Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The disclosures in this Quarterly Report on Form 10-Q are complementary to those made in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 26, 2024 (the “2023 Form 10-K”). You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing in this Quarterly Report on Form 10-Q as well as our audited financial statements, notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2023 Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report on Form 10-Q and of our 2023 Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. All amounts in Management’s Discussion and Analysis of Financial Condition and Results of Operations are approximate.
Overview
FGI is a global supplier of kitchen and bath products. Over the course of 30 years, we have built an industry-wide reputation for product innovation, quality, and excellent customer service. We are currently focused on the following product categories: sanitaryware (primarily toilets, sinks, pedestals and toilet seats), bath furniture (vanities, mirrors and cabinets), shower systems, customer kitchen cabinetry and other accessory items. These products are sold primarily for R&R activity and, to a lesser extent, new home or commercial construction. We sell our products through numerous partners, including mass retail centers, wholesale and commercial distributors, online retailers and specialty stores.
Consistent with our long-term strategic plan, we intend to drive value creation for our shareholders through a balanced focus on product innovation, organic growth, and efficient capital deployment. The following initiatives represent key strategic priorities for us:
● Commitment to product innovation. We have a history of being an innovator in the kitchen and bath markets and developing “on-trend” products and bringing them to market ahead of the competition. We have developed deep marketing skills, leading design capabilities, and product development expertise. A recent example of our innovative product development includes the Jetcoat Shower wall systems, which offer a stylized design option without the fuss of messy grout. We expect to continue to invest in research and development to drive product innovation in 2024.
● “BPC” (Brands, Products, Channels) strategy to drive above-market organic growth. We have continued to invest in our BPC strategy despite the market challenges, which is expected to drive improved organic growth in the longer term. We recently announced that we entered into a 5-year licensing agreement that will provide us access to an industry leading overflow toilet technology. We will market this technology as FlushGuard Overflow Technology. During the fourth quarter of 2023, we were awarded product placements at several large customers, including two of the largest commercial distributors in North America. In addition, we continue to focus on our initiatives to expand geographically, with recently signed agreements providing entry into India, Eastern Europe, Australia, and the UK.
● Enhanced Margin Performance. We generated gross margin of 27.4% in first quarter of 2024, up from 26.5% in the same period last year , owing to the ongoing shift to higher margin products. For the full year 2023, gross margin was 27.4%, up nearly 800 basis points from the 19.5% gross margin generated in 2022 . During the remainder of 2024, we expect gross margins to remain consistent with those generated during fiscal year 2023, with operating margin improvement driven by volume leverage.
● Efficient capital deployment. We will continue to prioritize capital deployment in support of organic growth opportunities, while continuing to evaluate strategic M&A opportunities. With total liquidity of $17.8 million as of March 31, 2024, the Company believes it has sufficient financial flexibility to fund its organic growth strategy.
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● Deep manufacturing partners and customer relationships. We have developed strong manufacturing and sourcing partners over the last 30+ years, which we believe will continue to give us a competitive advantage in the markets we serve. We also have deep relationships with an established global customer base, offering end-to-end solutions to support category growth. While recent supply chain and inflation pressures have been a headwind, our durable partnerships with manufacturing and sourcing partners have helped to mitigate these challenges.
We were incorporated in the Cayman Islands on May 26, 2021 in connection with a reorganization (the “Reorganization”) of our parent company, Foremost Groups Ltd. (“Foremost”), and its affiliates, pursuant to which, among other actions, Foremost contributed all of its equity interests in FGI Industries, Inc. (“FGI Industries”), FGI Europe Investment Limited, an entity formed in the British Virgin Islands, and FGI International, Limited, an entity formed under the laws of Hong Kong, each a wholly-owned subsidiary of Foremost, to the newly formed FGI Industries Ltd. Foremost was established in 1987 and has become a global leader in kitchen and bath design, indoor and outdoor furniture, food service equipment, and manufacturing. This discussion, and any financial information and results of operations discussed herein, refers to the assets, liabilities, revenue, expenses and cash flows that are directly attributable to the kitchen and bath business of Foremost before the completion of the Reorganization and are presented as if we had been in existence and the Reorganization had been in effect for the entirely of each of the periods presented.
