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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2025
Commission File Number: 001-41674
Shengfeng Development Limited
Shengfeng Building, No. 478 Fuxin East Road
Jin’an District, Fuzhou City
Fujian Province, People’s Republic of China, 350001
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
EXPLANATORY NOTE
Shengfeng Development Limited is furnishing its unaudited condensed consolidated financial statements and footnotes for the six months ended June 30, 2025 and 2024. The unaudited condensed consolidated financial statements and notes are attached as Exhibit 99.1 to this report of foreign private issuer on Form 6-K, and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2025 is attached as Exhibit 99.2 to this report of foreign private issuer on Form 6-K.
On August 27, 2025, the Company issued a press release announcing its unaudited financial results for the six months ended June 30, 2025 and 2024, a copy of which press release is attached as Exhibit 99.3 to this report of foreign private issuer on Form 6-K.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Shengfeng Development Limited | ||
| Date: August 27, 2025 | By: | /s/ Yongxu Liu |
| Name: | Yongxu Liu | |
| Title: |
Chief Executive Officer, President, Director, and Chairman (Principal Executive Officer) |
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EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Unaudited Condensed Consolidated Financial Statements and Notes of Shengfeng Development Limited for the Six Months Ended June 30, 2025 and 2024 | |
| 99.2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
| 99.3 | Press Release, dated August 27, 2025 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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Exhibit 99.1
SHENGFENG DEVELOPMENT LIMITED
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
F-
SHENGFENG DEVELOPMENT LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
|
As of June 30, |
As of December 31, |
|||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 14,327 | $ | 34,668 | ||||
| Restricted cash | 4,598 | 5,545 | ||||||
| Notes receivable | 6,841 | 7,340 | ||||||
| Accounts receivable, net | 124,611 | 127,300 | ||||||
| Due from related parties | 2,279 | 701 | ||||||
| Prepayments and other current assets, net | 37,346 | 29,684 | ||||||
| Total Current Assets | 190,002 | 205,238 | ||||||
| Property and equipment, net | 68,822 | 59,968 | ||||||
| Intangible assets, net | 11,235 | 11,413 | ||||||
| Operating lease right-of-use assets, net | 8,065 | 9,918 | ||||||
| Long-term investments | 1,942 | 1,900 | ||||||
| Deposit for investment | 10,617 | 10,573 | ||||||
| Deferred tax assets | 1,539 | 1,434 | ||||||
| Other non-current assets | 4,215 | 9,686 | ||||||
| Total Assets | $ | 296,437 | $ | 310,130 | ||||
| Liabilities and Equity | ||||||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Notes payable | $ | 12,176 | $ | 14,907 | ||||
| Accounts payable | 62,206 | 88,734 | ||||||
| Short-term bank loans | 48,739 | 39,401 | ||||||
| Long-term bank loans, current | 412 | |||||||
| Due to related parties | 1,546 | 1,687 | ||||||
| Salary and welfare payables | 2,421 | 3,047 | ||||||
| Accrued expenses and other current liabilities | 8,937 | 7,673 | ||||||
| Operating lease liabilities, current | 3,978 | 4,218 | ||||||
| Tax payables | 3,702 | 3,017 | ||||||
| Total Current Liabilities | 144,117 | 162,684 | ||||||
| Long-term bank loans | 16,046 | 16,390 | ||||||
| Operating lease liabilities, non-current | 3,254 | 4,719 | ||||||
| Deferred tax liabilities | 155 | 53 | ||||||
| Other non-current liabilities | 2,694 | 2,838 | ||||||
| Total Liabilities | 166,266 | 186,684 | ||||||
| Commitments and Contingencies | ||||||||
| Equity | ||||||||
| Class A ordinary share, $0.0001 par value, 400,000,000 shares authorized; 40,617,513 shares issued and outstanding as of June 30, 2025 and December 31, 2024 | 4 | 4 | ||||||
| Class B ordinary share, $0.0001 par value, 100,000,000 shares authorized; 41,880,000 shares issued and outstanding as of June 30, 2025 and December 31, 2024 | 4 | 4 | ||||||
| Additional paid-in capital | 83,762 | 83,762 | ||||||
| Statutory reserves | 5,959 | 5,959 | ||||||
| Retained earnings | 42,325 | 36,462 | ||||||
| Accumulated other comprehensive loss | (8,540 | ) | (9,047 | ) | ||||
| Total Shengfeng Development Limited’s Shareholders’ Equity | 123,514 | 117,144 | ||||||
| Non-controlling Interests | 6,657 | 6,302 | ||||||
| Total Equity | 130,171 | 123,446 | ||||||
| Total Liabilities and Equity | $ | 296,437 | $ | 310,130 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-
SHENGFENG DEVELOPMENT LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
|
For the Six Months Ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| Revenues | ||||||||
| Transportation | $ | 254,716 | $ | 217,450 | ||||
| Warehouse storage management service | 7,053 | 8,274 | ||||||
| Others | 1,665 | 1,407 | ||||||
| Total revenues | 263,434 | 227,131 | ||||||
| Cost of revenues | (239,364 | ) | (206,046 | ) | ||||
| Gross profit | 24,070 | 21,085 | ||||||
| Operating expenses | ||||||||
| Selling and marketing | (2,864 | ) | (2,861 | ) | ||||
| General and administrative | (13,414 | ) | (11,669 | ) | ||||
| Total operating expenses | (16,278 | ) | (14,530 | ) | ||||
| Income from operations | 7,792 | 6,555 | ||||||
| Other income (expense) | ||||||||
| Interest income | 41 | 46 | ||||||
| Interest expense | (1,315 | ) | (879 | ) | ||||
| Other income (expense), net | 250 | (73 | ) | |||||
| Income before income taxes | 6,768 | 5,649 | ||||||
| Provision for income taxes | (787 | ) | (637 | ) | ||||
| Net income | 5,981 | 5,012 | ||||||
| Less: income (loss) attributable to non-controlling interests | 118 | (24 | ) | |||||
| Net income attributable to Shengfeng Development Limited’s shareholders | $ | 5,863 | $ | 5,036 | ||||
| Comprehensive income (loss) | ||||||||
| Net income | 5,981 | 5,012 | ||||||
| Foreign currency translation adjustment | 535 | (710 | ) | |||||
| Total comprehensive income | 6,516 | 4,302 | ||||||
| Less: comprehensive income (loss) attributable to non-controlling interests | 146 | (54 | ) | |||||
| Total comprehensive income attributable to Shengfeng Development Limited | $ | 6,370 | $ | 4,356 | ||||
| Weighted average shares outstanding used in calculating basic and diluted earnings per share: | ||||||||
| Class A and Class B ordinary shares - Basic and diluted | 82,497,513 | 82,497,513 | ||||||
| Earnings per share | ||||||||
| Class A and Class B ordinary shares - Basic and diluted | $ | 0.07 | $ | 0.06 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-
SHENGFENG DEVELOPMENT LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| Class A Ordinary Shares ($0.0001 par value) |
Class B Ordinary Shares ($0.0001 par value) |
Additional paid-in |
Statutory | Retained | Accumulated other comprehensive |
Non- controlling |
Total | |||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | reserves | earnings | loss | interests | equity | |||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | 40,617,513 | $ | 4 | 41,880,000 | $ | 4 | $ | 83,762 | $ | 5,959 | $ | 36,462 | $ | (9,047 | ) | $ | 6,302 | $ | 123,446 | |||||||||||||||||||||
| Net income | - | - | 5,863 | 118 | 5,981 | |||||||||||||||||||||||||||||||||||
| Capital contribution from non-controlling shareholders | - | - | 237 | 237 | ||||||||||||||||||||||||||||||||||||
| Dividend to non-controlling shareholders | - | - | (28 | ) | (28 | ) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | - | - | - | - | - | 507 | 28 | 535 | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | 40,617,513 | $ | 4 | 41,880,000 | $ | 4 | $ | 83,762 | $ | 5,959 | $ | 42,325 | $ | (8,540 | ) | $ | 6,657 | $ | 130,171 | |||||||||||||||||||||
| Balance as of December 31, 2023 | 40,617,513 | $ | 4 | 41,880,000 | $ | 4 | $ | 83,762 | $ | 4,854 | $ | 26,689 | $ | (7,366 | ) | $ | 4,366 | $ | 112,313 | |||||||||||||||||||||
| Net income (loss) | - | - | 5,036 | (24 | ) | 5,012 | ||||||||||||||||||||||||||||||||||
| Capital contribution from non-controlling shareholders | - | - | 981 | 981 | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | - | - | - | - | - | (680 | ) | (30 | ) | (710 | ) | |||||||||||||||||||||||||||
| Balance as of June 30, 2024 | 40,617,513 | $ | 4 | 41,880,000 | $ | 4 | $ | 83,762 | $ | 4,854 | $ | 31,725 | $ | (8,046 | ) | $ | 5,293 | $ | 117,596 | |||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-
SHENGFENG DEVELOPMENT LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
|
For the Six Months Ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 5,981 | $ | 5,012 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization of property and equipment | 3,218 | 3,292 | ||||||
| Amortization of operating lease expenses | 2,121 | 3,599 | ||||||
| Amortization of intangible assets | 225 | 325 | ||||||
| Provision for (recovery of) credit losses | 273 | (82 | ) | |||||
| (Income) loss from equity method investment | (13 | ) | 2 | |||||
| (Gain) loss on disposal of property and equipment | (63 | ) | 100 | |||||
| Gain from disposal of subsidiaries | (8 | ) | ||||||
| Deferred income taxes | 1 | 207 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Notes receivable | 462 | 451 | ||||||
| Accounts receivable | 3,052 | (10,073 | ) | |||||
| Prepayments and other current assets | (4,637 | ) | (1,787 | ) | ||||
| Due from related parties | (1,570 | ) | 40 | |||||
| Other non-current assets | 1,677 | 3,701 | ||||||
| Accounts payable | (24,018 | ) | (3,376 | ) | ||||
| Due to related parties | (257 | ) | 58 | |||||
| Salary and welfare payable | (636 | ) | (2,286 | ) | ||||
| Accrued expenses and other current liabilities | 371 | (8,083 | ) | |||||
| Operating lease liabilities | (1,968 | ) | (3,593 | ) | ||||
| Tax payables | 1,394 | 920 | ||||||
| Other non-current liabilities | (155 | ) | (216 | ) | ||||
| Net cash used in operating activities | (14,542 | ) | (11,797 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Investments deposit refund | 6,826 | |||||||
| Investments deposit | (9,078 | ) | ||||||
| Cash paid to long-term investments | (21 | ) | ||||||
| Purchase of intangible assets | (9,055 | ) | ||||||
| Purchase of property and equipment | (7,813 | ) | (14,263 | ) | ||||
| Proceeds from disposal of property and equipment | 98 | 954 | ||||||
| Proceeds from disposal of subsidiaries | 9,678 | |||||||
| Loan to a third party | (2,993 | ) | ||||||
| Net cash used in investing activities | (10,729 | ) | (14,938 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from notes payable | 1,406 | 19,000 | ||||||
| Repayments of notes payable | (6,974 | ) | (16,889 | ) | ||||
| Proceeds from short-term bank loans | 36,331 | 26,882 | ||||||
| Repayments of short-term bank loans | (27,190 | ) | (26,882 | ) | ||||
| Proceeds from long-term bank loans | 9,188 | |||||||
| Proceeds from related parties | 110 | |||||||
| Dividend to non-controlling shareholders | (28 | ) | ||||||
| Capital contribution from non-controlling shareholders | 237 | 981 | ||||||
| Net cash provided by financing activities | 3,892 | 12,280 | ||||||
| Effects of exchange rate changes on cash, cash equivalents and restricted cash | 90 | (135 | ) | |||||
| Net decrease in cash, cash equivalents and restricted cash | (21,289 | ) | (14,590 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of period | 40,214 | 29,292 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 18,925 | $ | 14,702 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid for income tax | $ | 992 | $ | 388 | ||||
| Cash paid for interest | $ | 1,024 | $ | 841 | ||||
| Non-cash transaction in investing and financing activities: | ||||||||
| Liabilities incurred for purchase of property and equipment | $ | 858 | $ | 840 | ||||
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | 233 | $ | 1,023 | ||||
| Reconciliation to amount on consolidated balance sheets: | ||||||||
| Cash and cash equivalents | $ | 14,327 | $ | 11,176 | ||||
| Restricted cash | 4,598 | 3,526 | ||||||
| Total cash, cash equivalents and restricted cash | $ | 18,925 | $ | 14,702 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 1. | ORGANIZATION AND NATURE OF OPERATIONS |
Shengfeng Development Limited (“Shengfeng” or the “Company”), is a holding company incorporated under the laws of the Cayman Islands on July 16, 2020, as an exempted company with limited liability. The Company has no substantive operations other than holding all of the outstanding share capital of Shengfeng Holding Limited (“Shengfeng HK”) established under the laws of Hong Kong on August 18, 2020.
Shengfeng HK is also a holding company holding all of the outstanding equity of Fujian Tianyu Shengfeng Logistics Co., Ltd. (“Tianyu” or “Shengfeng WFOE” or “WFOE”), which was established on December 16, 2020 under the laws of the People’s Republic of China (“PRC” or “China”).
The Company, through its variable interest entity (the “VIE”), Shengfeng Logistics Group Co., Ltd. (“Shengfeng VIE” or the “VIE”), and its subsidiaries, operates as a transportation and warehouse storage management services provider in the PRC. Shengfeng VIE was incorporated on December 7, 2001 under the laws of the PRC. Paid-in capital of Shengfeng VIE was approximately $27.2 million (approximately RMB189.6 million) as of June 30, 2025.
On December 18, 2020, the Company completed a reorganization of entities under common control of its then existing shareholders, who collectively owned all of the equity interests of the Company prior to the reorganization. The Company, and Shengfeng HK were established as the holding companies of Shengfeng WFOE. Shengfeng WFOE is the primary beneficiary of Shengfeng VIE and its subsidiaries, and all of these entities included in the Company are under common control which results in the consolidation of Shengfeng VIE and its subsidiaries which have been accounted for as a reorganization of entities under common control at carrying value. The consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the accompanying consolidated financial statements of the Company.
