Hongli Group Inc.(HLP) - 2023 Q2 - Quarterly Report

Financial Statements This section presents the company's unaudited condensed consolidated financial position, operational results, equity changes, and cash flows for the period Condensed Consolidated Balance Sheets The company's balance sheet shows decreased assets and liabilities, with a significant increase in shareholders' equity due to IPO proceeds Balance Sheet Summary (as of June 30, 2023 vs. Dec 31, 2022) | Financial Metric | June 30, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Total Current Assets | $12,142,999 | $14,064,401 | -13.7% | | Total Assets | $31,156,424 | $36,164,139 | -13.8% | | Total Current Liabilities | $7,273,928 | $12,437,954 | -41.5% | | Total Liabilities | $10,573,254 | $22,689,446 | -53.4% | | Total Shareholders' Equity | $20,583,170 | $13,474,693 | +52.8% | - Cash and cash equivalents decreased significantly from $2,085,033 to $678,770[2] - Substantial reductions were seen in both short-term loans (from $6.0M to $4.0M) and long-term loans (from $10.1M to $3.3M)[2] - Capital structure changed significantly post-IPO, with an increase in outstanding shares to 12,371,875 and additional paid-in capital growing to $8,036,663[2] Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) The company experienced a year-over-year decline in revenue and net income, resulting in a comprehensive loss due to currency translation Statement of Operations Summary (For the Six Months Ended June 30) | Metric | 2023 | 2022 | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenues, net | $8,915,111 | $10,485,582 | -15.0% | | Gross Profit | $3,045,801 | $3,499,528 | -13.0% | | Income from operations | $784,995 | $1,511,963 | -48.1% | | Net Income | $796,354 | $1,866,862 | -57.3% | | Comprehensive (Loss) Income | ($318,822) | $1,249,032 | -125.5% | | Basic and diluted EPS | $0.07 | $0.19 | -63.2% | - A significant foreign currency translation loss of $1,115,176 drove the comprehensive loss, widening from the prior year's loss of $617,830[4] Condensed Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity grew substantially, primarily driven by net proceeds from the company's Initial Public Offering in early 2023 - The company raised $9,487,500 in gross proceeds from its Initial Public Offering (IPO) completed in two tranches[6] - Total IPO-related costs amounted to $2,060,201[6] Changes in Shareholders' Equity (For the Six Months Ended June 30, 2023) | Description | Amount | | :--- | :--- | | Balance, December 31, 2022 | $13,474,693 | | Net proceeds from IPO | $7,427,299 | | Net Income | $796,354 | | Foreign currency translation adjustment | ($1,115,176) | | Balance, June 30, 2023 | $20,583,170 | Condensed Consolidated Statements of Cash Flows The company's cash flow turned negative due to operating outflows and significant debt repayments, despite receiving IPO proceeds Cash Flow Summary (For the Six Months Ended June 30) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($1,042,104) | $1,602,691 | | Net cash provided by (used in) investing activities | $303,312 | ($1,687,794) | | Net cash (used in) provided by financing activities | ($365,338) | $171,704 | | Net change in cash, cash equivalents and restricted cash | ($1,247,293) | $58,011 | - Negative operating cash flow was driven by an increase in accounts receivable and inventories and a decrease in accounts payable[8] - Financing activities were dominated by $9.49 million in IPO proceeds used for significant debt repayments of short-term ($3.67 million) and long-term ($11.41 million) loans[8] - Cash paid for interest nearly doubled to $409,431, and cash paid for income taxes increased dramatically to $330,693[9]