CHEETAH NET SUPPLY CHAIN SERVICE INC.

Cheetah Net Supply Chain Service Inc. is undergoing a significant business transformation, shifting its focus from parallel-import vehicle sales to logistics and warehousing services, primarily for international trade flows between the U.S. and the PRC. The parallel-import vehicle business, which historically contributed significantly to revenue, experienced a severe downturn due to weakening macroeconomic conditions, price competition from luxury automakers in the PRC, and a shift in consumer preference toward domestic electric vehicles (EVs) ¹. This led to a 30.5% decline in sales in 2023 and a 95.7% decline in 2024, with vehicle sales dropping from 303 units in 2023 to 14 units in 2024 ². Consequently, the board of directors approved the discontinuation of the parallel-import vehicle business on March 3, 2025 ³.

The company's core business model is now centered on logistics and warehousing services, which it launched in February 2024 ⁴. This pivot leverages the company's prior experience in transporting parallel-import vehicles. Revenue is generated from freight forwarding, cargo storage, U.S. customs clearance, and labor services including cargo loading and unloading ⁵. The company operates as a Non-Vessel-Operating Common Carrier (NVOCC), coordinating shipments for customers who typically lack the industry knowledge or direct relationships with ocean carriers ⁶. Customers can engage the company for any combination of these services ⁷.

The logistics and warehousing segment is primarily driven by two acquired businesses: Edward Transit Express Group Inc. ("Edward") and TW & EW Services Inc ("TWEW"). Edward, acquired in February 2024 for a total consideration of $1.5 million ⁸, specializes in ocean transportation services, freight forwarding, and warehousing ⁹. TWEW, acquired in December 2024 for $1.0 million ¹⁰, provides general labor and logistics services, including loading, unloading, and other labor-related activities ¹¹. For the year ended December 31, 2025, the logistics and warehousing business contributed 100% of total revenue, compared to 21.8% in 2024 ¹².

For the fiscal year ended December 31, 2025, total revenue from continuing operations was $1,288,536 ¹³, an increase of 182.7% from $455,805 in 2024 ¹⁴. Cost of revenue increased by 304.5% to $1,121,761 in 2025 from $277,293 in 2024 ¹⁵. Gross profit for continuing operations decreased by 6.6% to $166,775 in 2025 from $178,512 in 2024 ¹⁶. Operating expenses totaled $4,746,351 in 2025, up from $3,919,058 in 2024 ¹⁷. The company reported a net loss from continuing operations of $3,649,703 in 2025, compared to a net loss of $3,232,194 in 2024 ¹⁸. Diluted EPS from continuing operations was $(1.12) in 2025, versus $(1.65) in 2024 ¹⁹. As of December 31, 2025, cash and cash equivalents were $233,217 ²⁰, and total current assets were $9,065,646 ²¹. Total liabilities were $2,502,877 ²², with current liabilities of $1,345,618 ²³. The company had loan receivables of $7,430,111 ²⁴ and long-term debt of $608,555 ²⁵.

Revenue from Edward decreased by 32.2% to $214,810 in 2025 from $316,852 in 2024, primarily due to reduced customer demand and shipment volume from the U.S.-China trade war ²⁶. Conversely, revenue from TWEW increased substantially to $1,073,726 in 2025 from $138,953 in 2024, reflecting a full year of operations post-acquisition ²⁷. General and administrative expenses decreased by $14,287, or 0.4%, to $3,627,426 in 2025 ²⁸, driven by lower recruiting expenses, insurance costs, and legal and accounting fees, partially offset by increased rental and lease expenses due to the headquarters relocation to Irvine, California, and higher payroll and benefits ²⁹. Impairment loss expenses of $731,307 were recorded in 2025, related to customer relationships ($135,346), trade names ($27,429), and goodwill ($568,532) from the Edward acquisition ³⁰.

Significant operational developments during the period include the acquisition of Edward in February 2024 and TWEW in December 2024, marking the strategic shift to logistics and warehousing ³¹. The company also acquired NexTrade International LLC in December 2024 for $1, which holds 100% ownership in Naiside (Shenzhen) International Trading Co., Ltd., though NexTrade has not commenced operations ³². The company relocated its headquarters to Irvine, California, in July 2024 to be closer to the ports of Los Angeles and Long Beach ³³. On March 3, 2025, the board approved the discontinuation of the parallel-import vehicle business ³⁴. The company also dissolved two wholly-owned subsidiaries, Pacific Consulting LLC and Cheetah Net Logistics LLC, on June 24, 2025, as part of an internal corporate restructuring ³⁵.

Management explicitly states that the company is undergoing a business transformation, shifting its business focus from parallel-import vehicle sales to logistics and warehousing services ³⁶. The company intends to continue focusing on improving operational efficiencies and expanding its market presence of the two acquired businesses, Edward and TWEW, in the California area ³⁷.

A major growth area is the logistics and warehousing services segment, which was launched in February 2024 ³⁸. This segment focuses on providing freight forwarding services for clients shipping goods from the U.S. to mainland China or Hong Kong, operating as a Non-Vessel-Operating Common Carrier (NVOCC) ³⁹. The company aims to streamline logistics for customers by leveraging its expertise and carrier network, offering services such as cargo storage, freight forwarding, U.S. customs clearance, and labor services ⁴⁰. The company has established partnerships with three ocean carriers and four trucking companies ⁴¹.

