# Quanome Technologies, Inc.: Form 10-Q for the period ended Sep 30, 2025

- Company: [Quanome Technologies, Inc.](/companies/qnme.md) (CIK 1996192)
- Form: 10-Q
- Filed: 2025-11-19
- Accepted by EDGAR: Nov 19, 2025, 16:01 ET
- Period: 2025-09-30
- Accession: 0001213900-25-112601
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1996192/000121390025112601/ea0265749-10q_lakeside.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1996192/000121390025112601/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-07-01 to 2025-09-30 | $6.1m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2025-07-01 to 2025-09-30 | $5.0m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-07-01 to 2025-09-30 | $1.1m | us-gaap:GrossProfit |
| Operating income | 3 months, 2025-07-01 to 2025-09-30 | −$1.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-07-01 to 2025-09-30 | $196.4k | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-07-01 to 2025-09-30 | $36.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-07-01 to 2025-09-30 | −$1.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-07-01 to 2025-09-30 | −$0.09 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-07-01 to 2025-09-30 | −$0.09 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-07-01 to 2025-09-30 | 14,733,489 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-07-01 to 2025-09-30 | −$4.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2025-09-30 | $4.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-09-30 | $15.0m | us-gaap:AssetsCurrent |
| Total assets | at 2025-09-30 | $18.6m | us-gaap:Assets |
| Current liabilities | at 2025-09-30 | $9.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-09-30 | $11.7m | us-gaap:Liabilities |
| Long-term debt | at 2025-09-30 | $2.4m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2025-09-30 | $7.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 48,832 characters.

*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 three months ended September 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 September 30, 2025, we had served over 400 customers to fulfill over 58,500 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 September 30, 2025, we had collaborated with almost all major global ocean and air carriers to forward 37,300 TEU of container loads and 75,100 tons of air cargo. As of September 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 September 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 $63.0 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 September 30, 2025, we had fulfilled over 58,500 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.

For the three months ended 30, 2025 and 2024, our revenues amounted to $6.1 million and $4.1 million, respectively, and our gross profit amounted to $1.1 million and $0.5 million during the same periods, respectively.

### 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 September 30, 2025, we had served over 400 customers to fulfill over 58,500 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.

### 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.

### 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, software 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.*** 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.

### Results of Operations

The following table summarizes the results of consolidated statements of operations and comprehensive income (loss) for the three months ended September 30, 2025 and 2024 in U.S. dollars.

|  | For the Three Months Ended September 30, 2025 Amount | As % of revenue | 2024 Amount | As % of revenue | Amount Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue from cross border freight solutions | $4,761,874 | 78.1% | $4,081,554 | 100.0% | $680,320 | 16.7% |
| Revenue from distribution of pharmaceutical products | 1,338,015 | 21.9% | - | - | 1,338,015 | N/A |
| **Total revenue** | 6,099,889 | 100.0% | 4,081,554 | 100.0% | 2,018,335 | 49.5% |
| Cost of revenue from cross border freight solutions | 4,200,352 | 68.9% | 3,559,015 | 87.2% | 641,337 | 18.0% |
| Cost of revenue from pharmaceutical products | 790,770 | 13.0% | - | - | 790,770 | N/A |
| **Total cost of revenue** | 4,991,122 | 81.8% | 3,559,015 | 87.2% | 1,432,107 | 40.2% |
| Gross profit from cross border freight solutions | 561,522 | 11.8% | 522,539 | 12.8% | 38,983 | 7.5% |
| Gross profit from pharmaceutical products | 547,245 | 40.9% | - | - | 547,245 | N/A |
| **Gross profit** | 1,108,767 | 18.2% | 522,539 | 12.8% | 586,228 | 112.2% |
| **Operating expenses** |  |  |  |  |  |  |
| Selling expenses | 189,411 | 3.1% | - | - | 189,411 | N/A |
| General and administrative expenses | 2,107,655 | 34.6% | 1,837,206 | 45.0% | 270,449 | 14.7% |
| Provision of allowance for expected credit loss | 83,325 | 1.4% | 12,837 | 0.3% | 70,488 | 549.1% |
| **Total operating expenses** | 2,380,391 | 39.0% | 1,850,043 | 45.3% | 530,348 | 28.7% |
| **Loss from operations** | (1,271,624) | (20.8)% | (1,327,504) | (32.5)% | 55,880 | (4.2)% |
| **Other income (expenses)** |  |  |  |  |  |  |
| Other income, net | 146,839 | 2.4% | 109,788 | 2.7% | 37,051 | 33.7% |
| Interest expense | (196,441) | (3.2)% | (28,110) | (0.7)% | (168,331) | 598.8% |
| **Total other (expenses) income, net** | (49,602) | (0.8)% | 81,678 | 2.0% | (131,280) | (160.7)% |
| **Loss before income taxes** | (1,321,226) | (21.7)% | (1,245,826) | (30.5)% | (75,400) | 6.1% |
| **Income taxes expense** | 35,990 | 0.6% | 89,581 | 2.2% | (53,591) | (59.8)% |
| **Net loss** | $(1,357,216) | (22.2)% | $(1,335,407) | (32.7)% | $(21,809) | 1.6% |

