Cheetah Net Supply Chain Service Inc S-3, filed Aug 28, 2024

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Non-accelerated

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Emerging growth company

Cheetah Net Supply Chain Service Inc. (CTNT)

S-3 2024-08-28

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North Carolina		81-3509120
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

		Page
About this Prospectus		ii

Commonly Used Defined Terms		iii

Cautionary Note Regarding Forward-Looking Statements		iv

Prospectus Summary		1

Risk Factors		6

Use of Proceeds		26

Dilution		26

Description of Share Capital		27

Description of Debt Securities		30

Description of Warrants		32

Description of Rights		34

Description of Units		34

Plan of Distribution		35

Material Contracts		37

Material Changes		37

Legal Matters		37

Experts		37

Where You Can Find Additional Information		37

Incorporation of Certain Information by Reference		38

·	“2023 Annual Report” are to our annual report on Form 10-K (File No. 001-41761), filed with the SEC on March 18, 2024;

·	“Cheetah Net” are to Cheetah Net Supply Chain Service Inc., a corporation that was incorporated under the laws of the State of North Carolina;

·	“customs clearance” are to the act of obtaining permission to export or import merchandise from one country into another;

·	“IPO” are to the initial public offering of the Company;

·	“June 2024 Quarterly Report” are to our quarterly report on Form 10-Q (File No. 001-41761), filed with the SEC on August 13, 2024;

·	“March 2024 Quarterly Report” are to our quarterly report on Form 10-Q (File No. 001-41761), filed with the SEC on May 13, 2024;

·	“parallel-import vehicles” are to vehicles purchased by dealers directly from overseas markets and imported into the PRC for sale through channels other than manufacturers’ official distribution systems;

·	“PRC” or “China” are to the People’s Republic of China;

·	“U.S. dollars,” “USD,” “$,” and “dollars” are to the legal currency of the United States; and

·	“we,” “us,” “our,” “our Company,” or the “Company” are to Cheetah Net and its subsidiaries, as the case may be.

	●	a visionary and experienced management team with strong financial and operational expertise;

	●	in-depth industry experience and strong overseas procurement capabilities supported by knowledgeable management, our team marketing logistics and warehousing services, and professional purchasing agents of parallel-vehicle services; and

	●	the ability to scale operation through a systematic approach to international services and procurement, which drive better pricing for customers.

	●	increase our focus on generating revenue from logistics and warehousing services to support non-vehicle international trade, using our financial service capabilities as a lead-in to grow our customer base; and

	●	launch additional logistics and warehousing services and pursue additional strategic and financially attractive acquisitions.

	·	(i) Allen-Boy International LLC, a limited liability company organized on August 31, 2016 under the laws of the State of Delaware;

	·	(ii) Pacific Consulting LLC, a limited liability company organized on January 17, 2019 under the laws of the State of New York;

	·	(iii) Entour Solutions LLC, a limited liability company organized on April 8, 2021 under the laws of the State of New York;

	·	(iv) Cheetah Net Logistics LLC, a limited liability company organized on October 12, 2022 under the laws of the State of New York; and

	·	(v) Edward, a corporation incorporated on July 14, 2010 under the laws of the State of California.

	·	Our business, financial condition, and results of operations have been and will likely continue to be materially adversely affected by the decreasing prices for vehicles sold in China’s market by luxury car manufacturers (see page 6 of this prospectus);

	·	Changes in consumer demand in the PRC market towards fuel-efficient vehicles and electric vehicles, or a general declining purchasing power of PRC consumers, are adversely affecting our vehicle sales volumes and our results of operations (see page 7 of this prospectus);

	·	The PRC government policies on the purchase and ownership of automobiles and stricter emission standards may further reduce the market demand for the automobiles we sell and thus negatively affect our business and growth prospects (see page 8 of this prospectus);

	·	We facilitate the import of automobiles of foreign brands into the PRC market as parallel-import vehicles, and any adverse change in political relations between the PRC and the U.S. or any other country where those brands originate, including the ongoing trade conflicts between the U.S. and the PRC, may negatively affect our business (see page 9 of this prospectus); and

	·	We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflicts between Russia and Ukraine and in the Middle East and the increasingly strained relationship between the U.S. and the PRC. Our business, financial condition and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflicts in Ukraine and the Middle East or any other geopolitical tensions (see page 9 of this prospectus).

