Hour Loop, Inc. (NASDAQ: HOUR) (“Hour Loop”), a leading online
retailer, announces its financial and operational results for the
first quarter ended March 31, 2022.
Financial Highlights for First Quarter
2022:
- Total revenues increased 32.5% to
$12.4 million compared to $9.3 million in the year-ago period;
- Net loss totaled $0.65 million
compared to net income of $0.86 million in the year-ago
period;
- Cash used for operating activities
was $7.9 million compared to $1.2 million in the year-ago
period.
Management Commentary
“We’re pleased with our first quarter 2022
performance as we reported strong financial and operational results
despite the significantly impacted consumer spending environment
driven by inflationary and supply chain pressures,” said Sam Lai,
CEO of Hour Loop. “Against this backdrop, we further demonstrated
our ability to execute on our strategy and drive growth as planned.
In fact, following our initial public offering in January, we have
rapidly expanded our labor force from 75 employees to over 175
employees, and delivered first quarter 2022 revenues of $12.4
million, up 32.5% compared to the year ago period.
“While we are encouraged by our progress, we are
not immune to the challenging macroeconomic environment, which
impacted our gross profit percentage as a result of increased
operating expenses, FBA fees, and a strong competitive environment.
However, despite these challenges, we are frontloading our
investments for the year while projecting to show profitability and
maintain double digit growth for the full year 2022. We believe our
investments are necessary to grow our headcount, rapidly scale, and
set a foundation for future success once these headwinds ease, and
we are building on our momentum since our IPO. We look forward to
continuing to execute, drive growth, and ultimately deliver
increased value for our shareholders.”
First Quarter 2022 Financial
Results
Total revenues in the first quarter of 2022 were
$12.4 million compared to $9.3 million in the year-ago period. The
increase was primarily due to continued growth and maturity in our
operating model which was enhanced by a favorable e-commerce
environment in the beginning of the year.
Gross profit percentage declined 3.8% to 52.3%
compared to 56.1% of total revenues in the comparable period a year
ago. This decrease was a function of our aggressive growth
initiatives and a heightened inflationary environment causing
higher cost of goods sold, FBA fees, and strong competition.
Operating expenses increased 65% to $7.2 million
compared to $4.4 million in the year- ago period. This was a
function of increased platform fees paid to Amazon, a significant
increase in our labor force, and increased legal and professional
fees due to the Company’s public listing.
Net loss in the first quarter was $0.65 million,
or $0.02 per diluted share, compared to net income of $0.86
million, or $0.03 per diluted share, in the comparable year-ago
period. The decrease was driven by increased costs and expenses as
a result of the reasons mentioned above.
As of March 31, 2022, the Company had $7.7
million in cash and cash equivalents compared to $10.6 million as
of December 31, 2021. This decrease was driven by the growth of
inventory and labor force.
Inventories as of March 31, 2022, were $11.8
million compared to $7.0 million as of December 31, 2021. The
Company intentionally invested heavily in inventories for strategic
reasons.
Full Year 2022 Financial
Outlook
For the full year 2022, the Company expects
revenue to be in the range of $81 million to $90 million,
representing 30% to 45% year-over-year growth.
About Hour Loop, Inc.Hour Loop
is an online retailer engaged in e-commerce retailing in the U.S.
market. It has operated as a third-party seller on www.amazon.com
and has sold merchandise on its website at www.hourloop.com since
2013. The Company expanded its operations to www.walmart.com in
October 2020. To date, the Company has generated practically all of
its revenue as a third-party seller on www.amazon.com and only a
negligible amount of revenue from its own website and Walmart. Hour
Loop manages more than 100,000 stock-keeping units (“SKUs”).
Product categories include home/garden décor, toys, kitchenware,
apparels, and electronics. The Company's primary strategy is to
bring most of its vendors product selections to the customers. It
has advanced software that assists the Company in identifying
product gaps so it can keep such products in stock year-round
including the entirety of the last quarter (holiday season) of the
calendar year. In upcoming years, Hour Loop plans to expand its
business rapidly by increasing the number of business managers,
vendors and SKUs.
