Hour Loop, Inc. (NASDAQ: HOUR) (“Hour Loop”), a leading online
retailer, announces its financial and operational results for the
year ended December 31, 2022.
Financial Highlights for
2022:
- Net revenues increased 52.8% to
$95.9 million in 2022, compared to $62.8 million in 2021.
- Net loss totaled $1.5 million,
compared to net income of $4.8 million in 2021.
- Cash used in operating activities
in 2022 was $11.6 million, compared to cash provided by operating
activities of $7.8 million in 2021.
Management Commentary
“We are pleased to report our full year 2022
results, in which we delivered great performance in terms of
revenue growth,” said Sam Lai, CEO of Hour Loop. “The revenue
growth rate for the fourth quarter and full year 2022 were 63.1%
and 52.8%, respectively, compared with the year-ago period.”
“However, our gross margin was negatively
impacted by the challenging e-commerce environment and intense
competition caused by high inventory levels across the industry.
Our operating expenses also increased because of increased
platform, advertising, and storage fees paid to Amazon, and a
significant increase in our labor force. Despite disappointing
margins, we believe we’ve built a solid foundation in 2022 to
generate strong growth for the years to come. We also plan to make
improvements on profitability.”
Looking forward, we’re cautiously optimistic.
Despite an uncertain economy, we continue to see strong demand for
our products during the first two months of 2023. We are confident
in our ability to continue delivering values to our vendors,
customers, and shareholders.
Full Year 2022 Financial
Results
Net revenues in 2022 were $95.9 million compared
to $62.8 million in 2021. The increase was primarily due to
continued growth and maturity in our operating model, despite the
overall e-commerce traffic slowdown and intense competition.
Gross profit percentage decreased 4.3% to 51.1%,
compared to 55.4% of total revenues in the comparable period a year
ago. The decrease was a function of heightened inflationary
environment causing higher cost of goods sold, increased FBA fees,
and intense competition.
Operating expenses increased 73.7% to $50.9
million compared to $29.3 million in the year-ago period. This was
a function of increased platform, advertising, and storage fees
paid to Amazon, and a significant increase in our labor force.
Net loss in 2022 was $1.5 million, or $0.04 per
diluted share, compared to net income of $4.8 million, or $0.14 per
diluted share, in 2021. The decrease was driven by increased costs
and expenses as a result of the reasons mentioned above.
As of December 31, 2022, the Company had $4.6
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 December 31, 2022, were $18.7
million compared to $7.0 million as of December 31, 2021. The
Company intentionally invested heavily in inventories for strategic
reasons.
Full Year 2023 Financial
Outlook
For the full year 2023, the Company is providing
guidance for gross revenue to be in the range of $112 million to
$122 million, representing 10% to 20% year-over-year growth. The
Company expects 2023 net income to be in the range of $0.5 million
to $4 million.
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 further expanded its
operations to other marketplaces such as Walmart, eBay, and Etsy.
To date, the Company has generated practically all its revenue as a
third-party seller on www.amazon.com and only a negligible
amount of revenue from its own website and other marketplaces. Hour
Loop manages more than 100,000 stock-keeping units (“SKUs”).
Product categories include home/garden décor, toys, kitchenware,
apparel, 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.
Investor ContactFinance
Departmentfinance@hourloop.com
HOUR LOOP, INC.CONDENSED
CONSOLIDATED BALANCE SHEETSDecember 31, 2022 and
2021
|
|
December 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
4,562,589 |
|
|
$ |
10,592,572 |
|
Accounts receivable, net |
|
|
352,379 |
|
|
|
125,991 |
|
Inventory, net |
|
|
18,801,529 |
|
|
|
7,041,864 |
|
Prepaid expenses and other current assets |
|
|
741,243 |
|
|
|
965,298 |
|
Total current assets |
|
|
24,457,740 |
|
|
|
18,725,725 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
274,195 |
|
|
|
15,667 |
|
Deferred tax assets |
|
|
549,320 |
|
|
|
45,488 |
|
Right-of-use lease assets |
|
|
450,721 |
|
|
|
30,111 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
25,731,976 |
|
|
$ |
18,816,991 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Short-term loan |
|
$ |
652,316 |
|
|
$ |
- |
|
Accounts payable |
|
|
11,883,253 |
|
|
|
9,539,258 |
|
Accrued expenses and other current liabilities |
|
|
1,583,930 |
|
|
|
1,282,161 |
|
Due to related parties |
|
|
- |
|
|
|
5,214,794 |
|
Income taxes payable |
|
|
- |
|
|
|
126,333 |
|
Operating lease liabilities-current |
|
|
385,216 |
|
|
|
- |
|
Total current liabilities |
|
|
14,504,715 |
|
|
|
16,162,546 |
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
Operating lease liabilities-non-current |
|
|
64,945 |
|
|
|
- |
|
Due to related parties |
|
|
4,329,460 |
|
|
|
- |
|
Total non-current
liabilities |
|
|
4,394,405 |
|
|
|
- |
|
Total liabilities |
|
|
18,899,120 |
|
|
|
16,162,546 |
|
Commitments and
contingencies |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
Preferred stock: $0.0001 par value, 10,000,000 shares authorized,
none issued and outstanding as of December 31, 2022 and 2021 |
|
|
- |
|
|
|
- |
|
Common stock: $0.0001 par value, 300,000,000 shares authorized,
35,047,828 and 33,300,000 shares issued and outstanding as of
December 31, 2022 and 2021, respectively |
|
|
3,506 |
|
|
|
3,330 |
|
Additional paid-in capital |
|
|
5,675,320 |
|
|
|
4,291 |
|
Retained earnings |
|
|
1,177,072 |
|
|
|
2,654,695 |
|
Accumulated other comprehensive loss |
|
|
(23,042 |
) |
|
|
(7,871 |
) |
Total stockholders’
equity |
|
|
6,832,856 |
|
|
|
2,654,445 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
25,731,976 |
|
|
$ |
18,816,991 |
|
The accompanying footnotes are an integral part
of these audited condensed consolidated financial statements.
