10q10k10q10k.net

What changed in Hour Loop, Inc's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Hour Loop, Inc's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+280 added−288 removedSource: 10-K (2026-03-24) vs 10-K (2025-03-27)

Top changes in Hour Loop, Inc's 2025 10-K

280 paragraphs added · 288 removed · 234 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

60 edited+24 added−18 removed37 unchanged
Biggest changeStrength of Barriers to Entry Higher Capital, Low Margin: Selling online is generally low margin, but it requires high capital investment in order to purchase goods and run advertising. Product Differentiation: Our proprietary software allows us to manage a huge number of SKUs. This allows us to participate in profitable long-tail products in addition to well-known popular ones.
Biggest changeHowever, private labels have much higher risk when experiencing stagnant or declining sales as they would have lower capability to find sales replacements that are already established. 8 Strength of Barriers to Entry Higher Capital, Lower Margin: Selling online is generally low margin, but it requires a high capital investment in order to purchase goods and run advertising.
And in fact, it makes a huge difference in profitability to both Amazon and the vendor when reacting to the competitive pricing changes. Apart from the weaknesses of business relationships, we believe Amazon also has disadvantages in the niche marketplaces, where product offerings are narrower and more personalized.
And in fact, it makes a huge difference in profitability to both Amazon and the vendor when reacting to the competitive pricing changes. Apart from the weaknesses of business relationships, we believe Amazon also has disadvantages in niche marketplaces, where product offerings are narrower and more personalized.
Through advanced software, we can identify product gaps and keep them in stock all year round. With respect to our advertising strategy, we advertise those products that we estimate will have greater demand based on our experience. This lets us allocate our advertising budget in a fashion that delivers positive value. We advertise our products on Amazon.
Through advanced software, we can identify product gaps and keep them in stock all year round. With respect to our advertising strategy, we advertise those products that we estimate will have greater demand based on our experience. This lets us allocate our advertising budget in a fashion that delivers positive value.
Amazon limits certain items’ restock quantities based on recent sales activity, and this affects the in-stock rate of popular items that needs a greater volume. 8 Weaknesses of Sold by Amazon As Amazon focuses on sales more than relationships with vendors, they do not follow vendors’ MAP strictly.
Amazon limits certain items’ restock quantities based on recent sales activity, and this affects the in-stock rate of popular items that needs a greater volume. Weaknesses of Sold by Amazon As Amazon focuses on sales more than relationships with vendors, they do not follow vendors’ MAP strictly.
Other than the training material, we assign mentors to evaluate and monitor trainees’ performance at each stage of the training program. 6 Task Generalization By generalizing each task with a standard process, we are able to shift assignments at regular intervals in order to find the most suitable employee for each specific task.
Other than the training material, we assign mentors to evaluate and monitor trainees’ performance at each stage of the training program. Task Generalization By generalizing each task with a standard process, we are able to shift assignments at regular intervals in order to find the most suitable employee for each specific task.
Target Market Size Total Addressable Market As an e-commerce company retailing in the U.S. market, our total addressable market covers all U.S. residents with Internet access, which segmentally includes repeat customers and new customers to online shopping every year. Growth of E-commerce vs. Total Retail Sales According to U.S.
Target Market Size Total Addressable Market As an e-commerce company retailing in the U.S. market, our total addressable market covers all U.S. residents with Internet access, which segmentally includes repeat customers and new customers to online shopping every year. Growth of E-commerce vs. Total Retail Sales According to U.S. Department of Commerce (U.S.
NE, #200, Redmond, WA 98052-7615, where we rent a virtual office from an unaffiliated third party under a virtual office/meeting room agreement. This agreement provides for daily telephone answering, messaging and fax services, and paid access to conference rooms on an as-needed basis. The virtual office arrangement expires on August 31, 2025.
NE, #200, Redmond, WA 98052-7615, where we rent a virtual office from an unaffiliated third party under a virtual office/meeting room agreement. This agreement provides for daily telephone answering, messaging and fax services, and paid access to conference rooms on an as-needed basis. The virtual office arrangement expires on August 31, 2026.
The advantages of selling via a wholesale model: ● Purchase lower unit quantities with wholesale orders than private label products. ● Selling wholesale is less time intensive and easier to scale than sourcing products via retail arbitrage. ● More brands will want to work with us because we can provide broader Amazon presence.
The advantages of selling via a wholesale model include the following: ● Purchase lower unit quantities with wholesale orders than private label products. ● Selling wholesale is less time intensive and easier to scale than sourcing products via retail arbitrage. ● More brands will want to work with us because we can provide broader Amazon presence.
Our relationship with Walmart is also similar. We pay Walmart fees for allowing us to sell our merchandise on their platform. As stated above, to date, we have generated only a negligible amount of revenues as a third-party seller on www.walmart.com .
Our relationship with Walmart is also similar. We pay Walmart fees for allowing us to sell our merchandise on their platform. As stated above, to date, we have generated only a negligible amount of revenues as a third-party seller on Walmart.
We established product diversification by managing wide range of SKUs and continually expand our product categories. Our business strategy allows us to mitigate risk and generate significant profit by selling low volumes items diversified across a large variety of products.
We established product diversification by managing a wide range of SKUs and continually expanding our product categories. Our business strategy allows us to mitigate risk and generate significant profit by selling low volumes items diversified across a large variety of products.
We believe that these facilities are adequate for our current and near-term future needs. 12
We believe that these facilities are adequate for our current and near-term future needs.
To date, we have generated practically all of our revenue as a third-party seller on www.amazon.com and only a negligible amount of revenue from our operations on our website at www.hourloop.com and as a third-party seller on other marketplaces. We manage more than 100,000 stock-keeping units (“SKUs”). Product categories include home/garden décor, toys, kitchenware, apparels, and electronics.
To date, we have generated practically all of our revenue as a third-party seller on Amazon and only a negligible amount of revenue from our operations on our website at www.hourloop.com and as a third-party seller on Walmart. We manage more than 100,000 stock-keeping units (“SKUs”). Product categories include home/garden décor, toys, kitchenware, apparel, and electronics.
Amazon, according to Marketplace Pulse, highlighting its continued growth, industry leadership, and outstanding sales performance. Automation We developed a proprietary software that is tailor made to all our operational needs. This includes managing order review process, shipment management, inventory management, accounting, and complete end-to-end third-party integrations. This allows us to scale, reduce cost, and improve quality.
Amazon sellers, highlighting its continued growth, industry leadership, and outstanding sales performance. Automation We developed proprietary software that is tailor-made to all our operational needs. This includes managing order review process, shipment management, inventory management, accounting, and complete end-to-end third-party integrations. This allows us to scale, reduce cost, and improve quality.
Name Age Position Sam Lai 43 Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer Sau Kuen (Maggie) Yu 48 Senior Vice President and Director Sam Lai. Mr. Lai has served as our Chief Executive Officer and been a member of our Board of Directors since June 2013 and our Chairman of Board since April 2021.
Name Age Position Sam Lai 44 Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer Sau Kuen (Maggie) Yu 49 Senior Vice President and Director Sam Lai. Mr. Lai has served as our Chief Executive Officer and been a member of our Board of Directors since June 2013 and our Chairman of Board since April 2021.
We allocate our advertising dollars prudently. This is accomplished by advertising items that deliver the most return for our advertising spending. We monitor the items being advertised by our competitors. On the operations side, we constantly refine our processes based on learnings from historical data.
We advertise our products on Amazon and allocate our advertising dollars prudently. This is accomplished by advertising items that deliver the most return for our advertising spending. We monitor the items being advertised by our competitors. On the operations side, we constantly refine our processes based on learnings from historical data.
In upcoming years, we plan to expand our business by increasing the number of business managers, vendors and SKUs while improving profitability. Business Model There are three main types of business models on Amazon: wholesale, private label and retail arbitrage.
In upcoming years, we plan to expand our business rapidly by increasing the number of business managers, vendors and SKUs. Business Model There are three main types of business models on Amazon: wholesale, private label and retail arbitrage.
Our primary strategy is to bring most of our vendors product selections to the customers. We have advanced software that assists us in identifying product gaps so we can keep such products in stock year-round including the entirety of the last quarter (holiday season) of the calendar year (“Q4”).
Our primary strategy is to bring most of our vendors’ product selections to the customers. We have advanced software that assists us in identifying product gaps so we can keep such products in stock year-round including the entirety of the fourth quarter (holiday season) of the calendar year.
This strategy allows us to stay profitable. 2 Historical Performance Our year end net revenues and net income (loss) from 2013 through 2024 is presented in the table below: Year Net Revenue Year-over- Year % Net Income (Loss) Net Income (Loss) % Year-over -Year % 2013 $ 26,135 - $ 4,682 18 % - 2014 $ 1,102,237 4117 % $ 150,300 14 % 3110 % 2015 $ 2,567,267 133 % $ 228,009 9 % 52 % 2016 $ 7,337,012 186 % $ 77,752 1 % NA 2017 $ 17,487,124 138 % $ (122,176 ) (1 )% (257 )% 2018 $ 24,402,144 40 % $ 657,821 3 % NA 2019 $ 26,564,693 9 % $ (423,073 ) (2 )% (165 )% 2020 $ 38,655,264 46 % $ 3,820,698 10 % NA 2021 $ 62,792,981 62 % $ 4,783,773 8 % 25 % 2022 $ 95,930,091 53 % $ (1,477,623 ) (2 )% (131 )% 2023 $ 132,124,202 38 % $ (2,429,694 ) (2 )% 64 % 2024 $ 138,252,861 5 % $ 657,447 0 % NA In 2024 and 2023, approximately 99% and 99%, respectively, of our revenue was through or with the Amazon sales platform.
Historical Performance Our year end net revenues and net income (loss) from 2013 through 2025 is presented in the table below: Year Net Revenue Year-over- Year % Increase Net Income (Loss) Net Income (Loss) % Year-over -Year % Increase (Decrease) 2013 $ 26,135 - $ 4,682 18 % - 2014 $ 1,102,237 4117 % $ 150,300 14 % 3110 % 2015 $ 2,567,267 133 % $ 228,009 9 % 52 % 2016 $ 7,337,012 186 % $ 77,752 1 % NA 2017 $ 17,487,124 138 % $ (122,176 ) (1 )% (257 )% 2018 $ 24,402,144 40 % $ 657,821 3 % NA 2019 $ 26,564,693 9 % $ (423,073 ) (2 )% (165 )% 2020 $ 38,655,264 46 % $ 3,820,698 10 % NA 2021 $ 62,792,981 62 % $ 4,783,773 8 % 25 % 2022 $ 95,930,091 53 % $ (1,477,623 ) (2 )% (131 )% 2023 $ 132,124,202 38 % $ (2,429,694 ) (2 )% 64 % 2024 $ 138,252,861 5 % $ 657,447 0 % NA 2025 $ 142,440,236 3 % $ 1,704,849 1 % 159 % In 2025 and 2024, approximately 98% and 99%, respectively, of our revenue was through or with the Amazon sales platform.
Profitability Management We have experienced operations managers tracking team performances with key performance indicators. We have departments specializing in logistic costs, advertising, marketing, and product management. We hold monthly process reviews to identify early red flags and look for areas to optimize. Each quarter, we set increasingly difficult bars both to grow gross margin and further reduce expenses.
Profitability Management We have experienced operations managers tracking team performances with key performance indicators. We have departments specializing in logistic costs, advertising, marketing, and product management. We hold monthly process reviews to identify early red flags and look for areas to optimize. Each quarter, we set increasingly difficult bars with the goals of growing gross margin and further reducing expenses.
