Cheetah Net Supply Chain Service (CTNT) - 2023 Q4 - Annual Report

Sales Performance - In Q4 2023, unit sales fell to 49 vehicles, a 36.4% decrease from Q4 2022 and a 38.0% drop from Q3 2023, resulting in a net loss for the quarter[115]. - The company sold 303 vehicles in 2023, a 34.6% decrease from 463 vehicles in 2022, primarily due to market volatility in China[135]. - Sales to U.S. market dealers/exporters in 2023 amounted to 73 vehicles, representing 24.1% of total unit sales, compared to 29 vehicles in 2022[136]. Revenue and Profitability - Total revenue decreased by $16.8 million, or 30.5%, from $55.2 million in 2022 to $38.4 million in 2023, despite an increase in average selling price per vehicle[122]. - Revenue for the year ended December 31, 2023, was $38.3 million, a decrease of $16.8 million or 30.5% from $55.2 million in 2022[134]. - Gross profit decreased by $0.2 million, or 5.0%, from $4.5 million in 2022 to $4.3 million in 2023, while gross margin increased by 3% from 8.1% in 2022 to 11.1% in 2023 due to strategic adjustments in the product portfolio[145]. - Net income for 2023 was $133,870, a significant decline from $816,980 in 2022, resulting in earnings per share of $0.01 compared to $0.05 in the previous year[215]. Cost Management - Cost of revenue decreased by $16.6 million, or 32.8%, from $50.7 million in 2022 to $34.1 million in 2023, primarily due to the decline in sales[124]. - The total cost of revenue decreased by $16.6 million, or 32.8%, from $50.7 million in 2022 to $34.1 million in 2023, with cost as a percentage of total revenue improving from 91.9% to 88.9%[140]. - Fulfillment expenses decreased by approximately $0.3 million, or 12.3%, from $2.1 million in 2022 to $1.9 million in 2023, primarily due to reductions in payroll and benefits and improved management of vehicle storage and towing costs[144]. Market Trends - The ongoing shift in consumer demand towards electric vehicles (EVs) produced by PRC manufacturers has negatively impacted the luxury vehicle market[115]. - The company discontinued the sale of select luxury car models to better align with market demand and streamline resource allocation[135]. Financial Position - As of December 31, 2023, the company had a positive working capital of $7.5 million, supported by cash of $0.4 million and total stockholders' equity of $6.9 million[164]. - The company completed its IPO in August 2023, raising net proceeds of approximately $3.7 million, which improved financial flexibility and reduced reliance on external debt financing[157]. - Total current assets decreased to $9,820,537 in 2023 from $14,492,525 in 2022, primarily due to a reduction in inventory and accounts receivable[213]. - The company’s total stockholders' equity rose to $6,904,628 in 2023 from $1,845,355 in 2022, reflecting a stronger financial position[213]. Cash Flow - Net cash provided by operating activities was $5.6 million for the year ended December 31, 2023, compared to $2.2 million in 2022, primarily due to a $4.5 million decrease in inventory[168][169]. - Cash reserves increased significantly to $432,998 in 2023 from $58,381 in 2022, indicating improved liquidity[213]. - Net cash used in financing activities was $4.6 million for the year ended December 31, 2023, compared to $2.6 million in 2022, with significant repayments including $25.5 million in LC financing and $4.2 million in inventory financing[171][172]. Debt and Financing - The annual interest rate for LC financing and revolving lines of credit is currently 18.0%[125]. - The total weighted average balance of funds obtained through inventory financing decreased from $4.5 million in 2022 to $0.6 million in 2023, with interest expenses incurred dropping from $0.7 million to $0.1 million[149]. - Interest expenses decreased significantly by approximately $1.2 million, or 49.2%, to $1.2 million in 2023, primarily due to a drop in inventory financing activities and the completion of the IPO in Q3 2023[148]. Inventory Management - The company recorded no reserves for inventory obsolescence as of December 31, 2023, indicating effective inventory management[177][186]. - As of December 31, 2023, the company had total inventory valued at $1,515,270, significantly down from $5,965,935 in 2022, representing a decrease of approximately 74.7%[268]. Tax and Regulatory - The effective tax rate increased to 25.8% in 2023 from 22.3% in 2022[299]. - The Company has not assessed a valuation allowance for deferred tax assets, believing it is more likely than not that all will be realized[250]. IPO and Stock Performance - The Company closed its IPO on August 3, 2023, selling 1,250,000 shares of Class A common stock at $4.00 per share, generating gross proceeds of $5.0 million[311]. - The Company's Class A common stock began trading on the Nasdaq Capital Market under the ticker symbol "CTNT" on August 1, 2023[311].