The accompanying unaudited condensed consolidated financial statements reflect the activities of the Company and each of the following entities, including its WFOE and the VIE:
| No. | Name of subsidiaries | Place of incorporation | Date of incorporation or acquisition | Percentage of direct or indirect | Principal activities | |||||||
| 1 | Shengfeng Holding Limited (“Shengfeng HK”) | Hong Kong | August 18, 2020 | 100 | % | Investment holding of Tianyu | ||||||
| 2 | Tianyu Shengfeng Logistics Group Co., Ltd. (“Tianyu”, formerly known as “Fujian Tianyu Shengfeng Logistics Co., Ltd “) | Fujian, the PRC | December 16, 2020 | 100 | % | Investment holding of Shengfeng VIE | ||||||
| The VIE and the VIE’s subsidiaries: | ||||||||||||
| 3 | Shengfeng Logistics Group Co., Ltd. (“Shengfeng VIE” or “Shengfeng Logistics”) | Fujian, the PRC | December 7, 2001 | 100 | % | Transportation and warehouse storage management service | ||||||
| 4 | Fuqing Shengfeng Logistics Co., Ltd. | Fujian, the PRC | April 15, 2011 | 100 | % | Transportation and warehouse storage management service | ||||||
| 5 | Xiamen Shengfeng Logistics Co., Ltd. | Fujian, the PRC | December 22, 2011 | 100 | % | Transportation and warehouse storage management service | ||||||
| 6 | Guangdong Shengfeng Logistics Co., Ltd. | Guangdong, the PRC | December 30, 2011 | 100 | % | Transportation and warehouse storage management service | ||||||
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 1. | ORGANIZATION AND NATURE OF OPERATIONS (CONTINUED) |
| No. | Name of subsidiaries | Place of incorporation | Date of incorporation or acquisition | Percentage of direct or indirect | Principal activities | |||||||
| 7 | Hainan Shengfeng Supply Chain Management Co., Ltd. | Hainan, the PRC | August 18, 2020 | 51 | % | Transportation and warehouse storage management service | ||||||
| 8 | Beijing Tianyushengfeng E-commerce Technology Co., Ltd. | Beijing, the PRC | January 9, 2004 | 100 | % | Transportation and warehouse storage management service | ||||||
| 9 | Beijing Shengfeng Supply Chain Management Co., Ltd. | Beijing, the PRC | April 13, 2016 | 100 | % | Transportation and warehouse storage management service | ||||||
| 10 | Shengfeng Logistics (Guizhou) Co., Ltd. | Guizhou, the PRC | August 15, 2017 | 100 | % | Transportation and warehouse storage management service | ||||||
| 11 | Shengfeng Logistics (Tianjin) Co., Ltd. | Tianjin, the PRC | March 8, 2016 | 100 | % | Transportation and warehouse storage management service | ||||||
| 12 | Shengfeng Logistics (Shandong) Co., Ltd. | Shandong, the PRC | March 15, 2016 | 100 | % | Transportation and warehouse storage management service | ||||||
| 13 | Shengfeng Logistics Hebei Co., Ltd. | Hebei, the PRC | February 17, 2016 | 100 | % | Transportation and warehouse storage management service | ||||||
| 14 | Shengfeng Logistics (Henan) Co., Ltd. | Henan, the PRC | March 28, 2016 | 100 | % | Transportation and warehouse storage management service | ||||||
| 15 | Shengfeng Logistics (Liaoning) Co., Ltd. | Liaoning, the PRC | March 2, 2016 | 100 | % | Transportation and warehouse storage management service | ||||||
| 16 | Shengfeng Logistics (Yunnan) Co., Ltd. | Yunnan, the PRC | January 25, 2016 | 100 | % | Transportation and warehouse storage management service | ||||||
| 17 | Shengfeng Logistics (Guangxi) Co., Ltd. | Guangxi, the PRC | February 1, 2016 | 100 | % | Transportation and warehouse storage management service | ||||||
| 18 | Hubei Shengfeng Logistics Co., Ltd. | Hubei, the PRC | December 15, 2010 | 100 | % | Transportation and warehouse storage management service | ||||||
| 19 | Shengfeng Logistics Group (Shanghai) Supply Chain Management Co., Ltd. | Shanghai, the PRC | August 26, 2015 | 100 | % | Transportation and warehouse storage management service | ||||||
| 20 | Shanghai Shengxu Logistics Co., Ltd. | Shanghai, the PRC | June 4, 2003 | 100 | % | Transportation and warehouse storage management service | ||||||
| 21 | Hangzhou Shengfeng Logistics Co., Ltd. | Zhejiang, the PRC | June 10, 2010 | 100 | % | Transportation and warehouse storage management service | ||||||
| 22 | Nanjing Shengfeng Logistics Co., Ltd. | Jiangsu, the PRC | August 30, 2011 | 100 | % | Transportation and warehouse storage management service | ||||||
| 23 | Suzhou Shengfeng Logistics Co., Ltd. | Jiangsu, the PRC | January 14, 2005 | 90 | % | Transportation and warehouse storage management service | ||||||
| 24 | Suzhou Shengfeng Supply Chain Management Co., Ltd. | Jiangsu, the PRC | August 9, 2019 | 100 | % | Transportation and warehouse storage management service | ||||||
| 25 | Shengfeng Supply Chain Management Co., Ltd. | Fujian, the PRC | June 19, 2014 | 100 | % | Transportation and warehouse storage management service | ||||||
| 26 | Fuzhou Shengfeng Transportation Co., Ltd. | Fujian, the PRC | April 18, 2019 | 100 | % | Transportation and warehouse storage management service | ||||||
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 1. | ORGANIZATION AND NATURE OF OPERATIONS (CONTINUED) |
| No. | Name of subsidiaries | Place of incorporation | Date of incorporation or acquisition | Percentage of direct or indirect | Principal activities | |||||||
| 27 | Sichuan Shengfeng Logistics Co., Ltd. | Sichuan, the PRC | June 27, 2019 | 100 | % | Transportation and warehouse storage management service | ||||||
| 28 | Fujian Shengfeng Logistics Co., Ltd. | Fujian, the PRC | April 2, 2020 | 100 | % | Transportation and warehouse storage management service | ||||||
| 29 | Fujian Dafengche Information Technology Co. Ltd. | Fujian, the PRC | August 26, 2020 | 100 | % | Software engineering | ||||||
| 30 | Ningde Shengfeng Logistics Co. Ltd. | Fujian, the PRC | November 12, 2018 | 51 | % | Transportation and warehouse storage management service | ||||||
| 31 | Shengfeng Logistics (Zhejiang) Co., Ltd. | Zhejiang, the PRC | February 1, 2021 | 100 | % | Transportation and warehouse storage management service | ||||||
| 32 | Chengdu Shengfeng Supply Chain Management Co., Ltd. | Chengdu, the PRC | October 12, 2021 | 100 | % | Supply chain management service | ||||||
| 33 | Shengfeng Logistics Group (Ningde) Supply Chain Management Co., Ltd. | Fujian, the PRC | September 23, 2022 | 100 | % | Supply chain management service | ||||||
| 34 | Anhui Shengfeng Supply Chain Management Co., Ltd. | Anhui, the PRC | November 29, 2023 | 100 | % | Transportation and warehouse storage management service | ||||||
| 35 | Shenzhen Tianyu Shengfeng Supply Chain Management Co., Ltd. | Guangdong, the PRC | May 19, 2023 | 100 | % | Transportation and supply chain management service | ||||||
| 36 | Ningbo Shengfeng Supply Chain Co., Ltd. | Zhejiang, the PRC | April 16, 2024 | 100 | % | Transportation and warehouse storage management service | ||||||
| 37 | Qingdao Shengfeng Supply Chain Co., Ltd. | Shandong, the PRC | April 22, 2024 | 100 | % | Transportation and warehouse storage management service | ||||||
| 38 | Zhongshan Shengfeng Supply Chain Management Co., Ltd. | Guangdong, the PRC | May 15, 2024 | 100 | % | Transportation and warehouse storage management service | ||||||
| 39 | Hunan Shengfeng Supply Chain Management Co., Ltd. | Hunan, the PRC | May 23, 2024 | 100 | % | Transportation and warehouse storage management service | ||||||
| 40 | Jiangxi Shengfeng Supply Chain Management Co., Ltd. | Jiangxi, the PRC | May 24, 2024 | 100 | % | Transportation and warehouse storage management service | ||||||
| 41 | Dongguan Shengfeng Supply Chain Management Co., Ltd. | Guangdong, the PRC | July 7, 2024 | 100 | % | Transportation and warehouse storage management service | ||||||
| 42 | Langfang Shengfeng Logistics Co., Ltd. | Hebei, the PRC | August 27, 2024 | 100 | % | Transportation and warehouse storage management service | ||||||
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 1. | ORGANIZATION AND NATURE OF OPERATIONS (CONTINUED) |
| No. | Name of subsidiaries | Place of incorporation | Date of incorporation or acquisition | Percentage of direct or indirect | Principal activities | |||||||
| 43 | Liaoning Tianyu Changsheng Supply Chain Management Co., Ltd. | Liaoning, the PRC | October 16, 2024 | 66 | % | Transportation and warehouse storage management service | ||||||
| 44 | Chongqing Tianyu Shengfeng Supply Chain Management Co., Ltd. | Chongqin, the PRC | October 21, 2024 | 100 | % | Transportation and supply chain management service | ||||||
| 45 | Fujian Shengfeng Fulai Low Altitude Comprehensive Service Co., Ltd. | Fujian, the PRC | November 7, 2024 | 51 | % | Transportation and cargo packaging service | ||||||
| 46 | Fujian Shengfeng Zhuoyue Shipping Engineering Technology Co., Ltd. | Fujian, the PRC | December 9, 2024 | 51 | % | Technical services and development | ||||||
| 47 | Zhangzhou Shengfeng Logistics Co., Ltd. | Fujian, the PRC | May 14, 2025 | 100 | % | Transportation and warehouse storage management service | ||||||
| Significant subsidiaries of Tianyu: | ||||||||||||
| 48 | Yichun Shengfeng Logistics Co., Ltd. | Jiangxi, the PRC | December 1, 2022 | 100 | % | Transportation and warehouse storage management service | ||||||
| 49 | Hubei Tianyu Shengfeng Logistics Co., Ltd. | Hubei, the PRC | November 14, 2023 | 100 | % | Transportation and supply chain management service | ||||||
Contractual Agreements
The Company conducts its operations through a series of agreements with the VIE and its subsidiaries as stated above. The VIE and its subsidiaries are utilized solely to facilitate the Company’s participation in transportation and warehouse storage management services in the PRC where foreign ownership is restricted. As such, Shengfeng VIE is controlled through contractual arrangements in lieu of direct equity ownership by the Company or any of its subsidiaries. Such contractual arrangements were made effective by a series of six agreements (collectively the “Contractual Arrangements”, or “the VIE Agreements,” which were signed on January 7, 2021).
As a result of the direct ownership in Tianyu and the Contractual Arrangements, the Company is regarded as the primary beneficiary of the VIE and its subsidiaries. Therefore, the VIE and its subsidiaries were treated as the consolidated entities under U.S. GAAP.
The significant terms of the Contractual Arrangements are as follows:
Equity Pledge Agreements
Each equity holder of the VIE has pledged all of his/her shares in the VIE and all other rights relevant to the shares to WFOE, as a collateral security for his/her and/or the VIE’s obligations to pay off all debt to WFOE, including consulting and services fees payable to WFOE. In the event of default of any payment obligation, WFOE will be entitled to certain rights, including transferring the pledged shares to itself and disposing the pledged shares through a sale or auction.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 1. | ORGANIZATION AND NATURE OF OPERATIONS (CONTINUED) |
Contractual Agreements (continued)
The Equity Pledge Agreement is effective until the full payment of the service fees under the Technical Consultation and Service Agreement and upon termination of Shengfeng Logistics’ obligations under the Technical Consultation and Service Agreement, or upon the transfer of shares of the Equity Shareholders.
The purposes of the Equity Pledge Agreement are to (1) guarantee the performance of Shengfeng Logistics’ obligations under the Technical Consultation and Service Agreement, (2) make sure the Equity Shareholders do not transfer or assign the pledged shares, or create or allow any encumbrance that would prejudice Tianyu’s interests without Tianyu’s prior written consent, and (3) provide Tianyu control over Shengfeng Logistics under certain circumstances. In the event Shengfeng Logistics breaches its contractual obligations under the Technical Consultation and Service Agreement, Tianyu will be entitled to dispose of the pledged shares in accordance with relevant PRC laws.
As of the date of this unaudited condensed interim report, the share pledges under the Equity Pledge Agreement have been registered with the competent PRC regulatory authority.
Exclusive Technical Consultation and Service Agreements
The VIE has entered into an exclusive technical consultation and service agreement with WFOE, pursuant to which, WFOE is engaged to provide certain technical services to the VIE, depending on the licenses obtained and held by the VIE. This technical consultation and service agreement will remain effective for 20 years and it can be extended by WFOE unilaterally. WFOE is entitled to collect service fees for the services it provides to the VIE, and the service fees are adjusted annually through written agreements. Technical service fees are composed of the basic annual fee, which is equal to 50% of the after-tax income of the VIE, and a floating fee, which shall not exceed the after-tax income after deducting paid basic annual fees. Due to its control over the VIE, WFOE has the right to determine the service fees to be charged to the VIE by considering, among others, the technical complexity of the services, the actual costs that may be incurred for providing the services and the VIE’s revenue.
The Technical Consultation and Service Agreement became effective on January 7, 2021 and will remain effective for 20 years. Such agreement can be extended if Tianyu provides its notice of extension to Shengfeng Logistics unilaterally prior to the expiration date of this agreement. Shengfeng Logistics shall use its best efforts to renew its business license and extend its operation term until and unless otherwise instructed by Tianyu.
The Technical Consultation and Service Agreement does not prohibit related party transactions. The Company’s audit committee is required to review and approve in advance any related party transactions, including transactions involving Tianyu or Shengfeng Logistics.