Our main objectives focus on increasing volume and maximizing profits, which is achieved with a customized auto pricing system we developed internally, in combination with well-trained business managers’ judgment on pricing skills as well as constant monitoring.
Therefore, we must draw a good balance between gross margin and revenue. Our main objectives focus on increasing volume and maximizing profits, which is achieved with a customized auto pricing system we developed internally, in combination with well-trained business managers’ judgment on pricing skills, as well as constant monitoring.
For a seller to be eligible for the Buy Box, they must meet a set of performance-based requirements, including order defect rate, customer shopping experience, time and experience on the Amazon selling platform, and status as a professional seller.
For a seller to be eligible for the Buy Box, they must meet a set of performance-based requirements, including order defect rate, customer shopping experience, time and experience on the Amazon selling platform, and status as a professional seller. 4 Overview of Market & Competition According to Marketplace Pulse (based on U.S.
Competition-Based Pricing Policy: 15% of our products are toys, which are extremely popular and competitive. In this type of environment where volume is high but gross margin is low, our main strategy is to purchase large quantities, so we can increase sales volume and price competitively while maintaining an average return on investment (“ROI”) of at least 15%.
In this type of environment, where volume is high but gross margin is low, our main strategy is to purchase large quantities, so we can increase sales volume and price competitively while maintaining an average return on investment (“ROI”) of at least 15%.
This is less than the U.S. ecommerce growth rate of 2023, during which total sales increased by 7% year-over-year from 2022. 4 Despite the slowdown, total U.S. ecommerce sales in 2024 still marked the highest on record. This is an impressive increase from a decade ago in 2011 when online sales in the U.S. totaled $199.3 billion.
This is less than the U.S. e-commerce growth rate of 2024, during which total sales increased by 6.6% year-over-year from 2023. Despite the slowdown, total U.S. e-commerce sales in 2025 still marked the highest on record. This is an impressive increase from 2011, when online sales in the U.S. totaled $199.3 billion.
Rails allow us to quickly build web pages and integrate both the frontend and the backend. The application runs on Amazon Web Services (“AWS”) and can be easily scaled up to as many hosts as needed. It is accessible from a browser, so there is no need to set up or install anything on the client-side.
The application runs on Amazon Web Services (“AWS”) and can be easily scaled up to as many hosts as needed. It is accessible from a browser, so there is no need to set up or install anything on the client-side.
By the time new entrants have done all that, our system would have continued to mature. This means we would be able to manage more SKUs more profitably with lower costs. 9 Risk of Entry-Potential Entrants Vendor Vertical Integration : A vendor may forward integrate into the e-commerce marketplace in order to directly engage with their online customers.
This means we would be able to manage more SKUs more profitably with lower costs. Risk of Entry-Potential Entrants Vendor Vertical Integration : A vendor may forward integrate into the e-commerce marketplace in order to directly engage with their online customers.
Moreover, business managers are also able to rotate the vendors they manage easily. This allows our organization to effectively and consistently manage a vendor when a key employee who previously managed such vendor is no longer with the company. In addition, the task generalization allows the Company to hire remote teams to further reduce labor costs.
Moreover, business managers are also able to rotate the vendors they manage easily. This allows our organization to effectively and consistently manage a vendor when a key employee who previously managed such vendor is no longer with the company.
A year later, it breached the $200 billion mark for the very first time. From 2011 to 2024, annual U.S. ecommerce sales multiplied by approximately 10 times.
A year later, it breached the $200 billion mark for the very first time. From 2011 to 2025, annual U.S. e-commerce sales multiplied by approximately 7.6 times.
Looking ahead, we anticipate a planned increase to approximately 180 in 2025 to support the growth of our GMS. Our strategic focus is to enhance overall competency without a proportional increase in headcount. 11 Executive Officers Set forth below is certain information regarding our executive officers.
Looking ahead, we anticipate a planned increase to approximately 165 in 2026 to support anticipated future revenue growth. Our strategic focus is to enhance overall competency without a proportional increase in headcount. Executive Officers Set forth below is certain information regarding our executive officers.
On April 7, 2021, Hour Loop converted from a Washington corporation to a Delaware corporation. Competitive Advantage Among the approximately 1.9 million active third-party sellers on Amazon, we believe we have two main competitive advantages: ● First, we have strong operations and sales teams experienced in listing, shipment, advertising, reconciliation and sales.
Competitive Advantage Among the approximately 1.9 million active third-party sellers on Amazon, we believe we have two main competitive advantages: ● First, we have strong operations and sales teams experienced in listing, shipment, advertising, reconciliation and sales.
Potential Substitute Products Posing Credible Threat to Company Products No potential substitute products would pose a credible threat to our company as we have developed a wide product diversification. As a company that focuses on reselling wholesale products, we have the resilience to find substitution of products or brands.
Potential Substitute Products Posing Credible Threat to Company Products We do not believe there are any potential substitute products that would pose a credible threat to us, as we have developed wide product diversification. Since we focus on reselling wholesale products, we have the resilience to find substitution of products or brands.
Lai does not hold, and has not previously held, any directorships in any reporting companies. Sau Kuen (Maggie) Yu. Ms. Yu has served as our Senior Vice President and has been a member of our Board of Directors since June 2013. Ms. Yu graduated with a Bachelor Degree in Computer Science from University of California, San Diego in 2004. Ms.
Lai does not hold, and has not previously held, any directorships in any other reporting companies. 10 Sau Kuen (Maggie) Yu. Ms. Yu has served as our Senior Vice President and has been a member of our Board of Directors since June 2013. Ms.
We do not consider other third-party sellers as key competitors, because none of them represents enough market share to influence sales outcome. The addressable market is incredibly vast; thus, we believe there are plenty of opportunities for everyone. Amazon Vendor Central Amazon Vendor Central allows manufacturers and brand owners to sell directly to Amazon as a first-party seller.
The addressable market is incredibly vast; thus, we believe there are plenty of opportunities for everyone. 7 Amazon Vendor Central Amazon Vendor Central allows manufacturers and brand owners to sell directly to Amazon as a first-party seller.
While we believe that these industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data and we do not make any representation as to the accuracy of the information. Unless the context otherwise requires, “Hour Loop,” “we,” “us,” “our,” or the “Company” refers to Hour Loop, Inc. and its consolidated subsidiaries.
While we believe that these industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data and we do not make any representation as to the accuracy of the information.
The combination of managing the business operations effectively along with allocating our advertising budget to high value items allows us to grow profitably. In cases where the advertising is fierce, we allocate the spending appropriately.
The combination of managing the business operations effectively, along with allocating our advertising budget to high value items, allows us to grow profitably. In cases where advertising is fierce, we allocate spending appropriately. Our strategy for competing with larger competitors is to monitor their pricing and not compete with them when their pricing is low or at a loss.
Growth of Amazon Prime Members Amazon has over 180 million Prime members in the U.S., and we were seeing continuous year-over-year growth over the past years. 5 Operational Advantages As of March 27, 2025, Hour Loop was recognized as one of the top 23 third-party sellers on U.S.
Growth of Amazon Prime Members Amazon has over 180 million Prime members in the U.S., and we were seeing continuous year over year growth over the past years. 5 Operational Advantages As of March 18, 2026, Hour Loop was recognized as number 25 in Marketplace Pulse’s Top Amazon Marketplace Sellers list based on positive reviews received in the last 30 days among U.S.
Affiliated Loans From time to time, the Company receives loans and advances from its stockholders to fund its operations. As of December 31, 2024, the Company had a total of $4,192,995 due to related parties, which included $3,499,418 in stockholder payables and $693,577 accrued for bonuses.
As of December 31, 2025, we had a total of $3,810,418 due to related parties, which included $2,660,418 in stockholder payables and $1,150,000 accrued for bonuses. As of December 31, 2024, we had a total of $4,192,995 due to related parties, which included $3,499,418 in stockholder payables and $693,577 accrued for bonuses.
By using JRuby on Rails, we can make use of the best parts of Java, Ruby, and Rails without paying for their disadvantages. For example, we can use the massive collections of Java library, portability, speed, multi-threading, and maturity, but we do not have to be tied down with verbose code and strict typing.
For example, we can use the massive collections of Java library, portability, speed, multi-threading, and maturity, but we do not have to be tied down with verbose code and strict typing. Rails allow us to quickly build web pages and integrate both the frontend and the backend.
Yu agreed to extend the term of the loan, with the new maturity date of December 31, 2025. As amended, the annual interest rate of the loan is 5.5%. Employees As of December 31, 2024, our headcount stands at 151, signaling a modest reduction compared to 2023. We have intentionally opted for a less aggressive approach in terms of headcount.
As amended, the loan matures on December 31, 2026 and has an annual interest rate of 4.75%. Employees As of December 31, 2025, our headcount stands at 159, signaling a modest increase compared to 2024. We have intentionally opted for a less aggressive approach in terms of headcount.
While stockholder payables are generally non-interest bearing and payable on demand, the Company and stockholders entered into loan agreements for loans with terms over one year. December 2020 Loan On December 30, 2020 and later modified on September 16, 2021, the Company, Mr. Lai and Ms.
While stockholder payables are generally non-interest bearing and payable on demand, we and our stockholders entered into loan agreements for loans with terms over one year. July 2021 Loan On July 27, 2021, the Company, Mr. Lai and Ms. Yu entered into a loan agreement with a principal amount of $4,170,418. The loan is subordinated.
Even if a new entrant has a team of the best software engineers in the world, it will still take them many years to refine their system. There is a myriad of intricacies as to the effectiveness of a system. Even if the new entrants have the system built, it will still take them years to collect historical sales data.
There is a myriad of intricacies as to the effectiveness of a system. Even if the new entrants have the system built, it will still take them years to collect historical sales data. By the time new entrants have done all that, our system would have continued to mature.
Multicultural Management We have a multicultural management team that is linguistically and culturally diverse in order to make judgments from different perspectives. Our remote teams in Taiwan and the Philippines provide diverse professional insights on specific tasks. Technological advantages Our software architecture was designed from the ground up to be scalable, secured, and easily extensible.
In addition, the task generalization allows us to hire remote teams to further reduce labor costs. 6 Multicultural Management We have a multicultural management team that is linguistically and culturally diverse in order to make judgments from different perspectives. Our remote teams in Taiwan and the Philippines provide diverse professional insights on specific tasks.
Apart from using the FBA program, we also use FedEx, Amazon partnered carrier, Amazon Freight, and Amazon Global Logistics to reduce expense.
Apart from using the FBA program, we also use FedEx, Amazon partnered carrier, Amazon Freight, and Amazon Global Logistics to reduce expense. The competitive shipping rates we secured provide us a cost-efficient way to deliver shipments from overseas and domestic to Amazon warehouse.
Yu does not hold, and has not previously held, any directorships in any reporting companies. Mr. Lai and Ms. Yu are married. Legal Proceedings From time to time, we are involved in various claims and legal actions arising in the ordinary course of business.
Legal Proceedings From time to time, we are involved in various claims and legal actions arising in the ordinary course of business.
Pricing Strategy and Policies In an ideal world, we would like to price our products at key stone pricing or double wholesale cost. However, we operate in a hyper competitive environment and we must stay competitive. Therefore, we must draw a good balance between gross margin and revenue.
As noted in our consolidated financial statements, as of December 31, 2025, we had retained earnings of $1,109,674. 3 Pricing Strategy and Policies In an ideal world, we would like to price our products at key stone pricing or double wholesale cost. However, we operate in a hyper competitive environment and we must stay competitive.