Recent Trends
Due to ongoing market conditions, we are experiencing, and may continue to experience, lower market demand for certain of our products, particularly in our bath furniture category, as weak demand, customer destock and inventory corrections have had a negative impact on our net sales. As previously noted, we also began experiencing supply chain disruptions and inflationary pressures, which affected operating margins beginning in late 2022. However, we adopted several productivity and pricing measures to offset these headwinds and began to see resumed margin expansion in the second half of 2023. While the demand environment remains uneven with multiple industry forecasters predicting modest declines in home improvement spend in 2024, we expect to generate above-market growth.
Results of Operations
The following table summarizes the results of our operations for the three months ended March 31, 2024 and 2023 and provides information regarding the dollar and percentage increase (decrease) during such periods.
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For the Three Months Ended March 31, 2024 and 2023
For the Three Months Ended
March 31,
Change
2024
2023
Amount
Percentage
USD
USD
USD
%
Revenues
$
30,753,519
$
27,162,266
$
3,591,253
13.2
Cost of revenues
22,340,036
19,960,108
2,379,928
11.9
Gross profit
8,413,483
7,202,158
1,211,325
16.8
Selling and distribution expenses
6,130,886
4,711,089
1,419,797
30.1
General and administrative expenses
2,282,858
2,142,245
140,613
6.6
Research and development expenses
320,673
351,751
(31,078)
(8.8)
Loss from operations
(320,934)
(2,927)
(318,007)
10,864.6
Operating margins
(1.0)
%
(0.0)
%
(100)
bps
—
Total other expenses, net
(194,636)
(267,819)
73,183
(27.3)
Benefit of income taxes
22,289
32,629
(10,340)
(31.7)
Net loss
(537,859)
(303,375)
(234,484)
77.3
Net loss attributable to FGI Industries Ltd. shareholders
(412,189)
(303,375)
(108,814)
35.9
Adjusted (loss) income from operations (1)
(199,445)
168,564
(368,009)
(218.3)
Adjusted operating margins (1)
(0.6)
%
0.6
%
(120)
bps
—
Adjusted net loss (1)
$
(439,331)
$
(164,296)
$
(275,035)
167.4
(1) See “Non-GAAP Measures” below for more information on our use of these adjusted figures and a reconciliation of these financial measures to their closest U.S. generally accepted accounting principles (“GAAP”) comparators.
Revenues
Our revenues increased by $3.6 million, or 13.2%, to $30.8 million for the three months ended March 31, 2024, from $27.2 million for the three months ended March 31, 2023. The increase in our revenues was primarily by increases in Sanitaryware and Shower System sales.
Revenue categories by product are summarized as follow :
For the Three Months Ended March 31,
Change
2024
Percentage
2023
Percentage
Percentage
USD
%
USD
%
%
Sanitaryware
$
20,517,562
66.7
$
15,354,546
56.5
33.6
Bath Furniture
3,089,211
10.0
4,966,659
18.3
(37.8)
Shower System
5,760,869
18.7
5,030,557
18.5
14.5
Other
1,385,877
4.6
1,810,504
6.7
(23.5)
Total
$
30,753,519
100.0
$
27,162,266
100.0
13.2
We derive the majority of our revenues from sales of Sanitaryware, which accounted for 66.7% and 56.5% of our total revenues for the three months ended March 31, 2024 and 2023, respectively. Revenues generated from the sales of Sanitaryware increased by 33.6% to $20.5 million from $15.4 million in same period of 2023. The increase in revenue was primarily driven by the rebounding pro business as a result of stabilized inventory levels and improved order flow.
Our revenues from bath furniture sales accounted for 10.0% and 18.3% of our total revenue for the three months ended March 31, 2024 and 2023, respectively. Bath Furniture sales decreased by 37.8% to $3.1 million for the three months ended March 31, 2024, compared to $5.0 million in the same period of 2023. The bath furniture market continues to be impacted by weak demand and a trade down to lower priced offerings. In response, we are launching mid-tier products to better address the current demand environment.