5

### For the Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024

The following table summarizes our consolidated results of operations and percentages of certain items in relation to total revenues for the three months ended September 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.

| Revenues Revenue from cross-border freight solutions | For the three months ended September 30, 2025 Amount | % of total Revenues | 2024 Amount | % of total Revenues | Amount Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Cross-border ocean freight solutions | $1,434,864 | 23.5% | $1,836,591 | 45.0% | $(401,727) | (21.9)% |
| Cross-border airfreight solutions | 3,327,010 | 54.5% | 2,244,963 | 55.0% | 1,082,047 | 48.2% |
| Subtotal | 4,761,874 | 78.1% | 4,081,554 | 100.0% | 680,320 | 16.7% |
| Revenue from distribution of pharmaceutical products | 1,338,015 | 21.9% | - | - | 1,338,015 | 100.0% |
| **Total revenues** | 6,099,889 | 100.0% | 4,081,554 | 100.0% | 2,018,335 | 49.5% |
| Cost of revenues – cross-border freight solution | 4,200,352 | 68.9% | 3,559,015 | 87.2% | 641,337 | 18.0% |
| Cost of revenues – pharmaceutical products | 790,770 | 13.0% | - | - | 790,770 | 100.0% |
| **Total cost of revenues** | 4,991,122 | 81.8% | 3,559,015 | 87.2% | 1,432,107 | 40.2% |
| Gross profit – cross-border freight solution | 561,522 | 11.8% | 522,539 | 12.8% | 38,983 | 7.5% |
| Gross profit – pharmaceutical products | 547,245 | 40.9% | - | - | 547,245 | 100.0% |
| **Total gross profit** | $1,108,767 | 18.2% | $522,539 | 12.8% | $586,228 | 112.2% |

### Revenues

Our total revenues from cross-border freight solutions increased by $0.7 million, or 16.7%, from $4.1 million for the three months ended September 30, 2024, to $4.8 million for the three months ended September 30, 2025. The increase was mainly due to increase in revenue from cross-border airfreight solutions.

Revenues from our cross-border ocean freight solutions decreased by $0.4 million, or 21.9%, from $1.8 million for the three months ended September 30, 2024, to $1.4 million for the three months ended September 30, 2025. This reduction was primarily due to a decrease in the volume of cross-border ocean freight processed and forwarded, dropping from 1,430 TEU in the three months ended September 30, 2024, to 1,331 TEU for the three months ended September 30, 2025.

Revenues from our cross-border airfreight solutions increased by $1.1 million or 48.2%, from $2.2 million for the three months ended September 30, 2024, to $3.3 million for the three months ended September 30, 2025. Despite our volume of cross-border air freight processed decreased, from approximately 7,273 tons for the three months ended September 30, 2024, to approximately 5,776 tons for the three months ended September 30, 2025, our revenue increased primarily due to we experienced stronger demand of value-added services, such as warehouse repackaging and related handling services, which generates higher revenue per shipment and more than offset the impact of lower freight volumes. revenue. For the three months ended September 30, 2025, revenues generated per tons increased by $267, or 86.6%, to $576 per tons, from $309 per tons for the same period in 2024.

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 three months ended September 30, 2025, our total revenue from pharmaceutical product distribution amounted to $1.3 million. We did not generate any revenue from this segment in the same period of the prior year.

