Mingzhu Announces Unaudited Financial Results for the Six Months Ended June 30, 2021

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Dec 23, 2021, 17:00 ET

SHENZHEN, China, Dec. 23, 2021 /PRNewswire/ -- MingZhu Logistics Holdings Limited ("MingZhu" or the "Company") (NASDAQ: YGMZ), an elite provider of logistics and transportation services to businesses, today announced its financial results for the six months ended June 30, 2021.

Mr. Jinlong, CEO of MingZhu, commented, "We ended the first half of 2021 in a stronger financial position, with 8.2% year over year revenue growth, a 15% improvement in gross profit, and a 24% improvement in operating income. We have been successfully executing on multiple fronts, while continuing to navigate the challenged COVID-19 environment. Of note, we have shuttered our Xinjiang operation and shifted to an asset-light strategy."

Mr. Jinlong, CEO of MingZhu, continued, "We continue to make significant progress in our business diversification strategy, including recent announcements of non-binding memorandums of understanding with Damo Electric Truck, and Xinjiang Feipeng Logistics Co. Ltd., and a major cooperation agreement with China Merchants Logistics Group Urumqi Limited. We are actively evaluating market opportunities that can serve as natural extensions of our business and be totally additive from both a revenue and profitability standpoint. A great example of this is the recent announcement of our expansion into the commercial liquor distribution market given its compelling synergies and adjacency to our existing business. Taken together, we are optimistic in our outlook and excited about the opportunities in front of us, as we focus on unlocking additional value for the company and shareholders."

Financial Results for the Six Months Ended June 30, 2021

Revenue for the six months ended June 30, 2021, increased by $0.7 million, or 8.2%, to $9.6 million from $8.9 million for the same period of last year. This increase was mainly attributable to growth of the Company's subcontracting business.

Gross profit increased by $0.2 million, or 15.0%, to $1.4 million for the six months ended June 30, 2021, from $1.2 million for the same period of last year. Gross margin increased by 0.8 percentage points to 14.3% for the six months ended June 30, 2021, from 13.5% for the same period of last year. The gross margin increase was primarily due to an improvement in the profitability of the Company's self-owned vehicle business.

General and administrative expenses increased by $352,270, or 61.0%, to $932,409 for the six months ended June 30, 2021, from $579,139 for the same period of last year. The increase was primarily due to the increase of professional fees. Provision for doubtful accounts decreased by $261,702, or 100%, to $nil for the six months ended June 30, 2021, from $261,702 for the same period of last year. The collection of accounts receivables was back to normal, and the Company did not record any provision for doubtful accounts for the first half of 2021. Total operating expenses increased by $0.6 million, or 7.6%, to $9.2 million for the six months ended June 30, 2021, from $8.6 million for the same period of last year.

Operating income increased by $74,926, or 24.0%, to $386,940 for the six months ended June 30, 2021, from $312,014 for the same period of last year. Operating margin was 4.0% for the six months ended June 30, 2021, compared to 3.5% for the same period of last year. Net loss for the first six months ended June 30, 2021, was $355,744, as compared to net income of $106,698 for the same period of last year.

Balance Sheet and Cash Flow

As of June 30, 2021, the Company had a balance of cash and restricted cash of $14.2 million compared to $11.6 million at December 31, 2020. Accounts receivable were $2.5 million as of June 30, 2021, compared to $5.3 million as of December 31, 2020. The decrease of accounts receivable was due to the improvement of collection from large customers. The balance of prepayment to suppliers totaled $6.0 million as of June 30, 2021, compared to $1.1 million as of December 31, 2020, reflecting increased demands from the Company's subcontractors. Total working capital was $31.6 million as of June 30, 2021, compared to $17.7 million at December 31, 2020.

Net cash used in operating activities was $5.0 million for the six months ended June 30, 2021, compared to net cash provided by operating activities of $1.5 million for the same period of last year. This was primarily due to the increase in payment in advance to suppliers. Net cash used in investing activities was $57,204 for the six months ended June 30, 2021, compared to $136,964 for the same period of last year. Net cash provided by financing activities was $7,653,904 for the six months ended June 30, 2021, compared to net cash used in by financing activities of $1.2 million for the same period of last year. This was primarily due to the proceeds from public offerings and the bank borrowings.

