Net loss was $48,625 for the full year 2021 compared to a net gain of $20,999 in 2020. The majority of the net losses in 2021 were driven by approximately $205,000 in one-time expenses related to the IPO (initial public offering).
The Company’s cash position remains solid, with $540,000 in cash and an unused $75,000 credit line and $150,000 credit revolver available to invest in the growth of the business.
2021 Milestones & Q1 2022 Operational Updates
As of March 17, 2022, we surpassed the initial minimum raise of our Regulation A offering of $1,000,000. As a result, we accepted subscriptions from 94 investors who became new shareholders as of March 17, 2022.
On April 11, 2022, we appointed AST (American Stock Transfer) as our transfer agent to administrate our common stock. Simultaneously, we filed an application with OTC Markets to quote on the OTCQB. We are currently awaiting approval and a date for the quotation of our common stock to begin.
During the fourth quarter of 2021, we ceased our staging and moving operations. After careful consideration, we decided our time and resources could be better spent growing other divisions of the Company and developing other income streams with less liability and overhead costs. The demand for physical home staging services has slowed due to virtual staging services, and the costs of operating the moving division outweighed the income and potential liability. As a result, we sold our moving truck for $54,000, which is approximately 50% more than our purchase price (approximately $37,000) in 2017 because of the high demand for commercial box trucks and the shortage in inventory.
During the first quarter of 2022, we dissolved our joint venture partnership with Smart Real Estate Tools, LLC. This mutual decision of the partners was based on our agents’ feedback, limited utilization, limited adoption, and the rising ongoing costs without growing profits. After careful consideration, we decided our goal of supporting our agents can be achieved by traditional methods of agent support rather than an emphasis on software tools. Andy Parker, the original developer of Smart Real Estate Tools, LLC, was offered a full-time employee position with us to oversee our Business Support department. Mr. Parker accepted the employment contract and is now directing our staff in that department.
Outlook
“We continue to achieve consistent, measurable revenue growth while improving profitability and reinvesting our net income and free cash flow into growing the business nationwide,” said Andrew Arroyo, founder, chairman, and CEO of AARE. “Despite the many challenges we all faced in 2021, AARE had a record year with increases in revenue and gross profits.”
Arroyo continued, “The economic and political landscape of 2022 is certainly dressing itself up to be much different than in recent years. After 25 years in the industry, I have learned how to prepare the agency ahead of these market cycles. To that end, we have systems in place that helped us through previous rising interest rate environments, recessions, and unusual market conditions. Our salesforce is ready to navigate a change in the market or a potential recession. We will continue to provide short-term guidance, financial outlooks, and long-term targets for our expected revenue, gross and net profits, and free cash flow. We want our shareholders to have clear visibility into our growth plans, strategies, and how we plan to navigate the landscape as economic and political events continue to unfold.”
1Q-2Q 2022 and FY2022 Outlook:
- FY2022:
- FY2022 Revenue of $9.5 million to $12 million
- FY2022 Gross Profit of $1.5 million to $1.8 million
- 1Q-2Q 2022:
- 1Q-2Q 2022 Revenue of $4.3 million to $5 million
- 1Q-2Q 2022 Gross Profit of $650,000 to $750,000
2022-23 Targets:
- Continued revenue growth between 20-40%
- Continued gross profit growth between 30-50%
- Continued reinvestment of net income and free cash flow to fuel our growth
Additional information can be found in the company’s 1K SEC filing and presentation on the Investor Relations section of the AARE website at https://ir.aare.com.
Conference Call Information
Management will conduct a conference call to discuss the full year results as well as outlook at 11:00 a.m. PST on Monday, May 9, 2022. The conference call will be accessible via webcast and recorded. After the call is complete, you can access the recording on the AARE Investor Relations website at https://ir.aare.com/.