Our strategy for competing with larger competitors is to monitor their pricing and not compete with them when their pricing is low or at a loss. Competitors sell at low prices or at a loss due to a variety of reasons, including, but not limited to, their desire to liquidate inventory or achieve short-term increase in revenue.
Competitors sell at low prices or at a loss due to a variety of reasons, including, but not limited to, their desire to liquidate inventory or achieve a short-term increase in revenue. During these times, we avoid matching their prices. This strategy allows us to stay profitable.
Furthermore, business managers consider different marketing segments such as costs and competitions in order to develop effective pricing strategies and policies. The following subsections provide more insight into various pricing strategies we have developed over the years. Our internal training mainly focuses on competition-based pricing policy and value-based pricing policy. 1.
The following subsections provide more insight into various pricing strategies we have developed over the years. Our internal training mainly focuses on competition-based pricing policy and value-based pricing policy. 1. Competition-Based Pricing Policy: 15% of our products are toys, which are extremely popular and competitive.
Our proprietary repricing tool analyze sales trend, projected sales, inventory age, inventory cost, potential profits, Fulfillment by Amazon (“FBA”) fees, competing offers, and seasonality and determines an urgency level, then depending on the level of urgency, it automatically adjusts prices accordingly. 3 Business managers, after establishing the bases for prices, begin to develop pricing strategies for each product while taking the current market conditions, company goals (e.g., increasing short-term or long-term profits) and strategies into consideration.
Our proprietary repricing tool analyzes sales trends, projected sales, inventory age, inventory cost, potential profits, Fulfillment by Amazon (“FBA”) fees, competing offers, and seasonality and determines an urgency level, then depending on the level of urgency, it automatically adjusts prices accordingly.
We also work with a labor outsourcing partner located in the Philippines that provides virtual assistants to help us with data entry and repetitive work, which is a very cost-effective way to do a lot of grunt work. Key Competitors by Market Size/Share Our key competitor is Amazon Retail.
In addition, we work with a labor outsourcing partner in the Philippines that supplies virtual assistants to support data entry and other routine, repetitive operational tasks in a highly cost-effective manner. Key Competitors by Market Size/Share Our key competitor is Amazon Retail. Amazon Retail frequently buys from the same brands we sell and sells them at a loss.
The terms of this service provide for a base payment that is charged based on our usage. Flywheel, our wholly owned subsidiary, had four office leases in Taiwan in 2024.
The terms of this service provide for a base payment that is charged based on our usage. Flywheel, our wholly owned subsidiary, had two office leases in Taiwan in 2025. The respective lease terms are June 10, 2025 to July 9, 2027, and December 1, 2025 to November 30, 2028 and the total contract amounts are $127,226, and $79,971 respectively.
Amazon Retail frequently buys from the same brands we sell and sells them at a loss. Amazon Retail offers can be identified by the “Sold by Amazon” tag on Amazon’s site, and they are formed by two components: (i) Amazon Vendor Central, and (ii) the Sold by Amazon (“SBA”) program.
Amazon Retail offers can be identified by the “Sold by Amazon” tag on Amazon’s site, and they are formed by two components: (i) Amazon Vendor Central, and (ii) the Sold by Amazon (“SBA”) program. We do not consider other third-party sellers as key competitors, because none of them represents enough market share to influence sales outcome.
The competitive shipping rates we secured provide us a cost-efficient way to deliver shipments from overseas and domestic to Amazon warehouse. 7 Efficiently Managed Operations We have a good management structure within the firm and a data-driven system that allows employees to manage tasks quickly and cost-efficiently.
Efficiently Managed Operations We have a good management structure within the firm and a data-driven system that allows employees to manage tasks quickly and cost-efficiently. Reduced Labor Costs We leverage third-party logistic companies to prepare and forward our shipments to Amazon, which reduces our logistic operation labor costs.
In contrast, private label sellers manage small number of SKUs that have large volumes in return with higher profit per unit. However, private labels have much higher risk when experiencing stagnant or declining sales as they would have lower capability to find sales replacements that are already established.
In contrast, private label sellers manage a small number of SKUs that have large volumes in return with higher profit per unit.
Department of Commerce data, e-commerce’s share of total retail sales has steadily increased, peaking at 16.4% in the second quarter of 2020. By the fourth quarter of 2024, it accounted for 16.4%, indicating a sustained and significant presence in the retail sector. Total U.S. retail sales increased 2.5% to $7.42 trillion in 2024 from $7.24 trillion in 2023.
Census Bureau) data, e-commerce’s share of total U.S. retail sales has steadily increased over time, peaking at 16.4% in the second quarter of 2020. By the fourth quarter of 2024, it accounted for 16.4% in total retail sales, and this share remained essentially unchanged into 2025 based on the most recent quarterly data.
On November 25, 2024, the term of the loan was revised such that maturity date was extended to May 23, 2025. The line of credit bears interest at a rate of 3.33% per annum. As of December 31, 2024 and 2023, the outstanding balance under the Taishin line of credit was $610,967 and $652,422, respectively.
As amended, the line of credit matures on May 18, 2026 and bears interest at a rate of 3.42% per annum. As of December 31, 2025 and 2024, the outstanding balance under the Taishin line of credit was $637,348 and $610,967, respectively. Affiliated Loans From time to time, we receive loans and advances from our stockholders to fund our operations.
The turnover rate for long-tail products is slow, so newcomers are not likely to enter. It also requires a sophisticated system to manage. Furthermore, vendor relationships do not happen overnight. Advanced System : We have already developed a highly sophisticated system which has been refined over time to become highly effective.
Product Differentiation: Our proprietary software allows us to manage a large number of SKUs. This allows us to participate in profitable long-tail products in addition to well-known popular ones. The turnover rate for long-tail products is slow, so newcomers are not likely to enter. It also requires a sophisticated system to manage. Furthermore, vendor relationships do not happen overnight.
Overview Our Business We are an online retailer engaged in e-commerce retailing in the U.S. market. We have operated as a third-party seller on www.amazon.com since 2013. We have also sold merchandise on our website at www.hourloop.com since 2013. We expanded our operations to other marketplaces such as Walmart, eBay and Etsy in recent years.
We have operated as a third-party seller on www.amazon.com (“Amazon”) since 2013, and on www.walmart.com (“Walmart”) since 2020. We have also sold merchandise on our website at www.hourloop.com since 2013.
Formation The Company was founded in 2013 by Sam Lai, our Chairman of the Board, Chief Executive Officer, interim Chief Financial Officer and significant stockholder, and Maggie Yu, our Senior Vice President, a member of our Board of Directors and a significant stockholder. With their vision, leadership, and software development skills, the Company grew rapidly.
The challenges of selling via a wholesale model include the following: ● Fierce competition on listing for Buy Box on Amazon (as described below). ● Developing and maintaining relationships with brand manufacturers. 1 Formation We were founded in 2013 by Sam Lai, our Chairman of the Board, Chief Executive Officer, interim Chief Financial Officer and significant stockholder, and Maggie Yu, our Senior Vice President, a member of our Board of Directors and a significant stockholder.
From 2013 to 2024, net sales grew from $0 to $138,252,861. We were originally incorporated under the laws of the State of Washington on January 13, 2015. In 2019, we formed a wholly owned subsidiary, Flywheel Consulting Ltd. (“Flywheel”), to provide business operating consulting services, exclusively to Hour Loop.
In 2019, we formed Flywheel, a wholly owned subsidiary, to provide business operating consulting services exclusively to Hour Loop. On April 7, 2021, Hour Loop converted from a Washington corporation to a Delaware corporation.
Consumers spent $1,192.29 billion online with U.S. merchants in 2024, which is around 16.07% of total U.S. retail sales for the year compared to 15.45% in 2023. Amazon accounted for approximately 40% of all e-commerce in the United States and that makes Amazon the biggest ecommerce giant currently in the market.
Total U.S. retail sales increased 3.5% to approximately $7.68 trillion in 2025, from $7.42 trillion in 2024. Consumers spent $1,233.7 billion online with U.S. merchants in 2025, which represents approximately 16.4% of total U.S. retail sales for the year, compared to 16.07% in 2024.
U.S. ecommerce sales increased 6.6% to $1,192.29 billion in 2024 from $1,118.68 billion in 2023. Amazon accounted for approximately 40% of all e-commerce in the United States and that makes Amazon the biggest ecommerce giant currently in the market.
Amazon is estimated to account for approximately 40.4% of all U.S. e-commerce sales, according to third-party industry analyses, making it the largest e-commerce retailer currently in the market. In 2025, total U.S. e-commerce sales reached $1,233.7 billion, representing a 3.4% year-over-year increase from $1,192.6 billion in 2024.
Removed
The challenges of selling via a wholesale model: ● Fierce competition on listing for Buy Box on amazon.com (as described below). ● Developing and maintaining relationships with brand manufacturers. 1 Market Description/Opportunities According to Marketplace Pulse, total U.S. retail sales increased 2.5% to $7.42 trillion in 2024 from $7.24 trillion in 2023.
Added
Unless the context otherwise requires, “Hour Loop,” “we,” “us,” “our,” or the “Company” refers to Hour Loop, Inc., together with Flywheel Consulting Limited, its wholly owned subsidiary (“Flywheel”). Overview Our Business We are an online retailer engaged in e-commerce retailing in the U.S. market.
Removed
During these times, we avoid matching their prices.
Added
Mr. Lai and Ms. Yu are husband and wife. With their vision, leadership, and software development skills, the Company grew rapidly. From 2013 to 2025, net sales grew from $0 to $142,440,236. We were originally incorporated under the laws of the State of Washington on January 13, 2015.
Removed
Overview of Market & Competition According to Marketplace Pulse, total U.S. retail sales increased 2.5% to $7.42 trillion in 2024 from $7.24 trillion in 2023. U.S. ecommerce sales increased 6.6% to $1,192.29 billion in 2024 from $1,118.68 billion in 2023. In 2024, total U.S. ecommerce sales reached 1,192.29 billion, representing a 6.6% year-over-year increase from $1,118.68 billion in 2023.
Added
Tariff Impact and Response Measures In the first quarter ended March 31, 2025, the U.S. presidential administration’s announcement of additional tariff increases—particularly on China-origin goods—introduced elevated volatility and uncertainty across global supply chains.
Removed
Reduced Labor Costs We leverage third-party logistic companies to forward or prep our shipments to Amazon, which reduces our logistic operation labor costs.
Added
In response, the Company undertook a strategic reassessment of its procurement and inventory management policies, anticipating both rising import costs and the risk of inventory shortages driven by accelerated market stockpiling. 2 Throughout 2025, the Company navigated a volatile trade environment characterized by expansive tariffs on China-origin goods.
Removed
Improving Sales of Popular Items and Securing the Inventories Without Paying Higher Storage Fees By Engaging the Services of Third Party Warehouses As a retailer, our success is heavily influenced by the inventory control of our suppliers (vendors).
Added
To mitigate these impacts, we successfully front-loaded approximately 3-6 months of sales-related inventory and adjusted our international commercial terms (“Incoterms”) to ensure supply chain stability. Although the Incoterms adjustment resulted in higher overall costs, it ensured continuity and stability across our supply chain.
Removed
However, many of our suppliers are having difficulties maintaining their stock level due to various reasons, such as the shortage of shipping containers, lack of labor, or disruption in manufacturing. The situation exacerbates during the pandemic and in peak season.
