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Cheetah Net Supply Chain Service Inc. Announces Third Quarter 2024 Results and Provides Corporate Update

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Cheetah Net Supply Chain Service reported Q3 2024 results, showing significant revenue decline to $61,208 from $10.0 million in Q3 2023, primarily due to downturn in parallel-import vehicle business. The company relocated headquarters to Irvine, CA, completed a public offering raising $1.1 million, and implemented a 1-for-16 reverse stock split. The company is transitioning from parallel-import vehicles to logistics and warehousing operations. Q3 2024 resulted in a net loss of $1.8 million compared to net income of $0.1 million in Q3 2023. Cash position stands at $5.3 million with working capital of $11.6 million as of September 30, 2024.

Cheetah Net Supply Chain Service ha riportato i risultati del terzo trimestre del 2024, evidenziando un marcato calo dei ricavi a $61,208 rispetto ai $10,0 milioni del terzo trimestre del 2023, principalmente a causa della flessione nel settore delle importazioni parallele di veicoli. L'azienda ha trasferito la sua sede a Irvine, CA, ha completato un'offerta pubblica raccogliendo $1,1 milioni e ha attuato un frazionamento inverso azionario in rapporto 1 a 16. L'azienda sta passando dalle importazioni parallele di veicoli alle operazioni di logistica e magazzinaggio. Nel terzo trimestre del 2024 si è registrata una perdita netta di $1,8 milioni rispetto a un reddito netto di $0,1 milioni nel terzo trimestre del 2023. La posizione di liquidità si attesta a $5,3 milioni con un capitale circolante di $11,6 milioni al 30 settembre 2024.

Cheetah Net Supply Chain Service reportó los resultados del tercer trimestre de 2024, mostrando una significativa disminución de ingresos a $61,208 desde $10,0 millones en el tercer trimestre de 2023, principalmente debido a una caída en el negocio de vehículos de importación paralela. La compañía mudó su sede a Irvine, CA, completó una oferta pública que recaudó $1,1 millones, y llevó a cabo un desdoblamiento de acciones inverso de 1 por 16. La empresa está en proceso de transición de vehículos de importación paralela a operaciones de logística y almacenamiento. El tercer trimestre de 2024 resultó en una pérdida neta de $1,8 millones en comparación con una ganancia neta de $0,1 millones en el tercer trimestre de 2023. La posición de efectivo se sitúa en $5,3 millones con un capital de trabajo de $11,6 millones a partir del 30 de septiembre de 2024.

Cheetah Net Supply Chain Service는 2024년 3분기 실적을 보고하며, 2023년 3분기 1천만 달러에서 61,208달러로 상당한 수익 감소를 보였으며, 이는 주로 병행 수입 차량 사업의 감소에 기인합니다. 회사는 본사를 캘리포니아주 어바인으로 이전하였고, 110만 달러를 모금하는 공모를 완료했으며, 1주를 16주로 역주식 분할하는 조치를 시행했습니다. 이 회사는 병행 수입 차량에서 물류 및 창고 운영으로 전환하고 있습니다. 2024년 3분기에는 2023년 3분기 순이익 10만 달러에 비해 180만 달러의 순손실이 발생했습니다. 현금 보유액은 530만 달러이며, 2024년 9월 30일 기준 운영 자본은 1,160만 달러입니다.

Cheetah Net Supply Chain Service a publié les résultats du troisième trimestre 2024, montrant une baisse significative des revenus à 61 208 $ contre 10,0 millions $ au troisième trimestre 2023, principalement en raison d'une baisse dans le secteur des véhicules d'importation parallèle. L'entreprise a déplacé son siège à Irvine, Californie, a complété une offre publique levant 1,1 million $ et a mis en œuvre un regroupement d'actions au taux de 1 pour 16. L'entreprise est en train de passer des véhicules d'importation parallèle aux opérations logistiques et d'entreposage. Le troisième trimestre 2024 a résulté en une perte nette de 1,8 million $ par rapport à un revenu net de 0,1 million $ au troisième trimestre 2023. La position de liquidités se chiffre à 5,3 millions $ avec un fonds de roulement de 11,6 millions $ au 30 septembre 2024.