Safe Harbor Statement
This press release includes forward-looking statements, which are statements other than statements of historical facts, and statements in the future tense. These statements include, but are not limited to, statements regarding our future performance, including expected financial results for the first quarter and full year of 2022, long-term financial targets for full year of 2025, and our continuous ability to achieve positive Adjusted EBITDA. Forward-looking statements are based upon various estimates and assumptions, as well as information known to us as of the date of this press release, and are subject to risks and uncertainties, including but not limited to: general economic conditions (including inflation and interest rates), the health of the U.S. real estate industry, and risks generally incident to the ownership of residential and commercial real estate, including seasonal and cyclical trends; our ability to continuously innovate, improve and expand our platform; our ability to attract new agents and retain current agents or increase agents’ utilization of our platform; our ability to expand our brokerage and adjacent services businesses; our ability to offer additional adjacent services; our ability to achieve expected benefits from our mortgage business, Ensure; our rapid growth and rate of growth; our net losses and ability to achieve or sustain profitability in the future; any future impact of the ongoing COVID-19 pandemic on our business; our ability to compete successful in the markets in which we operate; the effect of monetary policies of the federal government and its agencies; any decreases in our gross commission income or the percentage of commissions that we collect; fluctuation of our quarterly results and other operating metrics; our ability to successfully complete acquisitions and integrate target companies; the effect of the claims, lawsuits, government investigations and other proceedings that we are subject to from time to time; our ability to protect our intellectual property rights; and other general market, political, economic, and business conditions. Additionally, these forward-looking statements, particularly our financial outlook and long-term targets, involve risks, uncertainties and assumptions, including those related to the impacts of COVID-19 and inflationary pressure on our clients’ spending decisions. Significant variation from the assumptions underlying our forward-looking statements could cause our actual results to vary, and the impact could be significant. Accordingly, actual results could differ materially from those predicted or implied or such uncertainties could cause adverse effects on our results. Reported results should not be considered as an indication of future performance.
Additional risks and uncertainties that could affect our financial results are included under the caption “Risk Factors” in our Regulation A+ filing on Form 1-A qualified with the SEC on October 12, 2021, which is available on the Investor Relations page of our website at https://ir.aare.com/ and on the SEC website at www.sec.gov. Additional information will also be set forth in our Annual Report on Form 1-K for the year ended December 31, 2021 which was filed on April 26th, 2021 with the SEC. All forward-looking statements contained herein are based on information available to us as of the date hereof, and we do not assume any obligation to update these statements as a result of new information or future events. Undue reliance should not be placed on the forward-looking statements in this press release.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared in accordance with GAAP, from time to time, we may present Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin, which are non-GAAP financial measures, in this press release. Our use of non GAAP financial measures has limitations as an analytical tool, and these measures should not be considered in isolation or as a substitute for analysis of financial results as reported under GAAP.AARE uses Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We believe Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin are also helpful to investors, analysts and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical financial periods. Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin have limitations as analytical tools, therefore you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Because of these limitations, you should consider Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin alongside other financial performance measures, including net loss, operating cash flows and our other GAAP results. In evaluating Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments reflected in this press release. Our presentation of Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin should not be construed to imply that our future results will be unaffected by the types of items excluded from the calculation of Adjusted EBITDA, adjusted EBITDA margin and Free Cash Flow margin. Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin are not presented in accordance with GAAP and the use of these terms varies from others in our industry. Non-GAAP financial measures were not used in this report.
Reconciliations, if any, of these non-GAAP measures have been provided in the financial statement tables included in this press release and investors are encouraged to review these reconciliations.
About AARE
Founded in 2004, AARE is a nationwide real estate brokerage firm licensed and operating in 24 states. The agency provides a variety of real estate services including residential, commercial, property management, syndication, financing, andbusiness opportunities. AARE developed GENEROUS CAPITALISM®, an innovative business model that promotes the importance of corporate social responsibility through generous business practices. This model sets precedent for public corporations by making charitable contributions from top-line gross profits to positively impact local communities and global initiatives.
For more information, please visit www.AARE.com.