Exclusive Call Option Agreements
The equity shareholders of the VIE (the “Equity Shareholders”) have granted WFOE the exclusive and irrevocable right to purchase or to designate one or more person(s) at their discretion to purchase part or all of the equity interests in the VIE from the Equity Shareholders for a purchase price at any time, subject to the lowest price permitted by PRC laws and regulations. The VIE and its Equity Shareholders have agreed that without prior written consent of WFOE, the respective Equity Shareholders cannot sell, transfer, pledge or dispose their equity interests, and the VIE cannot sell, transfer, pledge or dispose, including but not limited to, the equity interests, significant assets, significant revenue and significant business. Also as agreed, the VIE cannot declare any dividend or change capitalization structure of the VIE and cannot enter into any loan or investment agreements without prior written consent of WFOE. Furthermore, the Equity Shareholders of the VIE have agreed that any proceeds from, including but not limited to, the sales of the Equity Shareholders’ equity interests in the VIE should be gratuitously paid to WFOE or one or more person(s) at their discretion. The Call Option Agreement will remain effective until all equity options in VIE held by such Equity Shareholders are transferred or assigned to WFOE or their designated representatives.
The Call Option Agreement remains effective until all the equity of Shengfeng Logistics is legally transferred under the name of Tianyu and/or other entity or individual designated by it.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 1. | ORGANIZATION AND NATURE OF OPERATIONS (CONTINUED) |
Contractual Agreements (continued)
Voting Rights Proxy Agreement
Pursuant to the irrevocable power of attorney, each of the Equity Shareholders of the VIE appointed WFOE as his or her attorney-in-fact to exercise such shareholder’s rights under PRC law and the relevant articles of association, including but not limited to, attending shareholders meetings, voting on their behalf on all matters requiring shareholders’ approval, including but not limited to, sale, transfer, pledge, or disposition of all or part of the Equity Shareholders’ equity interests, and designating and appointing the legal representative, directors, supervisors, chief executive officer and other senior management members of the VIE. Each power of attorney will remain in force until such Equity Shareholder ceases to be a shareholder of the VIE. Each shareholder has waived all his or her rights in connection with his or her equity interests, and confirmed that such rights have been authorized to WFOE under each power of attorney.
The Voting Rights Proxy Agreement became effective on January 7, 2021 and will remain effective for 20 years. Such agreement can be extended if Tianyu provides its notice of extension unilaterally prior to the expiration date of this agreement. All other parties shall agree with such extension without reserve.
Power of attorney
Each of the Equity Shareholders has signed a power of attorney (the “Power of Attorney”), pursuant to which, each of the Equity Shareholders has authorized WFOE to act as his or her exclusive agent and attorney with respect to all rights of such individual as a shareholder of the VIE, including but not limited to: (a) attending shareholders’ meetings; (b) exercising all the shareholder’s rights that shareholders are entitled to under PRC laws and the Articles of Association of the VIE, including but not limited to, sale, transfer, pledge and disposition of the equity interests of the VIE; and (c) designating and appointing the legal representative, chairperson, directors, supervisors, chief executive officer and other senior management members of the VIE. The Power of Attorney has the same term as the Voting Rights Proxy Agreement.
The Powers of Attorney is irrevocable and continuously valid from the date of execution of the Powers of Attorney, so long as the Equity Shareholders are shareholders of Shengfeng Logistics.
Spousal consent letter
Each of the respective spouses of the individual Equity Shareholders has executed an additional spousal consent letter which contains terms as described below. Pursuant to the spousal consent letters, each of the respective spouse of the individual Equity Shareholders, unconditionally and irrevocably agreed that the equity interests in the VIE held by and registered in the name of his/her spouse will be disposed of pursuant to the equity pledge agreement, the exclusive call option agreement and the shareholders’ voting rights proxy agreement. The spouse agreed not to assert any rights over the equity interests in the VIE held by his/her spouse.
Based on the foregoing Contractual Arrangements, which grant Shengfeng WFOE the effective control of Shengfeng VIE and enable Shengfeng WFOE to receive all of their expected residual returns, the Company accounts for Shengfeng VIE as the VIE. Accordingly, the Company consolidates the accounts of Shengfeng VIE for the periods presented herein, in accordance with Regulation S-X-3A-02 promulgated by the Securities Exchange Commission (“SEC”), and Accounting Standards Codification (“ASC”) 810-10, Consolidation.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for information pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2025 and 2024 are not necessarily indicative of the results that may be expected for the full year. The information included in this unaudited condensed interim report should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto included in Shengfeng’s annual financial statements for the fiscal year ended December 31, 2024 filed with the SEC on March 28, 2025.
Principles of Consolidation
The unaudited condensed consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIE and the VIE’s subsidiaries over which the Company exercises control and, where applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. All significant transactions and balances between the Company, its subsidiaries, the VIE and the VIE’s subsidiaries have been eliminated upon consolidation.
Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.
A VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, bears the risks of, and enjoys the rewards normally associated with, ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity.
Non-controlling interest represents the portion of the net assets of subsidiaries attributable to interests that are not owned or controlled by the Company. The non-controlling interest is presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interest’s operating results are presented on the face of the consolidated statements of income and comprehensive income as an allocation of the total income for the year between non-controlling shareholders and the shareholders of the Company.
All significant transactions and balances between the Company, its subsidiaries, the VIE and the VIE’s subsidiaries have been eliminated upon consolidation.
Use of Estimate and Assumptions
The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Estimates are adjusted to reflect actual experience when necessary. Actual results could differ from these estimates.
Variable Interest Entities
The Company applies the guidance codified in Accounting Standard Codification 810, Consolidations (“ASC 810”) on accounting for the VIE and its respective subsidiaries, which requires certain variable interest entities to be consolidated by the primary beneficiary of the entity in which it has a controlling financial interest. A VIE is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support; (b) as a group, the holders of the equity investment at risk lack the ability to make certain decisions, the obligation to absorb expected losses or the right to receive expected residual returns, or (c) an equity investor has voting rights that are disproportionate to its economic interest and substantially all of the entity’s activities are on behalf of the investor. The accompanying unaudited condensed consolidated financial statements include the financial statements of the Company, its subsidiaries and the VIE.
The Company is considered the primary beneficiary of a VIE or its subsidiaries if the Company had variable interests, that will absorb the entity’s expected losses, receive the entity’s expected residual returns, or both.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Variable Interest Entities (continued)
The Company’s total assets and liabilities presented in the accompanying unaudited condensed consolidated financial statements represent substantially all of the total assets and liabilities of the VIE because the other entities in the consolidation are non-operating holding entities with nominal assets and liabilities. The following financial statement amounts and balances of the VIE were included in the accompanying unaudited condensed unaudited condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024, and unaudited condensed consolidated statements of income and comprehensive income for the six months ended June 30, 2025 and 2024, respectively:
|
As of June 30, |
As of December 31, |
|||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 14,100 | $ | 34,318 | ||||
| Restricted cash | 4,598 | 5,545 | ||||||
| Notes receivable | 6,797 | 7,309 | ||||||
| Accounts receivable, net | 120,661 | 126,467 | ||||||
| Due from related parties | 2,279 | 662 | ||||||
| Prepayments and other current assets, net | 36,360 | 28,912 | ||||||
| Total Current Assets | 184,795 | 203,213 | ||||||
| Property and equipment, net | 66,876 | 57,827 | ||||||
| Intangible assets, net | 11,235 | 11,413 | ||||||
| Operating lease right-of-use assets, net | 7,980 | 9,827 | ||||||
| Long-term investments | 1,921 | 1,900 | ||||||
| Deposit for investment | 10,617 | 10,573 | ||||||
| Deferred tax assets | 1,519 | 1,396 | ||||||
| Other non-current assets | 4,215 | 9,623 | ||||||
| Total Assets | $ | 289,158 | $ | 305,772 | ||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Notes payable | $ | 12,176 | $ | 14,907 | ||||
| Accounts payable | 63,477 | 91,936 | ||||||
| Short-term bank loans | 48,739 | 39,401 | ||||||
| Long-term bank loans, current | 412 | |||||||
| Due to related parties | 1,436 | 1,687 | ||||||
| Salary and welfare payables | 2,324 | 3,017 | ||||||
| Accrued expenses and other current liabilities | 8,505 | 7,508 | ||||||
| Operating lease liabilities, current | 3,972 | 4,218 | ||||||
| Tax payables | 3,595 | 2,994 | ||||||
| Total Current Liabilities | 144,636 | 165,668 | ||||||
| Long-term bank loans | 16,046 | 16,390 | ||||||
| Operating lease liabilities, non-current | 3,188 | 4,648 | ||||||
| Deferred tax liabilities | 133 | 49 | ||||||
| Other non-current liabilities | 2,695 | 2,839 | ||||||
| Total Liabilities | 166,698 | 189,594 | ||||||
| Net assets | $ | 122,460 | $ | 116,178 | ||||
| For the Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Total revenues | $ | 256,540 | $ | 224,427 | ||||
| Cost of revenues | $ | (233,711 | ) | $ | (204,666 | ) | ||
| Income from operations | $ | 7,285 | $ | 5,962 | ||||
| Net income | $ | 5,570 | $ | 4,434 | ||||
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Foreign currencies translation and transaction
The reporting currency of the Company is the U.S. dollar. The Company in mainland China conducts its businesses in the local currency, Renminbi (RMB), as its functional currency. Monetary assets and liabilities are translated at the unified exchange rate as quoted by the People’s Bank of China at the end of the period. The statement of income accounts is translated at the average translation rates and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income (loss). Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.
Translation adjustments included in accumulated other comprehensive loss amounted to $8,540 and $9,047 as of June 30, 2025 and December 31, 2024, respectively. The balance sheet amounts, with the exception of shareholders’ equity, at June 30, 2025 and December 31, 2024 were translated at RMB7.1586 and RMB7.1884, respectively. The shareholders’ equity accounts were stated at their historical rates. The average translation rates applied to the statements of income accounts for the six months ended June 30, 2025 and 2024 were RMB7.1839, RMB7.1051 to $1.00 respectively. Cash flows are also translated at average translation rates for the period, therefore, amounts reported on the unaudited condensed consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the unaudited condensed consolidated balance sheets.
Cash and cash equivalents
Cash and cash equivalents represent demand deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal or use, and which have original maturities of three months or less and are readily convertible to known amounts of cash. The Company maintains most of its bank accounts in the mainland of China. Cash balances in bank accounts in mainland China are insured by the People’s Bank of China Financial Stability Department (“FSD”) while there is a RMB500,000 deposit insurance limit for a legal entity’s aggregated balance at each bank. As of June 30, 2025 and December 31, 2024, the Company had approximately $14.3 million and $34.7 million, respectively, of cash in banks, most held in the banks located in the mainland of China. Most of cash balance as of June 30, 2025 and December 31, 2024 are denominated in RMB.
Restricted cash
Restricted cash represents cash that cannot be withdrawn without the permission of third parties. The Company’s restricted cash is substantially cash balance in designated bank accounts as security for payment processing lawsuit, bank acceptance notes payables, letters of credit and letters of guarantee. Restriction on the use of such cash and the interest earned thereon is imposed by the banks and remains effective throughout the term of the security period. Upon maturities of the security period, the bank’s deposits are available for general use by the Company.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Fair value of financial instruments
ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. |
| ● | Level 3 — inputs to the valuation methodology are unobservable. |
Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, prepayments and other current assets, due from related parties, accounts payable, due to related parties, short-term bank loans, salary and welfare payables, accrued expenses and other current liabilities, current operating lease liabilities and taxes payable, approximates their recorded values due to their short-term maturities. The carrying value of long-term lease liabilities approximated its fair value as of June 30, 2025 and December 31, 2024 as the interest rates applied reflect the current market yield for comparable financial instruments.
Accounts receivable, net
Accounts receivable are recognized in the period when the Company has provided services to its customers and when its right to consideration is unconditional. On January 1, 2023, the Company adopted ASU 2016-13, “Financial Instruments — Credit Losses (Accounting Standards Codification (“ASC” Topic 326): Measurement on Credit Losses on Financial Instruments”, including certain subsequent amendments, transitional guidance and other interpretive guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, ASU 2020-02 and ASU 2020-03 (collectively, including ASU 2016-13, “ASC 326”). ASC 326 introduces an approach based on expected losses to estimate the allowance for doubtful accounts, which replaces the previous incurred loss impairment model. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. The Company’s estimation of allowance for credit losses considers factors such as historical credit loss experience, age of receivable balances, current market conditions, reasonable and supportable forecasts of future economic conditions, as well as an assessment of receivables due from specific identifiable counterparties to determine whether these receivables are considered at risk or uncollectible. The Company evaluates its accounts receivable for expected credit losses on a regular basis. The Company maintains an estimated allowance for credit losses to reduce its accounts receivable to the amount that it believes will be collected. The Company considers factors in assessing the collectability of its receivables, such as the age of the amounts due, the customer’s payment history, credit-worthiness and other specific circumstances related to the accounts. The Company adjusts the allowance percentage periodically when there are significant differences between estimated bad debts and actual bad debts. If there is strong evidence indicating that the accounts receivable is likely to be unrecoverable, the Company also makes specific allowance in the period in which a loss is determined to be probable. Accounts receivable balances are written off after all collection efforts have been exhausted. The allowance for credit losses was approximately $3.3 million and $3.0 million as of June 30, 2025 and December 31, 2024, respectively.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Prepayments and other assets, net
Prepayment and other assets primarily consist of VAT recoverable, advances to vendors for purchasing goods, long-lived assets or services that have not been received or provided, advances to employees, security deposits made to customers and advances to employees. Prepayment and other assets are classified as either current or non-current based on the terms of the respective agreements. These advances are unsecured and are reviewed periodically to determine whether their carrying value has become impaired. The Company considers the assets to be impaired if the collectability and recoverability of the advance becomes doubtful. The Company uses the aging method to estimate the allowance for uncollectible balances. The allowance is also based on management’s best estimate of specific losses on individual exposures, as well as a provision on historical trends of collections and utilizations. Actual amounts received or utilized may differ from management’s estimate of credit worthiness and the economic environment. The allowance for credit losses for prepayments and other assets were approximately $0.7 million and $0.6 million as of June 30, 2025 and December 31, 2024, respectively.