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Revenues from sales of Shower Systems increased by 14.5% to $5.8 million for the three months ended March 31, 2024, compared to $5.0 million for the comparable period of 2023. Shower systems make up approximately 18.7% and 18.5% of our total revenue for the three months ended March 31, 2024 and 2023, respectively. While the shower business experienced some modest inventory de-stocking during 2023, demand trends have remained steady and our recently launched programs had a positive impact during the first quarter. These new programs include the online shower door program with a large Canadian retailer, as well as the new shower wall systems roll-out at up to 300 locations of a large U.S. retailer with initial shipments that began in December 2023 .
The revenues from sales of other products (custom kitchen cabinetry and other small offerings) decreased by 23.5% to $1.4 million for the three months ended March 31, 2024, compared to $1.8 million in the same period of 2023. Fewer orders were received for our custom kitchen cabinetry during the holiday season in late 2023, resulting in decreased revenue from this product category in the three months ended March 31, 2024 as compared to the same period of last year.
Revenue Categories by Geographic Location
We derive our revenues primarily from the United States, Canada and Europe. Revenue categories by geographic location are summarized as follows:
For the Three Months Ended March 31,
Change
2024
Percentage
2023
Percentage
Percentage
USD
%
USD
%
%
United States
$
19,597,905
63.7
$
17,532,126
64.5
11.8
Canada
7,881,081
25.6
6,520,984
24.0
20.9
Europe
3,195,188
10.4
3,109,156
11.5
2.8
Rest of World
79,345
0.3
—
—
—
Total
$
30,753,519
100.0
$
27,162,266
100.0
13.2
We generated the majority of our revenues in the United States market, which amounted to $19.6 million for the three months ended March 31, 2024, compared to $17.5 million for the three months ended March 31, 2023, representing a 11.8% increase for the three-month periods. These revenues accounted for 63.7% and 64.5% of our total revenues for the three months ended March 31, 2024 and 2023, respectively. The increase in the U.S. market was primarily driven by the recovery of pro channel in our Sanitary category.
Our second largest market is Canada. Our revenues generated in the Canadian market were $7.9 million for the three months ended March 31, 2024, compared to $6.5 million for the three months ended March 31, 2023, representing a 20.9% increase. Similar to the U.S. market, the increased sales in the Canada market was primarily driven by the recovery of pro channel in our Sanitary category.
We also derive a small portion of our revenue from Europe, which consists primarily of sales in Germany. This amounted to $3.2 million for the three months ended March 31, 2024, compared to $3.1 million for the three months ended March 31, 2023, representing a 2.8% increase for the three-month periods. The sales in this market remained relatively stable.
Gross Profit
Gross profit was $8.4 million for the three months ended March 31, 2024, an increase of 16.8% compared to the prior-year period, as a result of volume growth. Gross profit margin improved to 27.4% for the three months ended March 31, 2024, up 90 basis points from 26.5% in the prior-year periods. Gross margins continue to benefit from a shift in revenue mix towards higher-margin products and lower logistics costs.
Operating Expenses
Selling and distribution expenses primarily consisted of personnel costs, marketing and promotion costs, commission, and freight and leasing charges. Our selling and distribution expenses increased by $1.4 million, or 30.1%,
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to $6.1 million for the three months ended March 31, 2024, from $4.7 million for the three months ended March 31, 2023. The increase in selling and distribution expenses represents increased personnel costs, marketing and promotion expenses and warehouse expenses as a result of inflation and our initiatives to drive sales growth.
General and administrative expenses primarily consisted of personnel costs, professional service fees, depreciation, travel, and office supply expenses. Our general and administrative expenses increased by $0.1 million, or 6.6%, to $2.3 million for the three months ended March 31, 2024, from $2.1 million for the three months ended March 31, 2023. The increase was primarily attributable to inflation and expenses incurred in connection with newly formed subsidiaries.
Research and development expenses mainly consisted of personnel costs and product development costs. Our research and development activities remained stable and are relatively immaterial to our unaudited condensed consolidated statements of operations and comprehensive loss.
Other Income (Expenses)
We incurred insignificant other income and expenses during the three months ended March 31, 2024 and 2023. Other income and expenses primarily include interest income and expenses, as well as miscellaneous non-operating income and expenses.
