
The repayment schedule for the Company’s loans is as follows:
| Twelve months ending June 30, | Vehicle loans | Equipment loans | Others | Total | ||||||||||||
| 2026 | $ | |||||||||||||||
| 2027 | ||||||||||||||||
| 2028 | ||||||||||||||||
| 2029 | ||||||||||||||||
| Total undiscounted borrowings | ||||||||||||||||
| Less: imputed interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total | $ | |||||||||||||||
NOTE 11 — LOAN FROM A RELATED PARTY
On March 1, 2025, the Company
entered into a loan agreement with a related party – ABL Shenzhen (see Note 14) for a principal amount up to $
F-30
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 — CONVERTIBLE DEBTS
On March 5, 2025, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with an institutional investor (the “Investor”).
Under the Securities Purchase
Agreement, the Company agreed to issue
Pursuant to the Securities
Purchase Agreement, the Company agreed to issue, upon the consummation of the closing of each tranche, common stock purchase warrants
(“Warrants”) to the Investor, in each case to purchase a number of shares of common stock determined by dividing
The Note does not bear any interest absent an Event of Default (as
defined in the Note) and matures on June 5, 2026. Commencing on the earlier of (i) the 60-day anniversary after the date hereof and (ii)
the date on which the first Resale Registration Statement shall have been declared effective by the Commission, the Company is required
to pay to the Investor the outstanding principal balance under the Note in monthly installments, on such date and each one (1) month anniversary
thereof, in an amount equal to
On April 22, 2025, the Second
Closing of the First Tranche was consummated. The Company issued Investor Warrants to purchase
The Company evaluated the Note with conversion features and the detachable warrant under the guidance of ASC 470-20, “Debt with Conversion and Other Options, as amended by ASU 2020-06” and ASC 815, “Derivatives and Hedging.” The Company determined that the warrant met the criteria for equity classification under ASC 815-40. Accordingly, the relative fair value of the warrant was recorded as a component of additional paid-in capital on the issuance date.
The Company determined that embedded derivative meets the definition of derivative instruments under ASC 815, Derivatives and Hedging. Following the adoption of ASU 2020-06, the Notes are recorded as a single unit within liabilities in the consolidated balance sheets as the conversion features within the Notes are not derivatives that require bifurcation and the Notes do not involve a substantial premium.
F-31
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 — CONVERTIBLE DEBTS (cont.)
The Company accounted for the host debt as a liability recorded at amortized cost under ASC 470-10, net of issuance costs and any discount that allocated to debt component.
The debt discount and issuance cost will be amortized to interest expense over the term of the Note using the effective interest method.
The Company recorded $
The Company recorded $
The relative fair value of
warrants of first closing of the first tranche was estimated using the Black-Scholes pricing model with the following weighted-average
assumptions: market value of underlying share of $
The relative fair value of
warrants of second closing of the first tranche was estimated using the Black-Scholes pricing model with the following weighted-average
assumptions: market value of underlying share of $
The Company applied the relative fair value method to allocate the proceeds from the issuance of convertible debt. The Note’s original issue discount and incurred total issuance costs were allocated to the note payable and warrants on the relative fair value basis in accordance with ASC 835-30 and ASC 470-20. The debt discount and issuance cost allocated to the loan component will be amortized to interest expense over the term of the Convertible Debts using the effective interest method.
The initial purchaser’s
discount and debt issuance costs primarily consisted of underwriting fees, lawyers fee, investor legal fee, auditor fee and SEC registration
fee.
| Amount | Equity Component | Debt Component | ||||||||||
| Initial purchaser’s debt discount | $ | $ | $ | |||||||||
| Debt issuance cost | ||||||||||||
| Total | $ | $ | $ | |||||||||
F-32
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 — CONVERTIBLE DEBTS (cont.)
The portion allocated to debt
component is amortized to interest expense using the effective interest method over the effected life of the Notes, or approximately
| June 30, 2025 | ||||
| Long term debt | ||||
| Outstanding principal | $ | |||
| Unamortized Initial Purchaser’s debt discount and debt issuance cost | ( | ) | ||
| Accrued interest | ||||
| Net carrying amount | $ | |||
| Convertible debts, current | $ | |||
| Convertible debts, non-current | ||||
| Total | $ | |||
The
Company recognized interest expense of $
NOTE 13 — GENERAL AND ADMINISTRATIVE EXPENSES
| For the years ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Payroll expense | $ | $ | ||||||
| Staff benefit expense | ||||||||
| Professional expense | ||||||||
| Travelling and entertainment | ||||||||
| Office expense | ||||||||
| Lease expense | ||||||||
| Insurance | ||||||||
| Other expense | ||||||||
| Repair and maintenance | ||||||||
| Depreciation on plant property and equipment | ||||||||
| Advertising | ||||||||
| Rent expense of short-term leases | ||||||||
| Motor expense | ||||||||
| Bank charges | ||||||||
| Management fee | ||||||||
| Amortization on intangible assets | ||||||||
| Total | $ | $ | ||||||
F-33
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 — RELATED PARTY TRANSACTIONS
The relationship of related parties is summarized as follows:
| Name of Related Party | Relationship with the Company | |
| Mr. Henry Liu | ||
| Mr. Shuai Li | ||
| Weship Transport Inc. (“Weship”) | ||
| American Bear Logistics (Wuhan) Co., Ltd. (“ABL Wuhan”) | ||
| American Bear Logistics (Shenzhen) Co., Ltd. (“ABL Shenzhen”) | ||
| LLL Intermodal Inc. (“Intermodal”) | ||
| ABL LAX LLC. (“ABL LAX”) |
| a) | Other receivable from related parties |
Other receivable from related parties consists of balances with the parties listed below, arising from interest receivable, storage income, rental income, contractor salaries charged by related parties, other expenses paid on their behalf:
| June 30, 2025 | June 30, 2024 | |||||||
| Other receivable from Weship | $ | $ | ||||||
| Other receivable from Intermodal | ||||||||
| Other receivable from ABL LAX | ||||||||
| Other payable to ABL Shenzhen | ( | ) | ||||||
| Total | $ | $ | ||||||
The Company has fully collected receivable from ABL LAX and collected
approximately $
| b) |
| June 30, 2025 | June 30, 2024 | |||||||
| Account payable to Weship | $ | $ | ||||||
| Account payable to ABL Wuhan | ||||||||
| Account payable to Intermodal | ||||||||
| Total | $ | $ | ||||||
| c) |
| June 30, 2025 | June 30, 2024 | |||||||
| Accounts receivable from Weship | $ | $ | ||||||
| Accounts receivable from ABL Shenzhen | ||||||||
| Accounts receivable from ABL Wuhan | ||||||||
| Total | $ | $ | ||||||
The Company has fully collected the accounts receivables from the related parties as of October 8, 2025.