#### Revenues by Customer Geographic

| Revenues Revenue from cross-border freight solutions | For the three months ended September 30, 2025 Amount | % of total Revenues | 2024 Amount | % of total Revenues | Amount Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Asia-based customers | $4,016,859 | 65.9% | $2,809,636 | 68.8% | $1,207,223 | 43.0% |
| U.S.-based customers | 745,015 | 12.2% | 1,271,918 | 31.2% | (526,903) | (41.4)% |
|  | 4,761,874 | 78.1% | 4,081,554 | 100.0% | 680,320 | 16.7% |
| Revenue from distribution of pharmaceuticals |  |  |  |  |  |  |
| Asia-based customers | 1,338,015 | 21.9% | - | - | 1,338,015 | 100.0% |
| **Total revenues** | $6,099,889 | 100.0% | $4,081,554 | 100.0% | $2,018,335 | 52.4% |

Revenues from cross-border freight solutions for the Asia-based customers increased by $1.2 million, or 43.0%, from $2.8 million for the three months ended September 30, 2024, to $4.0 million for the three months ended September 30, 2025. Revenues from cross-border freight solutions for the U.S.-based customers decreased by $0.5 million, or 41.4%, from $1.2 million for the three months ended September 30, 2024 to $0.7 million for the same period in 2025.

The increase in revenues from Asia-based customers for the three months ended September 30, 2025 was primarily driven by strengthened relationships with key clients. The company assigned dedicated teams to manage high-value accounts, which led to an increase in their shipment volumes. In addition, revenue growth was supported by an expansion of value-added logistics services, reflecting higher demand for services such as repackaging, handling, and customized solutions.

The decrease in revenue from the U.S.-based customers for the three months ended September 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.

Our customers for the distribution of pharmaceutical products are located in China, as we specifically target the Chinese market. For the three months ended September 30, 2025, our total revenue from pharmaceutical product distribution amounted to $1.3 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 three months ended September 30, 2025 and 2024 is as follows:

| Cost of revenue from cross-border freight solutions | For the three months ended September 30, 2025 | 2024 | Amount Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Transportation and delivery costs | $1,476,989 | $1,633,890 | $(156,901) | (9.6)% |
| Warehouse service charges | 898,262 | 770,102 | 128,160 | 16.6% |
| Custom declaration and terminal charges | 1,127,988 | 441,624 | 686,364 | 155.4% |
| Freight arrangement charges | 121,687 | 164,340 | (42,653) | (26.0)% |
| Overhead cost | 575,426 | 549,059 | 26,367 | 4.8% |
| Subtotal | 4,200,352 | 3,559,015 | 641,337 | 18.0% |
| Cost of revenue from distribution of pharmaceuticals |  |  |  |  |
| Cost of goods sold | 790,770 | - | 790,770 | 100.0% |
| Total cost of revenue | $4,991,122 | $3,559,015 | $1,432,107 | 40.2% |

Our cost of revenues from cross-border freight solutions decreased by $0.6 million, or 18.0%, from $3.6 million for the three months ended September 30, 2024, to $4.2 million for the three months ended September 30, 2025. The decrease in cost of revenues was mainly due to the combined effects of:

(i) an increase in customs declaration and terminal charges, consisting of customs fees, handling charges, and entry service fees charged by ports and terminals during the three months ended September 30, 2025, resulting from an increase in the volume of cross-border freight we handled, particularly airfreight, during the same period;

(ii) an increase in warehouse service charges, primarily representing labor costs at our regional warehousing and distribution centers during the three months ended September 30, 2025, was mainly driven by four 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 full-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. Fourth, we have one more warehouse used for the operation and increase the contract service costs at warehouses. 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; which was partly offset by

(iii) a decrease in transportation and delivery costs, including trucking, drayage, chassis rental, freight, and delivery costs during the three months ended September 30, 2025, which was primarily due to a reduction in delivery services provided to customers. More customers shifted from standard shipping services to value-added offerings such as warehouse repackaging. These services require less transportation activity and rely more on in-facility processing, which reduces our related delivery expenses. As a result, both revenue from transportation services and the associated delivery costs declined in line with the change in service;

(iv) a decrease 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 three months ended September 30, 2025, primarily due to a decrease in the volume of cross-border ocean arrangements, from the U.S. to China; and

Our cost of revenues from the distribution of pharmaceuticals was $0.8 million for the three months ended September 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 $1.1 million for the three months ended September 30, 2025, compared to $0.5 million in the same period of the prior year.

