China Auto Logistics (OTC:CALI)

TIANJIN, CHINA, July 30, 2018 (GLOBE NEWSWIRE) -- China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), a seller in China of imported automobiles and a provider of auto-related services, today announced it received notification that the Company’s securities will be delisted from The Nasdaq Stock Market as of August 1, 2018.

As reported in a Current Report on Form 8-K filed on June 1, 2018, the Company received notification from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) that due to the Company’s inability to timely file its Quarterly Report for the quarter ended March 31, 2018 on Form 10-Q, as well as its Annual Report for the year ended December 31, 2017 on Form 10-K, the Company was not in compliance with Listing Rule 5250(c)(1) of the Nasdaq Listing Rules.

As reported in a Current Report on Form 8-K filed on June 11, 2018, the Company submitted a plan to Nasdaq providing details on how the Company intended to regain compliance with the continued listing requirements of Listing Rule 5250(c)(1).

As reported in a Current Report on Form 8-K filed on July 17, 2018, certain executive officers and directors of the Company resigned on June 29, 2018 (the “Resignations”) as a result of a police investigation in The People’s Republic of China (the “PRC Investigation”), which arose as a result of an internal investigation being conducted by the Company’s Audit Committee (the “Internal Investigation”).

On July 17, 2018, the Company received a letter from Nasdaq pursuant to Listing Rule 5250(a) requesting additional information from the Company relating to the Resignations, the PRC Investigation and the Internal Investigation. The Company did not provide its response to Nasdaq by the requested July 20, 2018 deadline.

On July 24, 2018, the Company received a further letter from Nasdaq, which stated that, given the foregoing, Nasdaq concluded that the Company did not provide a definitive plan evidencing the Company’s ability to achieve compliance with Listing Rule 5250(c)(1). The letter stated that the Company has not provided public disclosure regarding its current financial status or the timing for the completion of the Internal Investigation and, as such, prospective and current investors do not have information they need to make an investment decision in the securities of the Company. The letter further noted the Company’s failure to respond to Nasdaq’s request for information pursuant to Listing Rule 5250(a) and that therefore Nasdaq does not have information necessary to evaluate the Company’s suitability for continued listing.

Nasdaq therefore determined that the Company’s securities will be delisted from The Nasdaq Stock Market.

The Company does not plan to request an appeal of Nasdaq’s foregoing determination. Accordingly, trading of the Company’s common stock will be suspended at the opening of business on August 1, 2018, and a Form 25-NSE will be filed with the SEC, which will remove the Company’s securities from listing and registration on The Nasdaq Stock Market.

NEW YORK, July 17, 2018 (GLOBE NEWSWIRE) -- The Nasdaq Stock Market® (NDAQ) announced that the trading halt status in China Auto Logistics Inc. (CALI) was changed to "additional information requested" from the company. Trading in the company's stock had been halted today, July 17, 2018, at 06:55:24 Eastern Time for "news pending" at a last sale price of $2.37.

Trading will remain halted until China Auto Logistics Inc. has fully satisfied Nasdaq’s request for additional information.

For news and additional information about the company, please contact the company directly or check under the company’s symbol using InfoQuotesSM on the Nasdaq® Web site.

TIANJIN, CHINA, June 11, 2018 (GLOBE NEWSWIRE) -- China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), a top seller in China of luxury imported automobiles and a leading provider of auto-related services, today announced it has submitted a plan to Nasdaq detailing how the Company plans to regain compliance with Nasdaq’s continued listing requirements. 

As previously reported, the Company has been advised by Nasdaq that due to the Company’s inability to timely file its Quarterly Report for the quarter ended March 31, 2018 on Form 10-Q, as well as its 2017 Annual Report on Form 10-K, the Company has not been in compliance with Nasdaq listing rule 5250(c)(1) which requires timely filing of such reports with the U.S. Securities and Exchange Commission for continued listing. 

Under Nasdaq rules, the Company was given until today, June 11, 2018, to submit a plan to Nasdaq providing full details on how the Company intends to regain compliance.  After reviewing the plan, Nasdaq may grant the Company an extension until October 15, 2018 for the Company to regain compliance.  If Nasdaq rejects the plan, the Company may appeal such decision to a Nasdaq Hearings Panel.

The Company’s common stock will continue to trade on Nasdaq pending Nasdaq’s review of the compliance plan.

TIANJIN, CHINA, June 01, 2018 (GLOBE NEWSWIRE) -- China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), a top seller in China of luxury imported automobiles and a leading provider of auto-related services, today reported on a Form 8-K that as a consequence of its inability to timely file its Quarterly Report on Form 10-Q for the period ended March 31, 2018, and the continued delinquency in filing its 2017 Annual Report on Form 10-K, the Company is not in compliance with Nasdaq listing rule 5250(c)(1), which requires timely filing of reports with the U.S. Securities and Exchange Commission for continued listing.

Under the Nasdaq rules, the Company has until June 11, 2018 to submit a plan to regain compliance with the Nasdaq rules and, if the plan is accepted by Nasdaq, then Nasdaq may grant an extension until October 15, 2018 for the Company to regain compliance. If Nasdaq does not accept the plan, the Company may appeal such decision to a Nasdaq Hearings Panel.

In a Form 8-K filed on April 10, 2018, the Company disclosed that the Audit Committee of the Board initiated an independent investigation which investigation is the reason for the Company’s inability to timely file its Form 10-K and Form 10-Q.  The Company also previously disclosed that a material weakness was identified in its internal controls and procedures over identifying and reporting certain relationships and related transactions, and that the identified material weakness would impact its disclosures in the Form 10-K and be the subject of the independent investigation.

The Company intends to fully cooperate with the investigation and, once completed, file the Form 10-K and Form 10-Q as soon as possible thereafter.  The Company also intends to submit a compliance plan to Nasdaq by June 11, 2018, including details on the investigation and its results, as well as specific steps that may be required to regain compliance with the Nasdaq rules.

Third Quarter 2017 Financial Results

• Net revenue from continuing operations in the third quarter rose 30.05% to $125,231,888 from $96,293,622 in the third quarter of 2016.
• The net loss from continuing operations attributable to shareholders in the third quarter was $(939,443), or $(0.23) per share, compared with a net loss of $(200,000) or $(0.05) per share, in the year earlier quarter.

Commenting on these results, Mr. Tong Shiping, Chairman and CEO of the Company, stated, "While our efforts during the quarter generated an increase in Auto Sales, the steps we took to improve margins, such as increased retail sales, fell short. We will continue to take the necessary steps to maintain our leadership position and believe this will serve us well down the road as China's economy continues to rebound and as high end buyers return to the market." He added, "One key indicator during the quarter of confidence in the future of the Company was the acquisition in September by our largest shareholder - - Bright Praise Enterprises Limited ('Bright Praise') - - of 806,000 new common shares issued by the Company in connection with a Debt Exchange Agreement. This transaction which is fully described in our Form 10-Q and in other filings with the U.S. Securities and Exchange Commission, brought Bright Praise ownership of the Company to 50.7%."

Outlook

"While we anticipate continuing difficulty in the short term with respect to improving margins," Mr. Tong stated, "we remain optimistic that the boost being provided to independent importers like ourselves by the government's Parallel Imported Vehicle Scheme, and an improving economy in China, will lead to improved results, especially as luxury buyers return to the market. In addition, we continue to review potential new higher margin businesses and are likely as well to continue to expand our retail sales where we believe higher margins also are possible."

Second Quarter 2017 Financial Results

• Net revenues in the 2017 second quarter rose sharply year over year, to approximately $138 million -- a gain of approximately 48% -- mainly on the strength of increased sales of automobiles compared with relatively weak auto sales in the second quarter of 2016.
• The net loss from continuing operations attributable to shareholders in the 2017 second quarter improved from $477,875, or a $0.12 loss per share a year earlier, to $342,109 or a loss per share of $0.08. The net income from discontinued operations attributable to shareholders was $0 in the 2017 second quarter compared to $5,664,104 or earnings per share of $1.40 in the 2016 second quarter.

Commenting on these results, Mr. Tong Shiping, Chairman and CEO of the Company, stated: "We were pleased to see the year over year rebound in auto sales in the second quarter. However, we also clearly saw our already tight margins further impacted by the recent tax imposed on purchasers of our higher margin, high end autos which kept buyers of these autos away. We think at some point we'll see high end buyers return and, meanwhile, are continuing to fight to maintain our position as a leader in the industry."

Outlook

"Much of our future growth in Auto Sales," Mr. Tong commented, "is dependent on the continuing growth and strengthening of the Chinese economy. While there is always reason to have some concerns about this, generally, we remain quite confident about the economy and, concomitantly, future sales of imported luxury and 'super luxury' vehicles."
He added, "While we remain cautious about steps we may take to improve our profitability, we are aware of the need and are staying focused on the issue."

First Quarter 2017 Financial Results

• Net revenues of approximately $111 million in the 2017 first quarter were approximately 19% lower than in the first quarter of 2016 when stronger than anticipated sales were spurred largely by customer response to a rapid devaluation of the Chinese currency.
• In the 2017 first quarter, the Company incurred a net loss attributable to shareholders from continuing operations of $(135,246) or $(0.03) per share. This compared with a somewhat higher loss in the same quarter last year of $(187,522) or $(0.05) per share and a total loss attributable to shareholders in the 2016 first quarter of $(1,060,917) or $(0.21)) per share.

Commenting on the quarter, Mr. Tong Shiping, Chairman and CEO of the Company, stated: "Despite a still relatively slower economy, increased competition, and increased government taxation on some luxury items, I believe we have continued to stabilize our business and are prepared to capitalize on any future overall improvements in the Chinese economy." He added, "While auto sales were down compared with unusually strong first quarter results in 2016, they nevertheless remained approximately 27% higher than in the first quarter of 2015. Also, we continue to be the sole one-stop provider of Financing Services to auto dealers in Tianjin, and this remains a base for our leadership, as does our much stronger financial position following the decision to sell our Zhonghe operations last year."

Outlook

"Over the near term, we do not expect to see any significant improvements in our gross margins in auto sales, if the new 'super luxury' tax remains a factor in our sales mix," Mr. Tong stated. "However," he added, "we have built up our inventory in the first quarter in anticipation of an improving outlook for auto sales. We think an improving economy will contribute to this, as well as benefits we anticipate from the Parallel Import Scheme that is being implemented in Tianjin and other key cities, which we believe provides us with some great long term advantages competing with official authorized automobile dealers."

"At the same time," Mr. Tong said, "we continue to study potential opportunities to expand into new higher margin services such as internet sales."