F-34
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 — RELATED PARTY TRANSACTIONS (cont.)
| d) |
| June 30, 2025 | June 30, 2024 | |||||||
| Loan receivable from Weship | $ | $ | ||||||
| Loan receivable from ABL LAX | ||||||||
| Total | $ | $ | ||||||
During the fiscal year ended
June 30, 2025, the Company entered into a loan agreement with related parties to support working capital needs. The loan bears interest
at an annual rate of
| d) |
| For the years ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue from Weship (a) | $ | $ | ||||||
| Revenue from ABL Wuhan (a) | $ | $ | ||||||
| Revenue from ABL Shenzhen (a) | $ | |||||||
| Revenue from ABL LAX | $ | |||||||
| Cost of revenue charged by Weship (b) | $ | $ | ||||||
| Rental income from Weship (c) | $ | $ | ||||||
| Rental income from Intermodal (d) | $ | |||||||
| Cost of revenue charged by Intermodal (e) | $ | $ | ||||||
| Cost of revenue charged by ABL Wuhan (f) | $ | $ | ||||||
| Cost of revenue charged by ABL LAX (g) | $ | |||||||
| Interest expense charge by ABL Shenzhen (see Note 11) | $ | |||||||
During the years ended June 30, 2025 and 2024, the Company had the following transactions with its related parties — Weship, ABL Wuhan, ABL Shenzhen, ABL LAX and Intermodal
| (a) |
| (b) |
| (c) |
| (d) | |
| (e) |
|
| (f) |
| (g) |
F-35
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 — RELATED PARTY TRANSACTIONS (cont.)
| e) |
| June 30, 2025 | June 30, 2024 | |||||||
| Due to shareholders, end | $ | $ | ( | ) | ||||
The balance with the shareholders
is unsecured, interest free, and due on demand. The Company had balance of due to shareholder Henry Liu of $ and $
| f) |
| June 30, 2025 | June 30, 2024 | |||||||
| Dividend payable to Mr. Henry Liu | $ | $ | ( | ) | ||||
| Dividend payable to Mr. Shuai Li | ( | ) | ||||||
| Total | $ | $ | ( | ) | ||||
No dividend was declared to
shareholders for the years ended June 30, 2025. As of June 30, 2025, non-taxable dividends payable of $
| g) |
| For the years ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Mr. Henry Liu | $ | $ | ||||||
| Mr. Shuai Li | ||||||||
| Total | $ | $ | ||||||
F-36
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 — TAXES
Corporate Income Taxes
Before the Reorganization,
the Company was elected to be taxed as an “S Corporation” under the provisions of the Internal Revenue Code and comparable
state income tax law. As an S Corporation, the Company is not subject to Federal income tax and Illinois State tax. Taxable income “pass
through” to the personal tax returns of the owners. However, Illinois allows subchapter S corporations to elect to pay the Pass-through Entity
(“PTE”) tax at entity level for tax years ending on or after December 31, 2021 and beginning prior to January 1,
2026. The PTE tax rate is equal to
The Company terminated its
status as a Subchapter S Corporation as of September 23, 2023, in connection with its Reorganization. As a C Corporation, the Company
combined statutory income tax rate is
Under the PRC Enterprise Income
Tax Law (the “EIT Law”), the standard enterprise income tax rate for domestic enterprises and foreign invested enterprises
is
In conjunction with the termination
of the Subchapter S corporation status, the C Corporation deferred tax assets and liabilities were estimated for future tax consequences
attributable to difference between the financial statement carrying amounts of the Company’s existing assets and liabilities and
their respective tax bases. The deferred tax assets and liabilities were measured using tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of the change in tax rates resulting from becoming a C Corporation was recognized as a $
As of June 30, 2025 and 2024, the Company did not have an accrued liability for uncertain tax positions and does not anticipate recognition of any significant liabilities for uncertain tax positions during the next 12 months. For the period ended June 30, 2025 and 2024, no amounts were incurred for income tax uncertainties or interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company’s tax years since its formation remain subject to possible income tax examination by its major taxing authorities for all periods.
The provision for income tax for the years ended June 30, 2025 and 2024 consists of the following:
| For the years ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Current income tax expense | $ | $ | ||||||
| Deferred income tax expense | ( | ) | ||||||
| Total income tax expense | $ | $ | ( | ) | ||||
F-37
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 — TAXES (cont.)