Cheetah Net Supply Chain Service berichtete über die Ergebnisse des 3. Quartals 2024 und zeigte einen signifikanten Rückgang der Einnahmen auf 61.208 USD im Vergleich zu 10,0 Millionen USD im 3. Quartal 2023, hauptsächlich bedingt durch einen Rückgang im Geschäft mit parallel importierten Fahrzeugen. Das Unternehmen hat seinen Hauptsitz nach Irvine, Kalifornien, verlegt, eine öffentliche Angebotsrunde abgeschlossen, in der 1,1 Millionen USD gesammelt wurden, und eine Rückabwicklung des Aktienanteils im Verhältnis 1 zu 16 umgesetzt. Das Unternehmen befindet sich im Prozess des Übergangs von parallel importierten Fahrzeugen zu Logistik- und Lagerbetrieben. Im 3. Quartal 2024 wurde ein Nettoverlust von 1,8 Millionen USD im Vergleich zu einem Nettogewinn von 100.000 USD im 3. Quartal 2023 verzeichnet. Die Liquiditätsposition beläuft sich auf 5,3 Millionen USD bei einem Working Capital von 11,6 Millionen USD zum 30. September 2024.

Positive
  • Strong liquidity position with $5.3 million cash and $11.6 million working capital
  • Improved gross margin from 11.6% to 48.8% in Q3 2024
  • Successfully raised $1.1 million through public offering
Negative
  • Revenue declined 99.4% to $61,208 in Q3 2024 from $10.0 million in Q3 2023
  • Net loss of $1.8 million in Q3 2024 compared to net income of $0.1 million in Q3 2023
  • $1.1 million allowance for credit loss on aged accounts receivable
  • General and administrative expenses increased 108% to $1.1 million

Insights

The Q3 2024 results reveal significant challenges in CTNT's business transformation. Revenue plummeted 99.4% year-over-year to just $61,208, with the company posting a net loss of $1.8 million compared to a profit last year. The dramatic decline stems from abandoning their parallel-import vehicle business for logistics and warehousing operations.

Key concerns include $1.1 million in credit loss allowances and doubled G&A expenses. While the $5.3 million cash position and $11.6 million working capital provide some runway, the company's transformation shows no immediate signs of success. The 1-for-16 reverse stock split and recent $1.1 million capital raise suggest financial pressure and potential dilution risks.

The strategic pivot from vehicle imports to logistics/warehousing appears poorly timed and executed. The new segment generated only $231,605 in revenue over nine months, representing just 12.4% of total revenue. The relocation to Irvine, while logical for port access, adds significant overhead without demonstrable benefits yet.

Management's admission that "tangible results may not be apparent for several quarters" is concerning given the cash burn rate. The 48.8% gross margin improvement offers little consolation given the minimal revenue base. The market should expect continued volatility as this micro-cap attempts this risky transformation amid challenging economic conditions.

IRVINE, Calif., Nov. 13, 2024 (GLOBE NEWSWIRE) -- Cheetah Net Supply Chain Service Inc. (“Cheetah” or the “Company”) (Nasdaq CM: CTNT), a provider of warehousing and logistics, today reported results for the quarter ended September 30, 2024 and provided a corporate update.

Recent Highlights*

  • On July 23, 2024, the Company relocated its headquarters from Charlotte, NC to Irvine, CA, in order to implement its business model transformation, be closer to the important Southern California market, take advantage of the region’s well-developed infrastructure and logistics networks, capitalize on the area’s large consumer presence, and gain access to California’s skilled labor force.

  • On July 26, 2024, the Company closed a public offering of 404,979 shares of its Class A common stock at an offering price of $3.68 per share, pursuant to an effective registration statement on Form S-1 (SEC File No. 333-280743), which was filed with the U.S. Securities and Exchange Commission on July 10, 2024 and declared effective on July 15, 2024, generating net proceeds of $1.1 million after deducting underwriting discounts and other related expenses. The Company intends to use the net proceeds for working capital and general corporate purposes. 

  • On August 16, 2024, the Company’s board of directors (the “Board”) approved the adoption of the Company’s Amended and Restated 2024 Stock Incentive Plan (the “Plan”). Subsequently, on September 30, 2024, the Company’s stockholders approved the Plan and the compensation committee of the Board granted stock awards of 118,750 shares of Class A common stock and 31,250 shares of Class B common stock. Share-based compensation expenses of $261,666 were recognized during the quarter ended September 30, 2024.

