Cheetah Net Supply Chain Service (CTNT) - 2025 Q1 - Quarterly Report

Part I Item 1. Financial Statements Unaudited Q1 2025 financials reflect a business transformation, with discontinued vehicle operations, revenue growth in logistics, a net loss, and decreased assets Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $324,142 | $1,650,962 | | Loan receivable | $9,114,695 | $6,088,295 | | TOTAL ASSETS | $14,508,243 | $15,379,454 | | Liabilities & Equity | | | | TOTAL LIABILITIES | $2,628,295 | $2,761,782 | | TOTAL STOCKHOLDERS' EQUITY | $11,879,948 | $12,617,672 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | REVENUE | $479,799 | $76,834 | | GROSS PROFIT | $56,256 | $34,334 | | LOSS FROM OPERATIONS | $(960,448) | $(733,308) | | LOSS FROM CONTINUING OPERATIONS | $(753,909) | $(466,348) | | LOSS FROM DISCONTINUED OPERATIONS | $0 | $(142,582) | | NET LOSS | $(753,909) | $(608,930) | | Loss per share - basic and diluted | $(0.23) | $(0.52) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,768,126 | $1,695,717 | | Net cash used in investing activities | $(3,026,400) | $(47,617) | | Net cash used in financing activities | $(68,539) | $(1,177,894) | | Net (decrease) increase in cash | $(1,326,813) | $470,206 | - On March 3, 2025, the Board approved the discontinuation of the parallel-import vehicle business, with financial results now reported as discontinued operations in accordance with ASC 205-20[23][93] Note 1: Organization and Business Description Cheetah Net is transitioning from its discontinued vehicle business to logistics and warehousing, supported by acquisitions and a reverse stock split - The company is undergoing a business transformation, shifting its focus from parallel-import vehicle sales to logistics and warehousing services following the acquisitions of Edward and TWEW[26] - The parallel-import vehicle business was formally discontinued on March 3, 2025, due to a significant decline in sales (95.7% drop in revenue in 2024) and challenges in collecting receivables[22][23] - A 1-for-16 reverse stock split was effectuated on October 21, 2024, and all share information has been retrospectively adjusted[20] Note 5: Discontinued Operations The parallel-import vehicle business is discontinued, reporting a Q1 2024 loss, with significant 2024 credit losses and substantial Q1 2025 receivables collection Loss from Discontinued Operations (Q1 2024) | Metric | For the Three Months Ended March 31, 2024 | | :--- | :--- | | Revenue | $1,430,951 | | Gross loss | $(9,283) | | Loss from discontinued operations | $(142,582) | - The company recorded a total allowance for credit loss of $1.6 million for the year ended December 31, 2024, related to the discontinued vehicle business[101] - In Q1 2025, the company collected $2.5 million in accounts receivable from the discontinued operations, resulting in a significant cash inflow from these activities[102][203] Note 8: Intangible Asset and Goodwill Intangible assets and goodwill from Edward and TWEW acquisitions total $1.2 million and $1.0 million respectively, with Q1 2025 amortization expenses - Acquired 100% of Edward on February 2, 2024, for a total purchase consideration of $1.2 million, resulting in goodwill of $568,532 and intangible assets (developed technology, customer relationships, trade names) of $516,000[119][121][122] - Acquired 100% of TWEW on December 19, 2024, for a total purchase consideration of $1.0 million, resulting in goodwill of $475,861 and customer relationship intangibles of $600,000[123][124] - For the three months ended March 31, 2025, the company incurred amortization expenses of $28,071 related to these acquired intangible assets[124] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the strategic pivot to logistics, noting Q1 2025 revenue growth from acquisitions, increased costs, a net loss, and sufficient liquidity - The company has formally discontinued its parallel-import vehicle business as of March 3, 2025, and is now focused on expanding its logistics and warehousing services through the acquisitions of Edward (Feb 2024) and TWEW (Dec 2024)[167][169][170] Results of Operations Summary (Continuing Operations) | Metric | Q1 2025 (Unaudited) | Q1 2024 (Unaudited) | Change % | | :--- | :--- | :--- | :--- | | Revenue | $479,799 | $76,834 | 524.5% | | Gross Profit | $56,256 | $34,334 | 63.8% | | Loss from continuing operations | $(753,909) | $(466,348) | 61.7% | | Net Loss | $(753,909) | $(608,930) | 23.8% | - The significant revenue increase in Q1 2025 is primarily attributed to the TWEW acquisition, which contributed $417,284 (87.0% of total revenue)[177] - As of March 31, 2025, the company had $0.3 million in cash and cash equivalents and $9.1 million in loan receivables, with management believing it has sufficient capital to fund operations for at least the next 12 months[197][199] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Cheetah Net is not required to provide quantitative and qualitative disclosures about market risk[213] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were ineffective at a reasonable assurance level[215] - No material changes occurred in the company's internal control over financial reporting during the quarter ended March 31, 2025[216] Part II Item 1. Legal Proceedings The company is not currently involved in material legal proceedings but anticipates potential litigation in the ordinary course of business - The company reports no current material legal proceedings[218] Item 1A. Risk Factors As a smaller reporting company, the company is not required to provide information regarding risk factors - The company is not required to provide risk factors as it qualifies as a smaller reporting company[219] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company details the use of proceeds from two public offerings, allocating funds from the July 2024 offering to the TWEW acquisition and the May 2024 offering to working capital - The July 2024 Offering raised net proceeds of approximately $1.1 million, of which $200,000 was used as cash consideration for the acquisition of TWEW[220][222] - The May 2024 Offering raised net proceeds of approximately $7.4 million, with about $7.2 million used for working capital and general corporate purposes as of the report date[223][225] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, material contracts, and CEO/CFO certifications - The report includes several new loan agreements as exhibits, dated between November 2024 and March 2025, with Hongkong Sanyou Petroleum Co Limited and Asia Finance Investment Limited[230] - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Sections 302 and 906 are filed with the report[230]