NOTE 6 — DISCONTINUED OPERATIONS

On March 3, 2025, the Company’s board of directors approved the discontinuation of the Company’s parallel-import vehicles business authorizing the writing off of receivables, and winding down of operations in compliance with applicable legal and regulatory requirements. In accordance with ASC 205-20, Presentation of Financial Statements — Discontinued Operations, the Company determined that the parallel-import vehicle segment met the conditions for reporting as a discontinued operation. As a result, all financial results associated with this business have been reclassified as discontinued operations in the accompanying consolidated financial statements for all periods presented.

Accounts Receivable, net

The Company’s parallel-import vehicle business was negatively impacted by deteriorating macroeconomic conditions since the second half of 2022. Several aged accounts receivable were concentrated among four long-term customers, who were in the process of business recovery. These receivables were partially backed by third-party guarantees, providing some assurance of collection. During the year ended December 31, 2024, the Company collected approximately $4.0 million related to accounts receivable generated in prior periods and earlier in the year. As of December 31, 2024, the Company had gross accounts receivable of approximately $4.1 million.

The Company conducted an initial assessment of collectability and recognized a credit loss of $1.1 million for accounts deemed uncollectible during the first three quarters of 2024. During the year-end CECL reassessment, the Company evaluated expected credit losses based on historical loss trends, customer risk factors, and forward-looking economic conditions, and provided an additional credit loss provision of $475,366 in the fourth quarter of 2024, resulting in a total allowance for credit loss of $1.6 million for the year ended December 31, 2024.

Subsequently, the Company collected an additional $2.5 million of the outstanding balance. On March 3, 2025, following the Board’s approved decision on discontinued operations, the Company had zero account receivable balance after the above-mentioned credit loss of $1.6 million and the subsequent collection of additional $2.5 million outstanding balance.

Cash Flows from discontinued operations

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