Lakeside Holding Limited

Thank you for standing by and welcome to the Lakeside Holding Limited fiscal 2025 third quarter and nine-month earnings conference call. Please note that today's call is being recorded. I will now turn the meeting over to Matthew Abinante, Investor Relations for Lakeside Holding Limited.

Thank you. And thanks to

everyone joining us today for Lakeside Holding Limited's earnings conference call to discuss our financial results for the third quarter and nine months of fiscal year 2025. Please note that our earnings press release was issued last week and our quarterly report on Form 10Q was filed with the Securities and Exchange Commission. Both documents are available in the Investor Relations section of our website at -holding.com. Joining me on the call today is Henry Liu, Chief Executive Officer of Lakeside Holding Limited. Before we begin, I would like to review the Safe Harbor Statement. Please be aware that today's discussion will contain forward-looking statements that reflect our current expectations and views of future events. These statements are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. You can identify some of these forward-looking statements by words or phrases such as may, will, expect, anticipate, aim, estimate, intend, plan, believe, is, are likely to, potential, continue, or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. These forward-looking statements involve various risks and uncertainties. For a detailed discussion of these risks and uncertainties, please refer to our filings with the SEC, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. Accepted as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. After the date on which the statements are made or to reflect the occurrence of unanticipated events, we qualify all of our forward-looking statements by these cautionary statements. And with that, I would like to hand the call over to Henry Liu, Chief Executive Officer of Lakeside. Henry, please go ahead.

Good afternoon, Matt, and thank you, everyone, for joining us today. We appreciate you taking the time to participate in our physical 2025 Third Quarter and Nine Man's Earnings Conference call. This period has been a dynamic one for Lakeside marked by challenges in our established markets and existing progress in our new strategic ventures. We are navigating a shifting global landscape with a clear focus on long-term growth and shareholder value. And I'm pleased to share our progress and outlook with you, our valued shareholders. Reflecting on the first nine months of physical 2025, we reported total revenues of $11.48 million for the nine months ended March 31, 2025. While this represents a decrease from the $13.53 million record in the same period of last year, it's important to contextualize these figures. Our traditional cross-border free solutions operated through American Bayer Logistics saw revenue of $10.76 million for the nine months. Compared to the $13.53 million in the premier year, this decline is primarily attributable to the normalization of global shipping demands and the persistent pricing pressures with the freight sector, a trend observed across the industry. For the third quarter specifically, total revenues were $3.18 million compared to the $4.46 million in the third quarter of physical 2024, with our cross-border free solutions contributing $3.31 million. Despite these headwinds in the freight segment, we are particularly encouraged by the initial performance and the strategic importance of our recent expansion into the pharmaceutical distribution sector. Following our acquisition of Hupan Pharmaceuticals' Hubei Company in November 2024, this new segment has already begun to contribute our top line, generating $715,362 in revenue for the nine months, and $497,276 in the third quarter alone. This is a testament to the significant growth opportunities we see in the Chinese pharmaceutical market. We are actively working to integrate Hupan Pharmaceuticals into our border operations, aiming to unlock synergies and expand our service offerings. Our gross profit for nine months stood at $1.20 million and for the third quarter, it was $0.72 million. The decrease from pre-year periods reflects the ephemeral pressure in freight markets. Operating expense for the nine months totaled $5.60 million and for the third quarter, $1.80 million. These figures include investments related to our expansion, such as selling expense of $158,117 for nine months, periods like $103,629 for the third quarter, which were not present in the pre-year, as well as increase the general and administrative expenses associated with our gross initiatives and public company operations. Consequently, we record a loss from operations of $4.40 million from the nine months and $1.10 million for the third quarter. Our net loss attributable to the company for the nine months was $4.35 million or $0.58 per year, and for the third quarter, it was $1.07 million or $0.14 per share. While these results reflect the current market conditions and our ongoing investments, we are taking proactive steps to manage costs, optimize our existing operations, and drive towards profitably the successful completion of our initial public offering on July 1, 2024, which raised the gross process of approximately $6.75 million, has provided us with the necessary capital to fill our strategy initiatives. Furthermore, the Convertible Debit Financing Agreement for up to $4.5 million announced in March 2025 will provide additional working capital to support the growth of our medical distribution business and for general corporate purposes, further strengthening our financial profitability. Looking at broader macroeconomic environments, we are closely monitoring developments in international trade relations, particularly the ongoing tariff discussions between the United States and China. Recent single signals suggest a potential easing of tensions, with the tariff choose offering a degree of cautious optimism for the global markets. While the situation remains, the flute and the crank agreement is more opposed than comprehensive solutions. Any execution is a positive sign for global trade flows. As a company with significant focus on the Asian Pacific markets, particularly the U.S.-China trade line, we will this development with hopefully a more stable and predictable trade environment would unadaptable benefit our cross-border logistics operations and create a more favorable backdrop for our extension efforts in China. We remain angel and prepared to adapt our strategies as the situation evolves, always with the goal of mitigating risk and capitalizing our emerging opportunities. Our strategic objectives for the remainder of fiscal 2025 and beyond are clear. First, we are committed to aggressively expanding our footprint in China's pharmaceutical distribution market. This involves integrating Hupan's pharmaceuticals seamlessly, actively pushing new distribution agreements and boarding our product portfolio. We are already progressing in discussion with major pharmaceutical procedures, such as Coulomb Pharmaceutical and are excited about the potential in this high-growth sector. Second, we will continue to optimize our cross-border logistics service. While the market is challenging, American Bear Logistics has a strong reputation and a resettlement customer base. We will focus on providing high-volume, customized solutions and adapting the evolving needs of our clients in the Asian Pacific to the U.S. trade line. Third, we will diligently manage our capital and resources, ensuring that our investments are directed towards initiatives that promise the highest return and contribute to suitable long-term shareholder value. In condition, while the past nine months have presented a complex operating environment, we are confident in our strategic direction, diversifying into the pharmaceutical sector coupled with our established expertise in cross-border logistics and our strategic financial positions post-IPO, positions next to a promising future. We are building a more resilient and diversified business, post to capitalize on growth opportunities in K-Markets. We remain optimistic about navigating the current challenges and delivering value to our shareholders. I want to thank our dedicated team for their hard work and commitment during this transformative period. I also want to thank our shareholders for your continued support and confidence in Lakeside. With that, I will now turn the call over to the operator to begin the question and answer session.