Added
In parallel, the Company initially suspended all containerized exports for shipments originating from China when the new tariff policy was originally enacted, as we were unwilling to incur significantly higher import costs.
Removed
In order to secure the inventories, we start to order large quantities of popular items or buying them out to store in the Amazon fulfillment center. However, the monthly storage fee of the Amazon fulfillment center in peak season (Q4) is 3.5 times higher than normal season, which puts pressure on our profits.
Added
Following the implementation of a 90-day tariff relief window under a temporary U.S.-China trade agreement, we promptly resumed exports and front-loaded the remainder of our 2025 sales-related inventory within that window. This approach allowed us to avoid elevated duties, while reducing exposure to future trade uncertainties in a still-fluid regulatory environment.
Removed
To maintain the balance of inventory level and margins, we are currently contracting the warehousing services of third-party warehouses, including Rahl Distribution, Inc., Singh Logistics Inc, Founder, Carolina Prep & Ship, and Shenzhen Linkhub Co., Ltd to support our overall stock planning process.
Added
To offset increased input costs and reduce the risk of stockouts, we implemented measured price increases on select finished goods inventory. These actions were designed to support margin stability and ensure product availability in a highly dynamic trade environment. These proactive measures successfully enabled the Company to secure adequate inventory to meet its 2025 sales projection.
Removed
By doing this, we can improve sales by preventing popular items from going out of stock, since we had secured adequate inventories ahead of time. Furthermore, we can also avoid paying higher Amazon storage fees in Q4. Growth Objectives In 2024, the U.S. e-commerce market continued its upward trajectory.
Added
However, the regulatory landscape shifted fundamentally in the first quarter of 2026. On February 20, 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the imposition of tariffs, effectively invalidating the 2025 reciprocal tariff regime.
Removed
In addition to our sales-driven initiatives, we have been optimizing our procurement strategy by transitioning from preordering to a restocking model, implementing stringent inventory controls to maintain optimal levels and mitigate overstock risks. By adopting a more selective approach to product sourcing, we aim to sustain profitability and ensure robust cash flow.
Added
While the Company is evaluating the potential for retroactive refunds of duties paid in 2025, the U.S. administration immediately transitioned to a new tariff framework. Effective February 24, 2026, U.S.

… 22 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

83 edited+16 added−14 removed124 unchanged
Biggest changeWe may not be able to maintain and enhance our product listings if we receive unfavorable customer complaints, negative publicity or otherwise fail to live up to consumers’ expectations, which could materially adversely affect our business, results of operations and growth prospects; ● We experience significant fluctuations in our operating results and growth rate; ● We face risks related to successfully optimizing and operating our fulfillment and customer service operations; ● The variability in our retail business places increased strain on our operations; ● Continued increases in Amazon Marketplace fulfillment and storage fees could have an adverse impact on our profit margin and results of operations; ● A change in one or more of the Company’s vendors’ policies or the Company’s relationship with those vendors could adversely affect the Company’s results of operations; ● Our revenue is dependent upon maintaining our relationship with Amazon and failure to do so, or any restrictions on our ability to offer products on the Amazon Marketplace, could have an adverse impact on our business, financial condition and results of operations; ● Loss of key personnel or the inability to attract, train and retain qualified employees could adversely affect the Company’s results of operations; ● We may face difficulties in meeting our labor needs to effectively operate our business; ● Our business could be adversely affected by increased labor costs, including costs related to an increase in minimum wage and health care; ● Breach of data security could harm our business and standing with our customers; ● Our hardware and software systems are vulnerable to damage, theft or intrusion that could harm our business; ● Our inability or failure to protect our intellectual property rights, or any claimed infringement by us of third-party intellectual rights, could have a negative impact on our operating results; ● The Company’s business is influenced by general economic conditions; ● Disruption of global capital and credit markets may have a material adverse effect on the Company’s liquidity and capital resources; ● The Company is dependent upon access to capital for its liquidity needs; ● We may complete a future significant strategic transaction that may not achieve intended results or could increase the number of our outstanding shares or amount of outstanding debt or result in a change of control; 13 ● Historically, we have experienced declines, and we may continue to experience fluctuation in our level of sales and results from operations; ● The ability of the Company to satisfy its liabilities and to continue as a going concern will continue to be dependent on the implementation of several items, the success of which is not certain; ● Parties with whom the Company does business may be subject to insolvency risks or may otherwise become unable or unwilling to perform their obligations to the Company; ● Failure to comply with legal and regulatory requirements could adversely affect the Company’s results of operations; ● Litigation may adversely affect our business, financial condition and results of operations; ● The effects of natural disasters, terrorism, acts of war, and public health issues may adversely affect our business; ● A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, may materially and adversely affect our business; ● The loss of key senior management personnel or the failure to hire and retain highly skilled and other key personnel could negatively affect our business; ● The ability of Sam Lai, our Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer and a significant stockholder, and Maggie Yu, our Senior Vice President, a member of our Board of Directors and a significant stockholder, who are husband and wife, to control our business may limit or eliminate minority stockholders’ ability to influence corporate affairs; ● Government regulation is evolving and unfavorable changes could harm our business; ● We are subject to product liability claims when people or property are harmed by the products we sell; ● We could face prior period sales tax and corporate tax liabilities, penalties and collection obligations; ● There can be no assurance that we will be able to comply with continued listing standards of The Nasdaq Capital Market (“Nasdaq”); ● High state income tax rates could impact our financials negatively; ● The market price of our common stock may be volatile, and you could lose all or part of your investment; and 14 Risks Related to Our Business We face intense competition.
Biggest changeWe may not be able to maintain and enhance our product listings if we receive unfavorable customer complaints, negative publicity or otherwise fail to live up to consumers’ expectations, which could materially adversely affect our business, results of operations and growth prospects; 11 ● Our business and results of operations could be materially and adversely affected by the new 10% global import surcharge and ongoing trade investigations; ● The termination of de minimis treatment for low-value shipments has increased our compliance costs and may disrupt our fulfillment model; ● We may be unable to recover duties paid under invalidated 2025 tariff regimes, and any recovery process may be costly and delayed; ● We experience significant fluctuations in our operating results and growth rate; ● We face risks related to successfully optimizing and operating our fulfillment and customer service operations; ● The variability in our retail business places increased strain on our operations; ● Continued increases in Amazon Marketplace fulfillment and storage fees could have an adverse impact on our profit margin and results of operations; ● A change in one or more of our vendors’ policies or our relationship with those vendors could adversely affect our results of operations; ● Our revenue is dependent upon maintaining our relationship with Amazon and failure to do so, or any restrictions on our ability to offer products on the Amazon Marketplace, could have an adverse impact on our business, financial condition and results of operations; ● Loss of key personnel or the inability to attract, train and retain qualified employees could adversely affect our results of operations; ● We may face difficulties in meeting our labor needs to effectively operate our business; ● Our business could be adversely affected by increased labor costs, including costs related to an increase in minimum wage and health care; ● Breach of data security could harm our business and standing with our customers; ● Our hardware and software systems are vulnerable to damage, theft or intrusion that could harm our business; ● Our inability or failure to protect our intellectual property rights, or any claimed infringement by us of third-party intellectual rights, could have a negative impact on our operating results; ● Our business is influenced by general economic conditions; ● Disruption of global capital and credit markets may have a material adverse effect on our liquidity and capital resources; ● We are dependent upon access to capital for its liquidity needs; ● We may complete a future significant strategic transaction that may not achieve intended results or could increase the number of our outstanding shares or amount of outstanding debt or result in a change of control; ● Historically, we have experienced declines, and we may continue to experience fluctuation in our level of sales and results from operations; ● Our ability to satisfy its liabilities and to continue as a going concern will continue to be dependent on the implementation of several items, the success of which is not certain; ● Parties with whom we do business may be subject to insolvency risks or may otherwise become unable or unwilling to perform their obligations; 12 ● Failure to comply with legal and regulatory requirements could adversely affect our results of operations; ● Litigation may adversely affect our business, financial condition and results of operations; ● The effects of natural disasters, terrorism, acts of war, and public health issues may adversely affect our business; ● A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, may materially and adversely affect our business; ● The loss of key senior management personnel or the failure to hire and retain highly skilled and other key personnel could negatively affect our business; ● The ability of Sam Lai, our Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer and a significant stockholder, and Maggie Yu, our Senior Vice President, a member of our Board of Directors and a significant stockholder, who are husband and wife, to control our business may limit or eliminate minority stockholders’ ability to influence corporate affairs; ● Government regulation is evolving and unfavorable changes could harm our business; ● We are subject to product liability claims when people or property are harmed by the products we sell; ● We could face prior period sales tax and corporate tax liabilities, penalties and collection obligations; ● There can be no assurance that we will be able to comply with continued listing standards of The Nasdaq Capital Market (“Nasdaq”); ● High state income tax rates could impact our financials negatively; and ● The market price of our common stock may be volatile, and you could lose all or part of your investment.
Our sales and operating results will also fluctuate for many other reasons, including due to factors described elsewhere in this section and the following: ● our ability to retain and increase sales to existing customers, attract new customers, and satisfy our customers’ demands; ● our ability to retain and expand our network of vendors; ● our ability to offer products on favorable terms, manage inventory, and fulfill orders; ● the introduction of competitive products, price decreases, or improvements; ● changes in usage or adoption rates of the Internet, e-commerce, electronic devices, and web services; ● timing, effectiveness, and costs of expansion and upgrades of our systems and infrastructure; ● the extent to which we finance, and the terms of any such financing for, our current operations and future growth; ● the outcomes of legal proceedings and claims, which may include significant monetary damages or injunctive relief and could have a material adverse impact on our operating results; 15 ● variations in the mix of products we sell; ● variations in our level of merchandise and vendor returns; ● the extent to which we offer fast and free delivery and provide additional benefits to our customers; ● factors affecting our reputation; ● the extent to which we invest in technology and content, fulfillment, and other expense categories; ● increases in the prices of fuel and gasoline, as well as increases in the prices of other energy products and commodities like paper and packing supplies and hardware products; ● the extent to which operators of the networks between our customers and us, the online retailer, successfully charge fees to grant our customers unimpaired and unconstrained access to our online services; ● our ability to collect amounts owed to us when they become due; ● the extent to which new and existing technologies, or industry trends, restrict online advertising or affect our ability to customize advertising or otherwise tailor our product and service offerings; ● the extent to which use of our services is affected by spyware, viruses, phishing and other spam emails, denial of service attacks, data theft, computer intrusions, outages, and similar events; and ● disruptions from natural or man-made disasters, extreme weather, geopolitical events and security issues (including terrorist attacks and armed hostilities), labor or trade disputes, and similar events.