The following table reconciles the statutory tax rate to the Company’s effective tax the years ended June 30, 2025 and 2024:
| For the years ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Loss before tax | $ | ( | ) | $ | ( | ) | ||
| Statutory state tax rate | % | % | ||||||
| Income tax recovery at the federal statutory rate | ( | ) | ( | ) | ||||
| Illinois state tax/PET tax recovery | ( | ) | ( | ) | ||||
| Illinois replacement tax recovery | ( | ) | ( | ) | ||||
| Non-deductible expense | ||||||||
| Federal income tax | ||||||||
| Change in valuation allowance | ( | ) | ||||||
| Foreign tax rate differential | ||||||||
| Total income tax expense | $ | $ | ( | ) | ||||
The Company’s deferred tax assets and liabilities consist of the following:
| June 30, 2025 | June 30, 2024 | |||||||
| Deferred tax assets: | ||||||||
| Allowance for credit loss | $ | $ | ||||||
| Lease liability – operating | ||||||||
| Lease liability – financing | ||||||||
| Non-capital loss carried forward | ||||||||
| Valuation allowance | ( | ) | ||||||
| Total deferred tax assets | $ | $ | ||||||
| Deferred tax liabilities: | ||||||||
| Right of use assets – operating | ( | ) | ( | ) | ||||
| Right of use assets – financing | ( | ) | ( | ) | ||||
| Intangible asset – license | ( | ) | ||||||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Deferred tax (liability) assets, net | $ | ( | ) | $ | ||||
As of June 30, 2025, the accumulated tax losses of subsidiaries incorporated
in the U.S. of approximately $
F-38
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 — STOCKHOLDERS’ EQUITY
Common Stocks
The Company was incorporated
under the laws of the State of Nevada on August 28, 2023. In accordance with the Company’s Articles of Incorporation, the Company
is authorized to issue
On October 25, 2023,
the Company amended its Articles of Incorporation to increase its number of authorized common stocks from
On March 29, 2024, a
On July 1, 2024, the Company
closed its IPO of
On June 24, 2025, the Company
entered into a Securities Purchase Agreement with certain investors for the issuance and sale of an aggregate of
As of June 30, 2025 and 2024,
Additional Paid-in Capital
The Company has
On the issuance date of the
Notes, the Company recorded the fair value of the warrant of $
On June 24, 2025, the Company
entered into a Securities Purchase Agreement with certain investors for the issuance and sale of an aggregate of
F-39
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 — STOCKHOLDERS’ EQUITY (cont.)
Representative’s Warrants
Pursuant to the Underwriting
Agreement, the Company issued to the Representative and its designee warrants (the “Representative’s Warrants”) to purchase
Management determined that
these warrants meet the requirements for equity classification under ASC 815-40 because they are indexed to their own shares and meet
the requirements for equity classification. The warrants were recorded at their fair value on the date of grant as a component of shareholders’
equity. The fair value of these warrants was $
As of June 30, 2025,
Common stock purchase warrants
Pursuant to the Securities Purchase Agreement, the Company agreed to issue, upon the consummation of the closing of each tranche, common stock purchase warrants (“Warrants”) to the Investor (see Note 12).
As of June 30, 2025,
As of June 30, 2025,
Statutory reserves
The Company is required to
make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on
after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations
to the statutory surplus reserve are required to be at least
F-40
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 — LOSS PER SHARE
For the year ended June 30,
2025, all potentially dilutive securities, including the convertible debenture and warrants, were excluded from the calculation of diluted
loss per share because the Company was in a loss position. Their inclusion would have been antidilutive.
| For the years ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Net loss attributable to the Company | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding – Basic and Diluted | ||||||||
| Loss per share – Basic and Diluted | $ | ( | ) | $ | ( | ) | ||
NOTE 18 — SEGMENT REPORTING
The Company follows Financial Accounting Standards Board (FASB”) Accounting Standards codification “ASC”) Topic 280, Segment Reporting, as amended by Accounting Standards Update (“ASU”) No.2023-07. Segment Reporting Topic 280: Improvements to Reportable Segment Disclosures, the Company continually monitors the reportable segments for changes in fact and circumstances to determine whether changes in the identification or aggregation of operating segments are necessary. An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Company’s chief operating decision maker in order to allocate resources and assess performance of the segment.
Based on internal management
reporting and assessment, the Company concludes that it has
F-41
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18 — SEGMENT REPORTING (cont.)
The summary of key information by segments for the year ended June 30, 2025 was as follows:
| Cross-border freight solutions (U.S.) | Pharmaceutical distribution (China) | Others | Total for year ended June 30, 2025 | |||||||||||||
| Revenue from external customers | $ | $ | $ | $ | ||||||||||||
| Revenue from related parties | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | $ | $ | $ | $ | ||||||||||||
| Gross profit | $ | $ | $ | $ | ||||||||||||
| Selling expense | $ | $ | $ | $ | ||||||||||||
| General and administrative expense | $ | $ | $ | $ | ||||||||||||
| Depreciation & amortization | $ | $ | $ | $ | ||||||||||||
| Income tax provision (credit) | $ | $ | $ | ( | ) | $ | ||||||||||
| Capital expenditure | $ | $ | $ | $ | ||||||||||||
| Long-lived assets | $ | $ | $ | $ | ||||||||||||
| Segment assets | $ | $ | $ | $ | ||||||||||||
| Segment profit (loss) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
NOTE 19 — COMMITMENTS AND CONTINGENCIES
Contractual Commitments
As of June 30, 2025, the Company’s contractual obligations consist of the following:
| Contractual Obligations | Total | Less than 1 year | 1 – 3 years | 3 – 5 years | More than 5 years | |||||||||||||||
| Operating lease obligations | $ | $ | $ | $ | $ | |||||||||||||||
| Finance lease obligations | ||||||||||||||||||||
| Vehicle loans | ||||||||||||||||||||
| Equipment loans | ||||||||||||||||||||
| Other loans | ||||||||||||||||||||
| Convertible debts | ||||||||||||||||||||
| Loan payable to a related party | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
Contingencies
The Company may be involved in certain legal proceedings, claims and disputes arising from the commercial operations, which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. Although the Company can give no assurances about the resolution of pending claims, litigation or other disputes and the effect such outcomes may have on the Company, the Company believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on the Company’s consolidated financial position or results of operations or liquidity as of June 30, 2025.
