UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

For the transition period from to .

Commission File Number. 001-42140

Lakeside Holding Limited

(Exact name of registrant as specified in its charter)

Nevada		82-1978491
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1475 Thorndale Avenue, Suite A
Itasca, Illinois 60143

(Address of principal executive offices, including zip code)

(224) 446-9048

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common Stock, par value US$0.0001 per share		LSH		The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by checkmark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The Nasdaq Stock Market LLC on December 29, 2023, the last business day of the Registrant’s most recently completed second fiscal quarter, was $0.00. The Registrant’s shares of common stock began trading on June 28, 2024.

As of September 25, 2024, the Registrant had 7,500,000 shares of common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

		Page
Explanatory Notes		ii
Cautionary Note Regarding Forward-Looking Statements		iii

PART I
Item 1.	Business	1
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	13
Item 1C.	Cybersecurity	13
Item 2.	Properties	13
Item 3.	Legal Proceedings	13
Item 4.	Mine Safety Disclosures	13

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14
Item 6.	Reserved	14
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 8.	Financial Statements and Supplementary Data	F-1
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	27
Item 9A.	Controls and Procedures	27
Item 9B.	Other Information	27
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	27

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	28
Item 11.	Executive Compensation	32
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	34
Item 13.	Certain Relationships and Related Transactions, and Director Independence	34
Item 14.	Principal Accounting Fees and Services	35

PART IV
Item 15.	Exhibits, Financial Statement Schedules	36
Item 16.	Form 10-K Summary	36
Signatures		37

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.

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:

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changes in the competitive environment, due to macroeconomic conditions or otherwise, or damage to our reputation;

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fluctuations in currency exchange, interest or inflation rates that could impact our financial condition or results;

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changes in our accounting estimates and assumptions on our financial statements;

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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;

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failure to protect intellectual property rights or allegations that we have infringed on the intellectual property rights of others;

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the failure to retain, attract and develop experienced and qualified personnel;

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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;

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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;

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our ability to develop, implement, update and enhance new technology;

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the actions taken by third parties that perform aspects of our business operations and client services; and

iii

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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.

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.

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.

Founded in Chicago, Illinois in 2018, we are an Asian American-owned business rooted in the U.S. with in-depth understanding of both the U.S. and Asian international trading and logistics service markets. Our customers are typically Asia- and U.S.-based logistics service companies serving large e-commerce platforms, social commerce platforms and manufacturers to sell and transport consumer and industrial goods made in Asia into the U.S. Since inception and as of June 30, 2024, we had served over 300 customers to fulfill over 41,000 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. Since inception and as of June 30, 2024, we had collaborated with almost all major global ocean and air carriers to forward over 31,300 twenty-foot equivalent unit, or TEU, of container loads and 47,800 tons of air cargo. As of June 30, 2024, we had also cooperated with over 200 domestic ground transportation carriers, including almost all major U.S. domestic ground transportation carriers, on a long-term, short-term or order basis, as the case may be.

We operate two 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 98,220 square feet and 39 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 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, 2024, we had assisted with the customs clearance of cross-border freight of an aggregate assessed value of over $38.0 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 markets, we have been able to build up our brand and reputation and have achieved fast growth since our inception. For the fiscal years ended June 30, 2024 and 2023, our revenues amounted to $18.3 million and $12.9 million, respectively, and our gross profit amounted to $3.7 million and $2.6 million during the same periods, respectively. As of June 30, 2024, we had fulfilled over 41,000 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.

Corporate History and Corporate Structure

We commenced our operations in February 2018 through American Bear Logistics Corp., a corporation established under the laws of the State of Illinois. From August to September 2023, we completed a reorganization and established our holding company, Lakeside Holding Limited, under the laws of the State of Nevada on August 28, 2023.

On July 1, 2024, we completed our initial public offering, or IPO, and listed our common stock on the Nasdaq Capital Market under the symbol “LSH.” We raised gross proceeds of approximately US$6.8 million from this offering. The gross proceeds were not reflected in our audited consolidated financial statements with respect to the fiscal year ended June 30, 2024 included elsewhere in this Report, and will be reflected in our audited consolidated financial statements with respect to the fiscal quarter ended September 30, 2024 upon the filing of our periodic report on Form 10-Q.

In July 2024, we established a wholly-owned subsidiary in the PRC with an aim to further expand our global footprints.

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.

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: As an ocean freight forwarder, we contract with ocean shipping carriers and/or other sizeable ocean freight forwarders to obtain transportation for a fixed number of containers between various points during a specific time period at agreed-upon rates. We handle both full container loads and less-than-container load freight, offering a wide range of shipping options and rates than available with carriers directly.

Airfreight consolidation and forwarding: As an airfreight forwarder, we purchase cargo capacity from airlines and/or other sizeable airfreight forwarders on a volume basis and resell the space to our customers. We determine the routing, consolidate individual, unconsolidated shipments bounds for a particular airport distribution point, and then select the airline for transportation to the distribution point, where we then arrange for the consolidated lot to be broken into its component shipments and for the transportation of each individual shipments to its final destination.

Through long-term cooperations with almost all major global ocean carriers and air carriers, we offer our freight consolidation and forwarding service customers a wide footprint globally to cater to their shipping and space needs throughout the year, including during peak periods. Since our inception and as of June 30, 2024, through cooperations with almost all major global ocean carriers and air carriers, we had served over 300 customers to forward cross-border shipments consisting of over 31,800 TEU of container loads and 47,800 tons of air cargo.

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 such as the U.S. Customs and Border Protection, or CBP. Our customs clearance services include screening commercial documentation for assessed value, country of origin, application for special trade programs and classification. Since our inception and as of June 30, 2024, we had assisted with the customs clearance of cross-border freight of an aggregate assessed value of over $38.0 million.

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 flexible, cost-competitive 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.