Our gross margin for cross-border freight solutions was 11.8% for the three months ended September 30, 2025, compared to 12.8% for three months ended September 30, 2024. The decrease in gross margin was primarily attributable to increased overhead costs allocated, as discussed above.

Our gross margin for the distribution of pharmaceutical was 40.9% for three months ended September 30, 2025. 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. The gross margin of the distribution of pharmaceutical was 56.1% for the fiscal year 2025, from the inception to June 30, 2025. This comparatively lower 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, in fiscal year 2025. Excluding the impact of the favorable purchase discounts, the gross margin for pharmaceutical distribution in fiscal year 2025 would be approximately 38.4%, which is comparable to the current quarter.

### Selling Expenses

Our selling expenses amounted to $0.2 million for the three months ended September 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, software expenses and the advertising expense amounted to $0.2 million, 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 $0.3 million, or 14.7%, from $1.8 million for the three months ended September 30, 2024, to $2.1 million for the three months ended September 30, 2025. These expenses represented 34.6% and 45.0% of our total revenues for the three months ended September 30, 2025 and 2024, respectively. The increase was mainly due to increase in our professional expense and 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 professional fees increased by $0.3 million, or 67.8%, from $0.3 million for the three months ended September 30, 2024, to $0.6 million for the three months ended September 30, 2025. Our professional fee represented 27.1% and 18.5% of our total general and administrative expenses for the three months ended September 30, 2025 and 2024, respectively. The increase was primarily due to advisory and consulting expenses strategic planning initiatives. These costs included external support for market assessments, financial and operational due diligence, and the development of long-term strategic plans to guide future growth.

### Other Income, net

Our other income, net, increased by $37,051, or 33.7%, from $109,788 for the three months ended September 30, 2024, to $146,839 for the three months ended September 30, 2025. The increase was primarily due to increase in interest income of $60,561 in connection with a third-party loan, which was partly offset by slightly decrease in rental income by $14,945.

### Interest Expenses

Our interest expenses increased by $168,331, or 598.8%, from $28,110 for the three months ended September 30, 2024, to $196,441 for the three months ended September 30, 2025. The increase in interest expense was mainly due to higher outstanding interest-bearing loans and interest expense in connection with the convertible note.

### Loss Before Income Taxes

We had a net loss before income taxes of $1.3 million and $1.2 million for the three months ended September 30, 2025 and 2024, respectively. We were in a loss position before income taxes for the three months ended September 30, 2025, primarily attributable to the net effects of: (i) the rise in operating expenses, which was partly offset by an increase in gross profit due to the new business segment for the three months ended September 30, 2025 as mentioned above.

### Income Tax Expense

We had income tax expenses of $35,990 and $89,581 for the three months ended September 30, 2025 and 2024, respectively. A current income tax provision of $57,979 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 three months ended September 30, 2025.

Based on management’s assessment of future taxable income, the Company 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. We recognized a recovery of deferred income tax credit of $21,989 due to amortization of intangible assets, resulting in a net income tax expense of $35,990 for the three months ended September 30, 2025.

We did not have current income tax provision in the three months ended September 30, 2024, due to net operating loss, and we recognized a deferred income tax asset of $373,897 due to temporary differences recognized and net operating loss carried forward. We also recognized a valuation allowance of $463,478 to write off our deferred tax asset since we are uncertain that we will be able to utilize the deferred tax asset to offset future taxable income, resulting in a net deferred tax expense of $89,581 in the three months ended September 30, 2024.

### Net loss

As a result of the foregoing, we had a net loss of $1.4 million and of $1.3 million for the three months ended September 30, 2025 and 2024, respectively.

### Liquidity and Capital Resources

As of September 30, 2025, we had a cash balance of $4.5 million. Our current assets were $15.0 million, and our current liabilities were $9.8 million, resulting in a current ratio of 1.5 and positive working capital of $5.2 million. Total stockholders’ equity as of September 30, 2025 was $7.0 million.