	·	Our business relies on a few customers that each accounts for more than 10% of our total purchases, and interruption in any of their operations may have an adverse effect on our business, financial condition, and results of operations (see page 11 of this prospectus);

	·	We have significantly reduced the number of independent contractors who serve as purchasing agents to acquire automobiles from U.S. dealers, and we may be unable to timely rehire or otherwise obtain a requisite number of such independent contractors should market conditions improve (see page 11 of this prospectus);

	·	We launched our financial services in October 2022 and started providing our logistics and warehousing services in February 2024, some or all of which may not succeed, and may adversely affect our business, financial condition, and results of operations (see page 12 of this prospectus);

	·	Sales to the PRC market represented approximately 87.7%, 78.7%, and 93.1% of our revenue from parallel-import vehicles for the six months ended June 30, 2024 and the years ended December 31, 2023 and 2022, respectively. Any negative impact to our ability to sell our products to our PRC customers could materially and adversely affect our results of operations and financial condition (see page 13 of this prospectus);

	·	The COVID-19 pandemic adversely impacted our business, results of operations, and cash flows in 2022 (see page 14 of this prospectus);

	·	Any negative publicity about us, our products and services, and our management may materially and adversely affect our reputation and business (see page 15 of this prospectus);

	·	If we fail to attract, recruit, or retain our key personnel, including our executive officers, senior management, and key employees, our ongoing operations and growth could be affected (see page 17 of this prospectus); and

	·	Future acquisitions may have an adverse effect on our ability to manage our business (see page 18 of this prospectus).

	·	We are subject to automotive, commercial lending, logistics and warehousing, and other laws and regulations in the U.S., which, if we are found to have violated, may adversely affect our business and results of operations (see page 18 of this prospectus);

	·	Non-compliance with laws and regulations on the part of any third parties with which we conduct business could expose us to legal expenses, compensation to third parties, penalties, and disruptions of our business, which may adversely affect our results of operations and financial performance (see page 19 of this prospectus);

	·	Third parties may claim that we infringe their proprietary intellectual property rights, which could cause us to incur significant legal expenses and prevent us from promoting our services (see page 19 of this prospectus);

	·	We may from time to time be subject to claims, controversies, lawsuits, and legal proceedings, which could adversely affect our business, prospects, results of operations, and financial condition (see page 20 of this prospectus); and

	·	As we generate a substantial portion of our revenue from customers doing business in the PRC market, we are subject to significant regulatory risks arising from the legal system in the PRC, which can change quickly with little advance notice (see page 20 of this prospectus).

	·	The market price of our Class A common stock may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the public offering price (see page 22 of this prospectus);

	·	Our existing stockholders may experience immediate and substantial dilution in the net tangible book value of Class A common stock as a result of the offering under this prospectus and any accompanying prospectus supplements (see page 23 of this prospectus);

	·	If we fail to maintain an effective system of internal controls, we may fail to meet our reporting obligations or be unable to accurately report our results of operations or prevent fraud, and investor confidence and the market price of our Class A common stock may be materially and adversely affected (see page 23 of this prospectus);

	·	The dual class structure of our common stock has the effect of concentrating voting control with our Chief Executive Officer, and his interests may not be aligned with the interests of our other stockholders (see page 24 of this prospectus); and

	·	We are an “emerging growth company” and a “smaller reporting company” under the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies will make our common stock less attractive to investors (see page 25 of this prospectus).

	·	may present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations;

	·	are not required to provide a detailed narrative disclosure discussing our compensation principles, objectives, and elements and analyzing how those elements fit with our principles and objectives, which is commonly referred to as “compensation discussion and analysis”;

	·	are not required to obtain an attestation and report from our auditors on our management’s assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

	·	are not required to obtain a non-binding advisory vote from our stockholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,” “say-on frequency,” and “say-on-golden-parachute” votes);

	·	are exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure; and

	·	are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act.