Notes payable
Notes payable represents trade accounts payable due to various suppliers where the Company’s banks have guaranteed the payment. The notes are non-interest bearing and normally paid within three to twelve months. The Company shall keep sufficient cash in designated bank accounts or notes receivable pledged to the bank as security for payment processing.
Revenue recognition
The Company adopted ASC Topic 606. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is the transaction price the Company expects to be entitled to in exchange for the promised services in a contract in the ordinary course of the Company’s activities and is recorded net of value-added tax (“VAT”). To achieve that core principle, the Company applies the following steps:
Step 1: Identify the contract (s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
The Company generates revenues from providing transportation services and warehouse storage management services. No practical expedients were used when adopting ASC 606. Revenue recognition policies for each type of revenue stream are as follows:
Transportation services
The Company derives its transportation service revenue by providing logistic services based on customers’ orders. The Transportation service is considered a performance obligation as the customer can only obtain benefits when the goods are delivered to the destination. The transaction price is predetermined according to the distance of the transportation as well as the volume of the goods. Generally, the credit term is within two months. There is no other obligation in our contracts, such as return, refund or warranties. Revenue is recognized at the point in time when delivery of goods is made and the customer has accepted delivery.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Revenue recognition (continued)
Warehouse storage management services
The Company derives revenue from the warehouse storage management service provided to third-party companies, including handling services, security and other services. The promised services in each warehouse storage management service contract are accounted as a single performance obligation, as the promised services in a contract are not distinct and are considered as a significant integrated service. The consideration is predetermined in the contract according to the unit price, space and term as well as the services used with no other obligations such as return, refund or warranties. No variable considerations exist such as discounts, rebates, refunds, credits, price concession, incentive performance bonuses or penalties. Pursuant to the service agreement, the Company provides the customers with warehouse storage management service during the service period. Service fees for which are paid by such customers on a monthly basis. The revenue is recognized on a straight-line basis over the period of the warehouse storage management service term, as customers simultaneously receive and consume the benefits of these services throughout the service period.
Principal and Agent Considerations
In the Company’s transportation business, the Company utilizes independent contractors and third-party carriers in the performances of some transportation services as and when needed. U.S. GAAP requires us to evaluate, using a control model, whether the Company itself promises to provide services to the customers (as a principal) or to arrange for services to be provided by another party (as an agent). Based on the Company’s evaluation using a control model, the Company determined that in all of its major business activities, it serves as a principal rather than an agent within their revenue arrangements. Revenue and the associated purchased transportation costs are both reported on a gross basis within the consolidated statements of income and comprehensive income.
Contract liabilities
A contract liability is recognized when a payment is received or a payment is due (whichever is earlier) from a customer before the Company transfers the related services. Contract liabilities are recognized as revenue when the Company performs under the contract. Revenue recognized that was included in contract liabilities at the beginning of the year was approximately $0.9 million and $0.7 million for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025 and December 31, 2024, contract liabilities amounted to approximately $1.2 million and $1.6 million, respectively, were included in “accrued expenses and other current liabilities.”
Disaggregated information of revenues by services:
|
For the Six Months Ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| Revenues: | ||||||||
| Transportation | $ | 254,716 | $ | 217,450 | ||||
| Warehouse storage management service | 7,053 | 8,274 | ||||||
| Others | 1,665 | 1,407 | ||||||
| Total revenues | $ | 263,434 | $ | 227,131 | ||||
As of June 30, 2025 and December 31, 2024, the Company had outstanding contracts for providing transportation and warehouse management services amounting to approximately $1.1 million and $0.5 million, all of which is expected to be completed within 12 months from June 30, 2025 and December 31, 2024, respectively.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Revenue recognition (continued)
The Company’s operations are primarily based in the PRC, where the Company derived a substantial portion of revenues. Disaggregated information of revenues by geographic locations are as follows:
|
For the Six Months Ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| Fujian | $ | 197,729 | $ | 160,940 | ||||
| Beijing | 12,352 | 13,690 | ||||||
| Zhejiang | 7,889 | 8,807 | ||||||
| Liaoning | 7,020 | 3,959 | ||||||
| Jiangxi | 6,407 | 4,183 | ||||||
| Others | 32,037 | 35,552 | ||||||
| Total | $ | 263,434 | $ | 227,131 | ||||
Leases
The Company follows ASC 842 — Leases (“ASC 842”), which requires lessees to record right-of-use (“ROU”) assets and related lease obligations on the balance sheet, as well as disclose key information regarding leasing arrangements.
The Company determines whether an arrangement is or contains a lease at inception. A lease for which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lessee as an operating lease. All leases of the Company are currently classified as operating leases. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liability, current, and operating lease liability, non-current in the Company’s consolidated balance sheets.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. The operating lease ROU assets and lease liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The operating lease ROU assets also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease. Renewal options are considered within the ROU assets and lease liabilities when it is reasonably certain that the Company will exercise that option. Lease expenses for lease payments are recognized on a straight-line basis over the lease term.
For operating leases with a term of one year or less, the Company has elected not to recognize a lease liability or ROU asset on its consolidated balance sheet. Instead, it recognizes the lease payments as expenses on a straight-line basis over the lease term. Short-term lease costs are immaterial to its consolidated statements of operations and cash flows. The Company has operating lease agreements with insignificant non-lease components and have elected the practical expedient to combine and account for lease and non-lease components as a single lease component.
The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Income taxes
The Company follows the liability method of accounting for income taxes in accordance with ASC 740 (“ASC 740”), Income Taxes. The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the unaudited condensed consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes have been incurred during the six months ended June 30, 2025 and 2024. All of the tax returns of the Company’s subsidiaries in the PRC remain subject to examination by the tax authorities for five years from the date of filing.
Risks and Concentration
| a) | Interest rate risk |
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s interest rate risk arises primarily from bank loans. Bank loans issued at variable rates and fixed rates expose the Company to cash flow interest rate risk and fair value interest rate risk respectively.
| b) | Concentration of credit risk |
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of June 30, 2025 and December 31, 2024, approximately $18.9 million and $40.2 million were deposited with financial institutions located in the PRC, respectively, where there is a RMB500,000 deposit insurance limit for a legal entity’s aggregated balance at each bank. As a result, the amounts not covered by deposit insurance were approximately $17.1 million and $37.7 million as of June 30, 2025 and December 31, 2024, respectively.
The Company is also exposed to risk from its accounts receivable and other receivables. These assets are subjected to credit evaluations. An allowance has been made for estimated unrecoverable amounts which have been determined by reference to past default experience and the current economic environment.
A majority of the Company’s expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at the exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to process the remittance.
Shengfeng WFOE and its subsidiaries, Shengfeng VIE and its subsidiaries (collectively “Shengfeng PRC entities”), the functional currency is the RMB, and the Company’s unaudited condensed consolidated financial statements are presented in U.S. dollars. The RMB depreciated by 1.49% in the year ended December 31, 2024, but appreciation by 0.41% in the six months ended June 30, 2025. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. The change in the value of the RMB relative to the U.S. dollar may affect its financial results reported in the U.S. dollar terms without giving effect to any underlying changes in its business or results of operations. Currently, the Company’s assets, liabilities, revenues and costs are denominated in RMB.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Risks and Concentration (continued)
To the extent that the Company needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if the Company decides to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to the Company.
| c) | Concentration of customers and suppliers |
Substantially all revenue was derived from customers located in China. There are no customers from whom revenue individually represented greater than 10% of the total revenue of the Company in any of the periods presented.
For the six months ended June 30, 2025, Hubei LuGe Logistics Co., Ltd. contributed approximately 31.8% of total cost of revenues of the Company. For the six months ended June 30, 2024, Fujian Jinwang Yuntong Logistics Technology Co., Ltd. contributed approximately 27.5% of total cost of revenues of the Company.
As of June 30, 2025 and December 31, 2024, no customers accounted more than 10% of the accounts receivable.
As of June 30, 2025, no supplier contributed more than 10% of total accounts payable balances. As of December 31, 2024, Hubei LuGe Logistics Co., Ltd. contributed approximately 10.9% of total account payable balances and Jilin Baoqi Smart Logistics Industry Center Co., Ltd. contributed approximately 10.8% of total account payable balances.
| d) | The VIE risk |
Under the Contractual Agreements with the consolidated the VIE, the Company has the power to direct activities of the consolidated the VIE and the VIE’s subsidiaries through the Company’s PRC subsidiary, and can have assets transferred freely out of the consolidated the VIE and the VIE’s subsidiaries without restrictions. Therefore, the Company considers that there is no asset of the consolidated the VIE that can only be used to settle obligations of the respective consolidated the VIE, except for the registered capital of the consolidated the VIE amounting to approximately $27.2 million as of June 30, 2025 and December 31, 2024. Since the consolidated the VIE and the VIE’s subsidiaries are incorporated as limited liability companies under the PRC Law, creditors of the consolidated the VIE and the VIE’s subsidiaries do not have recourse to the general credit of the Company.
The Company believes that the Company’s PRC subsidiary’s Contractual Arrangements with the consolidated the VIE and the Equity Shareholders are in compliance with PRC laws and regulations, as applicable, and are legally binding and enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce these Contractual Arrangements.
In addition, if the current structure or any of the Contractual Arrangements were found to be in violation of any existing or future PRC law, the Company may be subject to penalties, which may include, but not limited to, cancellation or revocation of the Company’s business and operating licenses and being required to restructure the Company’s operations or terminate the Company’s operating activities. The imposition of any of these or other penalties may result in a material and adverse effect on the Company’s ability to conduct its operations. In such case, the Company may not be able to operate or control the VIE, which may result in deconsolidation of the VIE.
Contingencies
From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company’s management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would have a material adverse impact on the Company’s consolidated financial position, results of operations and cash flows.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Segment reporting
ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Group’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Group’s business segments. The Group uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Group’s the chief operating decision maker (CODM) for making operating decisions and assessing performance as the source for determining the Group’s reportable segments. The Company’s chief operating decision-maker (“CODM”) has been identified as its Chief Executive Officer. The Company’s CODM relies upon the consolidated results of operations as a whole when making decisions about allocating resources and assessing the performance of the Company. As a result of the assessment made by CODM, the Company has only one reportable segment as defined by ASC 280. The single reportable segment contains Transportation, Warehouse storage management service and Others. The Company has concluded that consolidated net income is the measure of segment profitability. The Company does not distinguish between markets or segments for the purpose of internal reporting. The Company’s long-lived assets are all located in the PRC and substantially all of the Company’s revenues are derived from the PRC. Therefore, no geographical segments are presented. As such, all financial segment information required by ASC 280 can be found in the unaudited condensed consolidated financial statements.
Recent Accounting Pronouncements
The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company, or EGC, and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This ASU aligns the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. The Company is currently evaluating the impact of adopting ASU 2023-06 on its consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.
Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the unaudited condensed consolidated balance sheets, consolidated statements of income and comprehensive income (loss), changes in equity and cash flows.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 3. | ACCOUNTS RECEIVABLE, NET |
Accounts receivable, net consisted of the following:
| As of June 30, 2025 |
As of December 31, 2024 |
|||||||
| Accounts receivable | $ | 127,870 | $ | 130,345 | ||||
| Less: Allowance for credit losses | (3,259 | ) | (3,045 | ) | ||||
| Total | $ | 124,611 | $ | 127,300 | ||||
Movement of allowance for credit losses:
|
For the June 30, |
Year Ended December 31, 2024 |
|||||||
| Beginning balance | $ | 3,045 | $ | 3,269 | ||||
| Provision for (recovery of) credit losses | 264 | (61 | ) | |||||
| Written-off | (63 | ) | (117 | ) | ||||
| Exchange rate effect | 13 | (46 | ) | |||||
| Ending balance | $ | 3,259 | $ | 3,045 | ||||
| 4. | PREPAYMENTS AND OTHER ASSETS, NET |
The prepayments and other assets, net consisted of the following:
| As of June 30, 2025 |
As of December 31, 2024 |
|||||||
| Deposits (a) | $ | 13,238 | $ | 14,510 | ||||
| Prepayments for goods and services | 5,734 | 3,390 | ||||||
| VAT recoverable (b) | 7,601 | 5,600 | ||||||
| Prepayments and other receivables for property and equipment (c) | 1,426 | 5,232 | ||||||
| Loan receivable (d) | 12,782 | 9,738 | ||||||
| Disposal consideration (d) | 698 | 696 | ||||||
| Advances to employees | 92 | 81 | ||||||
| Others | 683 | 696 | ||||||
| Prepayments and other assets | 42,254 | 39,943 | ||||||
| Less: Allowance for credit losses for prepayments and other assets | (693 | ) | (573 | ) | ||||
| Prepayments and other assets, net | 41,561 | 39,370 | ||||||
| Less: Prepayments and other current assets, net | (37,346 | ) | (29,684 | ) | ||||
| Other non-current assets | $ | 4,215 | $ | 9,686 | ||||
| (a) | Deposits represent the refundable deposits to the lessors for the leased warehouses and office space. |
| (b) | VAT recoverable represents the balances that the Company can utilize to deduct its value-added tax liabilities within the next 12 months. |
| (c) | Prepayments and other receivables for property and equipment represent mainly prepayments and other receivables for constructions of logistic stations. |
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 4. | PREPAYMENTS AND OTHER ASSETS, NET (CONTINUED) |
| (d) | (i) On June 19, 2024, Shengfeng Supply Chain Management Co., Ltd. completed the transaction to sell 49% equity interest of Fujian Pingtan Tianyu Shengfeng Technology Co., Ltd. (“Pingtan SF”) and Pingtan SF’s subsidiary (Fujian Shengfeng Smart Technology Co., Ltd. (“SF Smart”)) to a third party for a consideration of approximately $6.8 million (RMB49.0 million). Shengfeng Supply Chain Management Co., Ltd. received approximately $6.1 million (RMB44.0 million) on December 31, 2024.