About MingZhu Logistics Holdings Limited (NASDAQ: YGMZ)

Established in 2002 and headquartered in Shenzhen, China, MingZhu Logistics Holdings Limited is a 4A-rated professional trucking service provider. Based on the Company's regional logistics terminals in Guangdong Province and Xinjiang Autonomous Region, MingZhu Logistics Holdings offers tailored solutions to our clients to deliver their goods through our network density and broad geographic coverage across the country by a combination of self-owned fleets tractors and trailers and subcontractors' fleets. For more information, please visit ir.szygmz.com.

Forward-Looking Statements

The statements in this press release regarding the Company's future expectations, plans and prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding plans, goals, objectives, strategies, future events, expected performance, assumptions and any other statements of fact that have not occurred. Any statements that contain the words "may", "will", "want", "should", "believe", "expect", "anticipate", "estimate", "calculate" or similar statements that are not factual in nature are to be considered forward-looking statements. Actual results may differ materially from historical results or from those expressed in these forward-looking statements as a result of a variety of factors. These factors include, but are not limited to, the Company's strategic objectives, the Company's future plans, market demand and user acceptance of the Company's products or services, technological advances, economic trends, the growth of the trucking services market in China, the Company's reputation and brand, the impact of industry competition and bidding, relevant policies and regulations, fluctuations in China's macroeconomic conditions, and the risks and assumptions disclosed in the Company's reports provided to the CSRC (China Security Regulatory Commission) For these and other related reasons, we advise investors not to place any reliance on these forward-looking statements, and we urge investors to review the Company's relevant SEC filings for additional factors that may affect the Company's future results of operations. The Company undertakes no obligation to publicly revise these forward-looking statements subsequent to the filing of these documents as a result of changes in particular events or circumstances.

MINGZHU LOGISTICS HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
	As of June 30, 2021		As of December 31, 2020
	USD		USD
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	4,693,923	$	2,105,625
Restricted cash		9,500,000		9,500,000
Financial assets held for trading		77,440		-
Accounts receivable, net		2,506,448		5,343,716
Operating supplies		81,453		-
Prepayments		6,048,877		1,059,335
Other receivables		17,412,942		11,448,022
Amount due from related parties		1,503,948		741,340
Total Current Assets		41,825,031		30,198,038

PROPERTY AND EQUIPMENT, NET		2,884,414		3,448,109

OTHER ASSETS
Deferred tax assets		-		31,852
Deposits		269,303		261,992
Total other assets		269,303		293,844
Total assets	$	44,978,748	$	33,939,991

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank borrowings	$	5,761,546	$	6,551,724
Accounts payable		652,191		1,415,591
Other payables and accrued liabilities		2,295,515		531,120
Amount due to related parties		144,496		993,846
Tax payable		1,172,496		2,722,409
Current portion of capital lease and financing obligations		65,191		51,135
Current maturities of loans from other financial institutions		183,285		235,487
Total current liabilities		10,274,720		12,501,312

OTHER LIABILITIES
Long-term loans from other financial institutions		31,531		136,400
Long-term portion of capital lease and financing obligations		85,780		27,989
Total other liabilities		117,311		164,389
Total liabilities		10,392,031		12,665,701

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Ordinary shares: $0.001 par value, 50,000,000 shares authorized, 15,687,375 and 12,354,040 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively. *		15,687		12,354
Share subscription receivables		(847,086)		(847,086)
Additional paid-in capital		27,883,950		13,824,820
Statutory reserves		910,093		877,886
Retained earnings		6,517,767		6,905,718
Accumulated other comprehensive (loss) income		106,306		500,598
Total shareholders' equity		34,586,717		21,274,290
Total liabilities and shareholders' equity	$	44,978,748	$	33,939,991

Giving retroactive effect to the re-denomination and nominal issuance of shares effected on February 12, 2020, and the surrender and cancellation of shares effected on May 21, 2020.

MINGZHU LOGISTICS HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
	For the Six Months Ended June 30,
	2020		2019
	USD		USD
REVENUES	$	9,602,080	$	8,872,972

COSTS AND EXPENSES
Transportation costs		8,229,288		7,678,741
General and administrative expenses		932,409		579,139
Provision for doubtful accounts		-		261,702
Sales and marketing expenses		53,443		41,376
Total costs and expenses		9,215,140		8,560,958

INCOME FROM OPERATIONS		386,940		312,014

OTHER (EXPENSES) INCOME
Interest expenses		(235,268)		(210,887)
Other expenses		(657,745)		-
Other income		191,048		109,623
Total other expenses, net		(701,965)		(101,264)