Third Quarter 2016 Financial Results

• Sales in the period of $96,293,622, down approximately 36% from the same period a year earlier.
• Net loss from continuing operations in its 2016 third quarter of $(200,000), or $(0.05) per share

Mr. Tong Shiping, Chairman and CEO of the Company, commented, "In the first half of the year, we took the necessary step with the sale of Zhonghe to strengthen our financial situation and thereby create a new base for moving forward in a still highly competitive imported luxury auto market. At the current time our focus is on further strengthening and building our Auto Sales business, where we may see new opportunities for growth possible as a consequence of our leadership position and the "Parallel Imported Vehicles" scheme that has begun to be implemented in Tianjin and a few other large cities. We believe, too, that the currency situation has stabilized."

He added, "While over the near term we will focus mainly on our core auto sales business, we also are considering other possible higher margin opportunities, as both our auto sales and financial services business can be expected to remain highly competitive, with the former, in particular, not leaving a lot of room for margin expansion."

Item 8.01     Other Events.

On June 6, 2016, China Auto Logistics Inc. (the “Company”) received notice from Nasdaq Listings Qualification Department (“Nasdaq”) that, after the appointment of Lv Fuqi and Bai Shaohua on May 27, 2016, the Company has regained compliance with Listing Rules 5605(b)(1) and 5605(c)(2).

A copy of the press release that discusses this matter is filed as Exhibit 99.1 to, and incorporated by reference in, this report. The information in this Current Report is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, except as shall be expressly set forth by specific reference in any such filing.

Item 1.01             Entry into a Material Definitive Agreement.

On June 1, 2016, Tianjin Binhai Shisheng Trading Group Co., Ltd. (“Shisheng”), a wholly-owned subsidiary of China Auto Logistics Inc. (the “Company”), signed (a) an Equity Transfer Agreement (the “Automall Disposition Agreement”) with Wuxi Huitong Automobile Sales and Service Co., Ltd. (“Huitong”) to sell 100% of the equity of Tianjin Zhonghe Automobile Sales and Service Co., Ltd. (“Zhonghe”) and (b) a Debt Transfer Agreement, dated June 1, 2016, by and among Shisheng, Huitong, and Hezhong (Tianjin) International Development Co., Ltd. (“Hezhong”) (the “Automall Debt Transfer Agreement”). Zhonghe owns and operates the Airport International Automall located in the Tianjin Airport Economic Area and owns 40% of Tianjin Car King Used Car Trading Company Ltd.

Under the terms of the Automall Disposition Agreement, the sale price for the Zhonghe equity is RMB 410,000,000 (approximately $62,300,000 as of June 1, 2016). The sale price is payable in two parts: (1) Huitong will pay Shisheng RMB 169,938,192 in cash by July 1, 2016 and (2) under the terms of the Automall Debt Transfer Agreement, Huitong assumed Shisheng’s outstanding payment obligations to Hezhong of RMB 240,061,808 under the Equity Transfer Agreement, dated November 30, 2013, by and between Hezhong and Shisheng. Upon signing, Shisheng transferred control of Zhonghe to Huitong. Failure by either party to fulfill their obligations under the Automall Disposition Agreement may result in the termination of the Automall Disposition Agreement, as well as a penalty of 10% of the total transfer price.

 Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On May 13, 2016, China Auto Logistics Inc. (the “Company”) received notification from the Nasdaq Listings Qualification Department (“Nasdaq”) that as a result of the recent resignations of two independent directors from the Company’s board of directors (the “Board”), the Company is no longer in compliance with Nasdaq’s Listing Rules 5605(b)(1), 5605(c)(2) and 5605(d)(2) (the “Rules”) because the Company no longer has (1) a majority of independent directors on the Board, (2) an audit committee of at least three independent directors, and (3) a compensation committee of at least two independent directors.

The Company has until June 27, 2016 to submit a plan to regain compliance with the Rules (a “Plan”) and, if the Plan is accepted by Nasdaq, then Nasdaq can grant an extension until November 9, 2016 for the Company to regain compliance. If Nasdaq does not accept the Plan, then the Company may appeal such decision.

The Company is actively searching for two qualified independent directors to serve on the Board and its audit and compensation committees. The Company intends to appoint these two directors prior to June 27, 2016 and negate the need to submit a Plan. If the Company is unable to meet such deadline, then the Company intends to submit a Plan to Nasdaq and request an extension of time in order to locate and appoint two qualified independent directors. However, there can be no assurance that the Company will ultimately be able to regain compliance with the Rules.

CHINA AUTO LOGISTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Item 8.01.    Other Events.

On December 15, 2015, China Auto Logistics Inc. (the “Company”) received notice from Nasdaq Listings Qualification Department (“Nasdaq”) that for the last 20 consecutive business days, the bid price of the Company’s common stock has been at $1.00 per share or greater and that the Company has regained compliance with Listing Rule 5550(a)(2).

A copy of the press release that discusses this matter is filed as Exhibit 99.1 to, and incorporated by reference in, this report. The information in this Current Report is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, except as shall be expressly set forth by specific reference in any such filing.

Item 1.01 Entry into a Material Definitive Agreement.

 
On November 10, 2015, Tianjin Binhai Shisheng Trading Group Co., Ltd. (“Shisheng”), a wholly-owned subsidiary of China Auto Logistics Inc. (the “Company”), signed a Payment Extension Agreement with Hezhong (Tianjin) International Development Co., Ltd. (“Hezhong”) to modify the payment terms of an Equity Transfer Agreement (the “Automall Acquisition Agreement”), dated November 30, 2013 and attached as an exhibit to the Company’s Current Report on Form 8-K filed on December 5, 2013. Pursuant to the Payment Extension Agreement, the payment due on November 30, 2015 under the Automall Acquisition Agreement has been extended to May 31, 2016 at an annual interest rate of 6%.

CHINA AUTO LOGISTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Management Discussion and Analysis

For the three months ended September 30, 2015, our net revenue increased 64.13% to $151,621,754, from $92,377,130 for the same period in 2014, and our cost of revenue increased 63.37% to $149,129,426 from $91,280,660 for the same period in 2014. Our gross profit margin increased 127.3% to 1.64% for the three months ended September 30, 2015 from 1.19% for the same period in 2014. As compared to the same period in 2014, our gross profit, income from operations, net income and net income attributable to shareholders of China Auto Logistics Inc. for the three months ended September 30, 2015 increased 127.3% to $2,492,328, increased 1,357.41% to $2,844,810, increased 170.46% to $1,248,757, and increased 170.55% to $1,248,880, respectively, primarily due to the previously deferred rent income being recognized as revenue, reversal of the reserve for due from Car King Tianjin, and the increase in sales of automobiles which were partially offset by the decline in revenue generated from financing services.

Sales of Automobiles

Net revenue from Sales of Automobiles increased 64.5% to $148,614,443 for the three months ended September 30, 2015 from $90,341,713 for the same period in 2014. During the three months ended September 30, 2015 and 2014, the Company sold 1,418 automobiles and 881 automobiles, respectively, representing an increase of approximately 61% in volume. The average unit selling price per automobile increased to $105,000 for the three months ended September 30, 2015 from $103,000 for the same period in 2014. Our sales increased substantially during the three months ended September 30, 2015 compared to the same period of 2014. In early August, China’s official currency “Renmenbi” (“RMB”) devalued by over 3% against U.S. dollars over a 5-day period. As most of the observers and economists expect RMB will continue to devalue against U.S. dollars and other major currencies, many of our customers expect the prices for imported automobiles will increase. As a result, some of our customers increased their orders in anticipation of increased prices. While we expect this trend to be short term, our sales increased substantially during the three months ended September 30, 2015.

Since the first quarter of 2013, we have experienced increased competition as more companies enter the imported automobile market. While we remain one of the leaders in the imported automobile market, we continue to sell our automobiles at a low gross margin in order to maintain or expand our market share and maintain our market leader status. During the three months ended September 30, 2015, sales for our top three selling brands, Mercedes Benz, Toyota, and Land Rover accounted for 74% of our total net automobile sales. During the three months ended September 30, 2014, sales for our top three selling brands, Mercedes Benz, Land Rover, and Toyota accounted for 67% of our net automobile sales. Our gross margin for Sales of Automobiles increased to 0.29% for the three months ended September 30, 2015 from 0.24% for the three months ended September 30, 2014 and increased from 0.02% for the full year of 2014.

Sales to the Company’s top three customers, each of which are car dealers, accounted for 46% and 25% of the Company’s sales during the three months ended September 30, 2015 and 2014, respectively. The Company will continue to maintain close working relationships with its top customers while attempting to reduce the concentration of revenues among these top customers by actively looking for new customers to enlarge its customer base.

Financing Services

The Company provides Financing Services to its business customers using the Company’s bank facility lines of credit. These business customers are typically not customers of other segments. The Company earns a service fee from its customers for drawing its facility lines related to its customers’ purchases of automobiles and payment of import taxes. Customers bear all the interest and fees charged by the banks and prepay those fees upon the execution of their service contracts with the Company. We continue to take advantage of the available credit lines granted by our banks to expand our Financing Services operations through increasing our service types and expanding our customer base.

Net revenue from Financing Services for the three months ended September 30, 2015 decreased 23.31% to $1,541,186 from $2,009,704 for the same period in 2014. The Company had aggregate credit lines of approximately $170 million (RMB1.08 billion) and had approximately $66.2 million drawn on our lines as of September 30, 2015. In addition to the facility lines of credit agreements with various banks, the Company had $68.7 million of short-term borrowings with Agricultural Bank of China, China Zheshang Bank, and Tianjin Binhai Rural Commercial Bank as of September 30, 2015. We had approximately $66.2 million drawn on our $174 million lines of credit as of September 30, 2014. The gross margin for our Financing Services segment decreased to 38.6% for the three months ended September 30, 2015 from 42.85% for the three months ended September 30, 2014.

Our Financing Services revenue consists of two portions: the interest income and fee income. Revenue from the fee income portion of our Financing Services decreased during the three months ended September 30, 2015 as a result of lower fee income generated during the period. Excluding revenue from the interest income portion of $946,254 and $1,138,879 in the three months ended September 30, 2015 and 2014, respectively, revenue from the fee income portion decreased 31.68% to $594,932 for the three months ended September 30, 2015 from $870,825 for the same period in 2014. Historically, a significant portion of our financing income has been related to fees that we charge to our customers for extending temporary credit beyond the financing terms for which these customers have contracted with banks. Because of a reutilization of our working capital following the Zhonghe Acquisition and the creation of Car King Tianjin, we had to limit our provision of this service starting in the beginning of 2014. With the acquisition installment payments made in November 2014 and January 2015, our working capital available to provide this temporary credit service, which had been a significant part of our Financing Services and a major contributor to our gross margin in recent years, was limited during the three months ended September 30, 2015. We will seek to continue to better manage the use of our cash flow in order to generate additional fee income in the future.