In addition, according to the agreement, Pingtan SF and Pingtan SF’s subsidiary (SF Smart) shall repay borrowing of approximately $6.8 million (RMB49.0 million) to the Company before July 30, 2024. As of June 30, 2025, the Company have received repayment of approximately $2.8 million (RMB20.0 million).
On July 25, 2025, Shengfeng Supply Chain Management Co., Ltd. and the third party signed an annulment agreement, pursuant to which, the above equity transaction shall be annulled and Shengfeng Supply Chain Management Co., Ltd. agreed to loan approximately $6.8 million (RMB49.0 million) to SF Smart. As a result, Shengfeng Supply Chain Management Co., Ltd. shall refund above-mentioned consideration to this third party and the third party shall transfer the 49% equity interest of Pingtan SF back to Shengfeng Supply Chain Management Co., Ltd. As of August 15, 2025, Shengfeng Supply Chain Management Co., Ltd. had refunded above-mentioned consideration of approximately $6.1 million (RMB44.0 million) to this third party and loaned approximately $2.8 million (RMB20.0 million) to SF Smart. The third party has transferred 49% equity interest of Pingtan SF back to Shengfeng Supply Chain Management Co., Ltd.
(ii) On June 11, 2024, for the purpose of acquiring a land use right to expand the Company’s logistic business, the Company signed Memorandum of Understanding of Share Purchase Agreement (“2024 MOU”) with two shareholders of Hubei Tongzhou Information Harbor Co., Ltd (“Tongzhou”) to acquire 100% equity interest of Tongzhou, which owns land use right and constructed certain office and warehouse on such land use right. As of June 30, 2025, the Company made a loan of approximately $8.7 million (RMB62.5 million) to Tongzhou to secure the transaction and provide working capital for its further development. On July 30, 2025, both parties reach a supplementary agreement to pay interest at annual rate of 2.6% by quarter since August 1, 2025. As of the date of this report, the transaction is not completed yet. Movement of allowance for credit losses for prepayments and other assets |
| For the six months ended June 30, 2025 |
Year Ended December 31, 2024 |
|||||||
| Beginning balance | $ | 573 | $ | 405 | ||||
| Provisions for credit losses for prepayments and other assets | 118 | 176 | ||||||
| Exchange rate effect | 2 | (8 | ) | |||||
| Ending balance | $ | 693 | $ | 573 | ||||
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 5. | RELATED PARTY TRANSACTIONS |
The table below sets forth the major related parties and their relationships with the Company as of June 30, 2025 and December 31, 2024, and for the six months ended June 30, 2025 and 2024:
| Name of related parties | Relationship with the Company | |
| Fujian Bafang Shengfeng Logistics Co., Ltd (“Fujian Bafang”) | An equity investee of the Company | |
| Fuzhou Tianyu Shengfeng Industrial Co., Ltd (“Fuzhou Tianyu”) | A company controlled by Yongxu Liu, CEO and Chairman of the Company | |
| Fuzhou Tianyu Shengfeng Property Management Co., Ltd (“Fuzhou Tianyu Management”) | A company under the control of a shareholder | |
| Fuzhou Tianyu Yuanmei Catering Co., Ltd (“Fuzhou Tianyu Catering”) | A company under the control of a shareholder | |
| Fujian Desheng Logistics Co., Ltd (“Fujian Desheng”) | A company under the control of a shareholder | |
| Yongxu Liu | The Company’s CEO and Chairman | |
| Yongteng Liu | CEO’s brother | |
| Fujian Yunlian Shengfeng Industry Co., Ltd., (“Fujian Yunlian”) | Shengfeng VIE’s shareholder | |
| Fuzhou Puhui Technology Co., Ltd | Non-controlling shareholder of Ningde Shengfeng Logistics Co. Ltd. | |
| Chongqing Changjiang River Modeling Material (Group) Co., Ltd. (“Chongqing Changjiang”) | Non-controlling shareholder of Liaoning Tianyu Changsheng Supply Chain Management Co., Ltd. | |
| Zhangwu Changjiang Materials Technology Co., Ltd. (“Zhangwu Changjiang”) | A company under the control of Chongqing Changjiang | |
| Changjiang Modeling Materials (Group) Kezuohou Banner Co., Ltd (“Changjiang Modeling”) | A company under the control of Chongqing Changjiang | |
| Kunshan Changjiang Modeling Materials Co., Ltd. (“Kunshan Changjiang”) | A company under the control of Chongqing Changjiang | |
| Chongqing Changjiang River Modeling Materials (Group) Xiantao Co., Ltd (“Xiantao Modeling”) | A company under the control of Chongqing Changjiang | |
| Chengdu Changjiang Modeling Materials Co., Ltd. (“Chengdu Changjiang”) | A company under the control of Chongqing Changjiang | |
| Shiyan Changjiang Modeling Materials Co., Ltd. (“Shiyan Changjiang”) | A company under the control of Chongqing Changjiang | |
| Chongqing Changjiang Modeling Materials Changzhou Co., Ltd. (“Changzhou Changjiang”) | A company under the control of Chongqing Changjiang |
| i) | Significant transactions with related parties were as follows: |
| For the Six Months Ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| Transportation services to Fujian Desheng | $ | 28 | $ | 116 | ||||
| Transportation services to Fujian Bafang | 4 | |||||||
| Transportation services to Chongqing Changjiang | 27 | |||||||
| Transportation services to Zhangwu Changjiang | 1,177 | |||||||
| Transportation services to Changzhou Changjiang | 123 | |||||||
| Transportation services to Shiyan Changjiang | 136 | |||||||
| Transportation services to Xiantao Modeling | 178 | |||||||
| Transportation services to Chengdu Changjiang | 4 | |||||||
| Transportation services to Changjiang Modeling | 2,120 | |||||||
| Transportation services to Kunshan Changjiang | 329 | |||||||
| Total | $ | 4,126 | $ | 116 | ||||
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 5. | RELATED PARTY TRANSACTIONS (CONTINUED) |
|
For the Six Months Ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| Transportation services from Fujian Bafang | $ | 1,394 | $ | 939 | ||||
| Lease services from Fuzhou Tianyu | $ | 124 | $ | 108 | ||||
| Lease services from Fuzhou Tianyu Management | $ | 8 | $ | 8 | ||||
| Catering services from Fuzhou Tianyu Catering | $ | $ | 1 | |||||
| ii) | Guarantees |
The Company’s shareholder, CEO and Chairman, Yongxu Liu, his spouse, Xiying Yang, Yongteng Liu, and Fuzhou Puhui Technology Co., Ltd, were the guarantors of the Company’s bank loans.
| iii) | Significant balances with related parties were as follows: |
| As of June 30, 2025 |
As of December 31, 2024 |
|||||||
| Due from related parties | ||||||||
| Fuzhou Tianyu | $ | 59 | $ | 41 | ||||
| Fujian Desheng | 39 | |||||||
| Zhangwu Changjiang | 1,077 | 26 | ||||||
| Changjiang Modeling | 296 | 582 | ||||||
| Kunshan Changjiang | 265 | 13 | ||||||
| Fujian Bafang | 4 | |||||||
| Chongqing Changjiang | 32 | |||||||
| Changzhou Changjiang | 88 | |||||||
| Shiyan Changjiang | 78 | |||||||
| Xiantao Modeling | 169 | |||||||
| Chengdu Changjiang | 5 | |||||||
| Fuzhou Tianyu Management | 1 | |||||||
| Fuzhou Puhui Technology Co., Ltd | 205 | |||||||
| Total | $ | 2,279 | $ | 701 | ||||
| As of June 30, 2025 |
As of December 31, 2024 |
|||||||
| Due to related parties | ||||||||
| Fujian Bafang (a) | $ | 1,436 | $ | 1,662 | ||||
| Fuzhou Tianyu | 18 | |||||||
| Fuzhou Tianyu Management | 7 | |||||||
| Yongteng Liu | 110 | |||||||
| Total | $ | 1,546 | $ | 1,687 | ||||
| (a) | On December 10, 2007, the Company entered into an interest-free loan agreement with Fujian Bafang for a principal amount of approximately $1.3 million (RMB 9.6 million). Such loan is due on demand. |
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 6. | NOTES PAYABLES |
| As of June 30, 2025 |
As of December 31, 2024 |
|||||||
| Bank acceptance notes payable issued by Industrial Bank Fuzhou Branch | $ | $ | 6,955 | |||||
| Commercial acceptance notes payable guaranteed by China Postal Savings Bank Fuzhou Branch | 8,404 | 4,196 | ||||||
| Letters of Credit issued by Industrial Bank Fuzhou Branch (a) | 3,772 | 3,756 | ||||||
| Total | $ | 12,176 | $ | 14,907 | ||||
| (a) | On September 30, 2024 and October 31, 2024, Industrial Bank Fuzhou Branch issued letter of credits approximately $1.8 million (RMB13.0 million) and approximately $2.0 million (RMB14.0 million) to the Company with due date of September 27, 2025 and September 30, 2025. These letters of credit were drawn down from Industrial Bank Fuzhou Branch’s credit line. |
The movement of notes payable is as follows:
| For the Six Months Ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| Beginning balance | $ | 14,907 | $ | 8,471 | ||||
| Additions | 4,190 | 19,000 | ||||||
| Repayments | (6,974 | ) | (16,889 | ) | ||||
| Exchange rate effect | 53 | (58 | ) | |||||
| Total | $ | 12,176 | $ | 10,524 | ||||
| 7. | BANK LOANS |
The following table presents bank loans from commercial banks as of June 30, 2025 and December 31, 2024:
| As of June 30, 2025 |
As of December 31, 2024 |
|||||||
| Bank of China Fuzhou Jin’an Branch | $ | 11,175 | $ | 11,295 | ||||
| China Merchant Bank Fuzhou Branch | 10,477 | 10,340 | ||||||
| Xiamen International Bank Co., Ltd. Fuzhou Branch | 8,381 | 6,956 | ||||||
| Haixia Bank of Fujian Fuzhou Jin’an Branch | 1,118 | 1,113 | ||||||
| Fujian Fuzhou Rural Commercial Bank Co., Ltd. Yuefeng Branch | 1,397 | 1,391 | ||||||
| Shanghai Pudong Development Bank Co., Ltd. Fuzhou Branch | 2,087 | |||||||
| Industrial Bank Fuzhou Branch | 10,603 | 4,994 | ||||||
| Haixia Bank of Fujian Fuzhou Minjiang Branch | 1,397 | 1,391 | ||||||
| China Industrial and Commercial Bank Fuzhou Branch | 4,191 | |||||||
| Bank of China Ningde Branch | 16,458 | 16,390 | ||||||
| Total | 65,197 | 55,791 | ||||||
| Less: Short-term bank loans | (48,739 | ) | (39,401 | ) | ||||
| Less: Long-term bank loans, current | (412 | ) | ||||||
| Long-term bank loans | $ | 16,046 | $ | 16,390 | ||||
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 7. | BANK LOANS (CONTINUED) |
The movement of bank loans is as follows:
| For the Six Months Ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| Beginning balance | $ | 55,791 | $ | 36,130 | ||||
| Additions | 36,331 | 36,070 | ||||||
| Repayments | (27,190 | ) | (26,882 | ) | ||||
| Exchange rate effect | 265 | (251 | ) | |||||
| Total | $ | 65,197 | $ | 45,067 | ||||
For the six months ended June 30, 2025 and 2024, the capitalized interest for the above bank loans was approximately $0.03 million and $0.05 million, respectively. For the six months ended June 30, 2025 and 2024, the interest expense for the above bank loans was approximately $1.0 million and $0.6 million, respectively. The bank loans outstanding as of June 30, 2025 and December 31,2024 carried a weighted average interest rate of approximately 3.20% and 3.49% per annum, respectively.
The repayment schedule for the bank loans is as follows:
| Twelve months ending June 30, | Repayment | |||
| 2026 | $ | 49,151 | ||
| 2027 | 1,234 | |||
| 2028 | 1,852 | |||
| 2029 | 2,058 | |||
| 2030 | 2,160 | |||
| Thereafter | 8,742 | |||
| Total | $ | 65,197 | ||
As of June 30, 2025 and December 31,2024, certain plant and land use right of the Company with the aggregated net book value of approximately $41.2 million and approximately $24.6 million, respectively, were pledged for certain notes payable and bank loans.
As of June 30, 2025, the Company had an aggregate credit line of approximately $101.1 million (RMB724.0 million) and approximately $77.4 million (RMB553.9 million) was used for the loan balance, bank acceptance notes payable, letters of credit and letters of guarantee.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 8. | LEASES |
Operating leases as lessee
As of June 30, 2025 and December 31, 2024, the Company had operating leases recorded on its consolidated balance sheets for certain office spaces and warehouses that expire on various dates through 2044. The Company terminated leases for certain facilities with lower usage. The termination of the leases reduced operating ROU assets of approximately $0.1 million and operating lease liabilities of approximately $0.1 million, respectively, during the six months ended June 30, 2025. The Company does not plan to cancel the remaining existing lease agreements for its existing facilities prior to their respective expiration dates. When determining the lease term, the Company considers options to extend or terminate the lease when it is reasonably certain that it will exercise or not exercise that option. The Company’s lease arrangements may contain both lease and non-lease components. The Company has separately accounted for lease and non-lease components based on their nature. Payments under the Company’s lease arrangement are fixed.