Another growth vector involves the integration and expansion of the acquired businesses. Edward Transit Express Group Inc. is engaged in ocean transportation services ⁴², while TW & EW Services Inc. provides general labor and logistics services ⁴³. The acquisition of TWEW in December 2024 is specifically noted to strengthen the company's position in the logistics sector ⁴⁴. The incorporation of Cheetah Net Supply Chain Service Ltd (Cheetah BVI) in the British Virgin Islands on March 28, 2025, is intended to support future international business development and facilitate potential global partnerships, though it has not commenced operations as of the annual report date ⁴⁵.

Regarding the operational outlook, the company plans to continue improving operational efficiencies and expanding the market presence of its acquired logistics and warehousing businesses in California ⁴⁶. The company is also considering developing an online platform to automate and digitalize key steps of the supply chain for customers, although these efforts are acknowledged as costly and time-consuming ⁴⁷. As of December 31, 2025, the company had 13 employees, with 12 full-time, and worked with one independent contractor for general labor support ⁴⁸. The company's headquarters relocated to Irvine, California, in July 2024, which is expected to enable stronger management focus on the logistics and warehousing business due to its proximity to the ports of Los Angeles and Long Beach ⁴⁹.

For capital allocation, the company has historically funded working capital needs from financing activities ⁵⁰. As of December 31, 2025, the company had cash and cash equivalents of $233,217 and a working capital balance of $7.7 million ⁵¹. It also had loan receivables from third parties of approximately $7.4 million, which management believes can support ongoing business operations and meet future obligations ⁵². The company may require additional cash resources and may seek to sell additional equity or debt securities or obtain a credit facility if current sources are insufficient ⁵³. Share-based compensation expenses were $387,618 in 2025 ⁵⁴, and total unrecognized compensation cost relating to nonvested shares was $107,380 as of December 31, 2025, to be recognized over a weighted average period of two years ⁵⁵.

The company explicitly flags several structural headwinds and execution risks. The business shift from parallel-import vehicle sales to logistics and warehousing services may depend on various factors, from the business environment to operation management and market expansion ⁵⁶. Government policies on ocean freight and tariff policy may reduce market demand for freight, logistics, and warehousing, negatively affecting business and growth prospects ⁵⁷. The logistics and warehousing business depends highly on a limited number of customers and third-party transportation and labor providers ⁵⁸. Any adverse change in political relations between the PRC and the U.S., including ongoing trade conflicts, may negatively affect the business ⁵⁹. Competition in the logistics and warehousing industry, dependent on factors such as service quality, speed reliability, and pricing, may limit the expansion of non-vehicle logistics warehousing revenue ⁶⁰. The company's success in these areas will depend on its ability to develop and scale an effective salesforce to market these services to international trading companies in the U.S. and the PRC ⁶¹.

The company faces material risks including economic uncertainty and capital markets disruption due to geopolitical instability from ongoing military conflicts between Russia and Ukraine and in the Middle East, which could lead to market disruptions, volatility in commodity prices, and supply chain interruptions ⁶². The increasingly strained relationship between the U.S. and China is a significant concern, as the company's business relies on stable economic and political relations between the two countries, with a deteriorating relationship potentially adversely affecting international logistics and the company's operations ⁶³. The logistics and warehousing industry is highly competitive, with many new entrants, and the company may struggle to compete against existing or new competitors with longer operating histories, greater brand recognition, or more extensive resources, potentially reducing market share and financial performance ⁶⁴. Inflation and a potential recession in the U.S., along with a weakening economy in the PRC, could increase the company's cost structure and diminish demand for its services ⁶⁵. Fluctuations in RMB-USD exchange rates could materially and adversely affect results, especially if clients choose not to engage the company due to exchange rate considerations ⁶⁶. Operationally, the discontinuation of the parallel-import vehicle business and the transformation to logistics and warehousing services pose risks if the company cannot successfully execute the shift, integrate acquired businesses, or achieve anticipated efficiencies ⁶⁷. The company's California location makes it susceptible to catastrophic events like natural disasters, which could disrupt operations ⁶⁸. Reliance on third-party systems like Google Drive and freight forwarding software GoFreight exposes the company to cybersecurity incidents, potentially leading to data loss, business disruption, reputational harm, and significant remediation costs ⁶⁹. The company's dependence on a few major customers, with the two largest accounting for 100% of parallel-import vehicle revenue in 2024, presents a risk if these relationships are terminated or not replaced ⁷⁰. Failure to renew its Ocean Transportation Intermediary (OTI) License, which expires on May 31, 2027, could compel a temporary suspension of logistics business ⁷¹.

Management's message to shareholders conveys a tone of strategic pivot and transformation, acknowledging the challenges faced by the discontinued parallel-import vehicle business and emphasizing the shift towards logistics and warehousing services. The company's Chief Executive Officer, Huan Liu, has been instrumental in this strategic redirection, overseeing the acquisition of Edward and TWEW to expand logistics capabilities. Management explicitly states that the company is "undergoing a business transformation of our business model, shifting our business focus from parallel-import vehicle sales to logistics and warehousing services" ⁷². A key strategic priority is to "continue to focus on improving operational efficiencies and expanding our market presence of the two acquired businesses in the California area" ⁷³. Another priority is to "develop and scale an effective salesforce to market these services to international trading companies in the U.S. and the PRC" ⁷⁴. Management also highlights the intention to "develop an online platform to facilitate our logistics and warehousing services, enabling us to automate and digitalize key steps of supply chain for our customers" ⁷⁵, while acknowledging the associated costs and time. The company's financial condition as of December 31, 2025, with cash and cash equivalents of $233,217 and a working capital balance of $7.7 million, along with loan receivables of approximately $7.4 million, is presented as sufficient to support ongoing operations for at least the next 12 months ⁷⁶.