As of June 30, 2024, we had established a ground transportation network in collaboration with over 200 domestic ground transportation carriers, including almost all major U.S. domestic ground transportation carriers, capable of delivering to thousands of business and residential addresses in approximately 48 U.S. states, on a long-term, short-term or order basis, as the case may be.

In addition, through establishing in-depth and long-standing partnerships with leading supply chain service providers in Asia for domestic supply chain services in the U.S., we have opened pathways to e-commerce and social commerce and have empowered several Asia-based e-commerce and social commerce platform giants to sell into the U.S. more easily and to deliver small-package goods to end consumers in the U.S. more smoothly.

Market Opportunity

The cross-border supply chain solutions industry is highly fragmented with thousands of companies of various sizes competing in domestic and international markets. The overall opportunities in the cross-border supply chain solutions sector are significant. According to McKinsey¹, the cross-border supply chain solutions sector is expected to see a significant growth in the coming years. It is estimated that the market size of cross-border e-commerce will expand to around $1 trillion in merchandise value by 2030, from a current value of approximately $300 billion.

We maintain a strong focus on the Asian market. According to McKinsey², Asia is expected to account for 57% of the growth of the global e-commerce logistics market between 2020 and 2025, making it one of the most important regions for global trade and logistics activities going forward. Our concentration on the Asian market enables us to develop in-depth expertise in serving Asian countries such as China and South Korea and provides us an edge in understanding the nuances and demands in this rapidly evolving market.

Partnering with almost all major global ocean and air carriers, our vast network of global freight carrier partners and in-depth connections with U.S. ground transportation providers can offer customers consistent services, even during peak periods. Such service reliability can be significantly beneficial for e-commerce platforms, social commerce platforms and manufacturers that often times may face supply chain disruptions during peak seasons.

¹	McKinsey, Signed, sealed, and delivered: Unpacking the cross-border parcel market’s promise (March 2022),https://www.mckinsey.com/industries/travel-logistics- and-infrastructure/our-insights/signed-sealed-and-delivered-unpacking-the-cross-border-parcel-markets-promise#.

McKinsey, Asia: The highway of value for global logistics (May 2021), https://www.mckinsey.com/featured-insights/asia-pacific/asia-the-highway-of-value-for-global-logistics

Strengths

We believe the following strengths contribute to our success and differentiate us from our competitors:

Fast-growing U.S.-based cross-border supply chain solution provider with a unique focus on the Asian market

We are an integrated cross-border supply chain solution provider based in the U.S. with a strategic focus on the Asian market. Leveraging our strong cross-border supply chain service capabilities, superior service quality, 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 provide our Asia-based customers with individually-tailored solutions that specifically cater to their requirements and needs in transporting goods into the U.S. Our solutions encompass a wide variety of services such as cross-border ocean and air freight consolidation and forwarding, customs clearance, warehousing and distributing as well as U.S. domestic ground transportation.

We have grown our business rapidly since our inception in 2018. As an Asian American-owned business deeply rooted in the U.S., our accumulated insights and deep understanding of both the U.S. and Asian international trading and logistics service markets have enabled us to build up our brand and reputation cross-border and achieve fast growth since our inception. As of June 30, 2024, we operated two regional warehousing and distribution centers in the U.S., in Illinois and Texas, and we had served over 300 customers and fulfilled over 41,300 cross-border supply chain solution orders for ocean freight and airfreight of an aggregate assessed value of $1.0 billion delivered to thousands of business and residential addresses in approximately 48 U.S. states.

Our revenues increased from $12.9 million for the fiscal year ended June 30, 2023 and to $18.3 million for the fiscal year ended June 30, 2024. The total number of our cross-border supply chain solution orders fulfilled increased significantly from over 10,000 for the fiscal year ended June 30, 2023 to over 16,000 for the fiscal year ended June 30, 2024, while the total number of our customers increased from approximately 190 to 206, respectively, during the same periods.

Extensive service provider network of global freight carriers and U.S. ground transportation carriers

We have established an extensive, long-standing service provider network of global freight carriers for our cross-border freight consolidation and forwarding services. Since inception and as of June 30, 2024, we had collaborated with almost all major global ocean and air carriers to serve over 300 customers to forward cross-border shipments consisting of over 31,800 TEU of container loads and 47,800 tons of air cargo. We have also established a massive, in-depth and long-standing U.S. domestic ground transportation service provider network in collaboration with domestic ground transportation carriers. As of June 30, 2024, we had 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 believe such extensive collaboration network has enabled us to provide our customers with more flexible and optimized options of origin ports, shipping routes, shipping frequency and delivery times that suit their needs better.

Symbiotic relationships with a large base of customers with high demands for supply chain solutions

We forge symbiotic relationships with a large base of customers that are typically Asia- and U.S.-based logistics service companies serving large e-commerce platforms, social commerce platforms and manufacturers to sell and transport consumer and industrial goods made in Asia into the U.S. Since inception and as of June 30, 2024, we had served over 300 customers with over 41,300 cross-border supply chain solution orders fulfilled. We believe our solutions have become a vital, indispensable part of our customers’ international trading and/or service value chain. Our solutions lift the burden associated with searching for, contracting with, coordinating with and paying various freight carriers, customs brokers and U.S. domestic transportation brokers on individual basis and enable our customers to commit their limited operational and managerial resources to their core business activities and achieve their business objectives cost-effectively. For example, we are among the earliest U.S.-based third-party supply chain service suppliers of a top integrated logistics service provider headquartered in China and have served this customer for over three years, enabling this customer to effectively obtain integrated supply chain capabilities and expertise in the U.S. without having devoted substantial operational resources and costs. Leveraging our strong supply chain service capabilities and deep understanding of the Asian market, we have been able to provide our Asia-based customers with customized solutions that specifically cater to their needs. We believe our customized cross-border supply chain solutions offer compelling value propositions to our customers, allowing us to become their go-to third-party service suppliers for exporting and transporting into the U.S.