The following table shows ROU assets and lease liabilities, and the associated financial statement line items:
| As of June 30, 2025 |
As of December 31, 2024 |
|||||||
| Assets | ||||||||
| Operating lease right-of-use assets, net | $ | 8,065 | $ | 9,918 | ||||
| Liabilities | ||||||||
| Operating lease liabilities, current | $ | 3,978 | $ | 4,218 | ||||
| Operating lease liabilities, non-current | $ | 3,254 | $ | 4,719 | ||||
| Weighted average remaining lease term (in years) | 3.00 | 3.25 | ||||||
| Weighted average discount rate (%) | 5.85 | 5.84 | ||||||
Information related to operating lease activities during as of June 30, 2025 and 2024 is set forth below:
|
For the Six Months Ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| Operating lease right-of-use assets obtained in exchange for lease liabilities | $ | 233 | $ | 1,023 | ||||
| Operating lease expense | ||||||||
| Amortization of right-of-use assets | 2,121 | 3,105 | ||||||
| Interest of lease liabilities | 245 | 494 | ||||||
| Total | $ | 2,366 | $ | 3,599 | ||||
Maturities of lease liabilities were as follows:
| Twelve months ending June 30, | Lease Liabilities |
|||
| 2026 | $ | 4,113 | ||
| 2027 | 1,627 | |||
| 2028 | 1,036 | |||
| 2029 | 299 | |||
| 2030 | 299 | |||
| Thereafter | 555 | |||
| Total lease payments | 7,929 | |||
| Less: imputed interest | (697 | ) | ||
| Total | $ | 7,232 | ||
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 9. | TAXES |
| (a) | Corporate Income Taxes (“CIT”) |
Cayman Islands
Under the current tax laws of Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.
Hong Kong
Under the current Hong Kong Inland Revenue Ordinance, the Company’s subsidiary incorporated in Hong Kong is subject to two-tier profit tax rates. The profits tax rate for the first HKD 2 million of assessable profits of a corporation will be subject to the lowered tax rate, 8.25% while the remaining assessable profits will be subject to the legacy tax rate, 16.5%. Additionally, payments of dividends by the subsidiary incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax. The Company did not make any provision for Hong Kong profit tax as there were no assessable profits derived from or earned in Hong Kong since inception.
PRC
The Company’s PRC subsidiaries, the VIE and the VIE’s subsidiaries are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “CIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on case-by-case basis. The total impact of preferential tax rates amounted to approximately $1.0 million and $0.7 million for the six months ended June 30, 2025 and 2024, respectively and the impact to EPS is not significant for the six months ended June 30, 2025 and 2024.
Under the CIT Laws, an enterprise which qualifies as a High and New Technology Enterprise (“the HNTE”) is entitled to a preferential tax rate of 15% provided it continues to meet HNTE qualification standards on an annual basis. Beijing Shengfeng Supply Chain Management Co., Ltd. as an HNTE and is entitled for a preferential tax rate of 15% from 2020 to 2025. Beijing Tianyushengfeng e-commerce Technology Co. Ltd. as an HNTE and is entitled for a preferential tax rate of 15% from 2021 to 2026 to the extent it has taxable income under the CIT Laws. Fujian Dafengche Information Technology Co. Ltd. as an HNTE and is entitled for a preferential tax rate of 15% from 2024to 2026. Shengfeng Supply Chain Management Co. Ltd. is eligible to enjoy a preferential tax rate of 15% from 2020 to 2022 and further extended to 2025 to the extent it has taxable income under the CIT Laws due to the local preferential tax policy.
Several subsidiaries and the VIE’s subsidiaries, including Chengdu Shengfeng Supply Chain Management Co., Ltd., Shengfeng Logistics (Liaoning) Co., Ltd., Shengfeng Logistics (Guangxi) Co., Ltd., etc., are qualified as small and low-profit, thus the preferential effective tax rates of 5% are applied to these entities.
| i) | The components of income (loss) before income taxes are as follows: |
| For the Six Months Ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| Non-PRC | $ | (119 | ) | $ | (176 | ) | ||
| PRC | 6,887 | 5,825 | ||||||
| Total | $ | 6,768 | $ | 5,649 | ||||
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 9. | TAXES (CONTINUED) |
| (a) | Corporate Income Taxes (“CIT”) (continued) |
| ii) | The components of the income tax provision are as follows: |
| For the Six Months Ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| Current income tax expense | $ | 786 | $ | 430 | ||||
| Deferred income tax expense | 1 | 207 | ||||||
| Total income tax expense | $ | 787 | $ | 637 | ||||
| iii) | The following table reconciles PRC statutory rates to the Company’s effective tax rate: |
The following table reconciles the China statutory rates to the Company’s effective tax rate for the six months ended June 30, 2025 and 2024:
| For the Six Months Ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| PRC statutory income tax rate | 25.0 | % | 25.0 | % | ||||
| Effect of preferential tax rates (a) | (15.2 | )% | (12.7 | )% | ||||
| Eligible additional deduction (b) | (1.0 | )% | (3.1 | )% | ||||
| Impact of different tax rates in other jurisdictions | 0.4 | % | 0.8 | % | ||||
| Non-taxable and exemptions | % | 0.1 | % | |||||
| Permanent differences (c) | 2.4 | % | 1.2 | % | ||||
| Effective income tax rate | 11.6 | % | 11.3 | % | ||||
| (a) | Preferential tax rates for small and micro enterprises and high-tech entities. |
| (b) | Eligible additional deduction mainly consisted of research and development super deduction and disabled staff super deduction. |
| (c) | Permanent differences mainly consisted of non-deductible meal and entertainment fees in PRC tax returns. |
| iv) | The following table summarizes deferred tax assets and liabilities resulting from differences between financial accounting basis and tax basis of assets and liabilities: |
| As of June 30, 2025 |
As of December 31, 2024 |
|||||||
| Deferred tax assets: | ||||||||
| Net operating losses carryforward | $ | 306 | $ | 280 | ||||
| Allowance for credit losses | 866 | 791 | ||||||
| Deferred income (a) | 253 | 256 | ||||||
| Intangible assets (b) | 192 | 193 | ||||||
| Operating lease liabilities | 1,439 | 1,806 | ||||||
| Total deferred tax assets | 3,056 | 3,326 | ||||||
| Less: valuation allowance | ||||||||
| Total deferred tax assets, net of valuation allowance | 3,056 | 3,326 | ||||||
| Net off against deferred tax liabilities | (1,517 | ) | (1,892 | ) | ||||
| Net deferred tax assets | $ | 1,539 | $ | 1,434 | ||||
| Deferred tax liabilities: | ||||||||
| Property and equipment (c) | $ | 157 | $ | 41 | ||||
| Operating lease right-of-use assets | 1,515 | 1,904 | ||||||
| Deferred tax liabilities | 1,672 | 1,945 | ||||||
| Net off against deferred tax assets | (1,517 | ) | (1,892 | ) | ||||
| Net deferred tax liabilities | $ | 155 | $ | 53 | ||||
| (a) | Deferred income represents the assets related government subsidies, which will amortize on a straight-line basis within the useful life of related assets. The tax basis is recognized when the Company received the subsidies. |
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 9. | TAXES (CONTINUED) |
| (a) | Corporate Income Taxes (“CIT”) (continued) |
| (b) | Intangible assets represent the amortization temporary difference of licensed software. Management uses 10 years useful life as the tax basis, which is different from the 5 years useful life in accounting basis. |
| (c) | Property and equipment represent the amortized temporary difference between the tax basis and the accounting basis. |
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the cumulative earnings and projected future taxable income in making this assessment. Recovery of substantially all of the Company’s deferred tax assets is dependent upon the generation of future income, exclusive of reversing taxable temporary differences. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are recoverable, valuation allowance amounted to nil as of June 30, 2025 and December 31, 2024.
According to PRC tax regulations, the PRC enterprise net operating loss can generally carry forward for no longer than five years, and HNTE’s net operating losses can be carried forward for no more than 10 years, starting from the year subsequent to the year in which the loss was incurred. Carryback of losses is not permitted. The Group will re-apply for the HNTE certificate when the prior certificate expires in the foreseeable future. Total net operating losses (NOLs) carryforwards of the Group’s VIEs and subsidiaries in mainland China is $1.5 million and $1.7 million as of June 30, 2025 and December 31, 2024, respectively. As of June 30, 2025, net operating loss carryforwards from PRC will expire in calendar years 2026 to 2030, and 2033, if not utilized.
Uncertain tax positions
According to the PRC Tax Administration and Collection Law, the statute of limitation is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitation is extended to five years under special circumstances where the underpayment of taxes is more than RMB100. In the case of transfer pricing issues, the statute of limitation is 10 years. The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of June 30, 2025 and December 31, 2024, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur interests and penalties tax for the six months ended June 30, 2025 and 2024.
| (b) | Tax payable |
Tax payable consisted of the following:
| As of June 30, 2025 |
As of December 31, 2024 |
|||||||
| Value-added tax payable | $ | 2,791 | $ | 1,879 | ||||
| Income tax payable | 617 | 821 | ||||||
| Other taxes payable | 294 | 317 | ||||||
| Total | $ | 3,702 | $ | 3,017 | ||||
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 10. | EQUITY |
Ordinary shares
The Company was established as a holding company under the laws of Cayman Islands on July 16, 2020. The original authorized number of ordinary shares is 50,000 shares with par value of $1.00 per share. On December 18, 2020, the Company amended the Memorandum of Association to increase the authorized share capital to 400,000,000 Class A ordinary Shares and 100,000,000 Class B ordinary Shares and reduced the par value to $0.0001 per share.
Initial Public Offering
On April 4, 2023, the Company completed its initial public offering (the “IPO”) of 2,400,000 Class A ordinary shares at a public offering price of $4.00 per share. The gross proceeds were $9.6 million from the offering, before deducting underwriting discounts and other related expenses. The Company received approximately $8.5 million after deducting offering costs.
Underwriter’s Warrants
In connection with the IPO, the Company issued to Univest Securities, LLC, and its affiliates, as the representative of the underwriters, warrants that are exercisable for a period of one year after the effective date of the registration statement, entitling the holders of the warrants to purchase an aggregate of up to 144,000 Class A ordinary shares at a per share price of $4.46. Management determined that these warrants meet the requirements for equity classification under ASC 815-40 because they are indexed to the Company’s Class A ordinary shares and meet the requirements for equity classification. The warrants were recorded at their fair value on the date of grant as a component of shareholders’ equity. The fair value of these warrants was $368,454, which was considered a direct cost of IPO and included in additional paid-in capital. The fair value has been estimated using the Black-Scholes pricing model with the following weighted-average assumptions: market value of underlying share of $4.05, risk free rate of 4.5%; expected term of one year; exercise price of the warrants of $4.46, volatility of 183.5%; and expected future dividends of nil. On October 19, 2023, the underwriters opted to exercise all warrants on a cashless basis. On October 25, 2023, the Company issued 97,513 Class A ordinary shares to the underwriters.
As of June 30, 2025 and December 31, 2024, 40,617,513 Class A ordinary shares and 41,880,000 Class B ordinary shares were issued and outstanding. The shares are presented on a retroactive basis to reflect the recapitalization.
Non-controlling interests
For the six months ended June 30, 2025, one of the non-controlling shareholders made capital contributions totaling approximately $0.2 million to the Company. On January 21, 2025, Suzhou Shengfeng, one of VIE subsidiaries declared a dividend of approximately $0.3 million, of which approximately $0.03 million was paid to the non-controlling shareholders. For the fiscal year ended December 31, 2024, one of the non-controlling shareholders made capital contributions totaling approximately $2.1 million to the Company.
Statutory reserves
The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity’s registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The statutory reserve as determined pursuant to PRC statutory laws totaled approximately $6.0 million and $6.0 million as of June 30, 2025 and December 31, 2024, respectively.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 10. | EQUITY (CONTINUED) |
Restricted assets
The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiary. Relevant PRC statutory laws and regulations permit payments of dividends by Shengfeng WFOE and its subsidiaries, Shengfeng VIE and its subsidiaries (collectively “Shengfeng PRC entities”) only out of retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the accompanying consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of Shengfeng PRC entities.
Shengfeng PRC entities are required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of their registered capital. In addition, Shengfeng PRC entities may allocate a portion of their after-tax profits based on PRC accounting standards to enterprise expansion fund and staff bonus and welfare fund at their discretion. Shengfeng PRC entities may allocate a portion of their after-tax profits based on PRC accounting standards to a discretionary surplus fund at their discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by State Administration of Foreign Exchange.
As a result of the foregoing restrictions, Shengfeng PRC entities are restricted in their ability to transfer their assets to the Company. Foreign exchange and other regulation in the PRC may further restrict Shengfeng PRC entities from transferring funds to the Company in the form of dividends, loans and advances. As of June 30, 2025 and December 31, 2024, amounts restricted are the paid-in-capital and statutory reserve of Shengfeng PRC entities, which amounted to approximately $88.2 million and $88.2 million, respectively.
| 11. | COMMITMENTS AND CONTINGENCIES |
| (a) | Commitments |
As of June 30, 2025, the Company had letters of guarantee in aggregate of approximately $7.1 million (RMB50.7 million) issued by serval banks to the customers, which terms extend through 2028. The Company was required to maintain restricted cash of approximately $2.1 million (RMB15.2 million) for letters of guarantee.
| (b) | Contingencies |
The Company is subject to legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate that the final outcome arising out of any such matters will have a material adverse effect on our consolidated financial position, cash flows or results of operations on an individual basis or in the aggregate. As of June 30, 2025, the Company had various legal proceedings or disputes in aggregate of $4.2 million (RMB30.0 million) related to the customers, suppliers, labor contracts and traffic accidents, which were still pending court decisions. Approximately $1.7 million (RMB12.4 million) was frozen in a bank due to the pending lawsuits, which amount was included in restricted cash as of June 30, 2025. As of the date of these unaudited condensed consolidated financial statements, the above-mentioned amount is still frozen in bank and the other legal proceedings or disputes have no material impact on the Company’s business or financial performances.
| (c) | Variable interest entity structure |
It is the opinion of management that (i) the corporate structure of the Company is in compliance with existing PRC laws and regulations; (ii) the Contractual Arrangements are valid and binding, and do not result in any violation of PRC laws or regulations currently in effect; and (iii) the business operations of Tianyu and the VIE are in compliance with existing PRC laws and regulations in all material respects.
However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. Accordingly, the Company cannot be assured that PRC regulatory authorities will not ultimately take a contrary view to the foregoing opinion of the Company’s management. If the current corporate structure of the Company or the Contractual Arrangements is found to be in violation of any existing or future PRC laws and regulations, the Company may be required to restructure its corporate structure and operations in the PRC to comply with changing and new PRC laws and regulations. In the opinion of management, the likelihood of loss in respect of the Company’s current corporate structure or the Contractual Arrangements is remote, based on current facts and circumstances.