We provide Financing Services to our customers with our lines of credit with major commercial banks in the PRC, including Agricultural Bank of China, China Merchants Bank, Pudong Development Bank, China Zheshang Bank, Industrial and Commercial Bank of China, China Minsheng Bank, and Shengjing Bank. We continue to strengthen our relationship with these banks and aim to negotiate with more banks for higher lines of credit at more favorable terms. Based on the Company’s business relationships with some financial institutions, we are able to obtain financing on an “as-needed” basis and we are in negotiations for a number of new credit lines. As of September 30, 2015 and December 31, 2014, we had approximately $170 million (RMB1.08 billion) and $182 million (RMB1.12 billion), respectively, lines of credit available to use in our Financing Services. As of September 30, 2015 and December 31, 2014, we had approximately $104 million and $119 million, respectively, lines of credit available to use in our Financing Services. As of November 10, 2015, the Company had aggregate credit lines of approximately $170 million (RMB1.08 billion). Although all of our lines of credit have maturities of less than one year and may not be renewed on the same terms, if at all, we do not expect that the expiration of our lines of credit with any one of our existing banks will have a material adverse effect on our ability to provide Financing Services. However, if the automobile market in the PRC, and in particular the market for imported automobiles, slows down in the future, our revenue from Financing Services would be materially and adversely affected by a decreased number of transactions.

Our revenue growth from Financing Services is heavily dependent on overall industry growth, the economic conditions of the market in the PRC and the interest rates charged by our banks on the lines of credit. As discussed above, we have established credit lines with most major commercial banks in the PRC and although an enormous decrease or the simultaneous expiration of credit lines or other bank facilities may temporarily reduce our capacity to provide Financing Services and affect our purchase power, we have not experienced formidable difficulties in the access of credit lines and any other bank facilities in the past. Therefore, we do not foresee any difficulty at this time in obtaining credit lines and loan facilities from our banks. However as banks in China continue to reduce their credit risk and improve the quality of their outstanding loans, we continue to experience more requirements for obtaining bank lines and loans such as requiring personal guarantees by our executives and directors, guarantees by our major customers, suppliers, and business partners.

In response to the economic slowdown in China, the Central Bank of China decreased the benchmark rate for borrowings by 0.25% to 4.35% in October 2015, which followed several interest rate cuts earlier 2015. We expect these interest reduction policies to increase the use of our Financing Services because of the lower cost of borrowing for our customers.

Web-based Advertising Services

The Company operates two websites, www.at188.com and www.at160.com which serve a broad spectrum of China’s “auto living” public by providing information about automobiles and auto-related products and services. We currently operate in one single city in Tianjin. In the three months ended September 30, 2015 and 2014, all of our revenue from our websites was generated by subscription fees and advertisements. Revenues from our Web-based Advertising Services decreased 40.73% from $25,713 for the three months ended September 30, 2014 to $15,239 for the same period in 2015. Since the fiscal year 2012, we have revised our business plan and moved away from Web-based Advertising Services to focus on automobile sales, Financing Services and, starting in the first quarter of 2014, the newly developed used car business through Car King Tianjin and any potential opportunities through operating the Airport International Auto Mall. We expect that the revenue generated from this segment will continue to be low compared to other segments.

Automobile Value Added Services

Revenue from our Automobile Value Added Services includes services such as assistance with customs clearance, storage and nationwide delivery services. We did not generate any revenue from Automobile Value Added Services during the three months ended September 30, 2015 and 2014. We expect our Automobile Value Added Services revenue to fluctuate from time to time depending on our customers’ needs.

Airport Auto Mall Automotive Services

Zhonghe operates two businesses including (i) selling used cars through Car King Tianjin; and (ii) leasing a portion of the Airport International Auto Mall. We are also considering directly targeting retail customers by selling new imported automobiles out of this facility. We lease a portion of the Airport International Auto Mall to Car King Tianjin to operate a used car business and are in discussions with Car King Tianjin to lease additional space of this facility as its operation size continues to grow. Since the inception of Car King Tianjin’s business, the Company has provided advances to Car King Tianjin as working capital, while Car King China has provided consigned inventories to support Car King Tianjin’s used car sales. From the start of operations in March 2014, Car King Tianjin has gradually increased our volume in used car sales in the Tianjin region. As of June 30, 2015 and December 31, 2014, we had approximately $1.8 million due from Car King Tianjin. Due to the cumulative loss incurred by Car King Tianjin, the balance due from Car King Tianjin was reduced by the shared cumulative loss of the investment in Car King Tianjin Car King Tianjin and the remaining balance was fully reserved as a result of the uncertainties of collecting these advances. During the three months ended September 30, 2015, Car King Tianjin remitted approximately $1.84 million (RMB11,500,000) of which $270,000 (RMB1,500,000) was applied to rent receivable and repayment of an outstanding loan balance of $1.57 million (RMB10,000,000) to the Company. As a result, the previously reserve amount was reversed and such reversal was recorded as recovery of reserve due from Car King Tianjin in the amount of $1,524,894 in the condensed consolidated statement of operations during the three months ended September 30, 2015.

The Company recognized rental income of approximately $0 and $652,000 for the three months and nine months ended September 30, 2014 related to this lease. Due to the cumulative loss incurred by Car King Tianjin, the Company has not received any return on its investment in the Joint Venture (as defined below) since the inception of its operations. As a result, starting in the third quarter of 2014, the Company deferred recording the rental income related to the lease of the Airport International Auto Mall. The Company recorded rent income of $1,462,877 for deferred rent for the period from third quarter of 2014 to the second quarter of 2015. Rent per the agreement was approximately $240,000 for the three months ended September 30, 2015. Since Car King Tianjin cannot generate sufficient cash to maintain its operations without relying on loans from its shareholders, the Company will not report rent income until cash is collected.

Since we own less than 50% of Car King Tianjin and have no significant control over Car King Tianjin, the revenue generated from Car King Tianjin is not reported in our consolidated revenue. During the three months ended September 30, 2015 and 2014, Car King Tianjin generated revenue in the amount of $1,904,293 and $1,169,322, respectively, and incurred a loss of $794,077 and $401,306, respectively. Car King Tianjin’s revenue represented revenue from sales of used automobiles at the Airport International Auto Mall and agency commissions earned from selling automobiles owned by other Car King locations. The increase in revenue was a result of substantial increase in the number of automobiles sold through Car King Tianjin. During the three months ended September 30, 2015, the number of automobiles sold through Car King Tianjin, including those for which Car King Tianjin acted as an agent for other Car King locations, reached 441 automobiles, including 46 automobile sales out of our own inventories and 395 automobiles for which we acted as sales agent. During the three months ended September 30, 2014, the number of automobiles sold through Car King Tianjin, including those for which Car King Tianjin acted as an agent for other Car King locations, was 278 automobiles, including 17 automobile sales out of our own inventories and 261 automobiles for which Car King Tianjin acted as sales agent. Car King Tianjin has reduced its mark-up for the used car sales or agency commission rates in order to increase the number of automobiles sold and to promote the “Car King” name in the Tianjin area. As a result, Car King Tianjin’s net loss increased during the three months ended September 30, 2015 compared to the same period of 2014 even though its revenue increased during the three months ended September 30, 2015 compared to the same period of 2014. Because the used car market in China is still in a preliminary development stage, we expect the overall used car market to continue to grow, and we hope that our investment will generate reasonable returns in the coming years. As of September 30, 2015 and December 31, 2014, the investment in Car King Tianjin amounted to $0 as the 40% share of the cumulative loss in Car King Tianjin exceeded our capital investment.

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On November 3, 2015, China Auto Logistics Inc. (the “Company”) received notification from the Nasdaq Listings Qualification Department (“Nasdaq”) that for the previous 30 consecutive business days, the bid price of the Company’s common stock (the “Common Stock”) had closed below the minimum $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2).

The letter states that the Company will be provided 180 calendar days, or until May 2, 2016, to regain compliance with the minimum bid price requirement. In accordance with Rule 5810(c)(3)(A), the Company can regain compliance if at any time during the 180-day period the closing bid price of the Common Stock is at least $1.00 for a minimum of 10 consecutive business days.

If by May 2, 2016 the Company has not regained compliance with the minimum bid price requirement, it may be eligible to have an additional period of 180 days to regain compliance. To qualify for additional time, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period. If the Company is not eligible for the second compliance period, then the Nasdaq Staff will provide notice that the Company’s securities will be subject to delisting. At such time, the Company may appeal the delisting determination to a Hearings Panel.

The Company intends to monitor the closing bid price of the Common Stock and may, if appropriate, consider implementing available options to regain compliance with the minimum bid price requirement, including a reverse split of the Common Stock. However, there can be no assurance that the Company will be able to regain compliance with the Nasdaq continued listing requirements.

CALI ($1.08) shares rose 44% during yesterday’s trading session on the heels of being pumped by smspennypicks.com. It seems like smspennypicks may be targeting distressed U.S. listed China Hybrid companies like CALI (yesterday) and QKLS (last week), giving us all the more reason to keep a close eye on the site’s updates.

If you recall, we wrote an article on CALI back in May of this year stating that we thought the company was being pumped irrationally up to, and through, $2.25 per share. The stock has had over 50% downside since then.  As a reminder, our reasons for being short were the company’s poor cash management and underlying fundamentals, neither of which substantiated the stock’s spike earlier this year.

We shorted CALI and said in May we expected shares to return to $1.20 levels or lower.  Prior to yesterday’s pump, shares were trading ~$0.75.  Today, CALI trades at $1.08. We covered our position on June 10th, when the stock was trading around $1.41. 

Disclosure: GeoInvesting is providing this information for your edification and in no way has any affiliation with any promoters and/or newsletters disseminating information on CALI, nor is GeoInvesting being paid to post this information. At times, the GeoTeam may trade P&D's on a long or short basis, depending on how we feel the momentum of the stocks will be affected by the efforts of stock promoters and any ensuing dumps.

CHINA AUTO LOGISTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Management Discussion and Analysis

For the three months ended June 30, 2015, our net revenue decreased 17.59% to $93,688,413, from $113,686,767 for the same period in 2014, and our cost of revenue decreased 17.58% to $92,856,032 from $112,665,784 for the same period in 2014. Our gross profit margin decreased 18.47% to 0.89% for the three months ended June 30, 2015 from 0.90% for the same period in 2014. As compared to the same period in 2014, our gross profit, loss from operations, net loss and net loss attributable to shareholders of China Auto Logistics Inc. for the three months ended June 30, 2015 decreased 18.47% to $832,381, decreased 0.76% to (298,141), increased 21.21% to $(2,245,917), and increased 21.62% to $(2,245,363), respectively, primarily due to the decreases in revenue of our segments, especially the Sales of Automobiles and Financing Services segments, and the increase in interest expense on the payable related to the Zhonghe Acquisition.