Persistent focus on providing superior service efficiency and quality

We are driven by a persistent focus on providing highly efficient quality services to our customers. We have standardized, unified and streamlined the protocols and criteria of our wide variety of supply chain service offerings, aiming to provide reliable and best-quality services to customers. For example, we manage our cross-border freight consolidation and forwarding services and our U.S. domestic ground transportation services to specific objectives, such as high customer service scores for on-time delivery and damage-free freight. During the fiscal years ended June 30, 2023 and 2024, among our overall cross-border ocean freight and airfreight supply chain solution orders, the damage rate of the total shipments delivered through our service network of global freight carriers and U.S. domestic ground transportation carriers consistently maintained less than 1.0%. We have also established a customer support regime that is available from 8am to 11pm, seven days a week, to address the needs of our international customers. During the fiscal years ended June 30, 2023 and 2024, over 40.0% and 46.0% of our customers were repeat customers.

Visionary and accomplished young management team with strong industry expertise and in-depth understanding of Asian market

We were founded by two Asian American entrepreneurs who have worked closely together for over seven years. Mr. Henry Liu, our co-founder, chairman of the board of directors and chief executive officer, is a successful Asia-born, U.S.-educated entrepreneur. Mr. Shuai Li, our co-founder, president and chief operating officer, is also of an Asian descent. We benefit from the leadership of such management team with prominent strategic visions, in-depth industry expertise, extensive managerial and operational experience as well as deep understanding of both the U.S. and Asian market. The key members of our management have an average of more than ten years of experience in the logistics service industry. We believe our management’s industry expertise, coupled with their vision and entrepreneurial spirit, has enabled us and will continue to enable us to navigate in the cross-border supply chain solution market successfully.

Our Growth Strategies

We believe that we have a significant opportunity before us, both to further our mission and to strengthen our business and grow our revenues. We are focused on the following strategies to drive our growth:

Solidify our competitive edge and further grow customer base

We have established a global ocean freight and airfreight carrier collaboration network as well as an extensive U.S. domestic ground transportation collaboration network that cater to the needs of our large base of customers in Asia seeking integrated cross-border supply chain solutions, and we have achieved a robust revenue growth during the past few years. We intend to solidify our competitive edge in the cross-border ocean freight solution sector and further grow the scale of our cross-border airfreight solution operations. We seek to deepen the strategic long-term relationships with our global ocean and air carrier service provider as well as U.S. domestic transportation service providers, tap into new markets with them and explore new ways of collaborations. On the other hand, we strive to strengthen our branding and sales efficiencies, increase our presence in Asia and the globe as a U.S.-based integrated cross-border supply chain solution provider, capitalize on the massive opportunities for cross-border supply chain solutions within the thriving global social commerce market driven by consumer purchases directly through social media channels, and expand our customer base globally. We will also continue to optimize our service quality and enhance the experience and loyalty of our customers.

Expand our global footprints more extensively

We seek to provide integrated supply chain solutions to customers globally. We believe there are significant opportunities in the merchandise trade between the U.S. and emerging economies in Southeast Asia and South America, which we intend to leverage on and further expand our global footprints. For example, in addition to our two existing regional warehousing and distribution centers in Illinois and Texas, we plan to establish new hubs and centers in other major border cities in the U.S., such as Houston, Texas and Miami, Florida to cater to the needs in cross-border supply chain solutions from customers in Canada and South America. We also plan to expand our already extensive coverage of Asia-to-U.S. shipping routes provided by our ocean carrier service providers and allow our customers in Asia to have more flexible and optimized options of origin ports, shipping routes and shipping frequency. Moreover, we aim to extend our carrier collaboration network’s reach to penetrate Europe and bring our integrated and streamlined cross-border supply chain solutions to European customers, facilitating the flow of goods from Europe to the U.S. as well as elsewhere in the world.

Diversify and increase the breadth and depth of our service offerings through an organic growth and/or mergers and acquisitions

We intend to expand our portfolio of supply chain solutions and diversify our service offerings to more upstream and downstream sectors throughout the entire international trade value chain through an organic growth and/or mergers and acquisitions. For example, leveraging our existing extensive cross-border logistics network and strong supply chain management capabilities, we plan to expand into the prospective trading market and establish integrated cross-border trading businesses in free-trade zones with a focus on the export of U.S.-made consumer goods to the Asian market and the import of Asia-made consumer goods into the U.S. In addition, we plan to continue to deepen and broaden our current supply chain service offerings by (i) expanding the categories of cargo transported through our cross-border ocean freight solutions and airfreight solutions to cover special cargo, including dangerous goods such as lithium batteries, perishable cargo, wet cargo, and temperature-sensitive goods, and (ii) launching new services such as last mile, inventory management and one-stop multi-model solutions, with an aim to bring more value-adds to our customers.

Optimize operational efficiency and maintain premier service quality

We aim to drive further the operational efficiency of each service offering under our cross-border ocean freight and airfreight solutions, reduce costs and maximize the overall profitability. For example, in addition to utilizing a core technology platform which streamlines and monitors our various service offerings in real time, we plan to upgrade the standardization machinery, systems and functions at our regional warehousing and distribution centers, including to further invest in automation equipment such as industrial conveyor belts to advance the automation processes of sorting, packaging, distribution and trans-loading at these regional centers. We will also continue to strengthen the training of our personnel among the various function departments and adopt a holistic yet rigorous service quality management approach to ensure the premier quality of each service offering under our integrated cross-border supply chain solutions.

