Second Quarter 2024 Financial Results

Revenues for the quarter were $0.3 million, compared with $12.2 million for the same quarter last year. This substantial decrease is primarily due to the significant decline in the Company’s parallel-import vehicle business. Revenue from this business segment dropped by approximately $12.0 million, or 98.4%.

Total cost of revenue from parallel-import vehicles sold decreased by approximately $10.8 million, or 98.0%, from $11.0 million in the second quarter of 2023 to $0.2 million in 2024. The Company’s cost of revenue from parallel-import vehicles sold amounted to 107.8% and 89.8%, respectively, of its parallel-import vehicle revenue. The decrease in total cost of parallel-import vehicles sold reflected in large part the reduction in the number of vehicles sold.

The Company reported total revenue of approximately $0.1 million generated from logistics and warehousing services during the second quarter of 2024, representing about 31.8% of its total revenues. This includes more than $70,000 derived from non-vehicle-related services. Ocean freight expenses directly related to the warehousing and services segment amounted to approximately $45,000.

Selling expenses decreased significantly to approximately $20,000, representing 6.6% of the Company’s total revenues, a $0.1 million decline from the second quarter of 2023. The decrease in selling expenses can be attributed primarily to the contraction in vehicle sales volume.

Net loss was $0.6 million, compared with net income of $0.2 million, for the same period last year.

Six Months 2024 Financial Results

Revenues for the first half of 2024 were $1.8 million compared with $22.4 million for the same period last year. This significant decrease was primarily due to a continued decline in the Company’s parallel-import vehicle business. During the first half of 2024, the Company sold 14 vehicles, compared with 175 for the same period last year.

Total cost of revenue from parallel-import vehicles sold was $1.6 million compared with $20.0 million for the same period last year, a decline of 91.7% attributed to the lower volume of parallel-import vehicles sold. For the six months ended June 30, 2024 and 2023, total cost as a percentage of revenue was 101.5% and 89.3%, respectively.

The Company reported total revenue of approximately $0.2 million generated from logistics and warehousing services during the first half of 2024, representing about 9.5% of the total revenues. This includes approximately $0.1 million derived from non-vehicle-related services. Ocean freight expenses directly related to the warehousing and services segment amounted to approximately $90,000.

Selling expenses were $0.1 million, a decrease of 76.6%, compared with $0.4 million from the same period last year. 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.

Net loss was $1.2 million, compared with net income of $0.05 million, for the same period last year.

Liquidity and Cash Flow

The Company reported cash of $6.3 million as of June 30, 2024. The Company’s working capital amounted to approximately $12.4 million, consisting of $13.6 million of current assets less $1.2 million of current liabilities, of which $0.8 million represents loans payable, current portion of long-term debt, and operating lease liabilities. 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
(704) 826-7280
[email protected]