Our sales and operating results will also fluctuate for many other reasons, including due to factors described elsewhere in this section and the following: ● our ability to retain and increase sales to existing customers, attract new customers, and satisfy our customers’ demands; ● our ability to retain and expand our network of vendors; ● our ability to offer products on favorable terms, manage inventory, and fulfill orders; ● the introduction of competitive products, price decreases, or improvements; ● changes in usage or adoption rates of the Internet, e-commerce, electronic devices, and web services; ● timing, effectiveness, and costs of expansion and upgrades of our systems and infrastructure; ● the extent to which we finance, and the terms of any such financing for, our current operations and future growth; ● the outcomes of legal proceedings and claims, which may include significant monetary damages or injunctive relief and could have a material adverse impact on our operating results; 14 ● variations in the mix of products we sell; ● variations in our level of merchandise and vendor returns; ● the extent to which we offer fast and free delivery and provide additional benefits to our customers; ● factors affecting our reputation; ● the extent to which we invest in technology and content, fulfillment, and other expense categories; ● increases in the prices of fuel and gasoline, as well as increases in the prices of other energy products and commodities like paper and packing supplies and hardware products; ● the extent to which operators of the networks between our customers and us, the online retailer, successfully charge fees to grant our customers unimpaired and unconstrained access to our online services; ● our ability to collect amounts owed to us when they become due; ● the extent to which new and existing technologies, or industry trends, restrict online advertising or affect our ability to customize advertising or otherwise tailor our product and service offerings; ● the extent to which use of our services is affected by spyware, viruses, phishing and other spam emails, denial of service attacks, data theft, computer intrusions, outages, and similar events; and ● disruptions from natural or man-made disasters, extreme weather, geopolitical events and security issues (including terrorist attacks and armed hostilities), labor or trade disputes, and similar events.
Factors that could cause fluctuations in the market price of our common stock include, but are not limited to, the following: ● actual or anticipated changes or fluctuations in our results of operations; ● the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections; 27 ● announcements by us or our competitors of new products or new or terminated significant contracts, commercial relationships, or capital commitments; ● industry or financial analyst or investor reaction to our press releases, other public announcements, and filings with the SEC; ● rumors and market speculation involving us or other companies in our industry; ● price and volume fluctuations in the overall stock market from time to time; ● changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; ● the expiration of market stand-off or contractual lock-up agreements and sales of shares of our common stock by us or our stockholders; ● failure of industry or financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company, or our failure to meet these estimates or the expectations of investors; ● actual or anticipated developments in our business, or our competitors’ businesses, or the competitive landscape generally; ● litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors; ● developments or disputes concerning our intellectual property rights, our products, or third-party proprietary rights; ● announced or completed acquisitions of businesses or technologies by us or our competitors; ● new laws or regulations or new interpretations of existing laws or regulations applicable to our business; ● any major changes in our management or our board of directors, particularly with respect to Mr.
Factors that could cause fluctuations in the market price of our common stock include, but are not limited to, the following: ● actual or anticipated changes or fluctuations in our results of operations; ● the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections; ● announcements by us or our competitors of new products or new or terminated significant contracts, commercial relationships, or capital commitments; ● industry or financial analyst or investor reaction to our press releases, other public announcements, and filings with the SEC; ● rumors and market speculation involving us or other companies in our industry; ● price and volume fluctuations in the overall stock market from time to time; ● changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; ● the expiration of market stand-off or contractual lock-up agreements and sales of shares of our common stock by us or our stockholders; ● failure of industry or financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company, or our failure to meet these estimates or the expectations of investors; 24 ● actual or anticipated developments in our business, or our competitors’ businesses, or the competitive landscape generally; ● litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors; ● developments or disputes concerning our intellectual property rights, our products, or third-party proprietary rights; ● announced or completed acquisitions of businesses or technologies by us or our competitors; ● new laws or regulations or new interpretations of existing laws or regulations applicable to our business; ● any major changes in our management or our board of directors, particularly with respect to Mr.
Therefore, the ability of the Company to meet its liabilities and to continue as a going concern is dependent on, among other things, improved profitability, the continued implementation of its business strategy, the availability of future funding, implementation of one or more corporate initiatives to reduce costs at the parent company level and other strategic alternatives, including selling all or part of the remaining business or assets of the Company.
Therefore, our ability to meet our liabilities and to continue as a going concern is dependent on, among other things, improved profitability, the continued implementation of its business strategy, the availability of future funding, implementation of one or more corporate initiatives to reduce costs at the parent company level and other strategic alternatives, including selling all or part of our remaining business or assets.
Even if management finds such controls to be effective, our independent registered public accounting firm may decline to attest to the effectiveness of such internal controls and issue a qualified report. We are a smaller reporting company and accordingly, are exempt from certain disclosure requirements, which could make our common stock less attractive to potential investors.
Even if management finds such controls to be effective, our independent registered public accounting firm may decline to attest to the effectiveness of such internal controls and issue a qualified report. 27 We are a smaller reporting company and accordingly, are exempt from certain disclosure requirements, which could make our common stock less attractive to potential investors.
Lai; ● general economic conditions and slow or negative growth of our markets; and ● other events or factors, including those resulting from war, incidents of terrorism, or responses to these events. 28 In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies.
Lai; ● general economic conditions and slow or negative growth of our markets; and ● other events or factors, including those resulting from war, incidents of terrorism, or responses to these events. In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies.
In addition, any infringement or other intellectual property claim made against us could be time-consuming to address, result in costly litigation, cause product delays, require us to enter into royalty or licensing agreements or result in our loss of ownership or use of the intellectual property. The Company’s business is influenced by general economic conditions.
In addition, any infringement or other intellectual property claim made against us could be time-consuming to address, result in costly litigation, cause product delays, require us to enter into royalty or licensing agreements or result in our loss of ownership or use of the intellectual property. Our business is influenced by general economic conditions.
As a result of competition, our product offerings may not be successful, we may fail to gain or may lose business, and we may be required to increase our spending or lower prices, any of which could materially reduce our sales and profits. Our business depends on our ability to build and maintain strong product listings on e-commerce platforms.
As a result of competition, our product offerings may not be successful, we may fail to gain or may lose business, and we may be required to increase our spending or lower prices, any of which could materially reduce our sales and profits. 13 Our business depends on our ability to build and maintain strong product listings on e-commerce platforms.
Further, if we are unable to comply with the security standards established by banks and the credit card industry, we may be subject to fines, restrictions and expulsion from card acceptance programs, which could adversely affect our retail operations. We face risks related to system interruption and lack of redundancy.
Further, if we are unable to comply with the security standards established by banks and the credit card industry, we may be subject to fines, restrictions and expulsion from card acceptance programs, which could adversely affect our retail operations. 17 We face risks related to system interruption and lack of redundancy.
Any adverse change in our relationship with Amazon, including restrictions on the ability to offer products or termination of the relationship, could adversely affect our continued growth and financial condition and results of operations. 17 Our profit is dependent on reimbursements from Amazon and any change in Amazon’s policy regarding reimbursement could adversely impact our ability to generate profits.
Any adverse change in our relationship with Amazon, including restrictions on the ability to offer products or termination of the relationship, could adversely affect our continued growth and financial condition and results of operations. Our profit is dependent on reimbursements from Amazon and any change in Amazon’s policy regarding reimbursement could adversely impact our ability to generate profits.
Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq. See “Management—Board Committees and Director Independence—Controlled Company and Director Independence”. 25 Government regulation is evolving and unfavorable changes could harm our business.
Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq. See “Management—Board Committees and Director Independence—Controlled Company and Director Independence”. Government regulation is evolving and unfavorable changes could harm our business.
We may incur losses relating to these claims, and in addition, these proceedings could cause us to incur costs and may require us to devote resources to defend against these claims that could adversely affect our results of operations. The effects of natural disasters, terrorism, acts of war, and public health issues may adversely affect our business.
We may incur losses relating to these claims, and in addition, these proceedings could cause us to incur costs and may require us to devote resources to defend against these claims that could adversely affect our results of operations. 21 The effects of natural disasters, terrorism, acts of war, and public health issues may adversely affect our business.
We also could become subject to investigations by the SEC or other regulatory authorities, which could require additional financial and management resources. 31 As an emerging growth company, our auditor will not be required to attest to the effectiveness of our internal controls.
We also could become subject to investigations by the SEC or other regulatory authorities, which could require additional financial and management resources. As an emerging growth company, our auditor will not be required to attest to the effectiveness of our internal controls.
Amazon reimburses us for any lost and damaged merchandise. These reimbursements form a substantial portion of our profits. Any change in Amazon policy regarding these reimbursements could impact our profit adversely. Additionally, we are dependent on Amazon’s ability to track and process these reimbursements. Any deficiencies in Amazon’s ability to process these reimbursements could impact our profits.
Amazon reimburses us for any lost and damaged merchandise. These reimbursements form a substantial portion of our profits. Any change in Amazon policy regarding these reimbursements could impact our profit adversely. Additionally, we are dependent on Amazon’s ability to track and process these reimbursements.
This, in turn, could have an adverse impact on value of our securities, and could adversely affect our ability to access the capital markets. 33 Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
This, in turn, could have an adverse impact on value of our securities, and could adversely affect our ability to access the capital markets. Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
See Part II, Item 5 “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividends.” We will indemnify and hold harmless our officers and directors to the maximum extent permitted by Delaware law.
See Part II, Item 5 “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividends.” 29 We will indemnify and hold harmless our officers and directors to the maximum extent permitted by Delaware law.
FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE FEE SHIFTING PROVISION CONTAINED IN THE BYLAWS DO NOT APPLY TO CLAIMS BROUGHT UNDER THE EXCHANGE ACT AND SECURITIES ACT. 23 Litigation may adversely affect our business, financial condition and results of operations.
FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE FEE SHIFTING PROVISION CONTAINED IN THE BYLAWS DO NOT APPLY TO CLAIMS BROUGHT UNDER THE EXCHANGE ACT AND SECURITIES ACT. Litigation may adversely affect our business, financial condition and results of operations.
The Company’s certificate of incorporation and bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our management without the consent of our board of directors.
Our certificate of incorporation and bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our management without the consent of our board of directors.
No individual vendor exceeded 15% of purchases in the year ended December 31, 2024. Our revenue is dependent upon maintaining our relationship with Amazon and failure to do so, or any restrictions on our ability to offer products on the Amazon Marketplace, could have an adverse impact on our business, financial condition and results of operations.
No individual vendor exceeded 15% of purchases in the year ended December 31, 2025. Our revenue is dependent upon maintaining our relationship with Amazon and failure to do so, or any restrictions on our ability to offer products on the Amazon Marketplace, could have an adverse impact on our business, financial condition and results of operations.
In addition, our ability to receive inbound inventory efficiently and ship completed orders to customers also may be negatively affected by natural or man-made disasters, extreme weather, geopolitical events and security issues, labor or trade disputes, and similar events. 16 The variability in our retail business places increased strain on our operations.
In addition, our ability to receive inbound inventory efficiently and ship completed orders to customers also may be negatively affected by natural or man-made disasters, extreme weather, geopolitical events and security issues, labor or trade disputes, and similar events. 15 The variability in our retail business places increased strain on our operations.
In addition, reduced consumer spending may drive us and our competitors to offer additional products at promotional prices, which would have a negative impact on gross profit. Disruption of global capital and credit markets may have a material adverse effect on the Company’s liquidity and capital resources.
In addition, reduced consumer spending may drive us and our competitors to offer additional products at promotional prices, which would have a negative impact on gross profit. Disruption of global capital and credit markets may have a material adverse effect on our liquidity and capital resources.
Section 21 of our certificate of incorporation and Section 7.4 of our bylaws provide that “[u]nless the corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located in the county in which the principal office of the corporation in the State of Delaware is established, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.
Our certificate of incorporation contains a forum selection clause and Section 7.4 of our bylaws provides that “[u]nless the corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located in the county in which the principal office of the corporation in the State of Delaware is established, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.
The extent to which COVID-19 could impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, and will depend on many factors, including the duration of the outbreak, the effect of travel restrictions and social distancing efforts in the United States and other countries, the scope and length of business closures or business disruptions, and the actions taken by governments to contain and treat the disease.