Disclosure: GeoInvesting is providing this information for your edification and in no way has any affiliation with any promoters and/or newsletters disseminating information on CALI, nor is GeoInvesting being paid to post this information. At times, the GeoTeam may trade P&D's on a long or short basis, depending on how we feel the momentum of the stocks will be affected by the efforts of stock promoters and any ensuing dumps.

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

 
On April 14, 2015, China Auto Logistics Inc. (the “Company”) received approval from The NASDAQ Listing Qualifications Department (“NASDAQ”) to transfer the listing of the Company’s common stock from The NASDAQ Global Market to The NASDAQ Capital Market. This transfer will be effective at the opening of business on April 16, 2015. The NASDAQ Capital Market is a continuous trading market that operates in substantially the same manner as The NASDAQ Global Market and listed companies must meet certain financial requirements and comply with NASDAQ’s corporate governance requirements. The Company’s common stock will continue to trade under the symbol “CALI.”

CHINA AUTO LOGISTICS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Management Discussion and Analysis

Our net revenue for 2014 decreased 12.4% to $402,269,611 from $459,235,057 for 2013 and our cost of revenue for 2014 decreased 12.06% to $397,829,464 from $452,379,416 for 2013. Gross profit margin decreased 39 basis points from 1.49% for 2013 to 1.10% for 2014. As compared to 2013, our gross profit, (loss) income from operations, net (loss) income and net (loss) income attributable to shareholders of China Auto Logistics Inc. for 2014 decreased 35.23% to $4,440,147, decreased 842.16% to $(21,743,278), decreased 5,303.38% to $(26,883,648), and decreased 5,224.04% to $(26,863,297), respectively primarily due to the decline of Sales of Automobiles, Web-based Advertising Services and Automobile Value Added Services and the impairment losses on the Airport International Auto Mall property and goodwill.

Acquisition of Zhonghe

On November 30, 2013, Shisheng signed the Auto Mall Acquisition Agreement with Hezhong to purchase 100% of the equity of Zhonghe, which owns and operates the Airport International Auto Mall.

Under the terms of the Auto Mall Acquisition Agreement, Shisheng will pay RMB559,768,000 (approximately $91.4 million) to Hezhong, in four annual installments with an annualized rate of interest of 6%. A substantial portion of the purchase price was related to the acquisition of the Airport International Auto Mall which was valued at $72,640,016. Apart from the other identified net assets in the amount of $10,075,231 and deferred tax liabilities related to the book and tax basis differences on the real estate and intangible assets in the amount of $11,448,664, the excess of purchase price over the identified assets and liabilities was allocated to goodwill in the amount of $20,107,700. We believe the goodwill valuation represents: (i) expected appreciation in the value of the Airport International Auto Mall, (ii) expected synergies and economies of scale from the integration of our business with Zhonghe and the newly formed Car King China used car business, (iii) the expectation that owning the Airport International Auto Mall will create other business opportunities in the future and will provide more resources to capture these potential opportunities, (iv) a defensive strategy to prevent our competitors from acquiring the Airport International Auto Mall, and (v) Zhonghe’s historical business. We believe that the purchase price paid represents the fair value of the assets acquired.

The fair market value of the Airport International Auto Mall is affected by the condition of the real estate market in China, especially in Tianjin. Even though the real estate market has been on an upward trend in recent years, it is uncertain that this trend will continue. During the course of the impairment evaluation for the Airport Auto Mall Automotive Service reporting unit at December 31, 2014, the Company determined that the carrying value of the Airport International Auto Mall exceeded its fair value. The fair value is determined using the income approach of valuation, which is based on the estimated future discounted cash flow generated from this property. Consequently, the Company recorded an impairment loss of $3,003,809 during the year ended December 31, 2014, which represents the excess of the carrying value of this property over its fair value.

Loss) Income from Operations

Loss from operations increased 842.16% to $21,743,278 in 2014 from income from operations of $2,929,747 in 2013. The decrease in income was primarily due to the decline of revenue from our Web-based Advertising Services and Automobile Value Added service segments. In addition, we recorded an impairment loss on the Airport International Auto Mall property and impairment loss on goodwill in 2014. Furthermore, our Airport Auto Mall Automotive Services segment is still in early stage development, and we therefore suffered losses from operating this segment primarily due to the depreciation expense. However, we believe we will continue to maintain our leading position in the imported luxury automobiles industry despite the current slow economy and competitive automobile industry.

TIANJIN, CHINA--(Marketwired - Oct 22, 2014) - China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), a top seller in China of luxury imported automobiles and a leading provider of auto-related services, reported it has received notification from the Nasdaq Listing Qualifications Department ("Nasdaq") that it is not in full compliance with listing requirements for the Nasdaq Global Market because the market value of the Company's publicly held shares has been below the required minimum of $5 million for 30 business days. Under the Nasdaq Listing Rules, the Company has 180 days (or until April 14^th, 2015) in which to regain compliance and avoid delisting by sustaining a $5 million market value of publicly held shares for at least ten consecutive business days. 

The Company said it plans to monitor the situation closely and to consider the options available to it, including submitting an application to transfer to the Nasdaq Capital Market. At this time, the Company cannot provide any assurance that it will be able to regain compliance or successfully transfer to the Nasdaq Capital Market.

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On October 16, 2014, China Auto Logistics Inc. (the “Company”) received notification from the Nasdaq Listings Qualification Department (“Nasdaq”) that for the previous 30 consecutive business days, the market value of publicly held shares (“MVPHS”) of the Company’s common stock (the “Common Stock”) had closed below the minimum $5 million requirement for continued inclusion on The Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(b)(1)(C).

The letter states that the Company will be provided 180 calendar days, or until April 14, 2015, to regain compliance with the minimum MVPHS requirement. In accordance with Rule 5810(c)(3)(D), the Company can regain compliance if at any time during the 180-day period the closing MVPHS is at least $5 million for a minimum of 10 consecutive business days. In the event the Company does not regain compliance with the MVPHS requirement prior to April 14, 2015, the Common Stock will be subject to delisting.

The Company intends to monitor the MVPHS of the Common Stock and may, if appropriate, consider implementing available options to regain compliance or submitting an application to transfer to The Nasdaq Capital Market. However, there can be no assurance that the Company will be able to regain compliance or successfully transfer to The Nasdaq Capital Market.

TIANJIN, CHINA--(Marketwired - Oct 15, 2014) - China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), a top seller in China of luxury imported automobiles and a leading provider of auto-related services, reported today that the Depository Trust Company ("DTC") has suspended the notice of global lock described in its July 16^th 2014 letter to CALI. DTC stated to the Company that it is continuing to consider the issues raised in the July 16^th letter and will be in contact with the Company once consideration of the matter has been completed. DTC noted further, however, that should it determine to proceed pursuant to the July 16^th letter, it will first issue notice to CALI and CALI will have the same rights to object as set forth in the July 16 letter.

Mr. Tong Shiping, Chairman and CEO of CALI commented, "We are appreciative of this latest decision by DTC and will continue to press our case before them which we believe is in the best interests of our shareholders."

Item 8.01.  Other Events.

 
On September 15, 2014, China Auto Logistics Inc. (the “Company”) received notice from the Depository Trust Company (“DTC”) that DTC has granted the Company a further thirty day extension, until October 15, 2014, with respect to DTC’s determination whether to impose a Global Lock (as hereinafter defined) of the Company’s shares. Should DTC institute a Global Lock, they would suspend all book entry services provided to DTC participants with respect to the Company’s common shares (the “Global Lock”). The Company had previously disclosed that the Company had received notice by DTC of its intent to institute a Global Lock (the “Global Lock Notice”) in a Form 8-K filed with the Securities and Exchange Commission on July 23, 2014. The Company had also previously disclosed an extension of the deadline to respond to the Global Lock Notice in a Form 8-K filed with the Securities and Exchange Commission on August 11, 2014. The Company continues to pursue all of its available options. There can be no assurance that the Company’s efforts will be successful.

Second Quarter 2014 Financial Results

• Revenues in the second quarter increased to $113,686,767 from $110,256,310 in the same period last year.
• (Loss) earnings per share attributable to shareholders of China Auto Logistics Inc. - basic and diluted was $(0.46) vs. last years same quarter of $0.22.

Mr. Tong Shiping, Chairman and CEO of the Company commented, "From an operating standpoint, during the quarter we continued our strategy of selling cars with reduced margins to maintain and expand our leadership in imported high end auto sales and were pleased that changes in the mix of our sales and our customers continued to result in stabilized bottom line results. Over time, we believe this situation will improve in our favor, particularly as we execute plans to greatly expand our e-commerce based sales and services anchored by new automalls we expect will be built or acquired throughout China in cooperation with our new strategic partner, Tianjin Binhai International Automall, Ltd."

He added, "With our 40% interest in Car King Tianjin, we also have exposure to China's used car market and are reviewing other opportunities we envision through our acquisition of the Airport International Auto Mall, such as retail auto sales. While we have had to fight a difficult economic environment and new competition to reach this point, I can say once again we truly are excited about where the Company is headed and are working diligently to finalize and implement our growth strategy."

Outlook

As noted earlier, the Company's optimism with respect to its long term growth has increased measurably in recent weeks as it has pursued the diversification it has been seeking with the acquisition of the Airport International Auto Mall, and with the significant potential for expansion it envisions as a consequence of the strategic cooperation agreement it has entered into.

Recently, the Company also has encountered a major challenge in the form of a notice from the Depository Trust Company of plans to impose a "global lock" on the Company's common shares. The Company is responding vigorously to this challenge which it views as unfairly harming shareholders even though the Company itself has not been charged with any wrongdoing. It has hired special counsel to handle the matter and is determined to do everything possible to protect shareholders, and will continue to update shareholders whenever new information on the matter becomes available.

Item 8.01.  Other Events.

On August 8, 2014, China Auto Logistics Inc. (the “Company”) announced that the Depository Trust Company (“DTC”) extended the deadline for the Company to submit its written response to DTC’s notice of its intention to suspend all book entry services provided to DTC participants with respect to the Company’s common shares (the “Global Lock Notice”). The Company must now submit its response to the Global Lock Notice by Spetember 12, 2014. The Company had previously disclosed the receipt of the Global Lock Notice in a Form 8-K filed with the Securities and Exchange Commission on July 23, 2014. Once the Company submits its response to DTC, DTC will then have up to twenty business days to reply to the Company with either a determination or a request for further information. There can be no assurance that the Company’s efforts will be successful.