F-42
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20 — ASSETS ACQUISITION
Hupan Pharmaceutical (Hubei) Co., Ltd acquisition
On November 5, 2024, the Company
entered into an equity transfer agreement (the “Equity Transfer Agreement”) with Hubei Haoyaoshi Zhenghe Pharmacy Chain Co.,
Ltd and Hubei Huayao Pharmaceutical Co., Ltd to acquire
Pursuant to the Equity Transfer
Agreement, Sichuan Hupan will acquire the entirety of the equity interests that Hubei Haoyaoshi Zhenghe Pharmacy Chain Co., Ltd and Hubei
Huayao Pharmaceutical Co., Ltd. hold in Hupan Pharmaceutical, for a total consideration of RMB
The acquisition was accounted
for as an asset acquisition because the acquisition was related to the pharmaceutical distribution license, a single asset. The acquisition
was closed on November 21, 2024.
| Amount | ||||
| Total consideration in cash | $ | |||
| Assets acquired and liabilities assumed: | ||||
| Cash acquired | ||||
| Original paid in capital paid to Hupan Pharmaceutical | ||||
| Intangible assets – license of pharmaceutical distribution | ||||
| Other payables | ( | ) | ||
| Deferred tax liabilities | ( | ) | ||
| Total assets acquired | $ | |||
The Company recorded impairment of intangible assets of for the year ended June 30, 2025.
NOTE 21 — SUBSEQUENT EVENTS
The Company evaluated all events and transactions that occurred after June 30, 2025 up through the date the consolidated financial statements were issued, and unless disclosed below, there are not any material subsequent events that require disclosure in these consolidated financial statements.
Exercise of Convertible Debt
Subsequent to the year ended June 30, 2025, the holders of convertible
debts exercised its right to convert the outstanding principal into shares of the Company’s common stock. In September 2025, the
Company issued an aggregate of
The conversion did not result in any gain or loss and had no impact on the Company’s consolidated statement of operations for the year ended June 30, 2025.
F-43
LAKESIDE HOLDING LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21 — SUBSEQUENT EVENTS (cont.)
Securities Purchase Agreement (cont.)
On July 16, 2025, the Company
entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain investors named therein (the
“Investors”), for the issuance and sale by the Company of an aggregate of
The Securities Purchase Agreement includes customary representations, warranties and covenants by the parties to the
agreements. Pursuant to the Securities Purchase Agreements, the Investors have agreed to purchase the Shares at a purchase price of $
On August 4, 2025, the Company
entered into another Securities Purchase Agreement with Investors, for the issuance and sale by the Company of an aggregate of
The Securities Purchase Agreement
includes customary representations, warranties and covenants by the parties to the agreements. Pursuant to the Securities Purchase Agreements,
the Investors have agreed to purchase the Shares at a purchase price of $
F-44
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report.
Based upon this evaluation, our management concluded that as of June 30, 2025, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2025, based on the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 Framework). Based on this evaluation under the 2013 Framework, our principal executive officer and principal financial officer have concluded that our internal control over financial reporting was not effective as of June 30, 2025 due to the following material weaknesses:
| ● | We are lacking adequate segregation of duties and effective risk assessment; and |
| ● | We are lacking sufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both the U.S. GAAP, and SEC guidelines. |
A material weakness is a deficiency, or a combination of deficiencies, within the meaning of PCAOB Auditing Standard AS 2201, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. We plan to address the weaknesses identified above by implementing the following measures:
| (i) | Continuously hiring additional accounting staffs with comprehensive knowledge of U.S. GAAP and SEC reporting requirements; |
| (ii) | Designing and implementing formal procedures and controls supporting the Company’s period-end financial reporting process, such as controls over the preparation and review of account reconciliations and disclosures in the consolidated financial statements; and |
| (iii) | Ameliorating our internal audit to assist with assessment of Sarbanes-Oxley compliance requirements and improvement of internal controls related to financial reporting. |
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fourth quarter of the fiscal year ended June 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.
None.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Our executive officers and directors, and their ages and positions as of the date of this report, are set forth below:
| Name | Age | Position(s) | ||
| Henry Liu | 35 | Chief Executive Officer | ||
| Yang Li | 43 | Chief Operating Officer and Director | ||
| Long (Leo) Yi | 48 | Chief Financial Officer and Director | ||
| Zhengyi (Janice) Fang | 33 | Independent Director | ||
| Xiaoou Li | 39 | Independent Director | ||
| Aik Siang Goh | 48 | Independent Director |
Mr. Henry Liu has served as the Chief Executive Officer since our establishment. Mr. Liu has over six years of logistics operation experience, especially in freight forwarding, and he has extensive knowledge of the supply chain industry. Mr. Liu has served as the president of American Bear Logistics Corp., our Illinois operating subsidiary, from February 2018 to present and co-lead its operations, client relationships and business development with Mr. Shuai Li. From August 2017 to February 2018, Mr. Liu served as an operator in Hoson Logistics America Inc., an Illinois-based logistics company, where he took charge of import and export of air and ocean freight. Mr. Liu received his bachelor’s degree in bioengineering from Northwest Agriculture and Forestry University in China in June 2013 and his master’s degree in food safety and technology from Illinois Institute of Technology in December 2015.