Thank you, Henry. We will now move to the question and answer portion of the call. Thank you to everyone who have submitted questions. Can you elaborate on the early synergies you're seeing from Hupon Pharmaceutical and how you envision the segment driving Lakeside's growth in the rapidly expanding Chinese healthcare market, especially given your efforts with companies like Keilung Pharmaceutical?

Thank you for that question. We are indeed very pleased with the initial contribution from Hupon Pharmaceutical. So, strategically, this accusation is a cornerstone of our diversification and growth strategy. The early synergies are manifesting in a few key areas. First, we are leveraging our existing logistics expertise to optimize Hupon's supply chain and distribution network with China, which is a complex but highly rewarding market. Second, our established relationships and understanding of the Asian Pacific religion are providing beneficial as we navigate the regulatory landscape and build partnerships. Our discussions with major players like Keilung Pharmaceutical are progressing, and these are aimed at securing significant distribution agreements that will allow us to tap into the substantial demand for high-quality pharmaceutical products. The Chinese healthcare market is on a significant growth trajectory, driven by an aging population, increasing health awareness, and government investment in healthcare infrastructure. We believe Hupon Pharmaceutical, supported by Lakeside's border capabilities and financial strength, is exceptionally well positioned to capture the meaningful share of this growth, becoming a significant driver to revenue and profitability for Lakeside in coming years. We see this as a long-term value character for our shareholders.

Speaking of cross-border freight business, while the market has seen some headwinds, American Bear Logistics has a long-standing presence. Can you speak to the specific strategies Lakeside is employing to maintain competitiveness and serve your customers effectively in the Asia-Pacific to US trade lane during this period of market adjustment?

That's a very reliant question. The cross-border freight market has certainly seen a shift from actual ordinary conditions of the past few years. However, American Bear Logistics has a deep understanding of Asian-Pacific to US trade line, built over many years. Our activities focus on a few core pillars. First, we are emphasizing customized, high-volume logistics solutions rather than competing solar on press for the commercialized freight. Our expertise in handling complex shipments and providing -to-end service is a key differentiator. Second, we are leveraging technology to enhance efficiency, improve visibility for our customers, and optimize our operations. This includes investment in our digital platforms and data analyst capabilities. Third, we are maintaining strong relationship with our carrier partners and customers, allowing us to adapt quickly to change needs and secure capacity. While the overall market has softened, there are still specific niches and customer segments that require the specialized service we offer. Our focus is serving these segments exceptionally well, managing our costs diligently, and ensuring that American Bear's logistics remain reliable and a profitable contributor to Lakeside, even as we grow our pharmaceutical businesses.

And our last question, can you share your long-term vision for the company and how the new pharmaceutical venture is expected to create sustained shareholder value over the next few years?

Our long-term vision for Lakeside is built of diversified and resilient global supply chain solutions provider with a strong presence in high-growth markets, particularly in Asian Pacific region. The next step is to develop the integration of our established cross-border logistics, advertised with our new rapidly expanding pharmaceutical distribution businesses in China is central to this vision. We see these two segments as complementary. The logistics business provides stable cash flow, deep market knowledge, and operational excellence. While the pharmaceutical business offers significant growth potential in non-cyclical industry, over the next few years we aim to achieve several key milestones. Firstly, to significantly scale our pharmaceutical business, we aim to make our distribution operations in China becoming recognized clear in the market. Secondly, to continue optimizing our logistics business, focusing on profitability and high-value services. Thirdly, to explore further strategic opportunities, whether organic or inorganic, and align with our core competencies and market focus. We believe this multi-pronged approach will lead to more consistent revenue growth, improved profitability, with a stronger, more diversified business model. Our commitment is to translate this operational success into sustained long-term volume for our shareholders by growing our earnings, strengthening our market position, and maintaining transparent communication about our progress.

Thank you, Henry, and thank you everyone for participating on today's call. We look forward to providing additional updates in the near future. In the meantime, we can be reached at -947-2093, or you can email me at matthew at -ir.com.

Thank you, everyone. Ladies and gentlemen, this concludes our conference for today. Thank you for your participation. You may now disconnect.