F-
SHENGFENG DEVELOPMENT LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of USD, except for share and per share data, unless otherwise noted)
| 12. | SUBSEQUENT EVENTS |
On July 25, 2025, Shengfeng Supply Chain Management Co., Ltd. and a third party signed an annulment agreement to annul the 49% equity transaction of Pingtan SF. (see Note 4 for detail)
The Company evaluated all events and transactions that occurred after June 30, 2025 up through the date the Company issued these unaudited condensed consolidated financial statements. Other than the events disclosed above, no other subsequent events have occurred that would require recognition or disclosure in the Company’s unaudited condensed consolidated financial statements.
F-34
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the related notes. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors.
A. Operating Results
Overview
We are a holding company incorporated in the Cayman Islands and are not a Chinese operating company. As a holding company with no material operations of our own, our operations have been conducted in China by our subsidiaries and through the VIE Agreements, with the VIE and the VIE’s subsidiaries. For accounting purposes, we control and receive the economic benefits of the VIE and the VIE’s subsidiaries’ business operations through such the VIE Agreements, which enables us to consolidate the financial results of the VIE and the VIE’s subsidiaries in our consolidated financial statement under U.S. GAAP. Neither we nor our subsidiaries own any equity interests in the VIE or the VIE’s subsidiaries. We have evaluated the guidance in FASB ASC 810 and determined that we are regarded as the primary beneficiary of the VIE, for accounting purposes, as a result of our direct ownership in Tianyu and the provisions of the VIE Agreements. Accordingly, we treat the VIE and the VIE’s subsidiaries as our consolidated entities under U.S. GAAP. We have consolidated the financial results of the VIE and the VIE’s subsidiaries in our unaudited condensed consolidated financial statements in accordance with U.S. GAAP.
Our Class A ordinary shares are shares of our offshore holding company in the Cayman Islands instead of shares of the VIE or the VIE’s subsidiaries in China, therefore, as an investor, you will not directly hold equity interests in the VIE or the VIE’s subsidiaries, and you may never directly hold equity interests in the VIE or the VIE’s subsidiaries through your investment in our Class A ordinary shares. For a description of the VIE Agreements, see “Item 3. Key Information—Our VIE Agreements” of our annual report for the fiscal year ended December 31, 2024 filed with the SEC on March 28, 2025.
The VIE is a contract logistics service provider in China. Contract logistics is a comprehensive process that merges traditional logistics with supply chain management. Contract logistics companies outsource resource management tasks to third-party companies and handle activities such as planning and designing supply chains, designing facilities, processing orders, collecting payments, managing inventories, and providing client services.
Our integrated logistics solution services are comprised of three business streams: (1) B2B freight transportation; (2) cloud storage; and (3) value-added services. Since 2001, we, through the VIE and the VIE’s subsidiaries, have developed extensive and reliable transportation networks in China, covering 382 cities in over 32 provinces as of June 30, 2025.
We, through the VIE and the VIE’s subsidiaries, operate on a scalable integrated network model, which we believe is best suited to support our business and maintain the quality of our comprehensive logistics services. As a contract logistics company, we, through the VIE and the VIE’s subsidiaries, directly own and operate all of our regional sorting centers, Cloud OFCs, and service outlets. We, through the VIE and the VIE’s subsidiaries, also directly own and operate our fleets. In order to establish a broader network and provide more efficient services, we, through the VIE and the VIE’s subsidiaries, cooperate with third-party transportation providers in providing freight transportation services. We believe this network model allows us to achieve strong operating results while maintaining and minimizing fixed costs and capital requirements, which results in higher return on earnings and equities.
Operational efficiency, cost management, and competitive pricing are critical to the success of a contract logistics company. We, through the VIE and the VIE’s subsidiaries, have achieved strong operational efficiency through centralized control and management of 25 regional sorting centers, 57 Cloud OFCs, 18 service outlets, approximately 430 self-owned trucks and vehicles, and over 67,000 transportation providers, route planning and optimization, and transportation and managements system.
For the six months ended June 30, 2025 and 2024, our net revenue, mainly generated from providing transportation and warehouse storage management services, was approximately $263.4 million and $227.1 million, respectively. Our total net revenue increased by approximately 16.0% during the half year 2025 compared to the same period in 2024, primarily driven by the higher net revenue from transportation services. We recorded net income of approximately $6.0 million and $5.0 million for the six months ended June 30, 2025 and 2024, respectively.
General Factors Affecting Our Results of Operations
Our business and operating results are affected by a number of general factors in China’s transportation industry, including, but not limited to:
| ● | China’s overall economic growth, level of urbanization and level of consumption; | |
| ● | the development of the manufacturing industry, fast moving consumer goods industry, telecommunication industry, and publishing industry; and | |
| ● | market competition. |
Unfavorable changes in any of these general factors could materially and adversely affect our business and our results of operations.
Key Factors Affecting Our Results of Operations
Our ability to expand our customer base
We will continue to seek to expand our customer base to achieve sustainable growth. We aim to attract new customers and maintain our existing customers. We acquire customers for our transportation services through the referral of our existing customers and our own efforts including online and off-line advertising. We plan to strengthen our partnerships by improving the quality and variety of our services. Additionally, we plan to put on more efforts to acquire more warehouse storage management service customers through our existing transportation service customers.
Strategic Acquisitions and Investments
We may selectively pursue acquisitions, investments, joint ventures and partnerships that we believe are strategic and complementary to our operations and technology. The business or financial performance of the companies we have invested in as well as our ability to successfully integrate these investments with our existing business would impact our results of operations and financial conditions.
Results of Operations
The following consolidated results of operations include the results of operations of the Company, its wholly owned subsidiaries and consolidated the VIE and the VIE’s subsidiaries.
The following table summarizes our consolidated results of operations, both in absolute amounts and as percentages of our total net revenue for the periods presented. The operating results in any historical period are not necessarily indicative of the results that may be expected for any future period.
|
|
For the six months ended June 30, 2025 and 2024
|
For the Six Months Ended June 30, |
||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||
| (In thousands) | % | (In thousands) | % | (In thousands) | % | |||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Transportation | $ | 254,716 | 96.7 | % | $ | 217,450 | 95.8 | % | $ | 37,266 | 17.1 | % | ||||||||||||
| Warehouse storage management services | 7,053 | 2.7 | % | 8,274 | 3.6 | % | (1,221 | ) | (14.8 | )% | ||||||||||||||
| Other revenue | 1,665 | 0.6 | % | 1,407 | 0.6 | % | 258 | 18.3 | % | |||||||||||||||
| Net revenue | 263,434 | 100 | % | 227,131 | 100 | % | 36,303 | 16.0 | % | |||||||||||||||
| Cost of revenue | (239,364 | ) | (90.9 | )% | (206,046 | ) | (90.7 | )% | (33,318 | ) | 16.2 | % | ||||||||||||
| Gross profit | $ | 24,070 | 9.1 | % | $ | 21,085 | 9.3 | % | $ | 2,985 | 14.2 | % | ||||||||||||
Net revenues
Transportation services
We, primarily through the VIE and the VIE’s subsidiaries, provide transportation services to companies in mainland China. Our major customers are in the manufacturing industry, the fast-moving consumer goods industry, the new energy (vehicle) industry, the telecommunication industry, and the publishing industry. Revenue from transportation services is recognized upon customers’ receipt of the transported goods.
Warehouse storage management services
We, primarily through the VIE and the VIE’s subsidiaries, generate revenue from warehouse storage management services through the provision of warehouse storage management services to various customers. We help companies place the goods and maintain the daily input and output of the goods. We primarily charge our customers service fees for our storage services and daily management services. Revenue from the warehouse storage management services is recognized over the service period.
Our net revenues increased by approximately 16.0% from approximately $227.1 million for the six months ended June 30, 2024 to approximately $263.4 million for the six months ended June 30, 2025. The increase was primarily driven by a significant increase in revenue from our transportation services.
Net revenues generated from our transportation services increased by approximately 17.1% from approximately $217.5 million for the six months ended June 30, 2024 to approximately $254.7 million for the six months ended June 30, 2025. The growth was primarily driven by the expansion of services with existing clients, reflecting a deepened partnership and expanded service offerings.
Net revenue generated from our warehouse storage management services decreased by approximately 14.8% from approximately $8.3 million for the six months ended June 30, 2024 to approximately $7.1 million for the six months ended June 30, 2025. The decrease was primarily due to a shifting of focus on transportation services for the six months ended June 30, 2025.
|
|
Cost of revenues
Our cost of revenue consists of cost of transportation services and cost of warehouse storage management services. The cost of transportation services comprises cooperation cost (the payments made to third-party transportation providers), depreciation and amortization expenses, toll fees, employee wages and benefits and fuel cost. Cooperation cost is the direct cost of transportation paid by the Company to third-party transportation providers, who are independent contractors and third-party carriers. The cost of warehouse storage management services consists of rental fees, handling fees, employee wages and benefits in connection with our services to our clients.
Our cost of revenues increased by approximately 16.2%, from approximately $206.0 million for the six months ended June 30, 2024 to approximately $239.4 million for the six months ended June 30, 2025, which was in line with the increase in revenue.
Gross profit
Our overall gross profit increased by approximately 14.2% from approximately $21.1 million for the six months ended June 30, 2024 to approximately $24.1 million for the six months ended June 30, 2025. For the six months ended June 30, 2025 and 2024, our overall gross margin was approximately 9.1% and 9.3%, respectively. The gross margin decreased mainly because we offer more competitive prices in response to the fierce market competition.
| For the Six Months Ended June 30, |
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| 2025 | 2024 | Change | ||||||||||||||
| (In thousands) | (In thousands) | (In thousands) | % | |||||||||||||
| Operating expenses | ||||||||||||||||
| Selling and marketing | $ | (2,864 | ) | $ | (2,861 | ) | $ | (3 | ) | 0.1 | % | |||||
| General and administrative | (13,414 | ) | (11,669 | ) | (1,745 | ) | 15.0 | % | ||||||||
| Total operating expenses | $ | (16,278 | ) | $ | (14,530 | ) | $ | (1,748 | ) | 12.0 | % | |||||
Operating expenses
Our operating expenses increased by approximately 12.0% from approximately $14.5 million for the six months ended June 30, 2024 to approximately $16.3 million for the six months ended June 30, 2025 for the following reasons:
Selling and marketing expenses
Our selling and marketing expenses consist primarily of employee wages, rental expenses, benefits for sales and marketing staff, depreciation expenses and other daily expenses related to sales and marketing functions.
Our selling and marketing expenses kept at approximately $2.9 million for the six months ended months ended June 30, 2025 and 2024.
General and administrative expenses
Our general and administrative expenses consist primarily of employee wages and benefits for corporate employees, rental expenses, depreciation and amortization expense and other expenses which are related to the general corporate functions.
Our general and administrative expenses increased by approximately 15.0% from approximately $11.7 million for the six months ended June 30, 2024 to approximately $13.4 million for the six months ended June 30, 2025, which was attributable to increased employee salaries and benefits.
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Income from operations
As a result of the foregoing, our profit from operations increased by approximately 18.9% from approximately $6.6 million for the six months ended June 30, 2024 to approximately $7.8 million for the six months ended June 30, 2025.
| For the Six Months Ended June 30, |
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| 2025 | 2024 | Change | ||||||||||||||
| (In thousands) | (In thousands) | (In thousands) | % | |||||||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | $ | 41 | $ | 46 | $ | (5 | ) | (10.9 | )% | |||||||
| Interest expense | (1,315 | ) | (879 | ) | (436 | ) | 49.6 | % | ||||||||
| Other income (expense), net | 250 | (73 | ) | 323 | (442.5 | )% | ||||||||||
| Total other expense, net | $ | (1,024 | ) | $ | (906 | ) | $ | (118 | ) | 13.0 | % | |||||
Our total net other expense increased by approximately 13.0% from approximately $0.9 million for the six months ended June 30, 2024 to approximately $1.0 million for the six months ended June 30, 2025 for the following reasons:
Interest expense
Our interest expense increased by approximately 49.6% from approximately $0.9 million for the six months ended June 30, 2024 to approximately $1.3 million for the six months ended June 30, 2025, as a result of an increased average bank loans balance for the six months ended June 30, 2025 compared with six months ended June 30, 2024.
Other income (expense), net
Our other income (expense) mainly consists of government subsidies, penalties and others. Other income, net amounted to approximately $0.3 million for the six months ended June 30, 2025, as compared to other expense, net of approximately $0.07 million for the six months ended June 30, 2024. The change was due to increased one-time compensation income and gain from disposal of property and equipment.
| For the Six Months Ended June 30, |
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| 2025 | 2024 | Change | ||||||||||||||
| (In thousands) | (In thousands) | (In thousands) | % | |||||||||||||
| Income before income taxes | $ | 6,768 | $ | 5,649 | $ | 1,119 | 19.8 | % | ||||||||
| Provision for income taxes | (787 | ) | (637 | ) | (150 | ) | 23.5 | % | ||||||||
| Net income | $ | 5,981 | $ | 5,012 | $ | 969 | 19.3 | % | ||||||||
Income before income taxes
As a result of the foregoing, our income before income taxes increased by approximately 19.8% from approximately $5.6 million for the six months ended June 30, 2024 to approximately $6.8 million for the six months ended June 30, 2025.
Provision for income taxes
The effective income tax rate was approximately 11.3% and 11.6% for the six months ended June 30, 2024 and 2025, respectively.
Net income
As a result of the foregoing, our net income increased by approximately 19.3% from approximately $5.0 million for the six months ended June 30, 2024 to approximately $6.0 million for the six months ended June 30, 2025.