Mr. Yang Li has served as our Chief Operating Officer since August 2023. Mr. Yang Li brings extensive leadership experience. Mr. Li served as Chief Executive Officer of Shanghai Nanchao Technology Inc. from 2014 to 2025, Managing Partner at Consensus Capital from 2017 to 2018, Chief Technology Officer of Dealuse Technology Inc. from 2010 to 2014, and began his career at TBA Digital Inc. from 2008 to 2010. Mr. Li holds a Bachelor of Arts in Computing Science from Simon Fraser University, and served as an Adjunct Lecturer at Fudan University’s Master of Science in Engineering program from 2016 to 2018.
Mr. Long (Leo) Yi has served as our chief financial officer since June 2024. Mr. Yi is a certified public accountant in the state of Illinois with 15 years of working experience in the accounting and financing field. From July 2019 to January 2023, Mr. Yi served as the chairman of audit committee in Color Star Technology Co., Ltd. (NASDAQ: ADD), an entertainment technology company focusing on the application of technology and artificial intelligence in the entertainment industry. From January 2018 to July 2021, Mr. Yi served as the chief executive officer of Urban Tea, Inc. (NASDAQ: MYT). From April 2019 to January 2020, he served as the chief financial officer of iFresh Inc (OTC: IFMK). From November 2012 to January 2018, Mr. Yi served as the chief financial officer of TD Holdings, Inc. (NASDAQ: GLG). Mr. Yi received a bachelor’s degree in accounting from Northeastern University (Shenyang, China) in September 1998, a master’s degree in accounting and finance from University of Rotterdam in June 2004 and another master’s degree in accounting and finance from McGill University in August 2006.
Ms. Zhengyi (Janice) Fang has served as an independent director since June 2024. Ms. Fang is a professional accountant certified by the American Institute of Certified Public Accountants in Washington. From December 2020 to present, Ms. Fang has served as a senior consultant at Ernst & Young in Haikou, China, in charge of, valuation, modeling, and economic consulting services. From September 2018 to November 2020, Ms. Fang worked as an audit associate and assistant manager at KPMG. Ms. Fang received her bachelor’s degree in business administration in accounting in June 2014 and her master’s degree in professional accounting in June 2017 from Seattle University. We believe that Ms. Fang’s significant experience in finance and accounting qualifies her to serve on our board.
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Ms. Xiaoou Li has served as an independent director since August 2025. Ms. Li brings more than nine years of experience in the financial industry. From 2015 to 2022, Ms. Li served as Account Manager of the Corporate Banking Department at China Citic Bank Corporation Ltd., focusing on corporate customer development, commercial financing product design, and other financing projects. Ms. Li earned a Master of Public Policy degree from the University of Bristol in 2013 and a Bachelor of Management in Land Resource Management from the Capital University of Economics and Business in 2010.
Mr. Aik Siang Goh has served as an independent director since September 2025. As a seasoned entrepreneur and business leader with over two decades of experience, Mr. Goh focus on leveraging cutting-edge technologies to drive innovation and growth. From 2022 to 2025, Ms. Goh served as Founder and Chairman of Edge Matrix Computing (EMC). Ms. Li earned a Master of Finance Management degree from the Macquarie Graduate School of Management in 2008 and a Bachelor of Commerce (Finance) in University of Melbourne in 1999.
Board Composition and Election of Directors
Our board of directors currently consists of five members. Each of our current directors will continue to serve until the first annual meeting of the stockholders or until their successor(s) shall have been elected and qualified.
Director Independence
Our common stock is listed on the Nasdaq Capital Market (the “Nasdaq”). Under the rules of the Nasdaq, independent directors may comprise a majority of a listed company’s board of directors within one year following the listing date of the company’s securities. Under the rules of the Nasdaq, a director will only qualify as an “independent director” if that that company’s board of directors affirmatively determines that such person does not have a relationship with the company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Our board of directors has undertaken a review of the independence of each director and, based on the information provided by each director concerning his or her background, employment and affiliations, our board of directors has determined that Zhengyi (Janice) Fang, Xiaoou Li and Aik Siang Goh qualify as independent directors in accordance with the Nasdaq rules. Our board of directors has made a subjective determination as to each independent director that no relationships exist that, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, our board of directors reviewed and discussed information provided by the directors and us with regard to each director’s relationships as they may relate to us and our management, including the beneficial ownership of our capital stock by each director.
Role of the Board of Directors in Risk Oversight
Risk assessment and oversight are an integral part of our governance and management processes. Our board of directors encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews these risks with the board of directors at regular board meetings as part of management presentations that focus on particular business functions, operations, or strategies, and presents the steps taken by management to mitigate or eliminate such risks.
Our board of directors does not have a standing risk management committee, but rather administers this oversight function directly through our board of directors as a whole, as well as through various standing committees of our board of directors that address risks inherent in their respective areas of oversight. While our board of directors has a fiduciary duty to monitor and assess strategic risk exposure, our audit committee is responsible for overseeing our major financial risk exposures and the steps our management has taken to monitor and control these exposures, overseeing cybersecurity risks and assisting the board of directors in its oversight over enterprise risk management. The audit committee also approves or disapproves any related person transactions. Our nominating and corporate governance committee monitors the effectiveness of our corporate governance guidelines and manages risks associated with the independence of the board of directors. Our compensation and leadership development committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.
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Committees of the Board of Directors
We have established an audit committee, a compensation committee and a nominating and corporate governance committee under the board of directors. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below.