Provision for Income Taxes
We recorded income tax expense of approximately $22,000 for the three months ended March 31, 2024, and $33,000 for the three months ended March 31, 2023. The decrease resulted from the decrease in taxable income.
Net Loss
Our net loss increased by $0.2 million, or 77.3%, to $0.5 million for the three months ended March 31, 2024, from $0.3 million for the three months ended March 31, 2023. This increase was a result of the combination of the changes discussed above.
Liquidity and Capital Resources
Our principal sources of liquidity are cash generated from operating activities and cash borrowed under credit facilities, which we believe provides sufficient liquidity to support our financing needs. As of March 31, 2024, we had cash and working capital of $3.3 million and $16.8 million, respectively. During the three months ended March 31, 2024, we drew an aggregate of approximately $4.5 million on the Credit Agreement and CTBC Credit Line for working capital replenishment.
We believe our revenues and operations will continue to grow and the current working capital is sufficient to support our operations and debt obligations well into the foreseeable future. However, we may need additional cash resources in the future if we experience changes in business conditions or other developments, such as rising interest rates, inflation and increased costs, and may also need additional cash resources in the future if we wish to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. For example, from time to time we may provide loans or other operational support to Foremost to assist Foremost in capital expenditures or other efforts related to the manufacturing services that Foremost provides to us, which could limit the assets available for other corporate purposes or require additional resources. If it is determined that the cash requirements exceed our amount of cash on hand, we may seek to issue debt or equity securities, and there can be no assurances that additional financing will be available on acceptable term, if at all.
As of March 31, 2024, FGI’s total outstanding debt consisted of the Credit Agreement with East West Bank and the CTBC Credit Line with CTBC Bank (each discussed below).
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East West Bank Credit Facility
Our wholly owned subsidiary, FGI Industries (formerly named Foremost Groups, Inc.), has a line of credit with East West Bank pursuant to a Business Loan Agreement (the “Credit Agreement”) with East West Bank, which is collateralized by all of the assets of FGI Industries and personally guaranteed by Liang Chou Chen, who holds approximately 49.89% of the voting control of Foremost. On November 25, 2022, the Credit Agreement was amended and restated with a maximum borrowing amount of $18,000,000 and a maturity date of December 21, 2024.
Pursuant to the Credit Agreement, FGI Industries is required to maintain (a) a debt coverage ratio (defined as earnings before interest, taxes, depreciation and amortization divided by current portion of long-term debt plus interest expense) of not less than 1.25 to 1, tested at the end of each fiscal quarter; (b) an effective tangible net worth (defined as total book net worth plus minority interest, less amounts due from officers, shareholders and affiliates, minus intangible assets and accumulated amortization, plus debt subordinated to East West Bank) of not less than $10,000,000 for the quarter ended March 31, 2021 and thereafter, on consolidated basis; and (c) a total debt to tangible net worth ratio (defined as total liabilities divided by tangible net worth, which is defined as total book net worth plus minority interest, less loans to officers, shareholders, and affiliates minus intangible assets and accumulated amortization) not to exceed 4.0 to 1, tested at the end of each fiscal quarter, on consolidated basis. As of March 31, 2023, FGI Industries was in compliance with this financial covenant. As described in Item 1. Note 8, FGI Industries is also required to provide the lender with certain periodic financial information, including annual audited financial statements of FGI Industries on a non-consolidated basis. As of the date of report, FGI Industries has obtained a waiver for such Corporate Borrower’s Audited Annual Statements, a U.S. standalone reporting obligation under the Credit Agreement, which were due by April 30, 2024.
The loan bears interest rate equal to, at the Company ’ s option, either (i) 0.25 percentage points less than the Prime Rate quoted by the Wall Street Journal or (ii) the SOFR Rate (as administered by CME Group Benchmark Administration Limited and displayed by Bloomberg LP) plus 2.20% per annum (in either case, subject to a minimum rate of 4.500% per annum) . The interest rate as of March 31, 2024 and December 31, 2023 was 8.25% and 8.25%, respectively.