	·	brand recognition;

	·	quality of services;

	·	effectiveness of sales and marketing efforts;

	·	pricing and discount policies; and

	·	hiring and retention of talented staff.

	·	actual or anticipated fluctuations in our revenue and other operating results;

	·	the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

	·	actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our Company, or our failure to meet these estimates or the expectations of investors;

	·	announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;

	·	price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;

	·	lawsuits threatened or filed against us; and

	·	other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.

	·	provisions that authorize our board of directors to issue shares with preferred, deferred, or other special rights or restrictions without any further vote or action by our stockholders; and

	·	provisions that restrict the ability of our stockholders to call meetings and to propose special matters for consideration at stockholder meetings.

	·	Governing Documents. Holders of shares of our common stock have the rights set forth in our third amended and restated articles of incorporation, bylaws, and applicable North Carolina law;

	·	Dividend Rights and Distributions. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of our common stock are entitled to share equally in dividends, if any, as may be declared from time to time by the board of directors out of funds legally available for that purpose;

	·	Ranking. Our common stock ranks junior with respect to dividend rights and rights upon our liquidation, dissolution, or winding up to all other securities and indebtedness. In the event of liquidation, dissolution, or winding up, the holders of our common stock would be entitled to share equally on a per share basis, after payment or provision for payment of all our debts and liabilities, and all of our remaining assets available for distribution;

	·	Conversion Rights. Shares of Class B common stock are convertible into shares of Class A common stock at any time after issuance at the option of the holder on a one-to-one basis. Shares of Class A common stock are not convertible into shares of any other class;

	·	Voting Rights. Each holder of Class A common stock is entitled to one vote per share of Class A common stock and each holder of Class B common stock is entitled to 15 votes per share of Class B common stock;

	·	Preemptive Rights. The holders of our common stock have no preemptive rights; and

	·	Redemption. We have no obligation or right to redeem our common stock.

	·	Special Meetings of Stockholders. Our bylaws provide that special meetings of our stockholders may be called only by or at the direction of (a) our board of directors, (b) the President of the Company, or (c) stockholders holding at least 20% of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting.

	·	Amendment of Bylaws. Subject to certain limitations under North Carolina law, our bylaws may be amended or repealed by either our board of directors or our stockholders. Therefore, our board of directors may amend or repeal bylaws without the approval of our stockholders, to the extent permitted under North Carolina law. However, a bylaw adopted, amended, or repealed by our stockholders might not be readopted, amended or repealed by our board of directors alone unless our articles of incorporation or a bylaw adopted by our stockholders authorizes our board of directors to adopt, amend or repeal that particular bylaw or the bylaws generally.

	·	Action Without Meeting. To the fullest extent permitted by the North Carolina Business Corporation Act, stockholders may take action without a meeting by written consent as to such matters and in accordance with such requirements and procedures authorized by the North Carolina Business Corporation Act. Unless otherwise permitted by the North Carolina Business Corporation Act, such written consent must be signed by all stockholders.

	·	an economic downturn in China;

	·	political instability that could adversely affect our ability to deliver our products to consumers in a timely fashion;

	·	changes in laws and regulations, in particular those with little advance notice;

	·	a deterioration of relations or disruption of trade with the U.S., such as anti-U.S. campaigns, and the boycott of U.S. products;

	·	tariffs and other trade barriers which could make it more expensive for us to deliver our products to consumers; and

	·	increases in shipping costs for our products or other service issues with our third-party shippers, such as global availability of shipping containers, and related labor and fuel costs.