Continue to invest in and advance our technologies

We plan to continue to invest in and further digitize our technology platform to address our needs or those of our customers. We believe that efficient and effective use of information technology and advanced automation systems will allow us to further enhance our competitive position and drive our continued growth and profitability. We intend to establish a core technology platform which encompasses our warehousing and distribution system, pricing engine, cross-border ocean and air carrier interface as well as U.S. domestic ground transportation carrier interface, allowing our customers to track the movement of their cross-border freight from end to end. In addition, we aim to develop a proprietary suite of intelligent tools and analytics, incorporating dynamic data science, predictive analytics and machine learning, to aid our daily operations and drive further productivity across our various cross-border supply chain service offerings.

Service Provider Network

We have established an extensive and long-standing service provider network of (i) global freight carriers and (ii) U.S. domestic ground transportation carriers. Since inception and as of June 30, 2024, we had collaborated with almost all major global ocean and air carriers to serve over 300 customers to forward cross-border shipments consisting of over 31,800 TEU of container loads and 47,800 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, 2024, 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.

Under our extensive collaboration network, we enable and empower global ocean freight carriers, airfreight carriers, licensed cross-border customs brokers as well as U.S. ground transportation carriers to connect and collaborate, providing reliable, timely and integrated services to our customers.

Our ability to provide services to our customers is highly dependent on good working relationships with these service providers. Maintaining acceptable working relationships with these service parties has gained increased importance in particular as a result of the effect of the pandemic, ongoing concern over terrorism, security, changes in governmental regulation and oversight of international trade. 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.

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:

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customer relationships;

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caliber and quality of services;

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modes of transportation;

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technology infrastructure and capabilities; and

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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.

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, 2024, 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, 2024, we had a workforce of 50 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. As of June 30, 2024, our overall workforce is 100% of a minority ethnicity and 62% of female. In addition, among such workforce, 30% holds a bachelor’s degree, 46% holds an advanced degree such as a master’s degree, and 98% is bi-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.

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.

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.

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.

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.

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.

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 June 27, 2024, 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, integrity, and availability of our critical systems and information.

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 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.

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.” On September 25, 2024, the closing sale price of our common stock was $2.25 per share.

Holders of Record

As of September 25, 2024, we had approximately six 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 annual report, with the proceeds of the IPO, we used approximately $1.8 million for in marketing activities and business expansion and used approximately $1.3 million for working capital needs.

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, 2024.

Item 6. [Reserved]

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, 2024 and 2023 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 have established an extensive collaboration network of service providers, including global freight carriers for our cross-border freight consolidation and forwarding services as well as domestic ground transportation carriers for our U.S. domestic transportation services. Since inception and as of June 30, 2024, we had collaborated with almost all major global ocean and air carriers to forward 31,300 TEU of container loads and 47,800 tons of air cargo. As of June 30, 2024, we had also cooperated with over 200 domestic ground transportation carriers, including almost all major U.S. domestic ground transportation carriers, on a long-term, short-term or order basis, as the case may be.

We operate two 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 75,014 square feet and 34 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, 2024, we had assisted with the customs clearance, in conjunction with our other service offerings, of cross-border freight of an aggregate assessed value of over $38.0 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. For the fiscal years ended June 30, 2024 and 2023, our revenues amounted to $18.3 million and $12.9 million, respectively, and our gross profit amounted to $3.7 million and $2.6 million during the same periods, respectively. As of June 30, 2024, we had fulfilled over 41,000 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.

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. Since inception and as of June 30, 2024, we had served over 300 customers to fulfill over 41,000 cross-border supply chain solution orders. We will continue to expand our customer base to achieve a sustainable business growth. We aim to attract new customers and maintain our existing customers. We plan to improve the quality and expand the variety of our services to obtain more customers.

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.

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.

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.

Impact of COVID-19

The global spread of COVID-19 and the efforts to control it have slowed global economic activity and disrupted, and reduced the efficiency of, normal business activities in much of the world. The pandemic has resulted in authorities around the world implementing numerous unprecedented measures such as travel restrictions, quarantines, shelter in place orders, and factory and office shutdowns. These measures have impacted and will likely continue to impact our workforce and operations, and those of our customers and suppliers.

Delays and congestions at various ports as a result of the COVID-19 restrictions during the pandemic also prolonged the delivery times for certain of our cross-border freight. Additionally, ocean freight carriers have consolidated with the potential for more to occur in the future. COVID-19 has placed significant stress on our global ocean and air freight carriers, U.S. domestic ground transportation carriers as well as other service providers, which may result in reduced carrier capacity or availability, pricing volatility or more limited carrier transportation schedules and other services that we utilize, which could adversely impact our business, financial condition and results of operations.

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.

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.

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

Selling Expenses. Our selling expenses mainly represent commissions paid to unrelated parities for customer referrals.

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

Other Income. Our other income primarily consists of rental income and employee retention credit received, if any.

Interest Expenses. Our interest expenses primarily consist of the interest expenses incurred for finance leases, equipment loans, vehicle loans and other loans and interest for late paid for credit card.

Income Tax Expenses. Our income tax expenses consist primarily of U.S. federal, state income taxes and replacement tax in the state of Illinois.

Fiscal Year Ended June 30, 2024 Compared to Fiscal Year Ended June 30, 2023

Results of Operations

The following table summarizes our consolidated results of operations and percentages of certain items in relation to total revenues for the fiscal years ended June 30, 2024 and 2023. The operating results in any historical period are not necessarily indicative of the results that may be expected for any future period.