Investor Contact
John Windscheffel
john@aare.org
Media Contact
David Malme
david@aare.org
ANDREW ARROYO REAL ESTATE, INC. | |||||||||
| BALANCE SHEETS | |||||||||
| December 31, 2021 and 2020 (audited) | |||||||||
| 2021 | 2020 | ||||||||
| ASSETS | |||||||||
| Current Assets | |||||||||
| Cash and Cash Equivalents | $ | 3,655 | $ | 38,701 | |||||
| Other Current Assets | |||||||||
| Other Current Assets | $ | 314,179 | $ | 285,151 | |||||
| Total Current Assets | $ | 317,833 | $ | 323,852 | |||||
| Property and equipment, net | $ | 68,342 | $ | 69,422 | |||||
| Other Assets | |||||||||
| Total Other Assets | $ | 123,625 | $ | – | |||||
| TOTAL ASSETS | $ | 509,801 | $ | 393,274 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| Current Liabilities | |||||||||
| Accounts Payable | $ | 19,050 | – | ||||||
| Charge Cards | $ | 84,793 | $ | 83,415 | |||||
| Line of Credit | $ | 55,408 | $ | 55,200 | |||||
| Current Portion of Long Term Debt | $ | 11,737 | $ | 10,007 | |||||
| Other Current Liabilities | $ | 280,670 | $ | 252,542 | |||||
| Total Current Liabilities | $ | 451,658 | $ | 401,164 | |||||
| Long Term Liabilities | |||||||||
| Notes Payable | $ | 172,988 | $ | 244,290 | |||||
| Total Liabilities | $ | 624,646 | $ | 645,454 | |||||
| Equity | |||||||||
| Common Stock, $.001 par value 25,000,000 shares authorized, 3,000,000 issued and outstanding; | $ | 1,000 | $ | 1,000 | |||||
| Preferred Stock, ($.001 par value; 3,000,000 shares authorized, no shares issued and outstanding as ofDecember 31, 2021 and December 31, 2020). | |||||||||
| Series A Convertible Preferred Stock, ($.001 par value; 2,000,000 shares authorized, and outstandingas of December 31, 2021 and December 31, 2020) | |||||||||
| Additional paid-In capital | $ | 583,514 | $ | 482,590 | |||||
| Shareholder Contribution/(Distribution) | $ | (66,220 | ) | $ | (119,364 | ) | |||
| Retained Earnings/(Deficit) | $ | (633,139 | ) | $ | (616,406 | ) | |||
| Total stockholders’ equity | $ | (114,845 | ) | $ | (252,180 | ) | |||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 509,801 | $ | 393,274 | |||||
ANDREW ARROYO REAL ESTATE, INC. |
| STATEMENT OF OPERATIONS |
| Years Ended December 31, 2021 and 2020 (audited) |
| 2021 | 2020 | ||||||||
| Income from Operations | $ | 9,119,970 | $ | 7,354,474 | |||||
| Cost of Sales: | |||||||||
| Charitable Contributions | $ | 60,847 | $ | 218,193 | |||||
| Coaching Fees | $ | 8,569 | $ | 11,238 | |||||
| Salaries & Wages | $ | 60,983 | $ | 43,800 | |||||
| Cost of Sales – Agents | $ | 6,896,003 | $ | 5,448,399 | |||||
| Cost of Sales – TC | $ | 208,175 | $ | 201,369 | |||||
| Cost of Sales- Material/Supply | $ | 54,306 | $ | 74,310 | |||||
| Property Management Fees Paid | $ | 144,142 | $ | 100,412 | |||||
| Recruiting Bonuses | $ | – | $ | 1,500 | |||||
| Referral Fees | $ | 281,767 | $ | 238,425 | |||||
| Staging & Moving Operations | $ | 26,023 | $ | 66,381 | |||||
| Total Cost of Sales | $ | 7,740,814 | $ | 6,404,027 | |||||
| Gross Profit | $ | 1,379,155 | $ | 950,447 | |||||
| General and administrative expenses | $ | 1,394,193 | $ | 904,133 | |||||
| Profit from Operations | $ | (15,038 | ) | $ | 46,314 | ||||
| Other Income/(Expense) | $ | (31,740 | ) | $ | (24,515 | ) | |||
| Profit /(Loss) before income tax benefit | $ | (46,778 | ) | $ | 21,799 | ||||
| Income Tax Provision | $ | 1,847 | $ | 800 | |||||
| Net Profit | $ | (48,625 | ) | $ | 20,999 | ||||
ANDREW ARROYO REAL ESTATE, INC. |
| STATEMENT OF STOCKHOLDERS’ EQUITY |
| Years Ended December 31, 2021 and 2020 (audited) |
| COMMON STOCK | PAID IN CAPITAL | RETAINED EARNINGS | TOTAL | |||||||||||||||||||||||
| Balance – December 31, 2019 | $ | 1,000 | $ | 482,590 | $ | (637,405 | ) | $ | (153,815 | ) | ||||||||||||||||
| Net Income / (Loss) | $ | – | $ | – | $ | 20,999 | $ | 20,999 | ||||||||||||||||||