	·	our ability to comply with applicable laws, regulations, and rules regarding commercial lending (see “—Legal, Regulatory, and Compliance Risks—We are subject to automotive, commercial lending, logistics and warehousing, and other laws and regulations in the U.S., which, if we are found to have violated, may adversely affect our business and results of operations” and “Item 1. Business—Governmental Regulations” in the 2023 Annual Report);

	·	our ability to obtain a license in order to engage in the business of making loans if we are required to obtain such a license in the future (see “Item 1. Business” in the 2023 Annual Report);

	·	our ability to maintain sufficient funds for commercial lending (see “—Operational Risks—We have primarily funded our working capital needs from financing activities historically, and there is no assurance that we will always maintain positive cash flow in the near future or at all”);

	·	the continued growth and development of the commercial lending industry;

	·	our ability to attract and retain long-term, quality customers with good credit and whether they can timely repay their borrowing from us; and

	·	our ability to compete effectively with our competitors in the commercial lending industry.

	·	we face challenges in ensuring the productivity of a large employee base and recruiting, training, and retaining highly skilled personnel, including areas of procurement, sales and marketing, and information technology for our growing operations;

	·	we face challenges in responding to evolving industry standards and government regulation that impact our business, the logistics and warehousing industry, and the parallel-import vehicle dealership industry in general;

	·	we may have limited experience for certain new services including financial services and logistics and warehousing services, and our expansion into these new services may not be profitable;

	·	the technological or operational challenges may arise from the new services;

	·	the execution of our future plans will be subject to the availability of funds to support the relevant capital investment and expenditures; and

	·	the successful execution of our strategies is subject to factors beyond our control, such as general market conditions, and economic and political developments in the U.S. and globally.

	●	the net tangible book value per share of our equity securities before and after the offering;

	●	the amount of the increase in such net tangible book value per share attributable to the cash payments made by purchasers in the offering; and

	●	the amount of the immediate dilution from the public offering price which will be absorbed by such purchasers.

Stockholder	Number of Shares of Common Stock		Percentage of Total Shares of Common Stock
Huan Liu		8,250,000		55	%
Xianggeng Huang		2,250,000		15	%
Xiaolin Tang		1,500,000		10	%
Yan Xiao		1,500,000		10	%
Yingchang Yuan		1,200,000		8	%
Shuang Li		300,000		2	%
Total		15,000,000		100	%

Stockholder	Number of Shares of Class A Common Stock		Percentage of Total Shares of Class A Common Stock
Xianggeng Huang		2,250,000		33.3	%
Xiaolin Tang		1,500,000		22.2	%
Yan Xiao		1,500,000		22.2	%
Yingchang Yuan		1,200,000		17.8	%
Shuang Li		300,000		4.5	%
Total		6,750,000		100	%

Purchaser	Number of Shares of Class A Common Stock		Consideration
Rapid Proceed Limited		1,000,000	$	1,800,000
Yan Bai		666,000	$	1,198,800

	●	the title of the debt securities;

	●	the total amount of the debt securities;

	●	the amount or amounts of the debt securities will be issued and interest rate;

	●	the conversion price at which the debt securities may be converted;

	●	the date on which the right to convert the debt securities will commence and the date on which the right will expire;

	●	if applicable, the minimum or maximum amount of debt securities that may be converted at any one time;

	●	if applicable, a discussion of material federal income tax consideration;

	●	if applicable, the terms of the payoff of the debt securities;

	●	the identity of the indenture agent, if any;

	●	the procedures and conditions relating to the conversion of the debt securities; and

	●	any other terms of the debt securities, including terms, procedure, and limitation relating to the exchange or conversion of the debt securities.

	●	the title of the warrants;

	●	the total number of warrants;

	●	the price or prices at which the warrants will be issued;

	●	the price or prices at which the warrants may be exercised;

	●	the currency or currencies that investors may use to pay for the warrants;

	●	the date on which the right to exercise the warrants will commence and the date on which the right will expire;

	●	whether the warrants will be issued in registered form or bearer form;

	●	information with respect to book-entry procedures, if any;

	●	if applicable, the minimum or maximum amount of warrants that may be exercised at any one time;

	●	if applicable, the designation and terms of the underlying securities with which the warrants are issued and the number of warrants issued with each underlying security;

	●	if applicable, the date on and after which the warrants and the related underlying securities will be separately transferable;

	●	if applicable, a discussion of material federal income tax considerations;

	●	if applicable, the terms of redemption of the warrants;

	●	the identity of the warrant agent, if any;

	●	the procedures and conditions relating to the exercise of the warrants; and

	●	any other terms of the warrants, including terms, procedures, and limitations relating to the exchange and exercise of the warrants.

