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