  • At a special stockholders’ meeting held on September 30, 2024, the Company’s stockholders approved the Company’s Fourth Amended and Restated Articles of Incorporation to authorize a reverse stock split. Subsequently, on October 7, 2024, the Board approved the a reverse stock split of the Company’s common stock at a ratio of 1-for-16 (the “Reverse Stock Split”). The Reverse Stock Split took effect on October 21, 2024. Starting on October 24, 2024, the Company’s Class A common stock began trading on the Nasdaq Capital Market on a post-split basis.

*All share numbers are retrospectively adjusted for the Reverse Stock Split.

Tony Liu, Cheetah’s Chairman and CEO commented, “Since the second quarter of this year, the Company has been undergoing a business transformation from the previous parallel-import vehicle business, which had shrunk substantially due to the deteriorating Chinese macroeconomy conditions since the second half of 2022, to the logistics and warehousing business, which utilizes more the international trade flows between the PRC and U.S. markets. Additionally, our headquarters relocation to Irvine, CA will enable a stronger management focus on our new business line due to Irvine’s proximity to the important ports of Los Angeles and Long Beach. Management will continue to take initiatives to seek out new business opportunities. While we believe that tangible results of these efforts may not be apparent for several quarters, we have confidence that we are positioning the Company for substantial future growth in this business.”

Third Quarter 2024 Financial Results

During the third quarter of 2024, the Company generated $61,208 in revenue from its logistics and warehousing operations, with no revenue from its parallel-import vehicle business. Compared to the Company’s total revenue of $10.0 million for the same period in 2023, this represented a decrease of $9.9 million, or 99.4%. The decline was primarily driven by the continued downturn in the Company’s parallel-import vehicle business.

Gross profit from the combined business segments in the third quarter of 2024 decreased by approximately $1.1 million, or 97.4%, compared to the third quarter of 2023. As a percentage of revenue, the gross margin increased from 11.6% for the three months ended September 30, 2023, to 48.8% for the three months ended September 30, 2024.

General and administrative expenses were $1.1 million for the three months ended September 30, 2024, which increased by $0.6 million, or 108.0%, from $0.5 million for the three months ended September 30, 2023, primarily due to increases in (i) personnel-related expenses and rental expenses to support the newly launched logistics and warehousing segment, (ii) recurring expenses associated with new business lines, aligning with the Company’s strategic shift towards logistics and warehousing, (iii) depreciation and amortization expenses, primarily due to the acquisition of new fixed assets and additional intangible assets from the acquisition of Edward Transit Express Group Inc. (“Edward”); and (iv) insurance expenses due to higher costs associated with directors and officers insurance.

Allowance of credit loss of accounts receivable was $1.1 million as compared to nil for the three months ended September 30, 2024 and 2023, respectively. During the three months ended September 30, 2024, the Company assessed the collection of aged accounts receivable related to parallel-import vehicles business and made $1.1 million of allowance of credit loss on accounts overdue by 210 days. Management will continue to review the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances.

Share-based compensation expenses was $0.3 million for the three months ended September 30, 2024, as compared to nil for the three months ended September 30, 2023.

Net loss was $1.8 million for the three months ended September 30, 2024, compared with net income of $0.1 million for the same period 2023.

Nine Months 2024 Financial Results

Revenues for the nine months ended September 30, 2024 were $1.9 million, compared to $32.5 million for the same period in 2023, representing a decrease of $30.6 million, or 94.3%. This decrease was primarily due to the continued decline in the Company’s parallel-import vehicle business. Since the acquisition of Edward, the Company generated revenue of $231,605 from its logistics and warehousing business, representing approximately 12.4% of its total revenues for the nine months ended September 30, 2024.

Gross profit decreased by approximately $3.5 million, or 97.5%, to $87,348 during the nine months ended September 30, 2024 from $8.9 million for the same period in 2023, primarily in line with the decreased sales of parallel-import vehicles. As a percentage of revenues, gross margin was 11.0% for the nine months ended September 30, 2024, compared to 4.7% for the same period in 2023.