A copy of the press release that discusses this matter is filed as Exhibit 99.1 to, and incorporated by reference in, this report. The information in this Current Report is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, except as shall be expressly set forth by specific reference in any such filing.

TIANJIN, China, July 23, 2014 (GLOBE NEWSWIRE) -- China Auto Logistics Inc. (the "Company" or "CALI") (Nasdaq:CALI), a top seller in China of luxury imported automobiles, a leading provider of auto-related services and a soon to be entrant in used car sales in China, today said it will vigorously oppose a "grossly unfair and highly damaging" plan by the Depository Trust Corporation, ("DTC"), as detailed in a notification letter received by the Company from DTC on July 17, 2014, to suspend all book entry services provided to DTC participants with respect to CALI shares (the "Global Lock"). The letter indicated the Company has until August 13, 2014 to provide a written response stating its objections to the DTC action, after which DTC will make either a determination or a request for further information within 20 business days.

According to the Company, the DTC decision to impose a "Global Lock" affecting all current shareholders is not based on any wrongdoing by the Company and there have been no allegations made against it. Rather, it is said to be based on DTC becoming aware of a recent SEC enforcement action against S. Paul Kelley et. al., in which the SEC alleges that Kelley et. al., among other offenses, violated Section 5 of the Securities Act. DTC's concern is that certain deposits made by Kelley et. al. were in violation of DTC's eligibility standards, and were comingled with shares of CALI eligible for deposit. 

Striving To Maintain U.S. Listing

"It is patently unfair," stated Mr. Tong Shiping, Chairman and CEO of China Auto Logistics, "that our current shareholders should be made to bear the brunt of the SEC enforcement action for past actions of a group of allegedly unscrupulous individuals. Nor should our China-based company be so severely punished after years of willing compliance with all applicable U.S. regulations, and shares that have been listed on NASDAQ since January 2010."

"We are fully aware," he continued, "that perhaps a disproportionate number of China-based companies that came public in the U.S. in recent years have been accused of, and in some cases found guilty of serious improprieties, while other simply have been chased away after the harshest imaginable treatment by the media and some very aggressive short sellers. Our Company, however, nevertheless has strived to maintain its U.S. listing, and communicates openly and regularly with our shareholders with the hope that their patience ultimately will be rewarded by the bright future we still see ahead in an improving economic environment."

"Quite simply," Mr. Tong continued, "we see DTC's action as a matter of throwing out the baby with the bathwater, and I have to ask, is this really based on our being a China-based company more than anything else?"

"We are quite determined to fight this tooth and nail," Mr. Tong said, "and will update shareholders when we have more information."

Item 8.01.  Other Events.

On July 23, 2014, China Auto Logistics Inc. (the “Company”) announced that, on July 17, 2014, the Company received a letter from the Depository Trust Company (“DTC”), notifying the Company that DTC intends to suspend all book-entry services provided to its participants with respect to the common shares of the Company (the “Global Lock”). The Company has until August 13, 2014 to provide a written response to DTC setting forth its reasons why the Global Lock should not be instituted. DTC would then have up to twenty business days to reply to the Company’s response with either a determination or a request for further information. The Company intends to object to the imposition of the Global Lock pursuant to the foregoing procedure, and is also currently considering all other options available to it. However, there can be no assurance that any of the Company’s efforts will be successful.

TIANJIN, CHINA--(Marketwired - Apr 10, 2014) - China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), a top seller in China of luxury imported automobiles, and a leading provider of auto-related services, reported today a lower year over year small profit for the year ended December 31, 2013, as it sought to maintain leadership in China's highly competitive luxury imported vehicle market. In a slower and more restrictive economic environment in 2013, the Company's luxury imported automobile sales declined approximately 22% and largely were of less profitable, lower endluxury vehicles.

Diversification and Free Trade Zone Potential

On a positive note, the Company saw fee income from Financing Services continue to grow despite slower auto sales. Most significantly, in the final months of the year, a key building block for diversifying into a potentially fast growing used car business as well as other auto related businesses was put into place, with the successful acquisition for $91.4 million on November 30, 2013 of Zhonghe Auto Sales Service Co., Ltd., which owns and operates the Tianjin Airport International Automall. The auto mall is in a prime location earmarked as one of the key sites in a proposed new Free Trade Zone (FTZ) in Tianjin, similar to the FTZ in Shanghai, which boosted real estate values and the value of companies located there. This followed an agreement in November with Car King China to launch Tianjin Car King Used Car Trading Company in which the Company has a 40% interest.

Mr. Tong Shiping, Chairman and CEO of the Company, stated, "While in 2013 we again absorbed the impact on our bottom line from competitive pricing in order to maintain leadership in our imported luxury auto business, I'm very pleased we succeeded in establishing a new leg for our business with significant long term growth potential.Used cars sales have become a much bigger slice of the auto sales pie in China, and we see a major opportunity for Car King Tianjin in the years ahead. It will take a while to build and measure our success with this new business as well as with our further possible diversification into higher margin retail auto sales. While we will continue to focus on expanding our existing auto-related services businesses and stabilizing auto sales margins, diversification will greatly strengthen our Company, position us well for new successes -- especially if the Tianjin FTZ comes to fruition -- and provide investors with new reasons for optimism about our future."

Financial Highlights

• 2013 revenues, which consisted primarily of luxury imported auto sales (98.30%), were $459,235,057, down 22.34% from $591,315,104 a year earlier, reflecting the year over year decline in Auto Sales.
• Gross profit margins in 2013 decreased to 1.49% from 1.90% in 2012, primarily reflecting a continuing decline in Auto Sales pricing in order to remain an industry leader against strong competition.
• Income from operations in 2013 was $2,929,747 compared with $3,582,194 a year earlier (including impairment changes for goodwill and intangible assets). The main contribution to income from operations came from Financing Services with operating income of $2,855,602 in 2013.
• Net income attributable to shareholders in 2013 was $524,260, or $0.14 per share, compared with $2,567,087, or $0.69 per share in 2012.

Item 8.01.  Other Events.

As previously reported on a Form 8-K filed on November 22, 2013 (the “Original Form 8-K”), Tianjin Binhai Shisheng Trading Group Co. Ltd (“Shisheng”), a wholly-owned subsidiary of the Company, entered into a Cooperation Framework Agreement to establish a joint venture between Tianjin Zhonghe Auto Sales Service Co., Ltd (“Zhonghe”), its wholly-owned subsidiary, and Car King (China) Used Car Trading Co., Ltd (“Car King”), to operate a used car trading platform and related services (the “Joint Venture”) at the Airport International Automall in Tianjin, China. As disclosed in the Original Form 8-K, the final terms of the Joint Venture were subject to the execution of a Joint Venture Agreement between Zhonge and Car King. After negotiation, Zhonghe and Car King will operate the Joint Venture in accordance with the terms of the Articles of Association of the Joint Venture, and will not be execuitng a Joint Venture Agreement.

China Auto Logistics Reports Services Agreement With the Tianjin International Automall Has Not Been Renewed; Cites Competition With Recently Acquired Airport International Automall

TIANJIN, CHINA--(Marketwired - Mar 14, 2014) -  China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), a top seller in China of luxury imported automobiles, and a leading provider of auto-related services, which recently acquired the Airport International Automall in Tianjin, reported today its agreement to manage the Tianjin International Automall (a cooperation agreement with Tianjin Prominent Hero International Logistics, Co., Ltd) expired on February 28, 2014 and was not renewed.

"To a certain extent the two malls are competitive," stated Mr. Tong Shiping, Chairman and CEO of China Auto Logistics, "and this is the main reason a joint decision was reached with the owners of the Tianjin International Automall to not renew the agreement."

Mr. Shiping added, "Despite being a small fraction of our sales, our auto mall management fees generated an excellent bottom line result. In recent periods, this contribution has been magnified by our continuing competitive stance in our much larger luxury auto sales business where profitability has decreased in order to maintain our leadership position. Going forward our focus is on further developing and implementing plans for our Airport Automall and our other businesses."

TIANJIN, CHINA--(Marketwired - Dec 5, 2013) - China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), a top seller in China of luxury imported automobiles, and a leading provider of auto-related services, reported today that on November 30, 2013, its subsidiary, Tianjin Binhai Shisheng Trading Group Co., Ltd. ("Shisheng") signed an equity transfer agreement with Hezhong International Development Co, Ltd. to acquire Tianjin Zhonghe Auto Sales Service Co., the owner and operator of the Airport International Automall in Tianjin (the "Automall"). The Company plans to develop the Automall into a key site for what it believes can become one of the largest used car businesses in China.

Following an initial payment of RMB 240 million (approximately $39.2 million) to be paid within 5 days of the signing, the remainder of the agreed purchase price of RMB 559,768,000 (approximately $91.4 million) will be paid in three additional annual installments with an annual interest rate of 6%, after which 100% of the equity in the acquisition will be transferred to Shisheng. In the interim, Shisheng will have operating control of the Automall, although failure to complete all required payments on time could result in termination of the agreement.

The Company anticipates utilizing its cash flow and bank borrowings to fund the acquisition. It also will be paying a finder's fee equal to 1% of the purchase price in the form of 340,000 restricted common shares under the terms of a Consulting Agreement, signed separately.

TIANJIN, CHINA--(Marketwired - Nov 22, 2013) - China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), a top seller in China of luxury imported automobiles, and a leading provider of auto-related services, reported today that the Company (through its wholly-owned subsidiary) has entered into a Cooperation Framework Agreement with respect to the establishment of a Joint Venture that will own and operate a used car business. Participation in the joint venture is contingent, however, on the successful completion by the Company of the acquisition of the Tianjin Airport International Automall, where the used car business will be operated. The acquisition is currently still in negotiations.

Additional details on the Framework Agreement are available in the Form 8-K filed today with the U.S. Securities and Exchange Commission.

Mr. Tong Shiping, CEO and Chairman of the Company, commented, "We believe the used car business could add another valuable dimension to our potential acquisition of the Tianjin Airport International Automall. Since the used car joint venture is fully contingent on this acquisition, which we cannot guarantee at this time will be completed, it would be premature to provide additional information currently. We will keep shareholders informed of our progress."

Third Quarter 2013 Financial Results

• Net revenues in the quarter were $125,489,366, compared with $170,456,821 in the same period last year.
• Earnings per share in the 2013 third quarter attributable to shareholders was $0.15, compared with $0.41 in the third quarter of 2012.

During the quarter, the Company kept in place its aggressive pricing strategy to provide customers in China with the lowest possible prices on imported luxury autos and to maintain the Company's leadership position in this industry segment. As anticipated, this strategy led to a further reduction during the quarter in the traditionally thin margins in this business. Imported vehicle sales (approximately 98.4% of third quarter revenues), while up from sales levels in the second quarter this year, also continued to be impacted in a still slow economic environment by the increased customs standards and tighter rule enforcement at the motor registration office initiated in the prior quarter.