Audit Committee. Our audit committee consists of Ms. Zhengyi (Janice) Fang, Ms. Xiaoou Li and Mr. Goh, and is chaired by Ms. Fang. Ms. Fang, Ms. Li and Mr. Goh each satisfies the “independence” requirements of Rule 5605(c)(2) of the Listing Rules of the Nasdaq and meet the independence standards under Rule 10A-3 under the Exchange Act, as amended. We have determined that Ms. Fang qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:
| ● | selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by the independent registered public accounting firm; |
| ● | reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response; |
| ● | reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; |
| ● | discussing the annual audited financial statements with management and the independent registered public accounting firm; |
| ● | reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies; |
| ● | annually reviewing and reassessing the adequacy of our audit committee charter; |
| ● | meeting separately and periodically with management and the independent registered public accounting firm; and |
| ● | reporting regularly to the board of directors. |
Compensation Committee. Our compensation committee consists of Ms. Fang, Ms. Li and Mr. Goh, and is chaired by Ms. Li. Ms. Fang, Ms. Li and Mr. Goh each satisfies the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq. The compensation committee assists the board of directors in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our executive officers may not be present at any committee meeting during which their compensation is deliberated upon. The compensation committee is responsible for, among other things:
| ● | reviewing the total compensation package for our executive officers and making recommendations to the board of directors with respect to it; |
| ● | approving and overseeing the total compensation package for our executives other than the three most senior executives; |
27
| ● | reviewing the compensation of our directors and making recommendations to the board of directors with respect to it; and |
| ● | periodically reviewing and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, and employee pension and welfare benefit plans. |
Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Ms. Fang, Ms. Li and Mr. Goh, and is chaired by Mr. Goh. Ms. Fang, Ms. Li and Mr. Goh each satisfies the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board of directors and its committees. The nominating and corporate governance committee is responsible for, among other things:
| ● | recommending nominees to the board of directors for election or re-election to the board of directors, or for appointment to fill any vacancy on the board of directors; |
| ● | reviewing annually with the board of directors the current composition of the board of directors with regards to characteristics such as independence, age, skills, experience and availability of service to us; |
| ● | selecting and recommending to the board of directors the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself; and |
| ● | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. |
Compensation committee interlocks and insider participation
None of the members of our compensation committee is or has been our current or former officer or employee. None of our executive officers served as a director or a member of a compensation committee (or other committee serving an equivalent function) of any other entity, including any entity whose executive officers served as a director or member of our compensation committee.
Family Relationships
No family relationships existed among any of our directors or executive officers.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics, or the Code of Conduct, applicable to all of our employees, executive officers and directors.
Insider Trading Policy
We have
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on our review of Forms 3, 4 and 5 and any amendments thereto furnished to us, we believe that during the fiscal year ended June 30, 2025, all filing requirements applicable to our executive officers and directors under the Exchange Act were met in a timely manner.
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Item 11. Executive Compensation.
Summary Compensation Table
The following table sets forth information with respect to compensation earned by our named executive officers (“NEOs”) for the fiscal years ended June 30, 2024 and 2025.
| Name and Principal Position | For the Fiscal Year Ended June 30, | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation ($) | All Other ($) | Total ($) | ||||||||||||||||||||||||||
| Henry Liu | 2025 | 73,200 | - | - | - | - | - | - | 73,200 | ||||||||||||||||||||||||||
| Chief Executive Officer | 2024 | 72,800 | - | - | - | - | - | - | 72,800 | ||||||||||||||||||||||||||
| Shuai Li (1) | 2025 | 83,882 | - | - | - | - | - | - | 83,882 | ||||||||||||||||||||||||||
| Former Chief Operating Officer | 2024 | 83,548 | - | - | - | - | - | - | 83,548 | ||||||||||||||||||||||||||
| Long Yi (2) | 2025 | 80,000 | - | - | - | - | - | - | 80,000 | ||||||||||||||||||||||||||
| Chief Financial Officer | 2024 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Lan Su (3) | 2025 | 34,127 | - | - | - | - | - | - | 34,127 | ||||||||||||||||||||||||||
| Former Chief Operating Officer | 2024 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
| (1) | Effective December 9, 2024 and March 13, 2025, Mr. Shuai Li resigned as the Chief Operating Officer and the director of the Company, respectively. Meanwhile, he remains to be one of the senior management of ABL. |
| (2) | Mr. Yi became our Chief Financial Officer upon the completion of our initial public listing on June 27, 2024 and received no compensation during the fiscal year ended June 30, 2024. |
| (2) | Mr. Su became our Chief Operating Officer on December 9, 2024 and received no compensation during the fiscal year ended June 30, 2024. Effective August 29, 2025, Mr. Su resigned from the Board of the Company. |
Employment Agreements
We have entered into employment agreements with each of our NEOs (collectively, the “Employment Agreements”). The Employment Agreements establish an initial base salary for each of our NEOs and provide that each of our NEOs is eligible to participate in our standard employee benefit plan. The employment of each of our NEOs can be terminated by us at any time with or without cause. Each of the NEOs may (i) resign if such resignation is approved by our board of directors or an alternative arrangement with respect to his services is agreed to by the board of directors, and (ii) terminate his employment at any time with a one-month prior written notice to the Company, if (a) there is a material reduction in his authority, duties and responsibilities, or (b) there is a material reduction in his annual salary.
None of our NEOs is entitled to any cash severance payment upon a termination of their employment for “cause” (as defined in such employment agreement), or for death and disability.
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If any of the NEOs’ employment is terminated by us without cause, he will be entitled to severance payments and benefits of: (i) a lump sum cash payment equal to six months of his base salary as of the date of such termination; (ii) a lump sum cash payment equal to a pro-rated amount of his target annual bonus for the year immediately preceding the termination, if any; (iii) payment of premiums for continued health benefits under the Company’s health plans for 12 months following the termination, if any; and (iv) immediate vesting of 100% of the then-unvested portion of any outstanding equity awards held, if any.
If any of the NEOs’ employment is terminated by himself due to the above-mentioned reasons, he will receive remuneration equivalent to three months of his base salary that he is entitled to immediately prior to such termination.