Selling expenses decreased to approximately $0.1 million for the nine months ended September 30, 2024, from $0.6 million for the nine months ended September 30, 2023. This decrease was the result of the contraction in vehicle sales volume that naturally led to a reduction in associated selling activities, reflecting current market demand dynamics. Selling expenses as a percentage of revenue was 6.3% and 1.9% for the nine months ended September 30, 2024 and 2023, respectively. General and administrative expenses increased by $1.0 million, or 63.2%, to $2.7 million for the nine months ended September 30, 2024 from $1.7 million for the nine months ended September 30, 2023, primarily due to (i) an increase in personnel-related expenses by approximately $0.4 million, which was attributed to the hiring of additional staff to support the newly launched logistics and warehousing segment, (ii) an increase of $0.1 million in rental and leases following the acquisition of Edward with the addition of a new office workspace in California, (iii) an increase of $0.1 million in recruiting expenses associated with the development of new business lines, aligning with the Company’s strategic shift towards logistics and warehousing, (iv) an increase of $0.1 million in depreciation and amortization expenses, primarily due to the acquisition of new fixed assets and additional intangible assets; (v) an increase of $0.2 million in insurance expenses due to higher costs associated with directors and officers insurance, and (vi) an increase of $0.1 million in other miscellaneous general and administration expenses during the nine months ended September 30, 2024.

Allowance of credit loss of accounts receivable was $1.1 million for the nine months ended September 30, 2024, compared to nil for the nine months ended September 30, 2023. During the nine months ended September 30, 2024, the Company assessed the collection of aged accounts receivable related to parallel-import vehicles business and made $1.1 million of allowance of credit loss on accounts overdue by 210 days. Management will continue to review the accounts receivable on a periodic basis and make general and specific allowances when there is doubt as to the collectability of individual balances.

Share-based compensation expenses was $0.3 million for the nine months ended September 30, 2024, as compared to nil for the nine months ended September 30, 2023.

Interest expenses decreased by approximately $1.0 million, or 89.2%, to approximately $0.1 million for the nine months ended September 30, 2024, from $1.1 million for the nine months ended September 30, 2023, primarily due to (i) significant declines in inventory financing, LC financing, and line of credit financing activities as the result of continuing reduction in vehicle sales and a decline in the need for such financing for parallel-import vehicles operation, and (ii) the Company’s paying down debts in line of credit financing and line of credits, using the capital infusion from its initial public offering in August 2023 and the follow-on offerings in May and July 2024.

Net loss was $3.0 million for the nine months ended September 30, 2024, compared with net income of $0.2 million for the same period of last year.

Liquidity and Cash Flow

As of September 30, 2024, the Company had cash and cash equivalents of $5.3 million and its working capital amounted to approximately $11.6 million, consisting of $12.4 million of current assets less $0.8 million of current liabilities, including $0.4 million of operating lease liabilities, $0.3 million of other payables, and $0.1 million of other current liabilities.

The Company also reported cash provided by operating activities of $0.6 million for the nine months ended September 30, 2024, and total stockholders’ equity of $14.0 million as of September 30, 2024.

The Company’s working capital cushion is supported by its financing activities and its ability to borrow under its existing credit facilities.

The Company is working to further improve its liquidity and capital sources primarily by generating cash from operations, debt financing, and, if needed, financial support from its principal stockholder. If necessary to fully implement its business plan and sustain continued growth, the Company may seek additional equity financing from outside investors. Based on the current operating plan, management believes that the aforementioned measures collectively will provide sufficient liquidity to meet the Company’s future liquidity and capital requirements for at least 12 months from the issuance date of its consolidated financial statements.

Forward-Looking Statements

This press release contains certain forward-looking statements, including statements that are predictive in nature. Forward-looking statements are based on the Company’s current expectations and assumptions. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. These statements may be identified by the use of forward-looking expressions, including, but not limited to, “anticipate,” “believe,” “continue,” “estimate,” “expect,” “future,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters, but the absence of these words does not mean that a statement is not forward-looking. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in the Company’s filings with the U.S. Securities and Exchange Commission, including its registration statement on Form S-1, as amended, under the caption “Risk Factors.”

