HomesToLife Ltd(HTLM) - 2024 Q2 - Quarterly Report

Unaudited Condensed Consolidated Financial Statements This section presents the company's unaudited financial statements, including balance sheets, statements of operations, changes in shareholders' equity, and cash flows, along with detailed explanatory notes Unaudited Condensed Consolidated Balance Sheets As of June 30, 2024, the company's total assets increased to SGD 10.18 million from SGD 9.39 million at the end of 2023, accompanied by a rise in total liabilities to SGD 8.69 million from SGD 7.28 million, resulting in a decrease in total shareholders' equity from SGD 2.11 million to SGD 1.48 million Condensed Consolidated Balance Sheet Summary (SGD) | Balance Sheet Item | Dec 31, 2023 (SGD) | June 30, 2024 (SGD) | Change | | :--- | :--- | :--- | :--- | | Total Current Assets | 4,987,732 | 4,468,868 | ▼ 10.4% | | Total Non-current Assets | 4,398,128 | 5,709,385 | ▲ 29.8% | | TOTAL ASSETS | 9,385,860 | 10,178,253 | ▲ 8.4% | | Total Current Liabilities | 4,346,099 | 4,637,521 | ▲ 6.7% | | Total Long-term Liabilities | 2,934,185 | 4,056,107 | ▲ 38.2% | | TOTAL LIABILITIES | 7,280,284 | 8,693,628 | ▲ 19.4% | | Total Shareholders' Equity | 2,105,576 | 1,484,625 | ▼ 29.5% | | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 9,385,860 | 10,178,253 | ▲ 8.4% | Unaudited Condensed Consolidated Statements of Operations For the six months ended June 30, 2024, the company reported a net loss of SGD 614,637, a significant reversal from a net income of SGD 98,877 in the corresponding period of 2023, primarily due to an 18.7% decrease in revenue and a substantial increase in general and administrative expenses Statement of Operations Summary (SGD) | Metric | Six Months ended June 30, 2023 (SGD) | Six Months ended June 30, 2024 (SGD) | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenues, net | 3,333,058 | 2,707,929 | ▼ 18.7% | | Gross Profit | 2,294,654 | 1,789,117 | ▼ 22.0% | | Total Operating Expenses | (2,224,970) | (2,480,410) | ▲ 11.5% | | Income (Loss) from Operations | 69,684 | (691,293) | - | | NET INCOME (LOSS) | 98,877 | (614,637) | - | | EPS – Basic and Diluted | 0.01 | (0.05) | - | Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity declined from SGD 2.11 million at the end of 2023 to SGD 1.48 million as of June 30, 2024, primarily due to the net loss of SGD 614,637 incurred during the six-month period - The primary driver for the decrease in shareholders' equity during the first half of 2024 was the net loss of SGD 614,637[9] Changes in Shareholders' Equity (SGD) | Description | Amount (SGD) | | :--- | :--- | | Balance as of December 31, 2023 | 2,105,576 | | Foreign currency translation adjustment | (6,314) | | Net loss for the period | (614,637) | | Balance as of June 30, 2024 | 1,484,625 | Unaudited Condensed Consolidated Statements of Cash Flows The company's cash and cash equivalents decreased by SGD 1.06 million during the first six months of 2024, ending the period at SGD 739,423, driven by significant cash outflows from operating and investing activities, partially offset by financing activities Cash Flow Summary (SGD) | Cash Flow Activity | Six Months ended June 30, 2023 (SGD) | Six Months ended June 30, 2024 (SGD) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | 70,182 | (1,221,997) | | Net cash used in investing activity | (153,280) | (140,570) | | Net cash (used in) provided by financing activities | (717,490) | 299,521 | | Net change in cash and cash equivalents | (800,588) | (1,063,046) | | Cash and cash equivalents, end of period | 2,083,202 | 739,423 | Notes to the Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations of the company's business operations, significant accounting policies, and specific financial statement line items, including a corporate reorganization, U.S. GAAP adherence, lease obligations, related-party transactions, concentration of risk, and subsequent events like the IPO NOTE 1 － BUSINESS OVERVIEW HomesToLife Ltd, incorporated in the Cayman Islands, primarily sells and distributes leather upholstered furniture and accessories through its retail stores in Singapore, undergoing a reorganization in April 2024 that resulted in HTL SG becoming an indirect wholly-owned subsidiary - The company is principally engaged in the sale and distribution of leather upholstered furniture and accessories in Singapore[15] - A group reorganization was completed in April 2024, which has been retroactively applied to the financial statements as a restructuring of entities under common control[17][19] NOTE 2 － SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements are prepared in accordance with U.S. GAAP, with the company qualifying as an 'emerging growth company' and electing to use the extended transition period for new accounting standards, recognizing revenue when control of products is transferred to the customer and accounting for leases under ASC 842 - The financial statements are prepared in accordance with U.S. GAAP[21] - The company is an 'emerging growth company' under the JOBS Act and has elected not to opt out of the extended transition period for new accounting standards[22][23] - Revenue is recognized at a point in time when control of products is transferred to customers, and the company records revenue on a gross basis as it acts as the principal in these transactions[41][44] NOTE 3 － INVENTORIES, NET Net inventories increased from SGD 889,907 at the end of 2023 to SGD 1,109,782 as of June 30, 2024, while the reserve for obsolete inventories remained unchanged at SGD 103,599 Inventories, Net (SGD) | Item | Dec 31, 2023 (SGD) | June 30, 2024 (SGD) | | :--- | :--- | :--- | | Goods for retail sales | 993,506 | 1,213,381 | | Less: reserve for obsolete inventories | (103,599) | (103,599) | | Total | 889,907 | 1,109,782 | NOTE 4 － PLANT AND EQUIPMENT, NET Net plant and equipment increased to SGD 359,509 as of June 30, 2024, from SGD 297,587 at year-end 2023, with depreciation expense for the first six months of 2024 significantly increasing to SGD 78,565 Plant and Equipment, Net (SGD) | Item | Dec 31, 2023 (SGD) | June 30, 2024 (SGD) | | :--- | :--- | :--- | | Plant and equipment, net | 297,587 | 359,509 | - Depreciation expense increased significantly to SGD 78,565 for the six months ended June 30, 2024, compared to SGD 19,323 for the same period in 2023[69] NOTE 5 － LEASES The company has operating leases for offices, retail stores, and a warehouse in Singapore, with total lease liabilities amounting to SGD 5.77 million and corresponding right-of-use assets of SGD 5.35 million as of June 30, 2024, and future minimum lease payments totaling SGD 6.28 million Lease Balances (SGD) | Item | Dec 31, 2023 (SGD) | June 30, 2024 (SGD) | | :--- | :--- | :--- | | Right-of-use assets, net | 4,100,541 | 5,349,876 | | Total lease liabilities | 4,441,294 | 5,766,817 | - Total future minimum lease payments under operating leases amount to SGD 6,281,646 as of June 30, 2024[74] NOTE 6 － SHAREHOLDERS' EQUITY The company was authorized to issue 100,000,000 ordinary shares with a par value of US$0.0001 per share, with 13,250,000 ordinary shares issued and outstanding as of June 30, 2024, presented on a retroactive basis following the reorganization - As of June 30, 2024, the company had 13,250,000 ordinary shares issued and outstanding out of an authorized 100,000,000 shares[75] NOTE 7 － NET INCOME (LOSS) PER SHARE For the six months ended June 30, 2024, the company reported a basic and diluted net loss per share of SGD (0.05), based on a net loss of SGD 614,637 and 13,250,000 weighted average shares outstanding, compared to a net income per share of SGD 0.01 in the same period of 2023 Net Income (Loss) Per Share | Metric | Six Months ended June 30, 2023 | Six Months ended June 30, 2024 | | :--- | :--- | :--- | | Net income (loss) (SGD) | 98,877 | (614,637) | | Weighted average shares | 13,250,000 | 13,250,000 | | Net income (loss) per share (SGD) | 0.01 | (0.05) | NOTE 8 － INCOME TAX EXPENSE The company recorded no income tax expense for the six-month periods ending June 30, 2023 and 2024, utilizing previously unrecognized deferred tax assets and tax losses to offset potential tax liability, with cumulative net operating losses of SGD 8.74 million in Singapore available for indefinite carryforward - The company recorded zero income tax expense for the first half of 2023 and 2024[78] - The company's Singapore operations are subject to a 17% corporate income tax rate[80] - As of June 30, 2024, the company had SGD 8,738,622 in cumulative net operating losses in Singapore available for carryforward with no expiration[81] NOTE 9 － RELATED PARTY BALANCES AND TRANSACTIONS The company engages in significant transactions with entities controlled by its controlling shareholders, including purchases from HTL Marketing Pte. Ltd. totaling SGD 677,629 for the six months ended June 30, 2024, and an amount due to its intermediate holding company, Golden Hill Capital Pte. Ltd., of SGD 922,040 Purchases from Related Parties (SGD) | Related Party | Six Months ended June 30, 2023 | Six Months ended June 30, 2024 | | :--- | :--- | :--- | | HTL Marketing Pte. Ltd. | 1,120,613 | 677,629 | - As of June 30, 2024, the company owed its intermediate holding company, Golden Hill Capital Pte. Ltd., SGD 922,040 for unsecured, interest-free advances[83][89] - Temporary advances due from related parties as of December 31, 2023, were fully repaid in March 2024[84][89] NOTE 10 － CONCENTRATIONS OF RISK The company faces several concentration risks, including a significant vendor concentration with related party HTL Marketing Pte. Ltd., reliance on customers solely in Singapore, and exposure to credit risk with cash balances exceeding the SGD 500,000 deposit protection limit - There was no single customer accounting for 10% or more of revenues, but all customers are located in Singapore[87][88] - A significant vendor concentration exists with related party HTL Marketing Pte. Ltd., which accounted for 94% and 82% of cost of goods sold in the first six months of 2023 and 2024, respectively[88][90] - The company is exposed to credit risk, with cash and cash equivalents of SGD 0.7 million held in Singaporean financial institutions, of which approximately SGD 0.5 million was subject to credit risk above the deposit protection limit[91][92] NOTE 11 － COMMITMENTS AND CONTINGENCIES As of June 30, 2024, the company was not aware of any significant commitments, legal proceedings, or claims that would have a material adverse effect on its financial condition or operations - The company did not have any significant commitments and contingencies as of June 30, 2024[94] NOTE 12 － SUBSEQUENT EVENTS Subsequent to the balance sheet date, the company completed its Initial Public Offering (IPO) on the NASDAQ on October 2, 2024, raising gross proceeds of $5.75 million, and formed a new subsidiary, HTL Far East Pte Ltd, on October 28, 2024, to develop its trading business - On October 2, 2024, the company consummated its IPO, raising $5.75 million in gross proceeds, with shares beginning trading on NASDAQ under the symbol 'HTLM' on October 1, 2024[97] - On October 28, 2024, the company formed a new subsidiary, HTL Far East Pte Ltd, in Singapore to develop its trading business[98]