In addition, in the event that any of the NEOs is terminated following a change in control of the Company, he shall be entitled to the severance payments and benefits of: (i) a lump sum cash payment equal to three months of his base salary at a rate equal to the greater of his annual salary in effect immediately prior to the termination, or his then current annual salary as of the date of such termination; (ii) a lump sum cash payment equal to a pro-rated amount of his target annual bonus for the year immediately preceding the termination; (iii) payment of premiums for continued health benefits under the Company’s health plans for three months following the termination; and (iv) immediate vesting of 100% of the then-unvested portion of any outstanding equity awards held, if any.
Equity-Based Compensation
As of the date of this report, we had not adopted any equity incentive plan, nor had we awarded any equity-based compensation to any employees, including our NEOs.
Other Compensation and Benefits
We maintain a 401(k) plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees are able to defer eligible compensation up to certain limits in the U.S. Internal Revenue Code of 1986, as amended (the “Code”), which are updated annually. We have the ability to make matching and discretionary contributions to the 401(k) plan. Currently, we do not make matching contributions or discretionary contributions to the 401(k) plan. The 401(k) plan is intended to be qualified under Section 401(a) of the Code, with the related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan are deductible by us when made, and contributions and earnings on those amounts are not generally taxable to the employees until withdrawn or distributed from the 401(k) plan.
Our NEOs did not participate in, or earn any benefits under, a non-qualified deferred compensation plan sponsored by us during the fiscal years ended June 30, 2025. Our board of directors may elect to provide our officers and other employees with non-qualified defined contribution or other non-qualified deferred compensation benefits in the future if it determines that doing so is in our best interests.
Our NEOs did not participate in, or otherwise receive any benefits under, any pension or retirement plan sponsored by us during the fiscal years ended June 30, 2025.
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Director Compensation
The following table sets forth certain information concerning the compensation of our then serving executive directors for the fiscal year ended June 30, 2025, except that the compensation of Mr. Long Yi and Mr. Lan Su as a director is included in “- Summary Compensation Table”:
| Name and Principal Position | For the Fiscal Year Ended June 30, | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation ($) | All Other ($) | Total ($) | |||||||||||||||||||||||||
| Yiye Zhou (1) | 2025 | 20,000 | 20,000 | |||||||||||||||||||||||||||||||
| Zhengyi (Janice) Fang | 2025 | 20,000 | 20,000 | |||||||||||||||||||||||||||||||
| Cynthia Vuong (2) | 2025 | 20,000 | 20,000 | |||||||||||||||||||||||||||||||
| (1) | Effective September 30, 2025, Ms. Yiye Zhou resigned from the Board of the Company. |
| (2) | Effective August 29, 2025, Ms. Vuong resigned from the Board of the Company. |
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The table below sets forth information, as of the date of this report, with respect to the beneficial ownership of our shares of common stock by: (a) each named executive officer, each of our directors, and our directors and executive officers as a group; and (b) each person or entity known by us to own beneficially more than 5% of our shares of common stock. Percentage ownership is based on an aggregate of 17,427,559 shares of common stock outstanding as of the date of this report. We have determined beneficial ownership in accordance with the rules of the SEC.
| Shares of Common Stock Beneficially Owned | ||||||||
| Name and Address of Beneficial Owner (1) | Number | %† | ||||||
| Executive Officers and Directors | ||||||||
| Henry Liu(2) | 2,700,600 | 15.5 | % | |||||
| Long (Leo) Yi | - | |||||||
| Aik Siang Goh | - | |||||||
| Zhengyi (Janice) Fang | - | |||||||
| Yang Li | - | |||||||
| Xiaoou Li | - | |||||||
| All Executive Officers and Directors as a group | 2,700,600 | 15.5 | % | |||||
| 5% or Greater Holders | - | |||||||
| H&L LOGISTICS INTERNATIONAL LLC(2) | 2,700,600 | 15.5 | % | |||||
| JIUSHEN TRANSPORT LLC(3) | 3,000,000 | 17.2 | % | |||||
| Brink Holding Limited(4) | 910,330 | 5.2 | % | |||||
| (1) | Unless noted otherwise, the address of all listed stockholder is 1475 Thorndale Avenue, Suite A, Itasca, Illinois 60143. |
| (2) | Represents 2,700,600 shares of common stock held of record by H&L LOGISTICS INTERNATIONAL LLC, a company wholly owned by Mr. Henry Liu organized under the laws of the State of Illinois. The registered address of H&L LOGISTICS INTERNATIONAL LLC is 270 Hearthstone Drive, Bartlett, Illinois 60103. |
| (3) | Represents 3,000,000 shares of common stock held of record by JIUSHEN TRANSPORT LLC, a company wholly owned by Mr. Shuai Li organized under the laws of the State of Illinois. The registered address of JIUSHEN TRANSPORT LLC is 1360 West Walton Street, Chicago, Illinois 60642. |
| (4) | Represents 910,330 shares of common stock held of record by Brink Holding Limited, a company wholly owned by Ms. Huifen Hua organized under the laws of British Virgin Islands. The registered address of Brink Holding Limited is Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands. |
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Item 13. Certain Relationships and Related Transactions, and Director Independence.