Year over year revenues and profits in the Company's highly profitable Financing Services segment were impacted by lower year over year auto sales, in the quarter. Of note, however, through the first nine months of 2013, operating income from this business remained ahead of operating income generated in the comparable period of 2012.

A key management focus in the third quarter was the continued due diligence investigation relating to the potential acquisition for an estimated $65 million to $130 million of the Airport International Automall, which includes the 26,000 square meter facility and the land use rights on which it is situated in Tianjin. If completed, this acquisition is expected to constitute a major element in the Company's strategy to expand its auto-related services businesses to fuel future growth.

Outlook

Mr. Tong Shiping, CEO and Chairman of the Company, commented, "We continue to believe in the growth potential for imported luxury vehicles in China as the economy continues to rebound. Consequently, painful as it is in the short-term, we will continue to press ahead at least through the remainder of the year with our aggressive pricing. Coupled with the provision of our auto-related financing this will make it difficult, if not impossible, for competitors to match what we can offer customers. Maintaining our leadership will facilitate the growth of our existing and planned auto-related services, as would the successful completion of the acquisition of the automall in Tianjin, although a final decision on the latter has not been reached as yet."

TIANJIN, CHINA--(Marketwired - Nov 4, 2013) - China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), a top seller in China of luxury imported automobiles, and a leading provider of auto-related services, reported today it has been notified by the Listing Qualifications department of the Nasdaq Stock Market that the Company has regained compliance with the $5 million minimum market value of publicly held shares requirement of the Nasdaq Global Market.

TIANJIN, CHINA--(Marketwired - Oct 3, 2013) - China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), a top seller in China of luxury imported automobiles, and a leading provider of auto-related services, reported today it received a letter from the Listings Qualification Department of the Nasdaq Stock Market ("NASDAQ") stating that on September 27, 2013, for the previous 30 consecutive business days, the market value of publicly held shares ("MVPHS") of the Company's common stock (the "Common Stock") had closed below the minimum $5 million requirement for continued inclusion on The Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(b)(1)(C).

The letter states that the Company will be provided 180 calendar days, or until March 26, 2014, to regain compliance with the minimum MVPHS requirement. In accordance with Rule 5810(c)(3)(D), the Company can regain compliance if at any time during the 180-day period the closing MVPHS is at least $5 million for a minimum of 10 consecutive business days. In the event the Company does not regain compliance with the MVPHS requirement prior to March 26, 2014, the Common Stock will be subject to delisting.

The Company intends to monitor the MVPHS of the Common Stock and may, if appropriate, consider implementing available options to regain compliance or submitting an application to transfer to The Nasdaq Capital Market. However, there can be no assurance that the Company will be able to regain compliance or successfully transfer to The Nasdaq Capital Market.

Mr. Tong Shiping, Chairman and CEO of the Company, stated, "We remain committed to growing our business in the Chinese luxury auto market where we continue to be a significant player. We further believe that at some point investors will recognize our strengths and value our shares more realistically."

Second Quarter 2013 Financial Results

• Net revenues in the 2013 second quarter declined 27% to $110,256,310 compared with $150,047,968 in the same period last year. The sharp decline in Auto Sales in the quarter, as explained below, was the key reason for the decline in overall revenues.
• The gross profit margin in the 2013 second quarter was 1.65% compared with 2.03% in the second quarter of 2012. With lower auto sales in the quarter, income from operations decreased 48.82% compared with a year earlier to $1,262,939. The largest contribution to operating income in the 2013 second quarter of $900,190 came from Financing Services, followed by $227,392 from Sales of Automobiles.
• Net income attributable to shareholders in the 2013 second quarter declined 51.47% to $800,484, or $0.22 per share, compared with $1,649,461, or $0.45 per share, in the same period last year. Diluted weighted average number of common shares in both periods was 3,694,394.

Mr. Tong Shiping, CEO and Chairman of the Company, commented, "With the expectation that imported luxury auto sales in China will continue to exceed the anticipated growth in auto sales overall, we are determined to maintain our leadership in this niche and are continuing our aggressive pricing strategy. We believe by sacrificing some profits over the near term, we will attain a much stronger position in the future."

"With respect to the problems posed by new procedures and requirements for imports," Mr. Tong added, "we are working with our customers and our suppliers to normalize the situation, while also anticipating further strengthening of the economic environment."

"Meanwhile," he continued, "our key focus continues to be on generating bottom line growth through the expansion of our more profitable auto related services. If successful, we believe acquiring the Airport International Automall would be a significant step in this direction."

Outlook

Mr. Tong concluded, "We see luxury imported auto sales outperforming the anticipated growth in China's auto sales over the next few years, but with stronger competition, at least through the current year, we do not anticipate margin expansion. Our continuing goal is to offset this with growth in our other services businesses where we see significant possibilities for profit growth, especially as the economy stabilizes further. Near term, we remain focused on achieving further progress on our announced acquisition plans which, if successful, should clearly demonstrate the soundness of our growth strategy."

TIANJIN, CHINA--(Marketwired - May 20, 2013) - China Auto Logistics Inc. (the "Company") (NASDAQ: CALI), a top seller in China of luxury imported automobiles, a leading provider of auto-related services, and developer and operator of a leading automobile portal and auto-related websites, announced today that a wholly owned subsidiary of the Company has signed a non-binding Letter of Intent (the "LOI") to acquire and operate the Airport International Automall, a 26,000 square meter vehicle sales and exhibition center located in the heart of the Tianjin Airport Economic Area adjacent to a number of top 4S shops (auto dealerships) in Tianjin. The port city of Tianjin is one of China's major automobile import and sales centers, where the Company also manages the city's largest imported vehicle auto mall.

The potential acquisition is subject to a due diligence investigation and valuation by the subsidiary, with the final price to be determined by negotiations between the parties. No date has been set for completion of the transaction, and there can be no assurance that any transaction will be completed as contemplated or at all.

Mr. Tong Shiping, Chairman and CEO of China Auto Logistics Inc, commented, "We are very excited about this potential acquisition for a variety of reasons. First, it is a business we know well, based on our successful management of Tianjin's largest auto mall for imported cars, which has been a steady and important contributor to our bottom line. Second, it would further demonstrate our commitment to the growth strategy we have announced to shareholders, which is to maintain our leadership in luxury auto sales and support this with the growth of our existing and new higher margin auto-related services businesse

First Quarter 2013 Financial Results

• Net revenues for the three months ended March 31, 2013 increased 0.17% to $107,625,066 from $107,445,586 in the first quarter last year.
• Net income attributable to shareholders in the 2013 first quarter declined to $1,007,335, or $0.27 per share, compared with $1,581,477, or $0.43 per share in the first quarter of 2012.

Mr. Tong Shiping, CEO and Chairman of the Company, stated, "It is of paramount importance to the Company, and its plans to expand new and existing higher margin auto-related services, that we maintain a leadership position in luxury auto sales. While our price cutting strategy currently is squeezing margins, we believe it ultimately will shake out weaker competitors and build our market share. Meanwhile, we remain pleased with the growing contribution to our bottom line from Financing Services, and also are making progress developing other high margin auto-related services opportunities that we hope to be able to report on in the very near future." 

Outlook

Mr. Tong commented, "We believe we will continue to operate in a strong growth market for luxury car sales in China, where most forecasters see this segment of the market outperforming the anticipated growth in general automobile sales. At the same time, we see continuing competition in the luxury automobile segment necessitating a continuation of our efforts to beat the prices of weaker competitors to expand our market share. To help us with this strategy, we envision a growing contribution over time from our current and planned higher margin auto-services related businesses."

TIANJIN, CHINA--(Marketwire - Nov 5, 2012) - China Auto Logistics Inc. (the "Company") (NASDAQ: CALI), one of China's leading developers of websites for buyers and sellers of imported and domestic automobiles, a top seller in China of imported luxury cars, and a leading provider of auto-related services, today announced receipt of a letter from The NASDAQ Stock Market notifying the Company that it has regained compliance with NASDAQ's minimum bid price continued listing requirement, as a result of the closing bid price of its common stock having been at or above the minimum requirement of $1.00 per share for at least 10 consecutive trading days.

TIANJIN, CHINA--(Marketwire - Nov 5, 2012) - China Auto Logistics Inc. (the "Company") (NASDAQ: CALI), one of China's leading developers of websites for buyers and sellers of imported and domestic automobiles, a top seller in China of imported luxury cars, and a leading provider of auto-related services, today announced receipt of a letter from The NASDAQ Stock Market notifying the Company that it has regained compliance with NASDAQ's minimum bid price continued listing requirement, as a result of the closing bid price of its common stock having been at or above the minimum requirement of $1.00 per share for at least 10 consecutive trading days.

TIANJIN, CHINA--(Marketwire - Oct 9, 2012) -  China Auto Logistics Inc. (the "Company") (NASDAQ: CALI), one of China's leading developers of websites for buyers and sellers of imported and domestic automobiles, a top seller in China of imported luxury cars, and a leading provider of auto-related services, today announced that, as previously approved by stockholders at a Special Meeting of Stockholders held on September 4, 2012, it has filed a Certificate of Amendment to its Articles of Incorporation, as amended, to effect a 1-for-6 reverse stock split of its common stock that will become effective at the end of business today.

As a result of the reverse stock split, every six (6) shares of the Company's issued and outstanding common stock have been combined into one (1) share of common stock, par value, $0.001 per share. Any fraction of a share of common stock that would otherwise have resulted from the reverse stock split will be rounded up to the next whole share. There will be no change to the authorized shares of common stock of the Company as a result of the reverse stock split. 

Trading of the Company's common stock on The Nasdaq Global Market ("Nasdaq") will continue, starting tomorrow, October 10, 2012, on a reverse stock split-adjusted basis, under the symbol "CALI." The new CUSIP number for the Company's common stock following the reverse stock split is 16936J 202.

TIANJIN, CHINA--(Marketwire - Oct 9, 2012) -  China Auto Logistics Inc. (the "Company") (NASDAQ: CALI), one of China's leading developers of websites for buyers and sellers of imported and domestic automobiles, a top seller in China of imported luxury cars, and a leading provider of auto-related services, today announced that, as previously approved by stockholders at a Special Meeting of Stockholders held on September 4, 2012, it has filed a Certificate of Amendment to its Articles of Incorporation, as amended, to effect a 1-for-6 reverse stock split of its common stock that will become effective at the end of business today.