Each sum of borrowings under the Credit Agreement is deemed due on demand and is classified as a short-term loan. The outstanding balance of such loan was $9,929,043 and $6,959,175 as of March 31, 2024, and December 31, 2023, respectively.
HSBC Canada Bank Loan
FGI Canada Ltd. has a line of credit agreement with HSBC Canada (the “Canadian Revolver”). The revolving line of credit with HSBC Canada allows for borrowing up to CAD $7,500,000 (US $5,662,087 as of the March 31, 2024 exchange rate). This is an assets-based line of credit, the borrowing limit is calculated based on certain percentage of accounts receivable and inventory balances. Pursuant to the Canadian Revolver, FGI Canada Ltd. is required to maintain (a) a debt to tangible net worth ratio of no more than 3.00 to 1.00; and (b) a ratio of current assets to current liabilities of at least 1.25 to 1.00. The loan bears interest at a rate of Prime rate plus 0.50%. As of March 31, 2024, FGI Canada Ltd. was in compliance with this financial covenant.
Borrowings under this line of credit amounts to $0 as of March 31, 2024, and December 31, 2023. The facility matures at the discretion of HSBC Canada upon 60 days’ notice.
FGI Canada Ltd. also has a revolving foreign exchange facility up to a permitted maximum of US $3,000,000. The advances are available to purchase foreign exchange forward contacts from time to time up to six months, subject to an overall maximum aggregate USD Equivalent outstanding face value not exceeding the Foreign Exchange Facility Limit.
CTBC Credit Facility
On January 25, 2024, FGI International entered into an omnibus credit line (the “ CTBC Credit Line”) with CTBC Bank Co., Ltd. (“CTBC”). Under the CTBC Credit Line, FGI International may borrow, from time to time, up to
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$2.3 million, with borrowings limited to 90% of FGI International’s export “open account” trade receivables. The CTBC Credit Line will bear interest at a rate of “Base Rate”, which is based on monthly or quarterly Taipei Interbank Offered in effect from time to time, plus 120 base points and handling fees, unless otherwise agreed to by the parties. The CTBC Credit Line is unsecured and is fully guaranteed by the Company and partially guaranteed by Liang Chou Chen. Borrowings under this line of credit amounts to $1,513,608 and $0 as of March 31, 2024 and December 31, 2023, respectively.
The following table summarizes the key components of our cash flows for the three months ended March 31, 2024 and 2023.
For the Three Months Ended March 31,
2024
2023
USD
USD
Net cash used in operating activities
$
(8,292,284)
$
(1,230,619)
Net cash used in investing activities
(609,035)
(74,173)
Net cash provided by (used in) financing activities
4,483,476
(1,368,504)
Effect of exchange rate fluctuation on cash
(40,332)
(13,920)
Net changes in cash
(4,458,175)
(2,687,216)
Cash, beginning of period
7,777,241
10,067,428
Cash, end of period
$
3,319,066
$
7,380,212
Operating Activities
Net cash used in operating activities was approximately $8.3 million for the three months ended March 31, 2024 and was primarily attributable to an increase in prepayments and other receivables - related parties of approximately $5.4 million, an increase in inventories of approximately $1.6 million, a decrease in accrued expenses and other current liabilities of approximately $0.6 million, a decrease in income tax payable of approximately $0.4 million, a decrease in accounts payable of approximately $0.7 million. These drivers were partially offset by non-cash items of $1.4 million.
Net cash used in operating activities was approximately $1.2 million for the three months ended March 31, 2023 and was primarily attributable to a decrease in accounts payable of approximately $6.6 million, a decrease in accrued expenses and other current liabilities of approximately $0.6 million and net income for the quarter of approximately $0.3 million, an increase in prepayments and other current assets of approximately $0.3 million, a decrease in operating lease liabilities of approximately $0.3 million. These drivers were partially offset by a decrease in inventories of approximately $3.4 million, a decrease in accounts receivable of approximately $1.7 million, plus non-cash items of approximately $0.5 million, and an increase in accounts payable-related parties of approximately $0.5 million, a decrease in right-of-used assets of approximately $0.4 million, a decrease in prepayments and other receivables - related parties of approximately $0.3 million, and an increase in income taxes payable of approximately $0.1 million.