The extent to which future pandemics could impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, and will depend on many factors, including the duration of the outbreak, the effect of travel restrictions and social distancing efforts in the United States and other countries, the scope and length of business closures or business disruptions, and the actions taken by governments to contain and treat the disease.
If a court were to find the exclusive forum provision contained in our certificate of incorporation and our bylaws to be inapplicable or unenforceable in an action, we might incur additional costs associated with resolving such action in other jurisdictions. 22 By purchasing our common stock, you are bound by the fee-shifting provision contained in our bylaws, which may discourage you from pursuing actions against us and could discourage stockholder lawsuits that might otherwise benefit the Company and its stockholders.
If a court were to find the exclusive forum provision contained in our certificate of incorporation and our bylaws to be inapplicable or unenforceable in an action, we might incur additional costs associated with resolving such action in other jurisdictions. 20 By purchasing our common stock, you are bound by the fee-shifting provision contained in our bylaws, which may discourage you from pursuing actions against us and could discourage stockholder lawsuits that might otherwise benefit us and our stockholders.
The Company’s performance is subject to general economic conditions and their impact on levels of discretionary consumer spending. General economic conditions impacting discretionary consumer spending include, among others, wages and employment, consumer debt, reductions in net worth, residential real estate and mortgage markets, taxation, fuel and energy prices, interest rates, consumer confidence and other macroeconomic factors.
Our performance is subject to general economic conditions and their impact on levels of discretionary consumer spending. General economic conditions impacting discretionary consumer spending include, among others, wages and employment, consumer debt, reductions in net worth, residential real estate and mortgage markets, taxation, fuel and energy prices, interest rates, consumer confidence and other macroeconomic factors.
To date, we have generated practically all of our revenue as a third-party seller on Amazon Marketplace. In 2024 and 2023, 99% and 99%, respectively, of our net revenue was through or with the Amazon sales platform. Therefore, we depend entirely on our relationship with Amazon for growth.
To date, we have generated practically all of our revenue as a third-party seller on Amazon Marketplace. In 2025 and 2024, 98% and 99%, respectively, of our net revenue was through or with the Amazon sales platform. Therefore, we depend entirely on our relationship with Amazon for growth.
The “controlled company” exception to the Nasdaq rules provides that a company of which more than 50% of the voting power is held by an individual, group or another company, a “controlled company,” need not comply with certain requirements of the Nasdaq corporate governance rules. As of March 27, 2025, Mr.
The “controlled company” exception to the Nasdaq rules provides that a company of which more than 50% of the voting power is held by an individual, group or another company, a “controlled company,” need not comply with certain requirements of the Nasdaq corporate governance rules. As of March 24, 2026, Mr.
Section 7.4 of our bylaws provides that “[i]f any action is brought by any party against another party, relating to or arising out of these Bylaws, or the enforcement hereof, the prevailing party shall be entitled to recover from the other party reasonable attorneys’ fees, costs and expenses incurred in connection with the prosecution or defense of such action, provided that the provisions of this sentence shall not apply with respect to ‘internal corporate claims’ as defined in Section 109(b) of the DGCL.” Our bylaws provide that for this section, the term “attorneys’ fees” or “attorneys’ fees and costs” means the fees and expenses of counsel to the Company and any other parties asserting a claim subject to Section 7.4 of the bylaws, which may include printing, photocopying, duplicating and other expenses, air freight charges, and fees billed for law clerks, paralegals and other persons not admitted to the bar but performing services under the supervision of an attorney, and the costs and fees incurred in connection with the enforcement or collection of any judgment obtained in any such proceeding.
Section 7.4 of our bylaws provides that “[i]f any action is brought by any party against another party, relating to or arising out of these Bylaws, or the enforcement hereof, the prevailing party shall be entitled to recover from the other party reasonable attorneys’ fees, costs and expenses incurred in connection with the prosecution or defense of such action, provided that the provisions of this sentence shall not apply with respect to “internal corporate claims” as defined in Section 115 of the DGCL or in connection with any other claim that a stockholder, acting in its capacity as a stockholder or in the right of the Corporation, has brought in an action, suit or proceeding.” Our bylaws provide that for this section, the term “attorneys’ fees” or “attorneys’ fees and costs” means the fees and expenses of counsel to the Company and any other parties asserting a claim subject to Section 7.4 of the bylaws, which may include printing, photocopying, duplicating and other expenses, air freight charges, and fees billed for law clerks, paralegals and other persons not admitted to the bar but performing services under the supervision of an attorney, and the costs and fees incurred in connection with the enforcement or collection of any judgment obtained in any such proceeding.
Further, we rely on the business continuity plans of these third parties to operate during pandemics, like the COVID-19 pandemic, and we have limited ability to influence their plans, prevent delays, and/or cost increases due to reduced availability and capacity and increased required safety measures.
Further, we rely on the business continuity plans of these third parties to operate during pandemics, and we have limited ability to influence their plans, prevent delays, and/or cost increases due to reduced availability and capacity and increased required safety measures.
If a vendor fails to deliver on its commitments, whether due to financial difficulties or other reasons, the Company could experience merchandise shortages that could lead to lost sales. Historically, the Company has not experienced difficulty in obtaining satisfactory sources of supply and management believes that it will continue to have access to adequate sources of supply.
If a vendor fails to deliver on its commitments, whether due to financial difficulties or other reasons, we could experience merchandise shortages that could lead to lost sales. Historically, we have not experienced difficulty in obtaining satisfactory sources of supply and management believes that we will continue to have access to adequate sources of supply.
The ability of the Company to satisfy its liabilities and to continue as a going concern will continue to be dependent on the implementation of several items, the success of which is not certain. The Company’s primary source of liquidity is available cash and cash equivalents, which is limited.
Our ability to satisfy our liabilities and to continue as a going concern will continue to be dependent on the implementation of several items, the success of which is not certain. Our primary source of liquidity is available cash and cash equivalents, which is limited.
Our business, results of operations, and financial condition may be materially adversely impacted if a public health outbreak, including the recent COVID-19 pandemic, interferes with our ability, or the ability of our employees, contractors, suppliers, and other business partners to perform our and their respective responsibilities and obligations relative to the conduct of our business.
Our business, results of operations, and financial condition may be materially adversely impacted if a public health outbreak, interferes with our ability, or the ability of our employees, contractors, suppliers, and other business partners to perform our and their respective responsibilities and obligations relative to the conduct of our business.
In some cases, the Company depends upon such third parties to provide essential products, services or other benefits, including with respect to merchandise, advertising, software development and support, logistics, other agreements for goods and services in order to operate the Company’s business in the ordinary course, extensions of credit, credit card accounts and related receivables, and other vital matters.
In some cases, we depend upon such third parties to provide essential products, services or other benefits, including with respect to merchandise, advertising, software development and support, logistics, other agreements for goods and services in order to operate our business in the ordinary course, extensions of credit, credit card accounts and related receivables, and other vital matters.
There can be no assurance that our liquidity will not be affected by changes in the financial markets and the global economy or that our capital resources will at all times be sufficient to satisfy our liquidity needs. The Company is dependent upon access to capital for its liquidity needs.
There can be no assurance that our liquidity will not be affected by changes in the financial markets and the global economy or that our capital resources will at all times be sufficient to satisfy our liquidity needs. 18 We are dependent upon access to capital for its liquidity needs.
The Company must have sufficient sources of liquidity to fund its working capital requirements and indebtedness. The future availability of financing will depend on a variety of factors, such as economic and market conditions, the availability of credit and the Company’s credit rating, as well as the Company’s reputation with potential lenders.
We must have sufficient sources of liquidity to fund our working capital requirements and indebtedness. The future availability of financing will depend on a variety of factors, such as economic and market conditions, the availability of credit and our credit rating, as well as our reputation with potential lenders.
If any of these third parties were to become subject to bankruptcy, receivership or similar proceedings, the rights and benefits of the Company in relation to its contracts, transactions and business relationships with such third parties could be terminated, modified in a manner adverse to the Company, or otherwise impaired.
If any of these third parties were to become subject to bankruptcy, receivership or similar proceedings, our rights and benefits in relation to our contracts, transactions and business relationships with such third parties could be terminated, modified in a manner adverse to us, or otherwise impaired.
Yu, our Senior Vice President, a member of the Board, and a significant stockholder, who are husband and wife, together beneficially owned an aggregate of 33,381,462 shares of our common stock, which represents approximately 94.9% of the voting power of our outstanding common stock. We are a “controlled company” within the meaning of Nasdaq’s corporate governance rules.
Yu, our Senior Vice President, a member of the Board, and a significant stockholder, who are husband and wife, together beneficially owned an aggregate of 33,394,442 shares of our common stock, which represents approximately 94.8% of the voting power of our outstanding common stock. We are a “controlled company” within the meaning of Nasdaq’s corporate governance rules.
The online retail business is rapidly evolving and intensely competitive. Some of our current and potential competitors have greater resources, longer histories, and/or more customers. They may secure better terms from vendors, adopt more aggressive pricing, and devote more resources to technology, infrastructure, fulfillment, and marketing.
Risks Related to Our Business We face intense competition. The online retail business is rapidly evolving and intensely competitive. Some of our current and potential competitors have greater resources, longer histories, and/or more customers. They may secure better terms from vendors, adopt more aggressive pricing, and devote more resources to technology, infrastructure, fulfillment, and marketing.
Unfavorable regulations, laws, decisions, or interpretations by government or regulatory authorities applying those laws and regulations, or inquiries, investigations, or enforcement actions threatened or initiated by them, could cause us to incur substantial costs, expose us to unanticipated civil and criminal liability or penalties (including substantial monetary fines), diminish the demand for, or availability of, our products, increase our cost of doing business, require us to change our business practices in a manner materially adverse to our business, damage our reputation, impede our growth, or otherwise have a material effect on our operations.
Unfavorable regulations, laws, decisions, or interpretations by government or regulatory authorities applying those laws and regulations, or inquiries, investigations, or enforcement actions threatened or initiated by them, could cause us to incur substantial costs, expose us to unanticipated civil and criminal liability or penalties (including substantial monetary fines), diminish the demand for, or availability of, our products, increase our cost of doing business, require us to change our business practices in a manner materially adverse to our business, damage our reputation, impede our growth, or otherwise have a material effect on our operations. 23 We are subject to product liability claims when people or property are harmed by the products we sell.
These factors could materially adversely affect the Company’s ability to fund its working capital requirements, costs of borrowing, and the Company’s financial position and results of operations would be adversely impacted.
These factors could materially adversely affect our ability to fund our working capital requirements, costs of borrowing, and our financial position and results of operations would be adversely impacted.
The Company utilizes Amazon’s FBA platform to store their products at the Amazon fulfillment center and to pack and distribute these products to customers. If Amazon continues to increase its FBA fees, our profit margin could be adversely affected.
We utilize Amazon’s FBA platform to store our products at the Amazon fulfillment center and to pack and distribute these products to customers. If Amazon continues to increase its FBA fees, our profit margin could be adversely affected.
The loss of the services of certain of the Company’s executive officers and other key management personnel could adversely affect the Company’s results of operations. In addition to our executive officers, the Company’s business is dependent on our ability to attract, train and retain qualified team members.
Our future success will also depend on our ability to attract and retain qualified key personnel. The loss of the services of certain of our executive officers and other key management personnel could adversely affect our results of operations. In addition to our executive officers, our business is dependent on our ability to attract, train and retain qualified team members.