As a result of the reverse stock split, every six (6) shares of the Company's issued and outstanding common stock have been combined into one (1) share of common stock, par value, $0.001 per share. Any fraction of a share of common stock that would otherwise have resulted from the reverse stock split will be rounded up to the next whole share. There will be no change to the authorized shares of common stock of the Company as a result of the reverse stock split. 

Trading of the Company's common stock on The Nasdaq Global Market ("Nasdaq") will continue, starting tomorrow, October 10, 2012, on a reverse stock split-adjusted basis, under the symbol "CALI." The new CUSIP number for the Company's common stock following the reverse stock split is 16936J 202.

Corporate Stock Transfer, the Company's transfer agent, will act as exchange agent for the reverse stock split. Transmittal letters will be provided to registered holders of the Company's common stock providing appropriate instructions.

The primary objective of the reverse stock split is to maintain the Company's listing on Nasdaq by regaining compliance with the minimum bid price listing requirement. Under this requirement, the Company's common stock must have a closing bid price of at least $1.00 for a minimum of 10 consecutive trading days prior to November 12, 2012. There can be no assurance that the reverse stock-split will have the desired effect of maintaining the closing bid price of the Company's common stock above $1.00 to meet this requirement.

Second Quarter 2012 Results

• Revenues in its second quarter ended June 30, 2012 grew 18.32% to $150,047,968 from $126,810,558 in the same period last year.
• Net income attributable to shareholders declined by 27.85% to $1,649,461 or $0.07 per share in the 2012 second quarter compared with $2,286,200 or $0.12 per share in the same period last year.

Mr. Tong Shiping, CEO and Chairman of the Company, stated, "We recognize we are sacrificing some profits at present with our decision to exit the highly competitive website advertising arena, particularly given the low margins in our auto sales. However, we believe we have developed a strong Internet presence with our sites that will bolster continuing growth of our auto sales where there is room for margin growth, and more importantly, present and future high margin auto-related services such as financing, which in the latter case achieved more than a tripling of operating income in this year's second quarter compared with last year. Further, we see continuing rapid growth ahead in luxury auto sales and related services, and will continue to seek to expand our leadership in this niche."

Looking Ahead

Commenting further, Mr. Tong stated, "At the end of the second quarter, the sum of our revenues from higher margin auto related services, including the sharply lower amount from web-based advertising, was approximately $2.6 million, from which we had income from operations of approximately $2.47 million as compared with approximately $3.13 million a year earlier. Going forward, we believe we can exceed prior operating income results and improve profits, with continued growth in our current and new automobile-related services, and as expanding awareness of our Company's leadership in luxury auto sales continues to match growth in the segment."

TIANJIN, CHINA--(Marketwire - Aug 7, 2012) -  China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), one of China's leading developers of websites for buyers and sellers of imported and domestic automobiles, a top seller in China of imported luxury cars, and a leading provider of auto-related services, reported today it received a letter from the Listings Qualification Department of the Nasdaq Stock Market ("NASDAQ") stating that on August 1, 2012, for the previous 30 consecutive business days, the market value of publicly held shares ("MVPHS") of the Company's common stock (the "Common Stock") had closed below the minimum $5 million requirement for continued inclusion on The Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(b)(1)(C).

The letter states that the Company will be provided 180 calendar days, or until January 28, 2013, to regain compliance with the minimum MVPHS requirement. In accordance with Rule 5810(c)(3)(D), the Company can regain compliance if at any time during the 180-day period the closing MVPHS is at least $5 million for a minimum of 10 consecutive business days. In the event the Company does not regain compliance with the MVPHS requirement prior to January 28, 2013, the Common Stock will be subject to delisting.

On July 17, 2012, Li Yangqian resigned as Chief Operating Officer of China Auto Logistics Inc. (the “Company”).  Mr. Li’s resignation did not result from any disagreement with us concerning any matter relating to the Company’s operations, policies or practices.

On July 17, 2012, Gao Yang resigned from the Company's Board of Directors (the “Board”).  Mr. Gao was a member of the Board’s (i) audit committee, (ii) compensation committee and (iii) nominating and corporate governance committee.  Mr. Gao’s resignation did not result from any disagreement with us concerning any matter relating to the Company’s operations, policies or practices.

On July 17, 2012, Qu Zhong resigned from the Board.  Ms. Qu was a member of the Board’s (i) compensation committee and (ii) nominating and corporate governance committee.  Ms. Qu’s resignation did not result from any disagreement with us concerning any matter relating to the Company’s operations, policies or practices.

On July 17, 2012, Kong Xiaoyan resigned from the Board.  Ms. Kong was a member of the Board’s (i) audit committee, (ii) compensation committee and (iii) nominating and corporate governance committee.  Ms. Kong’s resignation did not result from any disagreement with us concerning any matter relating to the Company’s operations, policies or practices.

On July 17, 2012, Yang Bin resigned from the Board and as Senior Vice President of the Company.  Mr. Yang’s resignation did not result from any disagreement with us concerning any matter relating to the Company’s operations, policies or practices.

On May 15, 2012, China Auto Logistics Inc. (the “Company”) received notification from the Nasdaq Listings Qualification Department (“Nasdaq”) that for the previous 30 consecutive business days, the bid price of the Company’s common stock (the “Common Stock”) had closed below the minimum $1.00 per share requirement for continued inclusion on The Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(a)(1).

The letter states that the Company will be provided 180 calendar days, or until November 12, 2012, to regain compliance with the minimum bid price requirement. In accordance with Rule 5810(c)(3)(A), the Company can regain compliance if at any time during the 180-day period the closing bid price of the Common Stock is at least $1.00 for a minimum of 10 consecutive business days.

TIANJIN, CHINA--(Marketwire - May 21, 2012) - China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), one of China's leading developers of websites for buyers and sellers of imported and domestic automobiles, a top seller in China of imported luxury cars, and a leading provider of auto-related services, reported today it received a letter from the Nasdaq Stock Market stating that for 30 consecutive business days prior to May 15, 2012, the bid price of the Company's common stock closed below the minimum $1.00 per share requirement for continued inclusion on Nasdaq pursuant to Nasdaq Marketplace Rule 5450(a)(1) (the "Minimum Bid Price Rule").

The Nasdaq letter has no immediate effect on the listing of the Company's common stock. In accordance with Nasdaq Rule 5810(c)(3)(A), the Company will be provided 180 calendar days, or until November 12, 2012, to regain compliance with the Minimum Bid Price Rule. The Company may regain compliance with the Minimum Bid Price Rule if the bid price of the Company's Common Stock closes at $1.00 per share or more for a minimum of 10 consecutive business days at any time prior to November 12, 2012.

The Company intends to actively monitor the closing bid price of its Common Stock and will consider all available options to regain compliance with the Minimum Bid Price Rule.

Undervalued Shares

Mr. Tong Shiping, Chairman and CEO of the Company, commented further, "We believe that with our outstanding record of sales growth -- including a year over year increase of 75% in 2011, and a 32% year over year increase in our first quarter sales this year -- as well as a PE ratio of only 1.6x 2011 earnings, and a continuing growth outlook for luxury auto sales in China, we believe our shares are very significantly undervalued. Going forward, as we continue to focus on growing our business, we believe investors will recognize our strengths and CALI shares will be valued more appropriately."

First Quarter 2012 Results

• Revenues in 2012, benefitting from the continuing strong demand in China for luxury vehicles, rose 31.7% to $107.45 million compared with $81.57 million a year earlier.
• Net income of $1,581,477, or $0.07 per share in this year's first quarter, from $2,077,134 or $0.11 per share in the first quarter of 2011.

Regrouping At a High Level of Achievement

Mr. Tong Shiping, CEO and Chairman of the Company, stated, "While I would have liked to continue the long string of quarterly profit gains we achieved in recent years, we have paused to regroup at a very high level of achievement with an aim to grow more strongly and steadily in the future, utilizing our web platforms." He added, "Of particular note, our quarterly revenues now exceed the annual revenues we had when we went public in November 2008. We also have dramatically expanded our web presence from a sole focus on auto importers, in a single city, to the full spectrum of China's auto buying public, with a presence in 50 cities across the country. Additionally, we have developed very strong banking relationships that should serve us well in future expansion efforts, while continuing to make strides in developing new high margin on-line services."

Outlook

"A relaunch of our bottom line growth has taken a bit longer than originally anticipated, but one indication of our continuing potential is that even with the first quarter 85% revenue decline in web-based advertising, revenues in the quarter of $3.1 million for our higher margin web-based advertising, financing services and automobile value added services combined, were only $200,000 lower than the approximately $3.3 million combined figure a year earlier," Mr. Tong noted.

"We also are encouraged by the continuing strong double digit growth outlook for luxury cars in China even in a slowed economy," he continued, "as growth in luxury auto sales provides the underpinning for growth in most of our current services."

"Longer term," Mr. Tong added, "we still see new web-based auto related services for domestic and imported auto drivers and dealers as the key drivers of CALI's bottom line growth and are working hard to bring some of these new services to fruition at the earliest possible time."

Cooperation Agreement with Five Leading Auto Insurers

The Company reported it has now concluded cooperation agreements with five of the leading auto insurance providers in China under which the Company will be qualified to offer automobile insurance to purchasers of automobiles in its auto mall, the largest imported luxury auto mall in Tianjin.

"Auto insurance is particularly important to buyers of the luxury cars we sell," stated Mr. Tong Shiping, CEO and Chairman of the Company, "and we now will be able to offer the very best insurance packages to our customers. We see this as an excellent addition to the 'one stop services' we currently provide and further expect it will attract new customers and help boost our luxury auto sales in this very strong market." Mr. Tong noted discussions regarding final details on how to best execute the agreements with each insurer are in progress and the new service is expected to be launched shortly.

Increased Support from Three Leading Banks

The Company also announced an expansion of its cooperation with three leading Chinese banks which it expects will lead to the further strengthening and growth of its auto-related services.

• Under an agreement reached with Bank of China (BOC), one of China's four largest state-owned commercial banks, the Company will soon offer its luxury auto customers the option of installment buying.
• Through an agreement developed with China Merchant Bank (CMB), the Company will soon establish an electronic payment platform which, among other things, will help the Company manage cash flow more efficiently.
• Agricultural Bank of China has agreed to grant the Company a credit line of RMB 960 million (approximately $152 million) which by itself would represent an approximate doubling of the Company's current aggregate credit line with several domestic banks.