HOUR LOOP, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOMEFor the years Ended December 31, 2022 and
2021
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Revenues, net |
|
$ |
95,930,091 |
|
|
$ |
62,792,981 |
|
Cost of revenues |
|
|
(46,942,770 |
) |
|
|
(27,984,335 |
) |
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
48,987,321 |
|
|
|
34,808,646 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Selling and marketing |
|
|
42,221,425 |
|
|
|
25,098,497 |
|
General and administrative |
|
|
8,685,254 |
|
|
|
4,236,000 |
|
Total operating expenses |
|
|
50,906,679 |
|
|
|
29,334,497 |
|
|
|
|
|
|
|
|
|
|
(Loss) income from
operations |
|
|
(1,919,358 |
) |
|
|
5,474,149 |
|
|
|
|
|
|
|
|
|
|
Other (expenses) income |
|
|
|
|
|
|
|
|
Other expense |
|
|
(17,520 |
) |
|
|
(12,299 |
) |
Interest expense |
|
|
(144,479 |
) |
|
|
(56,509 |
) |
Other income |
|
|
141,571 |
|
|
|
87,637 |
|
Total other (expenses) income,
net |
|
|
(20,428 |
) |
|
|
18,829 |
|
|
|
|
|
|
|
|
|
|
(Loss) income before income
taxes |
|
|
(1,939,786 |
) |
|
|
5,492,978 |
|
Income tax benefit
(expense) |
|
|
462,163 |
|
|
|
(709,205 |
) |
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
|
(1,477,623 |
) |
|
|
4,783,773 |
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
(15,171 |
) |
|
|
(4,690 |
) |
|
|
|
|
|
|
|
|
|
Total comprehensive (loss)
income |
|
$ |
(1,492,794 |
) |
|
|
4,779,083 |
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss)
income per common share |
|
$ |
(0.04 |
) |
|
|
0.14 |
|
Weighted-average number of
common shares outstanding |
|
|
34,991,666 |
|
|
|
33,300,000 |
|
The accompanying footnotes are an integral part
of these audited condensed consolidated financial statements.
HOUR LOOP, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWSFor the years
Ended December 31, 2022 and 2021
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(1,477,623 |
) |
|
$ |
4,783,773 |
|
Adjustments to reconcile of net (loss) income to net cash (used in)
provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation expenses |
|
|
79,084 |
|
|
|
448 |
|
Noncash lease expenses |
|
|
310,161 |
|
|
|
73,343 |
|
Noncash forgiven borrowing |
|
|
- |
|
|
|
(27,012 |
) |
Inventory allowance |
|
|
657,543 |
|
|
|
(246,593 |
) |
Stockbased Compensation |
|
|
91,013 |
|
|
|
- |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(226,388 |
) |
|
|
90,716 |
|
Inventory |
|
|
(12,417,208 |
) |
|
|
(2,433,382 |
) |
Prepaid expenses and other current assets |
|
|
(352,113 |
) |
|
|
(602,911 |
) |
Deferred Tax Assets |
|
|
(503,832 |
) |
|
|
(45,488 |
) |
Accounts payable |
|
|
2,343,995 |
|
|
|
6,335,002 |
|
Accrued expenses and other current liabilities |
|
|
175,436 |
|
|
|
(102,312 |
) |
Operating lease liabilities |
|
|
(283,244 |
) |
|
|
(61,527 |
) |
Net cash (used in) provided by
operating activities |
|
|
(11,603,176 |
) |
|
|
7,764,057 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(339,518 |
) |
|
|
(16,115 |
) |
Net cash used in investing
activities |
|
|
(339,518 |
) |
|
|
(16,115 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities: |
|
|
|
|
|
|
|
|
Payments to related parties |
|
|
138,854 |
|
|
|
3,023 |
|
Repayments from related parties |
|
|
(1,024,188 |
) |
|
|
- |
|
Capital contribution |
|
|
- |
|
|
|
2,800 |
|
Distribution to stockholders |
|
|
- |
|
|
|
(2,132,000 |
) |
Proceeds from Issuance of shares |
|
|
5,580,192 |
|
|
|
- |
|
Prepaid expenses and other current assets |
|
|
576,168 |
|
|
|
- |
|
Proceeds from Short-term debt |
|
|
652,316 |
|
|
|
- |
|
Net cash provided by (used in)
financing activities |
|
|
5,923,342 |
|
|
|
(2,126,177 |
) |
|
|
|
|
|
|
|
|
|
Effect of changes in foreign
currency exchange rates |
|
|
(10,631 |
) |
|
|
2,743 |
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in
cash and cash equivalents |
|
|
(6,029,983 |
) |
|
|
5,624,508 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of the year |
|
|
10,592,572 |
|
|
|
4,968,064 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at
end of the year |
|
$ |
4,562,589 |
|
|
$ |
10,592,572 |
|
The accompanying footnotes are an integral part
of these audited condensed consolidated financial statements.
Hour Loop (NASDAQ:HOUR)
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