Fitell Corporation (Nasdaq: FTEL) ("Fitell" or the "Company"), an online retailer of gym and fitness equipment in Australia, today announced its 2023 annual financial results for the fiscal year ended June 30, 2023.

Fitell’s Chief Executive Officer, Yinying “Sam” Lu commented, “Fitell’s mission is to build an ecosystem with a whole fitness and wellness experience powered by technology. This mission guides our strategic decisions and underscores our commitment to creating value for our shareholders.

Furthering this perspective, Jamarson Kong, Fitell’s Chief Financial Officer, noted, “Throughout fiscal year 2023, we navigated several economic headwinds, notably the challenges posed by inflation and the rise in interest rates in Australia. Consequently, our financial results for the year reflect some of these challenges. As we look to fiscal year 2024, we stand firm in our commitment to overcoming these challenges and advancing our growth trajectory. He further reported, “We’re focused on executing our long-term strategy, including expanding our business offerings and market footprint. Fitell's successful listing on Nasdaq on August 8, 2023, instills confidence in our ability to deliver on our growth strategies."

FY 2023 Financial Highlights

  • Revenue was $4.8 million, a year-to-year decrease of $3,356,512 or 41.2%, primarily due to reduced consumer spending from inflation and raising of interest rates in Australia.
  • Gross profit was $2.2 million, a year-to-year decrease of $1,462,255 or 40.2%.
  • Gross margin was 45.3%, a year-to-year increase of 0.7%.
  • Sales of consumable products was $223,343, a year-to-year increase of 11.6% or $23,239, due to efforts to diversify revenue streams.

Revenue by Categories vs. Prior Year

  Revenue Change from FY 2022
  US$ % US$ %
Merchandise revenue 4,036,047 84.1% (3,210,541) -44.3%
Sales of consumable products 223,343 4.7% 23,239 11.6%
Revenue from licensing customers 539,832 11.2% (169,210) -23.9%
  • Merchandise revenue decreased significantly by 44.3% or $3,210,541 to $4,036,04. The decrease was primarily attributable to: (i) a 42.6% decrease in sales order, primarily due to inflation and raising of interest rates in Australia; (ii) a decrease of 3.0% in the average revenue per order. Despite the consumer confidences in Australia is week recently, but the management has devoted a lot of marketing efforts in promoting our products and have successfully retained many loyal customers.
  • Sales of consumable products represents the revenue generated by selling various lifestyle products. The sales of consumable products have increased 11.6% or $23,239 to $223,343 from $200,104 in FY 2022. The increase was due to our additional efforts to diversify our revenue streams, to mitigate the negative financial impact attributed to the decline in merchandise revenue.
  • Revenue from licensing customers represents licensing, management consultant income, and some agency fee for distributing other miscellaneous items. Revenue from licensing customers has decreased by 23.9% or $169,216 to $539,832 in FY 2023 from $709,042 in FY 2022. The decrease was due to the temporarily suspension of the overseas expansions recently, because the market sentiments are negatively affected by the inflations and the rising in interest rate in the global market. Nevertheless, we will expand these services again, especially to the Asia market, when the time is right.

Cost of goods sold decreased by approximately $1.9 million, or 41.9%, from $4,520,078 in FY 2022 to $2,625,821.

Gross profit was $2,173,401 for the fiscal year ended June 30, 2023 and $3,635,656 for the fiscal year ended June 30, 2022, a decrease of $1,462,255, or 40.2%. The decrease was a combined result of the decrease in merchandise revenues and service revenue.

The gross profit margin increased 0.7% from 44.6% in FY 2022, to 45.3. The slight increase is mainly due to the change in revenue mix, as we have generated relatively more services revenue.

The IPO related expenses were $662,418 for consulting fee which is related to the Initial Public Offering project.

Subsequent Events

  • On August 8, 2023, the Company has successfully listed on Nasdaq and has raised a net proceed of approximately $13.6 million for the issuance of 3,000,000 shares of common stock.
  • Subsequent to June 30, 2023, the Company has entered into a consulting agreement with a third party, for future capital market and fund-raising consulting services. The consideration of the contract is $1.8 million.
  • On October 23, 2023, at the recommendation of the Nominating Committee, the Board appointed Yinying “Sam” Lu, a member of the Board, to serve as Chief Executive Officer beginning as of October 23, 2023.