	For the fiscal year ended June 30,
	2024					2023
Revenues	Amount		% of total Revenues			Amount		% of total Revenues			Amount Increase (Decrease)			Percentage Increase (Decrease)
Cross-border ocean freight solutions	$	7,873,835		43.0	%	$	8,073,685		62.7	%	$	(199,850	)		(2.5	)%
Cross-border airfreight solutions		10,441,320		57.0	%		4,799,206		37.3	%		5,642,114			117.6	%
Total revenues		18,315,155		100.0	%		12,872,891		100.0	%		5,442,264			42.3	%
Cost of revenues		14,599,198		79.7	%		10,308,602		80.1	%		4,290,596			41.6	%
Gross profit	$	3,715,957		20.3	%	$	2,564,289		19.9	%	$	1,151,668			44.9	%

Revenues

Our total revenues increased by $5.4 million, or 42.3%, from $12.9 million in the fiscal year ended June 30, 2023, to $18.3 million in the fiscal year ended June 30, 2024. The significant increase was primarily driven by higher revenues from our cross-border air freight solutions, partially offset by a decrease in revenues from our cross-border ocean freight solutions.

Revenues generated from our cross-border ocean freight solutions decreased by $0.2 million, or 2.5%, from $8.1 million in the fiscal year ended June 30, 2023, to $7.9 million in the fiscal year ended June 30, 2024. The volume of cross-border ocean freights processed and forwarded increased from 4,218 TEU in the fiscal year ended June 30, 2023, to 5,458 TEU in the fiscal year ended June 30, 2024. However, due to fierce competition in ocean freight market and lower customer demand post COVID-19 pandemic, we offered more customized services that involved only one or a few stages of the freight solution process for individual customers. This led to a decreased unit revenue per TEU compared to the same period in the prior year. As a result, the gross revenue generated from our cross-border ocean freight solution slightly decreased compared to the same period in the prior year.

Revenues generated from our cross-border airfreight solutions increased by $5.6 million or 117.6% from $4.8 million in the fiscal year ended June 30, 2023, to $10.4 million in the fiscal year ended June 30, 2024. The increase was primarily due to a rise in the volume of cross-border air freight processed, from approximately 12,966 tons for the fiscal year ended June 30, 2023, to approximately 26,160 tons for the fiscal year ended June 30, 2024. This surge can be attributed to our heightened focus on cross-border airfreight solutions in the second half of the fiscal year ended June 30, 2023, in response to the growing demand for our services, fueled by the continued expansion of the e-commerce industry.

We expect our revenues to continue growing due to the resurgence of the U.S. economy post-COVID-19, ongoing reductions in ocean freight charges stimulating import and export activities, and the persistent trend of online purchases. This trend highlights the need for prompt delivery to end-consumers with competitive pricing.

Revenues by Customer Geographic

	For the fiscal year ended June 30,
	2024					2023
Revenues	Amount		% of total Revenues			Amount		% of total Revenues			Amount Increase (Decrease)			Percentage Increase (Decrease)
Asia-based customers	$	13,081,165		71.4	%	$	5,531,468		43.0	%	$	7,549,697			136.5	%
U.S.-based customers		5,233,990		28.6	%		7,341,423		57.0	%		(2,107,433	)		(28.7	)%
Total revenues		18,315,155		100.0	%		12,872,891		100.0	%		5,442,264			42.3	%

Revenues generated from the Asia-based customers increased by $7.5 million, or 136.5%, from $5.5 million in the fiscal year ended June 30, 2023, to $13.1 million in the fiscal year ended June 30, 2024. Revenues generated from the U.S.-based customers decreased by $2.1 million, or 28.7%, from $7.3 million in the fiscal year ended June 30, 2023 to $5.2 million in the fiscal year ended June 30, 2024.

The increase in revenues from Asia-based customers in the fiscal year ended June 30, 2024, was driven by a surge in volume from these customers, particularly those serving large e-commerce platforms. This growth can primarily be attributed to the rising demand for our services, which is a direct result of the overall expansion of the e-commerce market in the U.S.

The decrease in revenue from the U.S.-based customers in the fiscal year ended June 30, 2024, compared to the fiscal year ended June 30, 2023, was primarily due to our shift in focus toward Asia-based e-commerce customers. Additionally, special projects with larger shipment volumes from U.S. customers were completed in the fiscal year ended June 30, 2023, with no similar projects in the fiscal year ended June 30, 2024.

Cost of Revenues

A breakdown of our cost of revenues for the fiscal years ended June 30, 2024 and 2023 is as follows:

	For the fiscal year ended June 30,				Amount Increase		Percentage Increase
	2024		2023		(Decrease)		(Decrease)
Transportation and delivery costs	$	7,477,986	$	5,860,066	$	1,617,920		27.6	%
Warehouse service charges		2,886,406		1,391,081		1,495,325		107.5	%
Custom declaration and terminal charges		2,374,101		1,580,615		793,486		50.2	%
Freight arrangement charges		486,357		416,068		70,289		16.9	%
Overhead cost		1,374,348		1,060,772		313,576		29.6	%
Total cost of revenue	$	14,599,198	$	10,308,602	$	4,290,596		41.6	%

Our cost of revenues increased by $4.3 million, or 41.6%, from $10.3 million in the fiscal year ended June 30, 2023, to $14.6 million in the fiscal year ended June 30, 2024. The increase in cost of revenues was mainly due to the combined effects of:

(i)

an increase in transportation and delivery costs, including trucking, drayage, chassis rental, freight and delivery cost during the fiscal year ended June 30, 2024, which was consistent with the increase in revenues during the same period;

(ii)

an increase in our warehouse service charges, mainly representing labor costs at our regional warehousing and distribution centers during the fiscal year ended June 30, 2024, due to (a) extended service hours to process higher volumes of cross-border airfreight, and (b) the hiring of additional employees at our regional warehousing and distribution centers to support our growing business;

(iii)

an increase in custom declaration and terminal charges, consisting of customs fees, handling charges, and entry service fees charged by ports and terminals during the fiscal year ended June 30, 2024, resulting from the higher assessed value of cross-border freight, particularly airfreight, during the same period;

(iv)

an increase in freight arrangement charges, mainly representing scheduling and booking fees for cross-border ocean freight during the fiscal year ended June 30, 2024, primarily due to increased business for cross boarder shipping from the U.S. to China; and

(v)

a slight increase in overhead costs, mainly comprising warehouse and equipment lease expenses, utilities, depreciation of property and equipment, and other direct costs during the fiscal year ended June 30, 2024. The increase was mainly attributable to a rise in warehouse and equipment lease expenses, from $1,010,345 in the fiscal year ended June 30, 2023, to $1,195,808 in the fiscal year ended June 30, 2024.

