Cheetah Net Supply Chain Service Inc. Reports 95.7% Revenue Decline and Strategic Shift to Logistics

Cheetah Net Supply Chain Service Inc. reported significant financial challenges for the fiscal year ending December 31, 2024, with total revenues plummeting to $1.6 million, a stark decline of 95.7% from $38.3 million in 2023. This drop was primarily attributed to a drastic reduction in sales of parallel-import vehicles, which accounted for 78.2% of total revenue in 2024, down from 100% in the previous year. The company sold only 14 vehicles in 2024 compared to 303 in 2023, reflecting a shift in consumer preferences towards domestically produced electric vehicles and the lingering effects of the COVID-19 pandemic on the Chinese market.

In response to these adverse market conditions, Cheetah Net has pivoted its business strategy by acquiring logistics and warehousing companies. In February 2024, the company acquired Edward Transit Express Group Inc., a California-based ocean transportation service provider, and in December 2024, it acquired TW & EW Services Inc., which offers general labor and logistics services. These acquisitions are part of a broader strategy to diversify revenue sources and mitigate the impact of declining vehicle sales. As of December 31, 2024, the logistics and warehousing segment contributed 21.8% of total revenue, with 24 active customers, a significant increase from seven customers at the launch of this business line.

Operationally, Cheetah Net has undergone substantial changes, including relocating its headquarters from Charlotte, North Carolina, to Irvine, California, to enhance its logistics operations due to proximity to major shipping ports. The company has also increased its marketing staff to pursue new business opportunities in international trade between the U.S. and China. As of the end of 2024, the company employed 15 individuals, a reduction from 389 independent contractors previously engaged in the parallel-import vehicle business.

Despite these strategic shifts, Cheetah Net reported a net loss of $5.2 million for 2024, driven by the costs associated with transitioning to logistics services and the financial fallout from the discontinued parallel-import vehicle operations. The company has recognized a credit loss of $1.6 million related to uncollectible accounts receivable from its former vehicle sales. Looking ahead, Cheetah Net aims to focus on improving operational efficiencies and expanding its market presence in logistics and warehousing, although it acknowledges the competitive landscape and potential geopolitical risks that could impact its business.

The company has also faced challenges in maintaining effective internal controls over financial reporting, identifying material weaknesses that could lead to misstatements in financial statements. Management is actively working on remediation plans to strengthen its internal control environment as it navigates this transition. Cheetah Net's future performance will depend on its ability to successfully execute its new business strategy and adapt to changing market conditions.