Investor Conference Call and Webcast

The company will host an investor conference call and webcast to discuss the results at 8:30 a.m. (Eastern Time) on Tuesday, October 31, 2023, before the market opens.

A live webcast of the conference call will be available on the company’s investor relations website at https://www.fitellcorp.com/investorrelations-ep, along with the company's earnings press release and slide presentation. To access the call by phone, dial in at 1-877-270-2148 (U.S. Toll Free) or 1-412-902-6510 (International Toll). The webcast also can be accessed by using the direct link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=Cxjh7jDl.

If you are unable to participate during the live webcast, the webcast of this call will also be archived and available for three months at the company’s investor relations website.

About Fitell Corporation

Fitell Corporation, through GD Wellness Pty Ltd (“GD”), its wholly owned subsidiary, is an online retailer of gym and fitness equipment both under its proprietary brands and other brand names in Australia. The company’s mission is to build an ecosystem with a whole fitness and wellness experience powered by technology to our customers. GD has served over 100,000 customers with large portions of sales from repeat customers over the years. The Company’s brand portfolio can be categorized into three proprietary brands under its Gym Direct brand: Muscle Motion, Rapid Motion, and FleetX, in over 2,000 stock-keeping units (SKUs). For additional information, please visit the Company’s website at www.fitellcorp.com.

Forward-Looking Statements

This press release contains “forward-looking statements”. Forward-looking statements reflect our current view about future events. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “could,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “propose,” “potential,” “continue” or similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the SEC.

For more information, please contact:

Chief Financial OfficerJamarson Kongjamarson@gymdirect.com.au

Investor Relations        ir@fitellcorp.com

FITELL CORPORATIONCONSOLIDATED BALANCE SHEETS AT JUNE 30, 2023 AND 2022

  June 30,     June 30,  
  2023     2022  
ASSETS              
Current assets              
Cash and cash equivalents $ 236,821     $ 716,052  
Investment in marketable securities   494,275       1,023,763  
Accounts net receivable   174,341       41,097  
Inventory, at cost   525,786       919,422  
Deposits and prepaids   13,412       6,872  
Prepaid IPO costs   5,317,866       223,229  
Total current assets   6,762,501       2,930,435  
               
Property and equipment, net   38,743       51,011  
Operating right of use asset   605,794       840,123  
Deferred tax asset   132,354       111,595  
Brand names   337,504       337,504  
Goodwill   1,161,052       1,161,052  
Total assets $ 9,037,948     $ 5,431,720  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY              
Current liabilities              
Accounts payable and accrued expenses $ 1,168,723     $ 805,029  
Deferred revenue   238,351       501,976  
Income tax payable   486,058       655,673  
Due to related parties   24,386       103,450  
Current portion of operating lease liability   212,062       206,690  
Total current liabilities   2,129,580       2,272,818  
               
Accrued employee benefits, non-current   18,430       5,283  
Operating lease liability, less current portion   473,015       716,239  
Total liabilities   2,621,025       2,994,340  
               
Commitments and contingencies (Note 6)              
               
Stockholders’ equity:              
Common stock, $0.0001 par value; 500,000,000 shares authorized, 8,120,000 and 7,000,000 shares issued and outstanding at June 30, 2023 and 2022, respectively   812       700  
Subscription receivable   -       (56 )
Additional paid-in capital   7,097,822       1,497,990  
Accumulated other comprehensive income (loss)   (64 )     26,999  
Retained earnings (accumulated deficit)   (681,647 )     911,747  
Total stockholders’ equity   6,416,923       2,437,380  
Total liabilities and stockholders’ equity $ 9,037,948     $ 5,431,720  
 

FITELL CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEARS ENDED JUNE 30, 2023 AND 2022

  For the years ended  
  June 30,  
  2023     2022  
           
Revenues:              
Merchandise revenue $ 4,036,047     $ 7,246,588  
Sales of consumable products   223,343       200,104  
Revenue from licensing customers   539,832       709,042  
Total revenues   4,799,222       8,155,734  
               
Cost of goods sold   (2,625,821 )     (4,520,078 )
               
Gross profit   2,173,401       3,635,656  
               
Operating expenses:              
Personnel expenses   965,395       981,711  
General and administrative expenses   888,141       503,269  
Sales and marketing expenses   454,995       604,200  
Operating lease expense   198,914       213,490  
Depreciation expense   12,268       730  
Total operating expenses   2,519,713       2,303,400  
               