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Impact of Foreign Currency Fluctuations
The reporting currency of the Company is USD. The Company in China conducts its businesses in the local currency, Renminbi (RMB), as its functional currency. Assets and liabilities are translated at the unified exchange rate as quoted by the People’s Bank of China at the end of the period. The statement of income accounts is translated at the average translation rates and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income (loss). Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. The foreign currency translation from RMB to USD could materially affect our financial condition and results of operations due to the fluctuation of exchange rate. The exchange rates in effect are shown below:
| U.S. Dollar Exchange Rate | For
the Six Months Ended June 30, 2025 |
For
the Six Months Ended June 30, 2024 |
Year ended December 31, 2024 |
||||
| At the end of the period - USD: RMB | US$1=RMB7.1586 | US$1=RMB7.1268 | US$1=RMB7.1884 | ||||
| Average rate for the period - USD: RMB | US$1=RMB7.1839 | US$1=RMB7.1051 | US$1=RMB7.1217 |
We did not have any foreign currency investments hedged by currency borrowings or other hedging instruments in the six months ended June 30, 2025 and 2024.
B. Liquidity and Capital Resources
The PRC government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of China. Under existing PRC foreign exchange regulations, our PRC subsidiary is able to pay dividends in foreign currencies to us without prior approval from SAFE. Approval from or registration with appropriate government authorities is, however, required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. See “Item 3. Key Information—D. Risk Factors—Risk Factors—Governmental control of currency conversion may affect the value of your investment and our payment of dividends” of our annual report for the fiscal year ended December 31, 2024 filed with the SEC on March 28, 2025.
Current PRC regulations permit our PRC subsidiary to pay dividends to us only out of its accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiary is required to set aside at least 10% of its respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its respective registered capital. We had various outstanding bank loans of approximately $65.2 million as of June 30, 2025. We have also entered into non-cancellable operating lease agreements for several offices, operating facilities and warehouses. The following table sets forth our contractual obligations as of June 30, 2025:
| Payments Due by Period (Amount in thousand) | ||||||||||||||||||||
| Total |
Within 1 Year |
1-3 Years | 3-5 Years |
More than 5 Years |
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| (In thousands) | ||||||||||||||||||||
| Bank loans | $ | 65,197 | $ | 49,151 | $ | 3,086 | $ | 4,218 | $ | 8,742 | ||||||||||
| Operating lease commitments | 7,929 | 4,113 | 2,663 | 598 | 555 | |||||||||||||||
| Total | $ | 73,126 | $ | 53,264 | $ | 5,749 | $ | 4,816 | $ | 9,297 | ||||||||||
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Cash flows and working capital
The following table sets forth a summary of our cash flows for the periods indicated:
| For the Six Months Ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| (In thousands) | (In thousands) | |||||||
| Net cash used in operating activities | $ | (14,542 | ) | $ | (11,797 | ) | ||
| Net cash used in investing activities | (10,729 | ) | (14,938 | ) | ||||
| Net cash flows provided by financing activities | 3,892 | 12,280 | ||||||
| Effects of exchange rate changes on cash, cash equivalents and restricted cash | 90 | (135 | ) | |||||
| Cash, cash equivalents and restricted cash, beginning of period | 40,214 | 29,292 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 18,925 | $ | 14,702 | ||||
As a holding company with no material operations of our own, we conduct a substantial majority of our operations through our PRC subsidiary and the VIE in China. We are permitted under PRC laws and regulations to provide funding to our PRC subsidiary in China through capital contributions or loans, subject to the approval of government authorities and limits on the amount of capital contributions and loans. In addition, our subsidiaries in China may provide Renminbi funding to the VIE only through loans. Foreign currency capital of a foreign-invested enterprise may be converted into Renminbi capital at its will according to the actual operation of the enterprise, as long as it is within such enterprise’s business scope.
Cash flows in Operating Activities
For the six months ended June 30, 2025, net cash used in operating activities was approximately $14.5 million, which was primarily comprised of decreased accounts payable of approximately $24.0 million, increased prepayments and other current assets of approximately $4.6 million, decreased operating lease liabilities of approximately $2.0 million, and increased due from related parties of approximately $1.6 million. Net cash used in operating activities was partially offset by net income of approximately $6.0 million, adjusted for non-cash items such as depreciation and amortization expense for property and equipment of approximately $3.2 million, approximately $2.1 million for amortization of operating lease right-of-use assets, approximately $3.1 million decrease in accounts receivable , approximately $1.7 million decrease in other non-current assets and approximately $1.4 million increase in tax payables.
For the six months ended June 30, 2024, net cash used in operating activities was approximately $11.8 million, which was primarily comprised of increased accounts receivable of approximately $10.1 million, decreased accrued expanse and other current liabilities of approximately $8.1 million, decreased operating lease liabilities of approximately $3.6 million, decreased of accounts payable of approximately $3.4 million and decreased salary and welfare payable of approximately $2.3 million, and increased prepayments and other current assets of approximately $1.8 million. Net cash used in operating activities was partially offset by net income of approximately $5.0 million, adjusted for non-cash items such as depreciation and amortization expense for property and equipment of approximately $3.3 million, approximately $3.6 million for amortization of operating lease right-of-use assets and approximately $3.7 million decrease in other non-current assets.
Cash flows in Investing Activities
For the six months ended June 30, 2025, net cash used in investing activities was approximately $10.7 million, consisting primarily of cash used to acquire property and equipment of approximately $7.8 million and approximately $3.0 million cash used for loan to a third party.
For the six months ended June 30, 2024, net cash used in investing activities was approximately $14.9 million, consisting primarily of cash used to acquire property and equipment of approximately $14.3 million, approximately $9.1 million cash used for purchasing intangible assets and approximately $9.1 million cash paid for investments deposit, mainly offset by approximately $9.7 million net cash received from disposal of subsidiaries, investments deposit refund of approximately $6.8 million and cash proceeds received from disposal of property and equipment of approximately $1.0 million.
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Cash flows in Financing Activities
For the six months ended June 30, 2025, net cash provided by financing activities was approximately $3.9 million, consisting primarily of cash proceeds from bank loans of approximately $36.3 million (including both short-term and long-term bank loans) and cash proceeds from notes payable of approximately $1.4 million, offset by cash repaid for bank loans of approximately $27.2 million and cash repaid for notes payable of approximately $7.0 million.
For the six months ended June 30, 2024, net cash provided by financing activities was approximately $12.3 million, consisting primarily of cash proceeds from bank loans of approximately $36.1 million (including both short-term and long-term bank loans), cash proceeds from notes payable of approximately $19.0 million and capital contributed by a non-controlling shareholder of approximately $1.0 million, partially offset by cash repaid for bank loans of approximately $26.9 million and cash repaid for notes payable of approximately $16.9 million.
Capital Expenditures
Our capital expenditures are incurred primarily in connection with the purchase of fixed assets, including electronic equipment, office equipment and vehicles, and intangible assets. Our capital expenditures were approximately $7.8 million and $23.3 million for the six months ended June 30, 2025 and 2024, respectively. Subsequent to June 30, 2025 and as of the issuance date of this unaudited condensed interim report, we made capital expenditures of approximately $1.3 million. We intend to fund our future capital expenditures with our existing cash balance, proceeds of bank loans and proceeds from the new equity financing.
Off-Balance Sheet Commitments and Arrangements
As of June 30, 2025, the Company had letters of guarantee in aggregate of approximately $7.1 million (RMB50.7 million) issued by several banks to the customers, which terms extend through 2027. The Company was required to maintain restricted cash of approximately $2.1 million (RMB15.2 million) for letters of guarantee.
As of June 30, 2025, we have not recorded any liabilities related to these letters of guarantee, as there are no indications of default. However, these commitments represent potential obligations that could result in liabilities if we fail to fulfill agreement terms.
We have not entered into any derivative contracts indexed to our shares that are classified as shareholder’s equity or that are not reflected in our unaudited condensed consolidated financial statements. Additionally, we do not have any retained or contingent interests in assets transferred to an unconsolidated entity that serves as credit, liquidity, or market risk support to such entity. We do not have any variable interests in any unconsolidated entity that provides financing, liquidity, market risk, or credit support to us or engages in leasing, hedging, or product development services with us.
C. Research and Development, Patents and Licenses, etc.
See “Item 4. Information on the Company—B. Business Overview—Our Technology Infrastructure” and “Item 4. Information on the Company—B. Business Overview—Intellectual Property” of our annual report for the fiscal year ended December 31, 2024 filed with the SEC on March 28, 2025.
D. Trend Information
Other than as described elsewhere in this unaudited condensed interim report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenue, income from continuing operations, profitability, liquidity or capital resources, or that would cause our reported financial information not necessarily to be indicative of future operating results or financial condition.
E. Critical Accounting Estimates
We prepare our unaudited condensed consolidated financial statements in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates, judgments, and assumptions that can have a meaningful effect on the reporting of consolidated financial statements. 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 because of changes in our estimates. Critical accounting estimates are defined as those reflective of significant judgments, estimates and uncertainties, which may result in materially different results under different assumptions and conditions. For the six months ended June 30, 2025, we identified no critical accounting estimates in the preparation of our unaudited condensed consolidated financial statements.
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Exhibit 99.3
Shengfeng Development Limited Announces Unaudited 2025 First Half Financial Results
Revenue Up 16.0% Year Over Year, Driven by Deepened Partnership and Expanded Service Offerings
Fuzhou, China — August 27, 2025 — Shengfeng Development Limited (“Shengfeng” or the “Company”) (NASDAQ: SFWL), a contract logistics company in China providing customers with integrated logistics solutions, today announced its unaudited financial results for the six months ended June 30, 2025.
Financial Highlights:
| ● | Total Revenue: Increased by approximately 16.0% from approximately $227.1 million for the six months ended June 30, 2024 to approximately $263.4 million for the six months ended June 30, 2025. The increase was primarily driven by a significant increase in revenue from our transportation services. |
| ● | Gross Profit: Increased by approximately 14.2% from approximately $21.1 million for the six months ended June 30, 2024 to approximately $24.1 million for the six months ended June 30, 2025. For the six months ended June 30, 2025 and 2024, our overall gross margin was approximately 9.1% and 9.3%, respectively. The gross margin decreased mainly because we offer more competitive prices in response to the fierce market competition. |
| ● | Net Income: Increased by 19.3% from approximately $5.0 million for the six months ended June 30, 2024 to approximately $6.0 million for the six months ended June 30, 2025. |
Cost and Expense Overview:
| ● | Operating Expenses: Operating expenses increased by approximately 12.0% from approximately $14.5 million for the six months ended June 30, 2024 to approximately $16.3 million for the six months ended June 30, 2025. |
| ○ | Selling and Marketing Expenses: Kept at approximately $2.9 million for the six months ended months ended June 30, 2025 and 2024. |
| ○ | General and Administrative Expenses: Increased by approximately 15.0% from approximately $11.7 million for the six months ended June 30, 2024 to approximately $13.4 million for the six months ended June 30, 2025, which was driven by higher employee salaries and benefits. These increases were necessary to support the Company’s expanded operations and higher revenue base. |
Cash Position:
| ● | Cash and Cash Equivalents: As of June 30, 2025, cash and cash equivalents were approximately $14.3 million, compared to approximately $34.7 million as of December 31, 2024. The decrease was primarily due to investments in business expansion and increased working capital requirements to support the growth in revenue. The Company remains committed to maintaining a strong liquidity position to support ongoing operations and strategic initiatives. |
Operational Highlights:
| ● | Transportation Services: Net revenues increased by approximately 17.1% from approximately $217.5 million for the six months ended June 30, 2024 to approximately $254.7 million for the six months ended June 30, 2025. The growth was primarily driven by the expansion of services with existing clients, reflecting a deepened partnership and expanded service offerings. |
| ● | Warehouse Storage Management Services: Revenues decreased by approximately 14.8% from approximately $8.3 million for the six months ended June 30, 2024 to approximately $7.1 million for the six months ended June 30, 2025. The decrease was primarily due to a shifting of focus on transportation services for the six months ended June 30, 2025. |
CEO Commentary:
Mr. Yongxu Liu, Chairman and Chief Executive Officer of Shengfeng, commented, “Our strong performance in the first half of 2025 reflects deepened collaborations with key clients across priority sectors. We continue to execute our strategy by focusing resources on high-growth verticals where our integrated logistics solutions deliver distinct competitive advantages.
In the new energy vehicle sector – our largest client segment – we expanded partnerships with industry leaders including CATL Battery, Tesla and Xiaomi, supporting their nationwide distribution network upgrades. For fast-moving consumer goods clients, our dedicated solutions for partners like Bright Dairy and Budweiser APAC enhanced supply chain responsiveness amid evolving market demands. Additionally, we further optimized manufacturing logistics for global innovators such as Schneider Electric through customized operational efficiencies.
Despite market fluctuations, the resilience of our focused industry approach positions us well for sustained growth. We remain committed to enhancing service capabilities in these core sectors while driving operational excellence throughout our network.”
Outlook:
Looking ahead, Shengfeng aims to sustain its growth and improve margins in the second half of 2025. The Company is committed to leveraging its extensive logistics network and innovative solutions to serve a broader range of industries and customers.
About Shengfeng Development Limited
Shengfeng Development Limited is a contract logistics company in China providing customers with integrated logistics solution services. Established in 2001, the Company has developed extensive and reliable transportation networks in China, covering 382 cities across 32 provinces, as of June 30, 2025. The Company provides integrated logistics solutions comprised of B2B freight transportation services, cloud storage services, and value-added services. The Company applies well-established management system and operation procedures to assist companies in China to increase efficiency and improve their own management systems with respect to transportation, warehousing and time management. For more information, please visit the Company’s website: http://ir.sfwl.com.cn/.
Forward-Looking Statements
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When The Company uses words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate” or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company’s expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company’s ability to achieve its goals and strategies, the Company’s future business development and plans for future business development, including its financial conditions and results of operations, product and service demand and acceptance, reputation and brand, the impact of competition and pricing, changes in technology, government regulations, fluctuations in general economic and business conditions in China, and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the U.S. Securities and Exchange Commission (“SEC”). For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company’s filings with the SEC, including under the section entitled “Risk Factors” in its annual report on Form 20-F filed with the SEC on March 28, 2025, as well as its current reports on Form 6-K and other filings, all of which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof, except as may be required by law.
For more information, please contact:
Shengfeng Development Limited
Investor Relations Department
Email: ir@sfwl.com.cn
Shengfeng Development Limited
Samuel Xian
Phone: +86 591 8367 2798
Email: Huasen.Xian@sfwl.com.cn