Rule 12b-2 of the Exchange Act defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that: ● had a public float of less than $250 million as of the last business day of its most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity; or ● in the case of an initial registration statement under the Securities Act or the Exchange Act for shares of its common equity, had a public float of less than $250 million as of a date within 30 days of the date of the filing of the registration statement, computed by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public offering price of the shares; or ● in the case of an issuer whose public float as calculated under the first or second bullets was zero or whose public float was less than $700 million, had annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available. 32 As a smaller reporting company, we are not required, and may not include, a Compensation Discussion and Analysis section in our proxy statements; we will provide only two years of financial statements; and we need not provide the table of selected financial data.
Rule 12b-2 of the Exchange Act defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that: ● had a public float of less than $250 million as of the last business day of its most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity; or ● in the case of an initial registration statement under the Securities Act or the Exchange Act for shares of its common equity, had a public float of less than $250 million as of a date within 30 days of the date of the filing of the registration statement, computed by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public offering price of the shares; or ● in the case of an issuer whose public float as calculated under the first or second bullets was zero or whose public float was less than $700 million, had annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available.
The market price of our common stock may fluctuate substantially and will depend on a number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance.
We cannot predict the prices at which our common stock will trade in the future. The market price of our common stock may fluctuate substantially and will depend on a number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance.
If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the value of our securities could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.
If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the value of our securities could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources. 28 Our ability to successfully implement our business plan and comply with Section 404 requires us to be able to prepare timely and accurate financial statements.
The Company is a party to contracts, transactions and business relationships with various third parties, including partners, vendors, suppliers, service providers and lenders, pursuant to which such third parties have performance, payment and other obligations to the Company.
We are a party to contracts, transactions and business relationships with various third parties, including partners, vendors, suppliers, service providers and lenders, pursuant to which such third parties have performance, payment and other obligations to us.
We are subject to product liability claims when people or property are harmed by the products we sell. Some of the products we sell expose us to product liability claims relating to personal injury, illness, death, or environmental or property damage, and can require product recalls or other actions.
Some of the products we sell expose us to product liability claims relating to personal injury, illness, death, or environmental or property damage, and can require product recalls or other actions.
For so long as we are an emerging growth company, we will not be required to: ● have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”); ● comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditors’ report providing additional information about the audit and the consolidated financial statements (i.e., an auditor discussion and analysis); ● submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay” and “say-on-frequency”; and ● disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
For so long as we are an emerging growth company, we will not be required to: ● have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”); ● comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditors’ report providing additional information about the audit and the consolidated financial statements (i.e., an auditor discussion and analysis); ● submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay” and “say-on-frequency”; and ● disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. 26 In addition, Section 102 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
As of March 27, 2025, Sam Lai, our Chairman of the Board, Chief Executive Officer, and Interim Chief Financial Officer, and a significant stockholder, and Maggie Yu, our Senior Vice President, member of the Board, and a significant stockholder, who are husband and wife, together beneficially owned an aggregate of 33,381,462 shares of our common stock, which represents approximately 94.9% of the voting power of our outstanding common stock.
As of March 24, 2026, Sam Lai, our Chairman of the Board, Chief Executive Officer, and Interim Chief Financial Officer, and a significant stockholder, and Maggie Yu, our Senior Vice President, member of the Board, and a significant stockholder, who are husband and wife, together beneficially owned an aggregate of 33,394,442 shares of our common stock, which represents approximately 94.8% of the voting power of our outstanding common stock.
A change in one or more of the Company’s vendors’ policies or the Company’s relationship with those vendors could adversely affect the Company’s results of operations. The Company is dependent on its vendors to supply merchandise in a timely and efficient manner.
A change in one or more of our vendors’ policies or our relationship with those vendors could adversely affect our results of operations. We are dependent on our vendors to supply merchandise in a timely and efficient manner.
Holders of shares of our common stock are entitled to receive such dividends as may be declared by our board of directors. To date, we have paid no cash dividends on our shares of common stock and we do not expect to pay cash dividends on our common stock in the foreseeable future.
We have never paid dividends on our common stock and have no plans to do so in the future. Holders of shares of our common stock are entitled to receive such dividends as may be declared by our board of directors.
Labor is one of the primary components in the cost of operating our business. Increased labor costs, whether due to competition, unionization, increased minimum wage, state unemployment rates, health care, or other employee benefits costs may adversely impact our operating expenses.
Labor is one of the primary components in the cost of operating our business. Increased labor costs, whether due to competition, unionization, increased minimum wage, state unemployment rates, health care, or other employee benefits costs may adversely impact our operating expenses. Additionally, there is no assurance that future health care legislation will not adversely impact our results or operations.
If we complete an acquisition, investment or other strategic transaction, we may require additional financing that could result in an increase in the number of our outstanding shares or the aggregate principal amount of our debt.
If we complete an acquisition, investment or other strategic transaction, we may require additional financing that could result in an increase in the number of our outstanding shares or the aggregate principal amount of our debt. A strategic transaction may result in a change in control of our company or otherwise materially and adversely affect our business.
Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our security holders to receive a premium for their securities and could also affect the price that some investors are willing to pay for our securities. 34 We have never paid dividends on our common stock and have no plans to do so in the future.
Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our security holders to receive a premium for their securities and could also affect the price that some investors are willing to pay for our securities.
We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.
As an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), we are permitted to rely on exemptions from certain disclosure requirements. We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.
Legal remedies available to an investor in “penny stocks” may include the following: ● If a “penny stock” is sold to the investor in violation of the requirements listed above, or other federal or states securities laws, the investor may be able to cancel the purchase and receive a refund of the investment. ● If a “penny stock” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages. 29 These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules.
Legal remedies available to an investor in “penny stocks” may include the following: ● If a “penny stock” is sold to the investor in violation of the requirements listed above, or other federal or states securities laws, the investor may be able to cancel the purchase and receive a refund of the investment. ● If a “penny stock” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages.
We depend on our senior management and other key personnel, particularly Sam Lai, our Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer. We do not have “key person” life insurance policies. We also rely on other highly skilled personnel.
The loss of key senior management personnel or the failure to hire and retain highly skilled and other key personnel could negatively affect our business. We depend on our senior management and other key personnel, particularly Sam Lai, our Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer. We do not have “key person” life insurance policies.
Possible effects may include, but are not limited to, disruption to our customers and revenue, absenteeism in our labor workforce, unavailability of products and supplies used in our operations, shutdowns that may be mandated or requested by governmental authorities, and a decline in the value of our assets, including various long-lived assets. 24 The loss of key senior management personnel or the failure to hire and retain highly skilled and other key personnel could negatively affect our business.
Possible effects may include, but are not limited to, disruption to our customers and revenue, absenteeism in our labor workforce, unavailability of products and supplies used in our operations, shutdowns that may be mandated or requested by governmental authorities, and a decline in the value of our assets, including various long-lived assets.
The ability of Sam Lai, our Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer and a significant stockholder, and Maggie Yu, our Senior Vice President, a member of our Board of Directors and a significant stockholder, who are husband and wife, to control our business may limit or eliminate minority stockholders’ ability to influence corporate affairs.
The loss of any of our executive officers or other key employees or the inability to hire, train, retain, and manage qualified personnel, could harm our business. 22 The ability of Sam Lai, our Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer and a significant stockholder, and Maggie Yu, our Senior Vice President, a member of our Board of Directors and a significant stockholder, who are husband and wife, to control our business may limit or eliminate minority stockholders’ ability to influence corporate affairs.
In addition, the continuation of the COVID-19 pandemic and various governmental responses in the United States has adversely affected and may continue to adversely affect our business operations, including our ability to carry on business development activities, restrictions in business-related travel, delays or disruptions in our on-going projects, and unavailability of the employees of the Company or third parties with whom we conduct business, due to illness or quarantines, among others.
Any future pandemics may also adversely affect our business operations, including our ability to carry on business development activities, restrictions in business-related travel, delays or disruptions in our on-going projects, and unavailability of the employees of the Company or third parties with whom we conduct business, due to illness or quarantines, among others.
Our business, like that of most companies, involves confidential information about our employees, our suppliers and our Company. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of all such data, including confidential information.
We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of all such data, including confidential information.
The COVID-19 pandemic has adversely affected and may continue to adversely affect the economies and financial markets worldwide, resulting in an economic downturn that could impact our business, financial condition and results of operations.
The COVID-19 pandemic adversely affected financial markets worldwide, and any pandemics in the future that had the reach similar to COVID-19, may result in an economic downturn that could impact our business, financial condition and results of operations.
A variety of factors has historically affected, and will continue to affect, our sales results and profit margins. These factors include general economic conditions; competition; actions taken by our competitors; consumer trends and preferences; access to third party marketplaces; and new product introductions and changes in our product mix.
These factors include general economic conditions; competition; actions taken by our competitors; consumer trends and preferences; access to third party marketplaces; and new product introductions and changes in our product mix.
For these reasons, penny stocks may have a limited market and, consequently, limited liquidity. We can give no assurance that our common stock will not be classified as a “penny stock” in the future.
In addition, many individual investors will not invest in penny stocks due, among other reasons, to the increased financial risk generally associated with these investments. For these reasons, penny stocks may have a limited market and, consequently, limited liquidity. We can give no assurance that our common stock will not be classified as a “penny stock” in the future.
We intend to retain future earnings, if any, to provide funds for operation of our business. Therefore, any return investors in our common stock may have will be in the form of appreciation, if any, in the market value of their shares of common stock.
Therefore, any return investors in our common stock may have will be in the form of appreciation, if any, in the market value of their shares of common stock.
Loss of key personnel or the inability to attract, train and retain qualified employees could adversely affect the Company’s results of operations. The Company believes that its future prospects depend, to a significant extent, on the services of its executive officers. Our future success will also depend on our ability to attract and retain qualified key personnel.
Any deficiencies in Amazon’s ability to process these reimbursements could impact our profits. 16 Loss of key personnel or the inability to attract, train and retain qualified employees could adversely affect our results of operations. We believe that our future prospects depend, to a significant extent, on the services of our executive officers.
Additionally, if any data intrusion, security breach, misappropriation or theft were to occur, we could incur significant costs in responding to such event, including responding to any resulting claims, litigation or investigations, which could harm our operating results. 19 Our inability or failure to protect our intellectual property rights, or any claimed infringement by us of third-party intellectual rights, could have a negative impact on our operating results.
Additionally, if any data intrusion, security breach, misappropriation or theft were to occur, we could incur significant costs in responding to such event, including responding to any resulting claims, litigation or investigations, which could harm our operating results.
Our business was negatively impacted by disruptions in our supply chain, which limited our ability to source merchandise, and limits on products fulfillment placed by Amazon. For example, we may be unable to launch new products, replenish inventory for existing products, ship into or receive inventory in our third-party warehouses in each case on a timely basis or at all.
For example, we may be unable to launch new products, replenish inventory for existing products, ship into or receive inventory in our third-party warehouses in each case on a timely basis or at all.
Significant legislative changes that impact our relationship with our workforce (none of which is represented by unions) could increase our expenses and adversely affect our operations.
Failure to comply with legal and regulatory requirements could adversely affect our results of operations. Our business is subject to a wide array of laws and regulations. Significant legislative changes that impact our relationship with our workforce (none of which is represented by unions) could increase our expenses and adversely affect our operations.
There can be no assurance that we will be successful in further implementing our business strategy or that the strategy, including the completed initiatives, will be successful in sustaining acceptable levels of sales growth and profitability.