Forward-Looking Statements This
press release contains statements that constitute "forward-looking
statements" including with respect to the Company's business
strategy, product development and industry trends. Forward-looking
statements are subject to numerous conditions, many of which are
beyond the control of the Company. While the Company believes these
forward-looking statements are reasonable, undue reliance should
not be placed on any such forward-looking statements, which are
based on information available to the Company on the date of this
release. These forward-looking statements are based upon current
estimates and assumptions and are subject to various risks and
uncertainties, including, without limitation, those set forth in
the Company's filings with the Securities and Exchange Commission,
as the same may be updated from time to time. Thus, actual results
could be materially different. The Company undertakes no obligation
to update these statements whether as a result of new information,
future events or otherwise, after the date of this release, except
as required by law.
ContactInvestor RelationsAlex
Thompson, Greg RoblesGateway Group, Inc.(949)
574-3860hourloop@gatewayir.com
HOUR LOOP, INC.CONDENSED
CONSOLIDATED BALANCE SHEETSAs of March 31, 2022
(Unaudited) and December 31, 2021
|
March 31, |
|
|
December 31, |
|
|
2022 |
|
|
2021 |
|
|
(unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
7,664,095 |
|
|
$ |
10,592,572 |
|
Accounts receivable, net |
|
122,535 |
|
|
|
125,991 |
|
Inventory, net |
|
11,766,733 |
|
|
|
7,041,864 |
|
Prepaid expenses and other current assets |
|
827,722 |
|
|
|
965,298 |
|
Total current assets |
|
20,381,085 |
|
|
|
18,725,725 |
|
|
|
|
|
|
|
|
|
Property and equipment |
|
132,739 |
|
|
|
15,667 |
|
Deferred tax assets |
|
228,021 |
|
|
|
45,488 |
|
Right-of-use lease assets |
|
467,975 |
|
|
|
30,111 |
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
21,209,820 |
|
|
$ |
18,816,991 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Accounts payable |
$ |
7,608,341 |
|
|
$ |
9,539,258 |
|
Accrued expenses and other current liabilities |
|
1,117,551 |
|
|
|
1,282,161 |
|
Due to related parties |
|
4,274,164 |
|
|
|
5,214,794 |
|
Income taxes payable |
|
126,333 |
|
|
|
126,333 |
|
Current operating lease liabilities |
|
257,684 |
|
|
|
- |
|
Total current liabilities |
|
13,384,073 |
|
|
|
16,162,546 |
|
|
|
|
|
|
|
|
|
Long-term operating lease liabilities |
|
207,402 |
|
|
|
- |
|
Total liabilities |
|
13,591,475 |
|
|
|
16,162,546 |
|
Commitments and
contingencies |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
Preferred stock: $0.0001 par value, 10,000,000 shares authorized,
none issued and outstanding |
|
- |
|
|
|
- |
|
Common stock: $0.0001 par value, 300,000,000 shares authorized,
35,032,753 and 33,300,000 shares issued and outstanding |
|
3,503 |
|
|
|
3,330 |
|
Additional paid-in capital |
|
5,615,322 |
|
|
|
4,291 |
|
Retained earnings |
|
2,009,807 |
|
|
|
2,654,695 |
|
Accumulated other comprehensive loss |
|
(10,287 |
) |
|
|
(7,871 |
) |
Total stockholders’
equity |
|
7,618,345 |
|
|
|
2,654,445 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
$ |
21,209,820 |
|
|
$ |
18,816,991 |
|
The accompanying footnotes are an integral part
of these unaudited condensed consolidated financial statements.