Gross Profit

Our gross profit increased by $1.2 million, or 44.9%, from $2.6 million in the fiscal year ended June 30, 2023, to $3.7 million in the fiscal year ended June 30, 2024. Our gross profit margin was 20.3% for the fiscal year ended June 30, 2024, compared to 19.9% for the fiscal year ended June 30, 2023. The slight increase in gross profit margin was primarily attributable to the rise in sales and our promotion of a diverse range of services, including warehousing, distribution, and customs clearance services, which we offered to current customers with a higher mark-up.

Selling Expenses

Our selling expenses decreased by $77,322, or 96.9%, from $79,822 in the fiscal year ended June 30, 2023, to $2,500 in the fiscal year ended June 30, 2024. The decrease was mainly driven by fewer customer referrals from third parties during the fiscal year ended June 30, 2024.

General and Administrative Expenses

Our general and administrative expenses increased by $1.8 million, or 77.5%, from $2.3 million in the fiscal year ended June 30, 2023, to $4.1 million in the fiscal year ended June 30, 2024. These expenses represented 22.6% and 18.1% of our total revenues for the fiscal years ended June 30, 2024 and 2023, respectively. The increase was primarily attributed to higher salary and employee benefit expenses, office expense and professional fee:

Our salaries and employee benefits expenses represented 66.1% and 61.4% of our total general and administrative expenses for the fiscal years ended June 30, 2024 and 2023, respectively. The increase was mainly due to the recruitment of additional sales, customer services, and back-office support personnel to support our business growth. For our salaries and employee benefits expenses, (i) our payroll expenses increased by $1.1 million, or 94.5%, from $1.2 million in the fiscal year ended June 30, 2023, to $2.3 million in the fiscal year ended June 30, 2024, and (ii) our employee benefit expenses, which mainly consist of 401(k) company contribution, meal allowance and health insurance expenses, increased by $0.2 million, or 73.6%, from $0.2 million in the fiscal year ended June 30, 2023, to $0.4 million in the fiscal year ended June 30, 2024, representing 9.9% and 10.1% of our total general and administrative expenses for the fiscal years ended June 30, 2024 and 2023, respectively. The increase was mainly due to higher meal allowance for overtime compensation and rising employee health insurance premiums.

Our professional fee increased by $0.3 million, or 266.6%, from $0.1 million in the fiscal year ended June 30, 2023, to $0.4 million in the fiscal year ended June 30, 2024. Our professional fee represented 9.2% and 4.5% of our total general and administrative expenses for the fiscal years ended June 30, 2024 and 2023, respectively. The increase was primarily due to accrued audit fees, legal fees, and financial reporting service fees of approximately $0.3 million for the annual audit for the fiscal year ended June 30, 2024. In the fiscal year ended June 30, 2023, these expenses were not included in professional fees, as they were accounted for as deferred initial public offering assets.

Our office expense represented 9.5% and 7.7% of our total general and administrative expenses for fiscal years ended June 30, 2024 and 2023, respectively. The increase was mainly due to office hardware including monitors and keyboard, printer ink, printer kits and charger purchased and more office supplies consumed due to more staff hired.

Other Income, Net

Our other income decreased by $0.6 million, or 61.8%, from $0.9 million in the fiscal year ended June 30, 2023, to $0.3 million in the fiscal year ended June 30, 2024. The decrease was primarily attributable to the termination of a sublease agreement for certain office and warehouse space with a related party, which occurred from August 2023 to December 2023. Additionally, we received an employee retention credit of $0.3 million in the fiscal year ended June 30, 2023, but we did not have such income in the fiscal year ended June 30, 2024.

Interest Expenses

Our interest expenses for the fiscal year ended June 30, 2024, remained relatively stable compared to same period in last year.

Income (Loss) Before Income Taxes

We had loss before income taxes of $295,614 for the fiscal year ended June 30, 2024, compared to income before taxes of $1,008,798 for the fiscal year ended June 30, 2023. We were in a loss position before income taxes for the fiscal year ended June 30, 2024, was primarily attributable to the net effects of: (i) the increase in gross profit, (ii) the rise in operating expenses; and (iii) the decrease in other income for the fiscal year ended June 30, 2024 as mentioned above.

Income Tax Expense

We had income tax credit of $67,337 and income tax expense of $65,068 in the fiscal year ended June 30, 2024 and 2023, respectively. 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 $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. For the fiscal year ended June 30, 2024 and 2023, the Company was taxed at rates of 2.5% and 7.0% and 2.5% and 4.95% for the Illinois replacement tax and pass-through-entity tax, respectively. Since our transition to a C Corporation on September 23, 2023, we are now obligated to pay federal tax at a rate of 21%. This tax obligation was previously exempt for us as an S Corporation.

Net Income (Loss)

As a result of the foregoing, we had a net loss of $225,252 for the fiscal year ended June 30, 2024, compared to our net income of $983,602 in the fiscal year ended June 30, 2023.

Liquidity and Capital Resources

As of June 30, 2024, we had a cash balance of $0.1 million. Our current assets were $3.5 million, and our current liabilities were $5.9 million, resulting in a current ratio of 0.6:1. Total stockholders’ equity as of June 30, 2024 was $0.6 million.