| Stockholder Contributions / (Distributions) | $ | – | $ | – | $ | (119,364 | ) | $ | (119,364 | ) | ||||||||||||||||
| Balance – December 31, 2020 | $ | 1,000 | $ | 482,590 | $ | (735,770 | ) | $ | (252,180 | ) | ||||||||||||||||
| Net Income / (Loss) | $ | – | $ | 100,924 | $ | (114,845 | ) | $ | (13,921 | ) | ||||||||||||||||
| Stockholder Contributions / (Distributions) | $ | – | $ | (583,514 | ) | $ | 735,770 | $ | 151,256 | |||||||||||||||||
| Balance – December 31, 2021 | $ | 0 | $ | 0 | $ | (114,845 | ) | $ | (114,845 | ) | ||||||||||||||||
ANDREW ARROYO REAL ESTATE, INC. |
| Statement of Cash Flows |
| Years Ended December 31, 2021 and 2020 (audited) |
| 2021 | 2020 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
| Net Income (Loss) | (48,625 | ) | 20,999 | |||||||
| Adjustments to reconcile net Income to net cash flows | ||||||||||
| provided by operating activities: | ||||||||||
| Deferred Income Taxes | 3,582 | |||||||||
| Depreciation & Amortization | 26,052 | 3,539 | ||||||||
| Changes in assets and liabilities | ||||||||||
| Changes in Other Receivables | – | – | ||||||||
| Changes in prepaid expenses & other | (29,028 | ) | (175,893 | ) | ||||||
| Changes in accounts payable | 19,050 | – | ||||||||
| Changes in Other Payables | 33,470 | 98,904 | ||||||||
| Income Taxes Payable | – | – | ||||||||
| Changes in accrued expenses | (55 | ) | 2,817 | |||||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 4,446 | (49,634 | ) | |||||||
| CASH FLOWS PROVIDED BY (USED FOR) INVESTING ACTIVITIES: | ||||||||||
| Net Purchases of property and equipment | (25,022 | ) | (47,014 | ) | ||||||
| Net Purchases of goodwill | (127,157 | ) | – | |||||||
| Net cash flows provided by (used in) Investing activities: | (152,179 | ) | (47,014 | ) | ||||||
| CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES: | ||||||||||
| Net proceeds (repayments) on borrowings | (73,481 | ) | 238,641 | |||||||
| Changes in Line of Credit | 208 | (5,340 | ) | |||||||
| Dividend Distribution | 66,220 | (119,364 | ) | |||||||
| Loan from Shareholder | – | – | ||||||||
| Proceeds (re-purchase) for Equity Investment | 119,740 | – | ||||||||
| NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: | 112,637 | 113,937 | ||||||||
| Net Increase (Decrease) in cash and cash equivalents | (35,046 | ) | 17,289 | |||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 38,701 | 21,412 | ||||||||
| CASH AND CASH EQUIVALENTS END OF YEAR | $ | 3,655 | $ | 38,701 | ||||||
ANDREW ARROYO REAL ESTATE, INC. |
| SCHEDULE |
| STATEMENT OF GENEROUS CAPITALISM |
| Years Ended December 31, 2021 and 2020 (audited) |
| 2021 | 2020 | ||||||||||
| Income from Operations | $ | 9,119,969 | $ | 7,354,474 | |||||||
| Cost of Sales: | |||||||||||
| Coaching Fees | $ | 8,569 | $ | 11,238 | |||||||
| Cost of Sales – Salaries & Wages | $ | 60,983 | $ | 43,800 | |||||||
| Cost of Sales– Agents | $ | 6,896,003 | $ | 5,448,399 | |||||||
| Cost of Sales– Transaction Coordinators | $ | 208,175 | $ | 201,369 | |||||||
| Cost of Sales– Material/Supply | $ | 54,305 | $ | 74,310 | |||||||
| Property Management Fees Paid | $ | 144,142 | $ | 100,412 | |||||||
| Recruiting Bonuses | $ | 0 | $ | 1,500 | |||||||
| Referral Fees | $ | 281,767 | $ | 238,425 | |||||||
| Staging & Moving Operations | $ | 26,023 | $ | 66,381 | |||||||
| Total Cost of Sales | $ | 7,679,968 | $ | 6,185,834 | |||||||
| Gross Profit | $ | 1,440,002 | $ | 1,168,640 | |||||||
| Generous Capitalism – Charitable Contributions | $ | 60,847 | $ | 218,193 | |||||||
| General and administrative expenses | $ | 1,394,193 | $ | 904,133 | |||||||
| Profit from Operations | $ | (15,038 | ) | $ | 46,314 | ||||||
| Other Income/(Expense) | $ | (31,740 | ) | $ | (24,515 | ) | |||||
| Profit /(Loss) before income tax benefit | $ | (46,778 | ) | $ | 21,799 | ||||||
| Income Tax Provision | $ | 1,847 | $ | 800 | |||||||
| Net Profit | $ | (48,625 | ) | $ | 20,999 | ||||||