Investing Activities
Net cash used in investing activities was $0.6 million and $0.1 million for the three months ended March 31, 2024, and 2023, respectively, which was attributable to the purchases of property and equipment.
Financing Activities
Net cash provided by financing activities was approximately $4.5 million for the three months ended March 31, 2024, which represents net proceeds from bank loans.
Net cash used in financing activities was approximately $1.4 million for the three months ended March 31, 2023, which represents net repayment of bank loans.
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Commitments and Contingencies
Capital Expenditures
Our capital expenditures were incurred primarily in connection with the acquisition of property and equipment. Our capital expenditures amounted to $0.6 million and $0.1 million for the three months ended March 31, 2024 and 2023, respectively. We do not expect to incur significant capital expenditures in the immediate future.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.
Critical Accounting Policies and Significant Accounting Estimates
A discussion of our critical accounting policies and significant accounting estimates is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Form 10-K. The preparation of the unaudited condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of some assets and liabilities and, in some instances, the reported amounts of revenues and expenses during the applicable reporting period. Actual results could differ materially from these estimates. Changes in estimates are recorded in results of operations in the period that the events or circumstances giving rise to such changes occur. Within the context of these critical accounting estimates, we are not currently aware of any reasonably likely events or circumstances that would result in different policies or estimates being reported for the three months ended March 31, 2024.
Recently Issued Accounting Pronouncements
See Note 2, “Summary of significant accounting policies” in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Non-GAAP Measures
In addition to the measures presented in our unaudited condensed consolidated financial statements, we use the following non-GAAP measures to evaluate our business, measure our performance, identify trends affecting our business and assist us in making strategic decisions. Our non-GAAP measures are: Adjusted Income from Operations, Adjusted Operating Margins and Adjusted Net Income. These non-GAAP financial measures are not prepared in accordance with GAAP. They are supplemental financial measures of our performance only, and should not be considered substitutes for net income, income from operations or any other measure derived in accordance with GAAP and may not be comparable to similarly titled measures reported by other entities.
We define Adjusted Income from Operations as GAAP income from operations excluding the impact of certain non-recurring expenses, including IPO-related compensation (cash and stock-based), legal fees and business expansion expenses. We define Adjusted Net Income as GAAP net income excluding the tax-effected impact of certain non-recurring expenses and income, such as IPO-related compensation, legal fees and business expansion expenses. We define Adjusted Operating Margins as adjusted income from operations divided by revenue.
We use these non-GAAP measures, along with GAAP measures, to evaluate our business, measure our financial performance and profitability and our ability to manage expenses, after adjusting for certain one-time expenses, identify trends affecting our business and assist us in making strategic decisions. We believe these non-GAAP measures, when reviewed in conjunction with GAAP financial measures, and not in isolation or as substitutes for analysis of our results of operations under GAAP, are useful to investors as they are widely used measures of performance and the adjustments we make to these non-GAAP measures provide investors further insight into our profitability and additional perspectives in comparing our performance over time on a consistent basis.
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The following table reconciles Income from Operations to Adjusted Income from Operations and Adjusted Operating Margins, as well as Net income to Adjusted Net Income for the periods presented.
For the Three Months Ended
March 31,
2024
2023
Loss from operations
$
(320,934)
$
(2,927)
Adjustments:
Non-recurring IPO-related stock-based compensation
59,719
59,719
IPO and arbitration legal fee
—
50,000
Business expansion expense
61,770
61,772
Adjusted (loss) income from operations
(199,445)
168,564
Revenue
$
30,753,519
$
27,162,266
Adjusted operating margins
(0.6)
%
0.6
%
For the Three Months Ended
March 31,
2024
2023
Net loss
$
(537,859)
$
(303,375)
Adjustments:
Non-recurring IPO-related stock-based compensation
59,719
59,719
IPO and arbitration legal fee
—
50,000
Business expansion expense
61,770
61,772
Total
(416,370)
(131,884)
Tax impact of adjustment at 18% effective rate
(22,961)
(32,412)
Adjusted net loss
$
(439,331)
$
(164,296)
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required for smaller reporting companies.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.