Transactions with Related Persons
The following sets forth the transactions we have entered into since July 1, 2022, and any currently proposed transactions, to which we were or are expected to be a participant where (i) the amount involved exceeded or will exceed the lesser of $120,000 or 1% of our total assets at year-end for the last two completed fiscal years, and (ii) any of our executive officers, directors, or holders of more than 5% of any class of our voting securities, or any affiliate or member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest, other than the compensation and other arrangements we describe in “Item 11. Executive Compensation” of this report.]
| For the years ended June 30, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Revenue from Weship (a) | $ | 8,241 | $ | 28,870 | $ | 109,314 | ||||||
| Revenue from ABL Wuhan (a) | $ | 1,196,119 | $ | 1,835,377 | $ | - | ||||||
| Revenue from ABL Shenzhen (a) | $ | 698,371 | $ | - | $ | - | ||||||
| Revenue from ABL LAX | $ | 3,084 | $ | - | $ | - | ||||||
| Cost of revenue charged by Weship (b) | $ | 869,975 | $ | 1,555,680 | $ | 1,598,143 | ||||||
| Rental income from Weship (c) | $ | 331,665 | $ | 288,185 | $ | 481,252 | ||||||
| Rental income from Weship (d) | $ | 20,021 | $ | - | $ | - | ||||||
| Cost of revenue charged by Intermodal (e) | $ | 673,823 | $ | 564,519 | $ | 325,237 | ||||||
| Cost of revenue charged by ABL Wuhan (f) | $ | 133,403 | $ | 162,625 | $ | - | ||||||
| Cost of revenue charged by ABL LAX (g) | $ | 2,737 | $ | - | $ | - | ||||||
| Interest expense charge by ABL Shenzhen | $ | 2,418 | $ | - | $ | - | ||||||
During the years ended June 30, 2025 and 2024, the Company had the following transactions with its related parties — Weship, ABL Wuhan, ABL Shenzhen, ABL LAXand Intermodal
| (a) | We provide logistic forwarding services to Weship, ABL Wuhan and ABL Shenzhen and charge Weship, ABL Wuhan and ABL Shenzhen at our regular market rate for the services provided. |
| (b) | Weship is one of our vendors for truck delivery service. |
| (c) | We subleased portion of its warehouse space to Weship for rental income. We subleased its warehouse in Chicago to Weship in July 2023 and again for the period from January 2024 to June 2025. We also subleased another warehouse with monthly rent of $6,500 from August 01, 2023 to October 31, 2024. |
| (d) | We subleased portion of our warehouse space to Intermodal for four months and another warehouse for twelve months. |
| (e) | Intermodal is one of our vendors, providing truck delivery service and provides labour forces. | |
| (f) | ABL Wuhan provides labor force and certain cross-border freight consolidation and forwarding services and is one of our cross-border freight consolidation and forwarding service providers. |
| (g) | ABL LAX provides service of arranging goods in and out of warehouse. |
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Related Party Transaction Policy
Our board of directors have adopted a written related party transaction policy, setting forth the policies and procedures for the review and approval or ratification of related party transactions. This policy covers, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement, or relationship, or any series of similar transactions, arrangements, or relationships, in which we were or are to be a participant, where the amount involved in any fiscal year exceeds the lesser of $120,000 or 1% of our total assets at year-end for the last two completed fiscal years, and a related party had, has, or will have a direct or indirect material interest, including without limitation, purchases of goods or services by or from the related party or entities in which the related party has a material interest, indebtedness, guarantees of indebtedness, and employment by us of a related party.
In reviewing and approving any such transactions, our audit committee has primary responsibility to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction and the extent of the related party’s interest in the transaction.
Item 14. Principal Accountant Fees and Services.
The following table represents the aggregate fees from our current principal accounting firm, ZH CPA, LLC for the fiscal years ended June 30, 2024 and 2025, respectively.
| 2024 | 2025 | |||||||
| Audit Fees | $ | 160,000 | $ | 270,000 | ||||
| Audit Related Fees | $ | - | $ | - | ||||
| Tax Fees | $ | - | $ | - | ||||
| All other fees | $ | - | $ | - | ||||
| Total Fees | $ | 160,000 | $ | 270,000 | ||||
Audit Fees - This category includes the services performed for the audit of our annual financial statements, review of the interim financial statements and for the audits of our financial statements in connection with our initial public offering, and comfort letter in connection with the underwritten public offering that are normally provided by the independent auditors in connection with engagements for those fiscal years.
Audit-Related Fees - This category consists of assurance and related services by the independent auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees”.
Tax Fees - This category consists of professional services rendered by the Company’s independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
All Other Fees - This category consists of fees for other miscellaneous items.
Pre-Approval Policies and Procedures
All of the services rendered to us by our independent registered public accountants were pre-approved by the Audit Committee.
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PART IV
Item 15. Exhibits, Financial Statement Schedules.
We have filed the following documents as part of this Annual Report on Form 10-K:
| (1) | Index to Consolidated Financial Statements |
| (2) | Financial Statement Schedules: |
| (3) | Exhibits required by Item 601 of Regulation S-K |
The documents set forth below are filed herewith or incorporated herein by reference to the location indicated.
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| * | Filed herewith |
| # | This certification is deemed not filed for purpose of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act. |
Item 16. Form 10-K Summary.
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: October 14, 2025 | Lakeside Holding Limited | |
| By: | /s/ Henry Liu | |
| Name: | Henry Liu | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| By: | /s/ Long (Leo) Yi | |
| Name: | Long (Leo) Yi | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Title | Date | |||
| /s/ Henry Liu | Chief Executive Officer | October 14, 2025 | ||
| Henry Liu | ||||
| /s/ Long (Leo) Yi | Chief Financial Officer | October 14, 2025 | ||
| Long (Leo) Yi | ||||
| /s/ Yang Li | Director and Chief Operating Officer | October 14, 2025 | ||
| Yang Li | ||||
| /s/ Aik Siang Goh | Independent Director | October 14, 2025 | ||
| Aik Siang Goh | ||||
| /s/ Zhengyi (Janice) Fang | Independent Director | October 14, 2025 | ||
| Zhengyi (Janice) Fang | ||||
| /s/ Xiaoou Li | Independent Director | October 14, 2025 | ||
| Xiaoou Li |
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