Second Quarter 2011 Results

• Net revenues increased 130% to $126.2 million compared with $54.8 million a year earlier, led by a 133% jump in sales of imported luxury autos to $123.1 million;
• Net income attributable to shareholders grew 23% to $2.3 million, or $0.12 per share on 19.2 million weighted average shares, compared with $1.9 million or $0.10 per share on 18.1 million weighted average shares in the 2010 second quarter

Over the past several quarters since becoming a publicly traded Company, I believe CALI has clearly and openly demonstrated that not only is it on an exciting growth track, but that management is very capable of developing well grounded growth strategies and successfully executing them," Mr. Tong stated. He continued, "As we enter the second half of 2011, it may well be looked on as the beginning of one of the most exciting new chapters in the Company's history, as we take another giant step forward, this time into the very large and growing domestic auto market in China. The opportunity is there for us and we intend to seize it, first with the acquisition and development of the domestic mall, and then with the further rapid expansion of our web-based auto-related services serving the full spectrum of auto sector buyers, dealers and drivers."

"As we move ahead," Mr. Tong added, "we will continue to be fully transparent and firmly believe we will be among the top Chinese companies to emerge strongly from this period of investor uncertainty."

TIANJIN, CHINA--(Marketwire - Jul 7, 2011) - China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), one of China's leading developers of automobile-related websites, a top seller in China of imported luxury vehicles and a leading provider in China of automobile-related services, announced today it successfully closed the sale on July 1 of three million unregistered common shares to accredited individual investors at an above market price of $1.75 per share, raising a total of $5.25 million for general corporate purposes.

For its first quarter ended March 31, 2011, the Company reported:

• Net revenue grew 50% to $81.2 million compared with $54.1 million in the same period last year;
• Net income attributable to shareholders increased 36% to $2.1 million, or $0.11 per share, on 19.2 million weighted average shares outstanding, compared with $1.5 million, or $0.08 per share on 18.1 million weighted average shares outstanding a year earlier;

"I am very pleased with the continuing outstanding results thus far in 2011 on the heels of our record setting results last year," stated Mr. Tong Shiping, CEO and Chairman of the Company. He continued, "A key focus in the period was the successful integration of our recently acquired www.goodcar.cn site into ourwww.cali.com.cn portal. During the quarter revenues generated by services offered on this highly popular consumer site were a significant contributor to the revenue growth and profits of our web-based advertising business, and expansion of the site will remain a continuing management focus."

Year End 2010:

• 2010 net income attributable to shareholders grew to $8,006,640, or $0.44 per share, a 44.11% gain over $5,548,686, or $0.31 per share, in 2009.
• The key contributor to the year over year increase in 2010 net income was the $5,097,853 in net operating income generated in 2010 by web-based advertising sales, which surpassed the $4,262,990 contribution to 2010 net operating income from sales of automobiles.
• Revenues in 2010 grew 19.75% to $257,681,456 compared with $215,188,081 a year earlier. Approximately 96.24% of 2010 revenues, or $247.9 million, came from automobile sales which grew 18.17% compared to 2009. While unit sales of 2,778 imported autos in 2010 was about flat with prior year results, average unit prices grew to $89,272, up 16.74% from 2009, reflecting the Company's increased focus on sales of imported high-end luxury vehicles. Luxury imports in China are growing faster than overall auto market sales growth and also represent an opportunity to achieve higher margins.

GeoTeam Note: Fourth Quarter 2010 vs. 2009 was $0.13 vs. $0.08.

"2010 was another outstanding year for CALI," stated Mr. Tong Shiping, CEO and Chairman of the Company, "as we plainly saw the bottom-line benefits once again of our strategic decision to rapidly expand our auto related web-based services. In pursuit of this strategy, we greatly broadened the potential audience for our websites with the introduction of our www.cali.com.cn portal at the Beijing Auto Show in April 2010. We included on the portal both our foreign and domestic auto sites and our new www.goodcar.cn site aimed at China's rapidly growing automobile driver population. In November we completed this acquisition and consequently added approximately $480,000 to 2010 revenues from the site. During the year, we also added over $800,000 in sales from our new auto mall management services managing the Tianjin Mall as of March 1. Most significantly, by year end 2010 we greatly expanded the cities covered by our new portal from 15 to 35 on our way to planned coverage of 60 cities by the end of this year, which we estimate will permit us to reach 70% of China's auto buying population."

Rodman & Renshaw on CALI                             01/11/2011

CALI: Terminating Coverage 

Termination of Coverage: Effective immediately, we are discontinuing research coverage of CALI to better allocate resources within our coverage universe. Effective upon the termination of coverage any of our prior financial projections on this stock should not be relied upon. Our last rating on CALI was Market Perform.

Company Description 

China Auto Logistics Inc. operates http://www.cali.com.cn, which rapidly has become one of the leading automobile portals for car dealers and consumers of vehicles and auto-related services throughout China. The Company also a seller of luxury imported cars as well as a developer of websites for buyers and sellers of imported and domestic automobiles. Recently initiating auto-related services for dealers and purchasers of domestic autos, it is a "one stop" provider of logistical services and financing to imported car dealers nationwide and manager of the large imported auto mall in Tianjin.

3Q10 Results 

CALI reported 3Q10 revenue and net income of $67.5 MM and $2.22 MM, with diluted EPS of $0.12, compared to our expectations of $68.5 MM, $2.15 MM, and $0.12, respectively. Top-line grew by 27.7% Y-o-Y and 23.2% sequentially. Gross profit stood at $3.7 MM or 5.6% in gross margin, compared to $2.8 MM or 5.3% in margin in 3Q09 and $3.0 MM or 5.5% in margin in 2Q10. CALI generated $3.1 MM in EBIT, implying an EBIT margin of 4.6%, compared to 4.3% and 4.7% in 3Q09 and 2Q10. Net income was $2.22 MM, a Y-o-Y increase of 38.3% from $1.6 MM in 3Q09. Diluted EPS was $0.12, compared to $0.09 in 3Q09 and $0.10 in 2Q10. CALI ended the quarter with $4.2 MM in cash while receivable in financing service and inventory stood at $20.1 MM and $27.8 MM. Working capital was $34.08 MM as of September 30, 2010. During the quarter the company generated $2.2 MM of free cash flow.

Valuation 

We assigned a Market Perform rating on CALI primarily because we viewed the company as still being in the early stages of transitioning towards a service oriented business model. Web and financing services still only contribute less than 5% of revenues and margins in the business are susceptible to imported auto sales. We believe the surge in auto sales in China should drive demand for derivative services such as those being provided by CALI. We believe CALI should be on the investor radar as an opportunity for exposure to China’s auto services industry.

Investment Risks 

a) Cyclical nature of the imported luxury automotive market; b) significant business concentration; c) highly competitive nature of the market; d) substantial ownership control with a single stockholder; and e) significant government


Notice Regarding Privacy and Confidentiality: 


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Results published on November 15, 2010

Mr. Tong Shiping, CEO and Chairman of the Company, stated, "In the 2010 third quarter our broad spectrum 'auto living' websites again led the strong growth we achieved and, in fact, all of our auto-related services posted higher results in the quarter, which led to another sequential improvement in our overall gross margin." He added, "With our recently completed acquisition of www.goodcar.com.cn and plans to expand coverage of our sites to 35 cities by year end on track, I'm very confident of continuing strong growth in this segment going forward, and another record year for the Company in 2010."

Rodman & Renshaw

CALI: 3Q10 Earnings Update

Overview: CALI reported 3Q10 revenue and net income of $67.5 MM and $2.22 MM, with diluted EPS of $0.12, compared to our expectations of $68.5 MM, $2.15 MM, and $0.12, respectively. Top-line grew by 27.7% Y-o-Y and 23.2% sequentially. Gross profit stood at $3.7 MM or 5.6% in gross margin, compared to $2.8 MM or 5.3% in margin in 3Q09 and $3.0 MM or 5.5% in margin in 2Q10. Net income was $2.22 MM, a Y-o-Y increase of 38.3% from $1.6 MM in 3Q09. Diluted EPS was $0.12, compared to $0.09 in 3Q09 and $0.10 in 2Q10. CALI ended the quarter with $4.2 MM in cash while receivable in financing service and inventory stood at $20.1 MM and $27.8 MM. Working capital was $34.08 MM as of September 30, 2010. During the quarter the company generated $2.2 MM of free cash flow.

Legacy Business Grows By A Healthy 26.2%: Imported car sales generated ~$64.9 MM in revenue, growing robustly by 26.2% Y-o-Y from $51.4 MM in 3Q09, given a continued strong demand for luxury passenger cars in China. Total shipment volume in the quarter reached 670 units, slightly down from 697 units in 3Q09 and 681 units in 2Q10. However the average selling price rose by 31.4% Y-o-Y to $96,853/car from $77,736 in 3Q09 as the company’s focus on high-end luxury vehicle sales.

Web Advertising Business Accelerates: Web Advertising business generated $1.7 MM of revenue, an increase of 77.3% from 3Q09. Although revenue contribution is insignificant, compared to Imported Car Sales, Web Advertising accounted for roughly 44% of CALI’s total gross profits during the quarter, with imported car dealership only delivering 33%. Management indicated that CALI currently has more than 200 paid subscribers in its Web Advertising services, aided by its rapid expansion into 29 cities in China. The company aims to have footprints in 35 cities by year end 2010 and 60 cities by the end of 2011, eventually catering to approximately 70% of Chinese car buyers.

Expect Imported Car Sales To Remain Revenue Driver: We are confident that the overall demand in China for high end luxury cars should continue to remain healthy in the coming 2011 and 2012 given the rapidly growing population of Chinese high net-worth. In the near-term we believe CALI’s top-line should be still driven by the growth of imported cars, due to the fact that 96% of total revenue was contributed by this segment, and it is delivering a strong Y-o-Y growth. As global luxury car markers i.e. BMW, Mercedes-Benz all reported phenomenal sales record in China this year, we believe CALI is well positioned to benefit.

Our Estimates: For 4Q10 we expect revenue and net income to be $68.4 MM and $2.29 MM, with diluted EPS of $0.13. This implies full year revenue, net income, and diluted EPS of $244.9 MM, $7.9 MM, and $0.44. For FY11, our estimates are $280.2 MM, $11.3 MM, and $0.62, respectively. We are maintaining our Market Perform rating on CALI.
 

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Commenting on the outlook for the remainder of the year, Mr. Tong stated, "On the heels of our pending acquisition of www.goodcar.cn, and our very successful introduction at the end of April of the CALI portal -- which we have followed with a major media campaign still in progress -- the excitement and optimism about the unique space we are carving in what is now the world's largest automobile market pervades our entire management team. We are still at the very earliest stage of effecting our growth strategy, and the results are exceeding our expectations. On our agenda for the year, we continue to anticipate adding and growing new web-based services, utilizing the growing scope of our sites and new portal. We do not anticipate any effect from a possible slowdown in the Chinese auto market where we see continuing growth at a healthy level. I am very confident this will be another year of substantial progress on many fronts and new records in sales and earnings."