StateHouse Holdings Inc. Reports Revenue Growth in Q1 2023, Debt Concerns Remain

LOS ANGELES– StateHouse Holdings Inc. announced a 42% increase in revenues to $24.7 million for the first quarter ending March 31, 2023. Retail revenues also experienced substantial growth, rising 58% to $14.4 million compared to the first quarter of the previous year. However, the company saw a slight decline in revenues compared to the previous quarter due to seasonal factors and reduced foot traffic in stores.

The net loss for the quarter remained relatively flat at $10 million, with an improved net loss per share of ($0.05) compared to ($0.10) in the same period last year.

Despite the positive revenue growth, StateHouse continues to face financial challenges. As of March 31, 2023, the company had $2.6 million in cash but a working capital deficit of $107 million. StateHouse acknowledged recurring operating losses and an accumulated operating deficit of $369 million. The company also reported negative cash flows from operating activities at the end of the quarter.

StateHouse disclosed that it obtained a fifth extension on its Senior Secured Debt, which is due on June 5, 2023. However, it will need to refinance or secure additional funding to meet this obligation. The company has reduced its workforce by 16% since the beginning of the year and is exploring the potential sale of non-core assets to strengthen its balance sheet and fund its growth objectives. StateHouse stated that its current operations are sustainable, but significant cash needs cannot be met with existing cash flow.

On a positive note, StateHouse received $6.4 million of ERC (Employee Retention Credit) funds after the first quarter ended. The company also implemented cost-cutting measures, reducing operating expenses by approximately $12 million annualized compared to the previous quarter.

CEO Ed Schmults expressed confidence in the company’s progress and highlighted its integrated supply chain and scale, which is expected to yield additional cost synergies. StateHouse aims to achieve positive EBITDA in 2023 and become cash flow positive by the end of the year.

As StateHouse works to address its debt concerns and improve its financial position, the company remains focused on delivering excellent customer satisfaction and loyalty through innovative products and its customer loyalty program.