As of June 30, 2024 and 2023, we had accounts receivable net of allowance of $2.8 million and $1.4 million, respectively. We periodically review our accounts receivable and allowance level to ensure our methodology for determining allowances is reasonable and to accrue additional allowances if necessary. For the accounts receivable, as of June 30, 2024 and 2023, we provided a credit loss allowance of $54,066 and $25,909, respectively.

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

As of June 30, 2024, we had a working capital deficit of $2.3 million. We are currently focused on improving our liquidity and securing additional capital sources through various short-term and long-term strategies. In the short term, we intend to primarily focus on the followings:

(i)

enhancing the collection of outstanding accounts receivable balance, as a result of which, subsequent to June 30, 2024 and through the report date, we had collected approximately $2.8 million, representing 95.8% of the accounts receivable balance as of June 30, 2024, and our accounts receivable turnover days was 42 days for the fiscal year ended June 30, 2024;

(ii)

collecting the balance of due from related parties in full of approximately $0.4 million by December 31, 2024;

(iii)

continued expansion of our business and service scope to achieve anticipated levels of revenues, while continuing to control costs;

(iv)

commitments by our stakeholders in providing working capital loans to us when needed; and

(v)

actively seeking favorable equity financings, including through IPO with approximately $5.79 million which was closed on July 1, 2024, and obtaining additional bank loans to meet our capital requirements.

Our IPO was closed in July 2024, which is subsequent to the end of the fiscal year of this report, we will have sufficient funds to fulfill its short-term financial obligations. In the long term, we anticipate generating sufficient cash flow from our operations, obtaining additional bank loans and other borrowings to meet our capital requirements to fund our operations and growth plans. Based on our current operating plan, our management is confident that we will have sufficient working capital and other financial resources to fund its operations and fulfill financial obligations for at least twelve months from the issuance date of the consolidated financial statement.

Cash Flows

The following table sets forth summary of our cash flows for the periods indicated:

	For the fiscal years ended June 30,
	2024			2023 (revised)*
Net cash (used in) provided by operating activities	$	(53,640	)	$	39,303
Net cash used in investing activities		(78,799	)		(18,288	)
Net cash provided by (used in) financing activities		78,755			(253,088	)
Effect of exchange rate changes on cash		3,216			32,560
Net decrease in cash		(50,468	)		(199,513	)
Cash, beginning of the year		174,018			373,531
Cash, end of the year	$	123,550		$	174,018

*	Revised to reflect reclassification of cash flows described in Note 2 in the accompanying consolidated financial statements included elsewhere in this Report

Operating Activities

Net cash used in operating activities was $53,640 in the fiscal year ended June 30, 2024, including net loss of $228,277, adjusted for non-cash items for $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 due from 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.

Net cash provided by operating activities was $39,303 in the fiscal year ended June 30, 2023, including net income of $943,730, adjusted for non-cash items for $927,316 and changes in working capital of negative $1,831,743. The non-cash items primarily included $826,284 non-cash operating lease expense, $130,755 depreciation, $31,780 depreciation of right-of-use finance assets, offset by $93,742 from reversal of allowance for expected credit loss, and impacted by an increase of $32,239 from deferred state tax expense. The adjustments for changes in working capital mainly included an increase of $506,152 in accounts receivable — third parties due to significant increase of revenues in the fiscal year ended June 30, 2023, an increase of $579,496 in due from related parties because of unpaid rental income, a decrease of $101,896 in accounts payable — related parties, and a decrease of $833,365 in operating lease liabilities, partially offset by an increase of $57,701 in accrued liabilities and other payables, a decrease of $54,441 in contract assets, an increase of $32,829 in tax payable and a decrease of $18,672 in prepayment and other deposit.

The $92,943 decrease in cash used in operating activities in the fiscal year ended June 30, 2024 compared to the prior year was primarily due to a net loss of $228,227 in the fiscal year ended June 30, 2024 compared to a net income of $943,730 in the prior fiscal year, offset by a decrease of $838,370 in cash outflow from working capital due to timing of vendor payments, client payments and related parties payment.

In our ordinary course of business, we typically grant a credit term of 15 days to customers that are independent third parties for their accounts receivable balances, while our major vendors generally provide us with a credit term of 30 days. Historically, our credit terms with related parties were more flexible. The decrease of $838,370 in cash outflow from the working capital in the fiscal year ended June 30, 2024 compared to the prior fiscal year was primarily attributable to:

(i)

a faster collection cycle from related-party customers for both accounts receivable and advances from the related parties for the fiscal year ended June 30, 2024; and

(ii)

an increase in accounts payable to related parties as of June 30, 2024,

(iii)

a significant increase in our revenue near fiscal year ended and completed shipment that we not invoiced to our customers, which resulted in significantly higher accounts receivable balances from non-related-party customers as of June 30, 2024, thereby impacting our cash flow position.

Investing Activities

Net cash used in investing activities was $78,799 in the fiscal year ended June 30, 2024, compared to $18,288 in the fiscal year ended June 30, 2023. On August 4, 2023, we reduced our unpaid registered capital contribution in our investee company in China, ABL Wuhan, while the third-party shareholders increased their registered capital contribution accordingly. As a result, the third-party shareholders now hold 80% of equity interest and we hold 20% of equity interest in ABL Wuhan. Consequently, ABL Wuhan ceased to be our subsidiary after August 4, 2023. This change resulted in a cash outflow of $48,893 due to the deconsolidation of the subsidiary and a payment for registered capital of $29,906 during the fiscal year ended June 30, 2024. Net cash used in investing activities for the fiscal year ended June 30, 2023, was primarily attributable to our purchases of property and equipment.