(LOSS) INCOME BEFORE INCOME TAXES		(315,025)		210,750

PROVISION FOR INCOME TAXES		40,719		104,052

NET INCOME		(355,744)		106,698

OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation adjustment		(394,292)		(62,324)
COMPREHENSIVE INCOME	$	(750,036)	$	44,374

Weighted average shares used in computation:
Basic*		14,387,374		9,000,000
Diluted*		15,985,367		9,000,000

(LOSS) EARNINGS PER SHARE - BASIC*	$	(0.02)	$	0.01
(LOSS) EARNINGS PER SHARE - DILUTED*	$	(0.02)	$	0.01

Giving retroactive effect to the re-denomination and nominal issuance of shares effected on February 12, 2020, and the surrender and cancellation of shares effected on May 21, 2020.

MINGZHU LOGISTICS HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
									Retained Earnings
	Shares*		Amount		Share Subscription Receivables		Additional Paid-in Capital		Statutory Reserve		Unrestricted		Accumulated Other Comprehensive Income (Loss)		Total
			USD		USD		USD		USD		USD		USD		USD
BALANCE, December 31, 2020		12,354,040	$	12,354	$	(847,086)	$	13,824,820	$	877,886	$	6,905,718	$	500,598	$	21,274,290

Net income (loss) for the period		-		-		-		-		-		(355,744)		-		(355,744)
Foreign currency translation adjustment		-		-		-		-		-		-		(394,292)		(394,292)
Appropriation to statutory reserve		-		-		-		-		32,207		(32,207)		-		-
Issuance of shares through public offering		3,333,335		3,333		-		14,059,130		-		-		-		14,062,463

BALANCE, June 30, 2021		15,687,375	$	15,687	$	(847,086)	$	27,883,950	$	910,093	$	6,517,767	$	106,306	$	34,586,717

MINGZHU LOGISTICS HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	For the Six Months Ended June 30,
	2021		2020
	USD		USD
Cash flows from operating activities:
Net (loss) income	$	(355,744)	$	106,698
Adjustments to reconcile net income to net cash provided by operating activities:
(Gain) Loss on disposals of equipment		(5,532)		2,721
Provision for doubtful accounts		-		263,003
Amortization of deferred financing fees		57,199		34,911
Depreciation for property and equipment		747,316		835,463
Deferred income tax expenses		32,122		(76,596)
Changes in operating assets and liabilities
Accounts receivable		3,051,083		4,306,728
Operating supplies		(81,282)		-
Prepayments		(9,370,842)		(517,693)
Other receivables		(5,888,995)		(3,243,964)
Deposits		(4,031)		(3,709)
Accounts payable		(776,760)		(75,447)
Other payables and accrued liabilities		9,129,748		(366,206)
Tax payables		(1,558,220)		217,752
Net cash (used in) provided by operating activities		(5,023,938)		1,483,661

Cash flows from investing activities:
Purchases of equipment		(57,204)		(136,964)
Net cash used by investing activities		(57,204)		(136,964)

Cash flows from financing activities:
Proceeds from short-term bank borrowings		4,327,532		796,337
Repayment of short-term bank borrowings		(5,185,311)		(1,172,663)
Repayment of long-term bank borrowings		-		(85,322)
Repayments of loans from other financial institutions		-		(8,871)
Repayments of obligations under capital leases		(236,116)		(852,718)
Amounts advanced from related parties		4,158,734		5,195,613
Repayments to related parties		(13,885,698)		(5,083,005)
Proceeds from public offerings		18,474,763		-
Net cash provided by (used in) in financing activities		7,653,904		(1,210,629)

Effect of exchange rate change on cash		15,536		(6,310)

Net increase in cash and restricted cash		2,588,298		129,758
Cash and restricted cash at beginning of the period		11,605,625		223,507
Cash and restricted cash at end of the period	$	14,193,923	$	353,265

Supplemental disclosure of cash flow information:
Interest paid	$	200,435	$	154,324
Income tax paid	$	990,349	$	74,889

Supplemental non-cash investing and financing information:
Non-cash capital leases to acquire revenue equipment	$	(118,883)	$	(23,649)
Uncollected receivable from disposal of revenue equipment	$	9,221	$	-
Professional fees paid by related parties		-		143,862

Reconciliation to amounts on consolidated balance sheets:
Cash	$	4,693,923	$	353,265
Restricted cash		9,500,000		-
Total cash	$	14,193,923	$	353,265