HOUR LOOP, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSSFor the Three Months Ended March 31, 2022 and
2021(Unaudited)
|
Three Months |
|
|
Three Months |
|
|
Ended |
|
|
Ended |
|
|
March 31, |
|
|
March 31, |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
Revenues, net |
$ |
12,353,983 |
|
|
$ |
9,322,913 |
|
Cost of revenues |
|
(5,897,269 |
) |
|
|
(4,094,552 |
) |
|
|
|
|
|
|
|
|
Gross profit |
|
6,456,714 |
|
|
|
5,228,361 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
Selling and marketing |
|
5,526,102 |
|
|
|
3,827,194 |
|
General and administrative |
|
1,675,964 |
|
|
|
536,809 |
|
Total operating expenses |
|
7,202,066 |
|
|
|
4,364,003 |
|
|
|
|
|
|
|
|
|
(Loss) income from
operations |
|
(745,352 |
) |
|
|
864,358 |
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
|
Other expense |
|
(5,450 |
) |
|
|
(870 |
) |
Interest expense |
|
(83,558 |
) |
|
|
- |
|
Other (expense) income |
|
6,939 |
|
|
|
2,406 |
|
Total other income, net |
|
(82,069 |
) |
|
|
1,536 |
|
|
|
|
|
|
|
|
|
(Loss) income before income
taxes |
|
(827,421 |
) |
|
|
865,894 |
|
Provision for income
taxes |
|
182,533 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
(644,888 |
) |
|
|
865,894 |
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
(2,416 |
) |
|
|
(1,222 |
) |
|
|
|
|
|
|
|
|
TOTAL COMPREHENSIVE (LOSS)
INCOME |
$ |
(647,304 |
) |
|
$ |
864,672 |
|
|
|
|
|
|
|
|
|
Basic and diluted (loss)
income per common share |
$ |
(0.02 |
) |
|
$ |
0.03 |
|
Weighted-average number of
common shares outstanding |
|
35,032,753 |
|
|
|
33,300,000 |
|
The accompanying footnotes are an integral part
of these unaudited condensed consolidated financial statements.
HOUR LOOP, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWSFor the Three
Months Ended March 31, 2022 and
2021(Unaudited)
|
Three Months |
|
|
Three Months |
|
|
Ended |
|
|
Ended |
|
|
March 31, |
|
|
March 31, |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
Net (loss) income |
$ |
(644,888 |
) |
|
$ |
865,894 |
|
Reconciliation of net income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
Depreciation expenses |
|
8,396 |
|
|
|
- |
|
Noncash lease expenses |
|
57,186 |
|
|
|
17,274 |
|
Prepaid expenses -IPO cost |
|
(576,167 |
) |
|
|
- |
|
Distribution to director and supervisor |
|
31,012 |
|
|
|
- |
|
Interest expense -due to related party |
|
83,558 |
|
|
|
- |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
3,456 |
|
|
|
(94,500 |
) |
Inventory |
|
(4,724,869 |
) |
|
|
(2,971,952 |
) |
Prepaid expenses and other current assets |
|
17,699 |
|
|
|
(86,413 |
) |
Accounts payable |
|
(1,930,917 |
) |
|
|
1,688,236 |
|
Accrued expenses and other current liabilities |
|
(218,344 |
) |
|
|
(575,357 |
) |
Operating lease liabilities |
|
(30,593 |
) |
|
|
853 |
|
Net cash used in operating
activities |
|
(7,924,471 |
) |
|
|
(1,155,965 |
) |
|
|
|
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
Purchases of property and equipment |
|
(125,468 |
) |
|
|
- |
|
Net cash used in investing
activities |
|
(125,468 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities: |
|
|
|
|
|
|
|
Net advances from related parties |
|
(1,024,188 |
) |
|
|
(45,877 |
) |
Capital contribution |
|
- |
|
|
|
2,800 |
|
Cash capital increase |
|
6,156,360 |
|
|
|
- |
|
Net cash provided by (used in)
financing activities |
|
5,132,172 |
|
|
|
(43,077 |
) |
|
|
|
|
|
|
|
|
Effect of changes in foreign
currency exchange rates |
|
(10,710 |
) |
|
|
(641 |
) |
|
|
|
|
|
|
|
|
Net change in cash and cash
equivalents |
|
(2,928,477 |
) |
|
|
(1,199,683 |
) |
|
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of year |
|
10,592,572 |
|
|
|
4,968,064 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at
end of year |
$ |
7,664,095 |
|
|
$ |
3,768,381 |
|
|
|
|
|
|
|
|
|
Supplemental disclosures of
cash flow information: |
|
|
|
|
|
|
|
Cash paid for interest |
$ |
- |
|
|
$ |
- |
|
Cash paid for income tax |
$ |
- |
|
|
$ |
- |
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
Right-of-use of assets and operating lease liabilities
recognized |
$ |
503,577 |
|
|
$ |
- |
|
Non-cash distribution to stockholders |
$ |
- |
|
|
$ |
- |
|
Non-cash short-term debt from related parties |
$ |
- |
|
|
$ |
- |
|
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