	●	the date of determining the security holders entitled to the rights distribution;

	●	the aggregate number of rights issued and the aggregate amount of securities purchasable upon exercise of the rights;

	●	the exercise price;

	●	the conditions to completion of the rights offering;

	●	the date on which the right to exercise the rights will commence and the date on which the rights will expire; and

	●	any applicable federal income tax considerations.

	●	the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately;

	●	any provisions for the issuance, payment, settlement, transfer, or exchange of the units or of the securities composing the units;

	●	whether the units will be issued in fully registered or global form; and

	●	any other terms of the units.

	●	through agents;

	●	to or through underwriters;

	●	through broker-dealers (acting as agent or principal);

	●	directly by us to purchasers (including our affiliates and shareholders), through a specific bidding or auction process, a rights offering, or other method;

	●	through a combination of any such methods of sale; or

	●	through any other methods described in a prospectus supplement.

	●	block transactions (which may involve crosses) and transactions on Nasdaq or any other organized market where the securities may be traded;

	●	purchases by a broker-dealer as principal and resale by the broker-dealer for its own account pursuant to a prospectus supplement;

	●	ordinary brokerage transactions and transactions in which a broker-dealer solicits purchasers;

	●	sales “at the market” to or through a market maker or into an existing trading market, on an exchange or otherwise; and

	●	sales in other ways not involving market makers or established trading markets, including direct sales to purchasers.

	●	our 2023 Annual Report, filed with the SEC on March 18, 2024;

	●	our March 2024 Quarterly Report and June 2024 Quarterly Report, filed with the SEC on May 13, 2024 and August 13, 2024, respectively;

	●	our Current Reports on Form 8-K filed with the SEC on August 28, 2024, August 13, 2024, July 26, 2024, July 25, 2024, July 12, 2024, July 8, 2024, May 15, 2024, April 29, 2024, February 7, 2024, and January 30, 2024;

	●	the information in our proxy statement filed on August 20, 2024 and April 23, 2024;

	●	the description of our common stock set forth in the registration statement on Form 8-A, filed with the SEC on July 26, 2023, including any amendment or report filed for the purpose of updating such description.

SEC Registration Fee	$	10,332
FINRA Filing Fee	$	11,000
Legal Fees and Other Expenses	$	*
Accounting Fees and Other Expenses	$	*
Printing Expenses	$	*
Miscellaneous Expenses	$	*
Total	$	*

Exhibit No.		Description
1.1*		Form of Underwriting Agreement
4.1		Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 of our Registration Statement on Form S-1 (File No. 333-280743), filed with the SEC on July 10, 2024)
4.2*		Form of Debt Security
4.3*		Form of Warrant Agreement and Warrant Certificate
4.4*		Form of Unit Agreement and Unit Certificate
4.5**		Form of indenture with respect to senior debt securities, to be entered into between registrant and a trustee acceptable to the registrant, if any
4.6**		Form of indenture with respect to subordinated debt securities, to be entered into between registrant and a trustee acceptable to the registrant, if any
5.1**		Opinion of Maynard Nexsen, PC
5.2**		Opinion of Hunter Taubman Fischer & Li LLC
23.1**		Consent of Marcum Asia CPAs LLP
23.2**		Consent of Assentsure PAC
23.3**		Consent of Maynard Nexsen, PC (included in Exhibit 5.1)
23.4**		Consent of Hunter Taubman Fischer & Li LLC (included in Exhibit 5.2)
24.1**		Power of Attorney (included on signature page)
25.1***		Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of the Trustee under the Senior Debt Securities Indenture
25.2***		Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of the Trustee under the Subordinated Debt Securities Indenture
107**		Filing Fee Table

*	To be filed, if applicable, by amendment or as an exhibit to a report filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and incorporated herein by reference.
**	Filed herewith.
***	To be filed, if necessary, on electronic Form 305b2 pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939.