For more information, please contact:

Cheetah Net Supply Chain Service Inc. 
Investor Relations
(949) 418 7804
ir@cheetah-net.com

 
CHEETAH NET SUPPLY CHAIN SERVICE INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 
     Three Months Ended September 30,  Nine Months Ended September 30, 
     2024     2023     2024     2023 
REVENUES            
Parallel-import Vehicles $   10,038,246  $1,631,248   32,475,714 
Logistics and Warehousing  61,208      231,605    
Total Revenues   61,208    10,038,246    1,862,853    32,475,714 
             
COST OF REVENUES            
Cost of vehicles     8,365,730   1,515,270   27,190,224 
Fulfillment expenses     505,156   140,798   1,722,704 
Ocean freight service cost  31,339      119,437    
Total cost of revenues  31,339   8,870,886   1,775,505   28,912,928 
             
GROSS PROFIT   29,869    1,167,360    87,348    3,562,786 
             
OPERATING EXPENSES            
Selling expenses  19,557   184,061   117,819   603,184 
General and administrative expenses  1,102,454   530,089   2,735,450   1,676,559 
Allowance of credit loss of accounts receivable  1,095,094      1,095,094    
Share-based compensation expenses  261,666      261,666    
Total operating expenses  2,478,771   714,150   4,210,029   2,279,743 
             
(LOSS) INCOME FROM OPERATIONS  (2,448,902)  453,210   (4,122,681)  1,283,043 
             
OTHER INCOME (EXPENSES)            
Interest income  88,459   107   145,631   4,009 
Interest expenses  (14,865 ) (286,197)  (113,830)  (1,058,111)
Other income  36      809    
OTHER INCOME (EXPENSES), NET  73,630   (286,090)  32,610   (1,054,102)
             
(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES   (2,375,272)   167,120    (4,090,071)   228,941 
             
Income tax (benefits) provision  (559,980)  44,217   (1,052,969)  58,226 
             
NET (LOSS) INCOME $ (1,815,292) $ 122,903  $ (3,037,102) $ 170,715 
             
(Loss) Earnings per share - basic and diluted* $(1.06) $0.11  $(1.78) $0.16 
Weighted average shares - basic and diluted*   1,709,610    1,091,727    1,709,610    1,058,509 

* Retrospectively adjusted for the Reverse Stock Split.

 
CHEETAH NET SUPPLY CHAIN SERVICE INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS DATA
 
     September 30,     December 31, 
  2024 2023
ASSETS  (Unaudited)   
CURRENT ASSETS:      
Cash and cash equivalents $5,287,376 $432,998
Accounts receivable, net  3,291,450  6,494,695
Loans receivable  3,058,295  672,500
Inventory    1,515,270
TOTAL CURRENT ASSETS   12,418,881   9,820,537
TOTAL ASSETS $ 16,828,155 $ 10,059,265
       
TOTAL CURRENT LIABILITIES   835,885   2,358,791
       
TOTAL LIABILITIES   2,874,412   3,154,637
       
TOTAL STOCKHOLDERS’ EQUITY*   13,953,743   6,904,628
       
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY* $ 16,828,155 $ 10,059,265

* Retrospectively adjusted for the Reverse Stock Split

 
CHEETAH NET SUPPLY CHAIN SERVICE INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
     For the Nine Months Ended
  September 30,
     2024     2023 
Cash flows from operating activities:      
Net (loss) income $(3,037,102) $170,715 
Net cash provided by operating activities  601,526   2,871,734 
       
Cash flows from investing activities:      
Net cash used in investing activities  (2,970,912)   
       
Cash flows from financing activities:      
Net cash provided by (used in) financing activities  7,223,764   (2,225,246)
       
Net increase in cash  4,854,378   646,488 
Cash, beginning of the period  432,998   58,381 
Cash, end of the period $5,287,376  $704,869 
       

FAQ

What was Cheetah Net's (CTNT) revenue for Q3 2024?

Cheetah Net (CTNT) reported revenue of $61,208 for Q3 2024, representing a 99.4% decrease from $10.0 million in Q3 2023.

What was the ratio of CTNT's reverse stock split in October 2024?

Cheetah Net (CTNT) implemented a 1-for-16 reverse stock split that took effect on October 21, 2024.

How much did CTNT raise in their July 2024 public offering?

CTNT raised $1.1 million in net proceeds through a public offering of 404,979 shares at $3.68 per share on July 26, 2024.

What is CTNT's cash position as of September 30, 2024?

CTNT reported cash and cash equivalents of $5.3 million with working capital of $11.6 million as of September 30, 2024.

Cheetah Net Supply Chain Service Inc.

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