Income from operations   (346,312 )     1,332,256  
               
Other income (expenses):              
IPO related expenses   (662,418 )     (605,950 )
Unrealized loss on investments   (529,488 )     (466,478 )
Other income (expenses)   9,885       (54 )
Interest income   1,978       99  
Interest expense   (92,800 )     (27,419 )
Total other income (expenses)   (1,272,843 )     (1,099,802 )
               
Income (loss) before taxes   (1,619,155 )     232,454  
               
Income tax expense (benefit)   (25,761 )     219,852  
               
Net income (loss)   (1,593,394 )     12,602  
Foreign currency translation adjustment   (27,063 )     (66,949 )
Comprehensive loss $ (1,620,457 )   $ (54,347 )
               
Basic and diluted earnings (loss) per share on net income (loss) $ (0.21 )   $ 0.00  
               
Weighted average shares outstanding - basic and diluted   7,714,959       7,000,000  
 

FITELL CORPORATIONCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITYFOR THE YEARS ENDED JUNE 30, 2023 AND 2022

  Common Stock   Subscription Receivable   Additional Paid-in   Accumulated Other Comprehensive   Retained Earnings (Accumulated      
  Shares   Amount   Shares   Amount   Capital   Income (Loss)   Deficit)   Total  
Balance July 1, 2021 7,000,000   $ 700     -   $ (56 ) $ 1,497,990   $ 93,948   $ 899,145   $ 2,491,727  
                                               
Foreign currency translation adjustment -     -     -     -     -     (66,949 )   -     (66,949 )
                                               
Net income -     -     -     -     -     -     12,602     12,602  
                                               
Balance June 30, 2022 7,000,000   $ 700     -   $ (56 ) $ 1,497,990   $ 26,999   $ 911,747   $ 2,437,380  
                                               
Stock issued for services 1,120,000     112     -     -     5,599,888     -     -     5,600,000  
                                               
Settlement of stock subscription -     -     -     56     (56 )   -     -     -  
                                               
Foreign currency translation adjustment -     -     -     -     -     (27,063 )   -     (27,063 )
                                               
Net loss -     -     -     -     -     -     (1,593,394 )   (1,593,394 )
                                               
                                               
Balance June 30, 2023 8,120,000   $ 812     -     -   $ 7,097,822   $ (64 ) $ (681,647 ) $ 6,416,923  
 

FITELL CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS

  For the years ended  
  June 30,  
  2023     2022  
Cash Flows from Operating Activities              
Net income (loss) $ (1,593,394 )   $ 12,602  
               
Adjustments to reconcile net income (loss) to net cash from operating activities:              
Depreciation   12,268       730  
Bad debt provision   426,971       -  
Unrealized loss on investments   529,488       466,478  
Stock issued for services   560,000       -  
Changes in operating assets and liabilities              
Accounts receivable, net   (560,215 )     (27,996 )
Inventory, at cost   393,636       (4,352 )
Deposits and prepaids   (61,177 )     74,394  
Right of use activity   (3,523 )     (4,454 )
Deferred tax asset   (20,759 )     (61,533 )
Other non-current assets   -       42,010  
Accounts payable and accrued expenses   363,694       (198,755 )
Deferred revenue   (263,625 )     (662,743 )
Income tax payable   (169,615 )     235,920  
Accrued employee benefits, non-current   13,147       (4,082 )
Net cash from activities   (373,104 )     (131,781 )
               
Cash Flows from Investing Activities              
Purchase of investments   -       (1,490,241 )
Purchase of property and equipment   -       (51,741 )
Net activity on amount due from related party   -       1,076,687  
Net cash from investing activities   -       (465,295 )
               
Cash Flows from Financing Activities              
Net activity on due to related parties   (79,064 )     93,915  
Net cash from financing activities   (79,064 )     93,915  
               
Foreign currency translation adjustment   (27,063 )     (66,949 )
               
Change in cash and cash equivalents   (479,231 )     (570,110 )
               
Cash and cash equivalents at beginning of period   716,052       1,286,162  
               
Cash and cash equivalents at end of period $ 236,821     $ 716,052  
               
Supplemental Cash Flow Information              
Cash paid for interest $ -     $ -  
Cash paid for income taxes $ 80,375     $ 547,118  
 Non-Cash Investing and Financing Activities              
               
Stock issued for prepaid IPO services $ 5,040,000     $ -  
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