Financing Activities

Net cash provided by financing activities was $78,755 in the fiscal year ended June 30, 2024, compared to $253,088 net cash used in the fiscal year ended June 30, 2023. The increase in net cash provided by financing activities was mainly due to the net proceeds of $185,014 from loans borrowed and proceeds of $237,302 from stockholders, partially offset by payment of IPO related cost of $170,000, the repayment of equipment and vehicle loans and principle payment of finance leases totaling of $149,592 during the fiscal year ended June 30, 2024. The net cash used in financing activities for the fiscal year ended June 30, 2023, was primarily attributable to payment of IPO related cost of $90,000, the repayment of equipment and vehicle loans amounting to $104,598, repayment of loans of $100,864 and net proceeds from stockholders totaling $63,014.

Capital Expenditures

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 $18,288 in the fiscal years ended June 30, 2024 and 2023, 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, working capitals loans from stockholders and the proceeds from our IPO which was closed in July 2024.

Commitments and Contractual Obligations

As of June 30, 2024, 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	$	4,236,202	$	1,391,267	$	1,774,692	$	1,070,243	$	—
Finance lease obligations		57,109		38,961		18,148		—		—
Vehicle loans		157,032		62,169		72,520		22,343		—
Equipment loans		91,714		53,988		37,726		—		—
Other loans		660,680		648,440		12,240		—		—
Total	$	5,202,737	$	2,194,825	$	1,915,326	$	1,092,586	$	—

Off-Balance Sheet Commitments and Arrangements

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

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect our reported amount of assets, liabilities, revenue, costs and expenses, and any related disclosures. Although there were no material changes made to the accounting estimates and assumptions in the past two years, we continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates.

Despite the fact that the management determines there are no critical accounting estimates, the most significant estimates relate to allowance for credit losses, for which we are required to estimate the collectability of accounts receivable, and contract asset relating to shipment in transit.

The estimates were based on a number of factors including historical experience, the age of the accounts receivable balances, the credit quality of customers, current and reasonably expected future economic conditions, and other factors that may affect our ability to collect from customers.

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 it provides. 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.

While our significant accounting policies are more fully described in Note 2 — Summary of Significant Accounting Policies to our consolidated financial statements, we believe that there were no critical accounting policies that affect the preparation of financial statements.

Recent Accounting Pronouncements

We consider the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews newly issued accounting standards.

In August 2020, the FASB issued ASU No. 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, which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. This ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The new standard will become effective for us beginning January 1, 2024, using either a modified retrospective or a fully retrospective method of transition and early adoption is permitted. Management is currently evaluating the impact of the new standard on our financial statements.

In June 2022, the FASB issued ASU No. 2022-03, “Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions,” which clarifies and amends the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities. The guidance will be effective for years beginning after December 15, 2023 and interim periods within those years. We do not expect the adoption to have a material impact on our consolidated financial statements.

We do not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on our consolidated balance sheets, statements of income (loss) and comprehensive income (loss) and statements of cash flows.

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.

Item 8. Financial Statements and Supplementary Data.

LAKESIDE HOLDING LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 6413)		F-2
Consolidated Balance Sheets as of June 30, 2024 and 2023		F-3
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Years Ended June 30, 2024 and 2023		F-4
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended June 30, 2024 and 2023		F-5
Consolidated Statements of Cash Flows for the Years Ended June 30, 2024 and 2023		F-6
Notes to Consolidated Financial Statements		F-7 – F-32

F-1

REPORT OF 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, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2024, 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/ ZH CPA, LLC

We have served as the Company’s auditor since 2023.

Denver, Colorado

September 30, 2024

999 18^th Street, Suite 3000, Denver, CO, 80202 USA Phone: 1.303.386.7224 Fax: 1.303.386.7101 Email: admin@zhcpa.us

F-2

LAKESIDE HOLDING LIMITED
CONSOLIDATED BALANCE SHEETS

	As of June 30, 2024			As of June 30, 2023
ASSETS
CURRENT ASSETS
Cash	$	123,550		$	174,018
Accounts receivable – third parties, net		2,082,152			1,373,676
Accounts receivable – related party, net		763,285			44,627
Prepayment and other receivable		-			52,623
Contract assets		129,506			44,740
Due from related parties		441,279			746,130
Total current assets		3,539,772			2,435,814

NON-CURRENT ASSETS
Investment in other entity		15,741			—
Property and equipment at cost, net of accumulated depreciation		344,883			489,520
Right of use operating lease assets		3,471,172			2,271,070
Right of use financing lease assets		37,476			48,206
Deferred tax asset		89,581			—
Deferred offering costs		1,492,798			90,000
Prepayment, deposit and other receivable		202,336			137,336
Total non-current assets		5,653,987			3,036,132
TOTAL ASSETS	$	9,193,759		$	5,471,946

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payables – third parties	$	1,161,858		$	462,214
Accounts payables – related parties		227,722			365,413
Accrued liabilities and other payables		1,335,804			325,701
Current portion of obligations under operating leases		1,186,809			769,782
Current portion of obligations under financing leases		37,619			42,889
Loans payable, current		746,962			586,688
Dividend payable		98,850			98,850
Tax payable		79,825			32,829
Due to shareholders		1,018,281			90,000
Total current liabilities		5,893,730			2,774,366

NON-CURRENT LIABILITIES
Loans payable, non-current		136,375			231,599
Deferred tax liability		-			24,752
Obligations under operating leases, non-current		2,506,402			1,564,633
Obligations under financing leases, non-current		17,460			21,836
Total non-current liabilities		2,660,237			1,842,820
TOTAL LIABILITIES	$	8,553,967		$	4,617,186
Commitments and Contingencies

EQUITY
Common stocks, $0.0001 par value, 200,000,000 shares authorized, 6,000,000 and 6,000,000 issued and outstanding as of June 30, 2024 and 2023, respectively*		600			600
Subscription receivable		(600	)		(600	)
Additional paid-in capital		642,639			-
Accumulated other comprehensive income (loss)		2,972			(244	)
(Deficits) Retained earnings		(5,819	)

SEC Form 10-K filed by Lakeside Holding Limited