As of September 30, 2025 and June 30, 2025, we had accounts receivable net of allowance of $3.4 million and $3.3 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 September 30, 2025 and June 30, 2025, we provided a credit loss allowance of $171,613 and $87,728, 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 periods ended September 30, 2025 | 2024 |
| --- | ---: | ---: |
| Net cash used in operating activities | $(4,016,518) | $(1,402,784) |
| Net cash used in investing activities | (108,800) | (38,279) |
| Net cash provided by financing activities | 3,672,316 | 4,044,402 |
| Effect of exchange rate changes on cash | 36,578 | 12,386 |
| Net increase in cash and cash equivalent | (416,424) | 2,615,725 |
| Cash, beginning of the period | 4,956,060 | 123,550 |
| Cash, end of the period | $4,539,636 | 2,739,275 |

#### Operating Activities

Net cash used in operating activities was $4,016,518 in the three months ended September 30, 2025, which included a net loss of $1,357,216, adjusted for non-cash items of $1,037,413 and changes in working capital deficits of $3,696,715. The non-cash items primarily included $527,261 straight line lease expense of operating leases, $359,239 stock-based compensation for consulting expenses, $50,565 depreciation included in G&A and cost of revenue, $8,600 depreciation of right-of-use finance assets, $69,602 amortization of discount and bond issuance cost, $21,371 amortization of intangible assets, $$60,561 interest income from a third party loan, $83,325 from provision of allowance for expected credit loss and a decrease of $21,989 from deferred tax liabilities. The adjustments for changes in working capital mainly included an increase of $279,024 in accounts receivable from third parties due to an increase of revenues near period end, an increase of $82,118 in other receivable – related parties, an increase in inventory of $35,452,an increase of $2,935,837 in prepayment, deposit and other receivable – third parties and a payment of $897,689 for operating lease liabilities, partially offset by a decrease of $69,662 in contract assets, an increase of $121,571 in refund liabilities, an increase of $39,445 in accounts payable to related parties, an increase of $45,114 in accounts payable to third parties, a decrease of $43,435 in accounts receivable from related parties, a decrease of $51,279 in note receivable, a decrease of $61,133 in right of return assets, an increase of $18,175 in contract liabilities, an increase of $45,704 in tax payable, and an increase of $37,887 in accrued liabilities and other payables.

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

The $2,613,734 increase in cash used in operating activities for the three months ended September 30, 2025, compared to the prior year, was primarily due to an increase in advance deposits of $2.8 million to a supplier partly offset by an increase of $644,304 in accounts payable — third parties and related parties due to the timing of vendor, client, and related parties payment.

#### Investing Activities

Net cash used in investing activities was $108,800 and $38,279 for the three months ended September 30, 2025 and 2024, respectively. Net cash used in investing activities for the three months ended September 30, 2025, was primarily attributable to an additional loan of $108,800 to a third party. The cash used in same period of last year mainly attributable to was primarily attributable to our purchases of property and equipment and the prepayment for the installation of a security system which was still in progress as of the period ended.

#### Financing Activities

Net cash provided by financing activities was $3,672,316 for the three months ended September 30, 2025, compared with $4,044,402 for the same period in the prior year. The decrease was primarily due to a smaller scale of financing activities compared with the prior period. During the three months ended September 30, 2025, we generated cash inflows from loan borrowings of $1.2 million, private placements of $3.0 million, advances from related parties of $0.3 million and advance from shareholders of $0.1 million, which were partially offset by $0.3 million in principal repayments of convertible debt, loan repayments of $0.2 million, advance to a third party of $0.2 million and advance to related parties of $0.2 million. During the three months ended September 30, 2024, we had net proceeds of approximately $5,351,281 from the offering, partly offset by repayment of $879,574 to shareholders, loans repayment of $265,456 and advancement to related party of $126,227 during the three months ended September 30, 2024.

### 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 nil and $38,279 for the three months ended September 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.

### 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

## Market risk

As filed, 216 characters.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are not required to provide the information otherwise required under this item.

## Controls and procedures

As filed, 2,176 characters.

### 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 September 30, 2025, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.

- 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 AS2201, 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

During the most recent fiscal quarter, there has not been any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 216 characters.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are not required to provide the information otherwise required under this item.

Filed Nov 19, 2025.
Source: SEC EDGAR, the filing index for accession 0001213900-25-112601. Last ingested by Listed: Oct 29, 2026, 08:16 ET. No prices; not investment advice.