There can be no assurance that we will be successful in further implementing our business strategy or that the strategy, including the completed initiatives, will be successful in sustaining acceptable levels of sales growth and profitability. 19 Parties with whom we do business may be subject to insolvency risks or may otherwise become unable or unwilling to perform their obligations to us.
Notwithstanding the foregoing, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Securities Exchange of 1934, as amended (the “Exchange Act”), the Securities Act of 1933, as amended (the “Securities Act”), or any claim for which the federal courts have exclusive or concurrent jurisdiction.” Therefore, the exclusive forum provision in our certificate of incorporation and our bylaws will not relieve us of our duty to comply with the federal securities laws and the rules and regulations thereunder, and stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.
Notwithstanding the foregoing, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Securities Exchange of 1934, as amended, the Securities Act of 1933, as amended, or any claim for which the federal courts have exclusive or concurrent jurisdiction.
Our ability to successfully implement our business plan and comply with Section 404 requires us to be able to prepare timely and accurate financial statements. We expect that we will need to continue to improve existing controls, and implement new operational and financial systems, procedures and controls to manage our business effectively.
We expect that we will need to continue to improve existing controls, and implement new operational and financial systems, procedures and controls to manage our business effectively.
The Company cannot make any assurances that it would be able to arrange for alternate or replacement contracts, transactions or business relationships on terms as favorable as the Company’s existing contracts, transactions or business relationships, if at all.
We cannot make any assurances that it would be able to arrange for alternate or replacement contracts, transactions or business relationships on terms as favorable as our existing contracts, transactions or business relationships, if at all. Any inability on our part to do so could negatively affect our cash flows, financial condition and results of operations.
The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.
These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities.
Our trademark, trade secrets and other intellectual property, including proprietary software, are valuable assets that are critical to our success. The unauthorized reproduction or other misappropriation of our intellectual property could cause a decline in our revenue.
The unauthorized reproduction or other misappropriation of our intellectual property could cause a decline in our revenue.
A strategic transaction may result in a change in control of our company or otherwise materially and adversely affect our business. 20 Historically, we have experienced declines, and we may continue to experience fluctuation in our level of sales and results from operations.
Historically, we have experienced declines, and we may continue to experience fluctuation in our level of sales and results from operations. A variety of factors has historically affected, and will continue to affect, our sales results and profit margins.
These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles and guidance.
These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles and guidance. A change in these principles or guidance, or in their interpretations, may have a significant effect on our reported results and retroactively affect previously reported results.
There is no guarantee that we will be able to maintain our Nasdaq listing for any period of time by perpetually satisfying Nasdaq’s continued listing requirements. Our failure to continue to meet these requirements may result in our common stock being delisted from Nasdaq, which could have a material adverse effect on the price of our common stock.
Our failure to continue to meet these requirements may result in our common stock being delisted from Nasdaq, which could have a material adverse effect on the price of our common stock. The market price of our common stock may be volatile, and you could lose all or part of your investment.
We also use and rely on other services from third parties, such as our telecommunications services, and those services may be subject to outages and interruptions that are not within our control. We experience significant fluctuations in our operating results and growth rate. We are not always able to accurately forecast our growth rate.
We also use and rely on other services from third parties, such as our telecommunications services, and those services may be subject to outages and interruptions that are not within our control. Our business and results of operations could be materially and adversely affected by the new 10% global import surcharge and ongoing trade investigations. Following the U.S.
Competition for qualified personnel in the technology industry has historically been intense, particularly for software engineers, computer scientists, and other technical staff. The loss of any of our executive officers or other key employees or the inability to hire, train, retain, and manage qualified personnel, could harm our business.
We also rely on other highly skilled personnel. Competition for qualified personnel in the technology industry has historically been intense, particularly for software engineers, computer scientists, and other technical staff.

… 33 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+1 added−0 removed4 unchanged
Biggest changeOur cybersecurity risk management program shall include: ● risk assessments to identify material cybersecurity risks to our Confidential Information, Critical Systems and broader enterprise IT environment; ● a dedicated security team responsible for managing (1) cybersecurity risk assessment processes, (2) security controls, and (3) response to cybersecurity incidents; ● cybersecurity awareness training including spear-phishing resistance for employees, and senior management; ● a cybersecurity incident response plan outlining procedures for detecting, responding to, and mitigating cybersecurity incidents; and ● a vendor management policy to oversee cybersecurity risks associated with service providers. 35 We have no t identified any known cybersecurity threats, including prior incidents, that have materially affected or are reasonably likely to materially affect our operations, business strategy, results of operations, or financial condition.
Biggest changeOur cybersecurity risk management program shall include: ● risk assessments to identify material cybersecurity risks to our Confidential Information, Critical Systems and broader enterprise IT environment; ● a dedicated security team responsible for managing (1) cybersecurity risk assessment processes, (2) security controls, and (3) response to cybersecurity incidents; ● cybersecurity awareness training including spear-phishing resistance for employees, and senior management; ● a cybersecurity incident response plan outlining procedures for detecting, responding to, and mitigating cybersecurity incidents; and ● a vendor management policy to oversee cybersecurity risks associated with service providers.
The team holds primary responsibility for our cybersecurity risk management program and works closely with our IT service provider to ensure its effective implementation. Our management team meets regularly with our IT service provider to review current cybersecurity issues.
The team holds primary responsibility for our cybersecurity risk management program and works closely with our IT service provider to ensure its effective implementation. 30 Our management team meets regularly with our IT service provider to review current cybersecurity issues.
However, we recognize that cybersecurity threats pose ongoing risks which, if realized, could have a material adverse impact on our business, financial condition and results of operations. Cybersecurity Governance Our executive management team, in collaboration with our managed information technology service provider, is responsible for assessing and managing cybersecurity risks to the Company, including our Confidential Information and Critical Systems.
Cybersecurity Governance Our executive management team, in collaboration with our managed information technology service provider, is responsible for assessing and managing cybersecurity risks to the Company, including our Confidential Information and Critical Systems.
Added
We have not identified any known cybersecurity threats, including prior incidents, that have materially affected or are reasonably likely to materially affect our operations, business strategy, results of operations, or financial condition. However, we recognize that cybersecurity threats pose ongoing risks which, if realized, could have a material adverse impact on our business, financial condition and results of operations.

Item 2. Properties

Properties — owned and leased real estate

3 edited+1 added−1 removed0 unchanged
Biggest changeThe terms of this service provide for a base payment that is charged based on our usage. Flywheel, our wholly owned subsidiary, had four office leases in Taiwan in 2024.
Biggest changeThe terms of this service provide for a base payment that is charged based on our usage. Flywheel, our wholly owned subsidiary, had two office leases in Taiwan in 2025. The respective lease terms are June 10, 2025 to July 9, 2027, and December 1, 2025 to November 30, 2028 and the total contract amounts are $127,226, and $79,971 respectively.
The virtual office arrangement expires on August 31, 2025. Terms of the virtual office arrangement provide for a rent payment of $59 per month. We also lease a warehouse located at Qiaojiao Road, No. 1, Qiaojiao Middle Road, Tangxia Town, Dongguan City, Guangdong, China, who handle our storage and warehousing from an unaffiliated third party.
The virtual office arrangement expires on August 31, 2026. Terms of the virtual office arrangement provide for a rent payment of $59 per month. We also lease a warehouse located at Qiaojiao Road, No. 1, Qiaojiao Middle Road, Tangxia Town, Dongguan City, Guangdong, China, who handle our storage and warehousing from an unaffiliated third party.
ITEM 2. PROPERTIES Our corporate headquarters are located at 8201 164th Ave. NE, #200, Redmond, WA 98052-7615, where we rent a virtual office from an unaffiliated third party under a virtual office/meeting room agreement. This agreement provides for daily telephone answering, messaging and fax services, and paid access to conference rooms on an as-needed basis.
ITEM 2. PROPERTIES Our corporate headquarters is located at 8201 164th Ave. NE, #200, Redmond, Washington 98052-7615, where we rent a virtual office from an unaffiliated third party under a virtual office/meeting room agreement. This agreement provides for daily telephone answering, messaging and fax services, and paid access to conference rooms on an as-needed basis.
Removed
The respective lease terms are February 9, 2023 to March 8, 2025, March 1, 2024 to June 30, 2025, June 1, 2024 to May 31, 2025, and August 1, 2024 to July 31, 2025 and the total contract amounts are $28,652, $123,107, $52,434 and $73,175 respectively We believe that these facilities are adequate for our current and near-term future needs. 36
Added
We believe that these facilities are adequate for our current and near-term future needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeTo the knowledge of our management, there are no legal proceedings currently pending against us which we believe would have a material effect on our business, financial position or results of operations and, to the best of our knowledge, there are no such legal proceedings contemplated or threatened. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Biggest changeTo the knowledge of our management, there are no legal proceedings currently pending against us which we believe would have a material effect on our business, financial position or results of operations and, to the best of our knowledge, there are no such legal proceedings contemplated or threatened. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 31 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−5 removed5 unchanged
Biggest changeThe above issuances were made pursuant to an exemption from registration as set forth in Rule 506 of Regulation D and Section 4(a)(2) of the Securities Act. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Transfer Agent and Registrar The Company’s transfer agent is Nevada Agency and Transfer Company.
Biggest changeThe above issuances were made pursuant to an exemption from registration as set forth in Rule 506 of Regulation D and Section 4(a)(2) of the Securities Act and/or Regulation S promulgated under the Securities Act. 32 Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Transfer Agent and Registrar Our transfer agent is Nevada Agency and Transfer Company.
Holders As of March 27, 2025, there were 35,151,440 shares of common stock issued and outstanding, and we had approximately 5 holders of record of our common stock. The number of record holders does not include beneficial owners of common stock whose shares are held in the names of banks, brokers, nominees or other fiduciaries.
Holders As of March 24, 2026, there were 35,183,890 shares of common stock issued and outstanding, and we had approximately 5 holders of record of our common stock. The number of record holders does not include beneficial owners of common stock whose shares are held in the names of banks, brokers, nominees or other fiduciaries.
On October 2, 2023, the Company issued 1,948 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch, Alan Gao and Hillary Bui, with a fair market value of $1.54 per share as compensation for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On July 2, 2025, the Company issued 2,275 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Alan Gao and Hillary Bui, with a fair market value of $1.3185 per share as compensation for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed The Nasdaq Capital Market and its stock symbol is “HOUR.” The closing price of our common stock on Nasdaq on March 26, 2025 was $2.00.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed The Nasdaq Capital Market and its stock symbol is “HOUR.” The closing price of our common stock on Nasdaq on March 23, 2026 was $1.89.
On June 30, 2023, the Company issued 1,752 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch, Alan Gao and Hillary Bui, with a fair market value of $1.7125 per share as compensation for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On April 1, 2025, the Company issued 1,750 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Alan Gao and Hillary Bui, with a fair market value of $1.7140 per share as compensation for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On January 2, 2024, the Company issued 2,139 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch, Alan Gao and Hillary Bui, with a fair market value of $1.4025 per share as compensation for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
Recent Sales of Unregistered Securities On January 2, 2025, the Company issued 1,596 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Alan Gao and Hillary Bui, with a fair market value of $1.8799 per share as compensation for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
Branch as compensation for services rendered. 38 On October 1, 2024, the Company issued 2,196 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Alan Gao and Hillary Bui, with a fair market value of $1.3660 per share as compensation for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On October 3, 2025, the Company issued 951 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Alan Gao and Hillary Bui, with a fair market value of $3.1530 per share as compensation for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
Removed
As of March 27, 2025, there were 8,097,909 shares authorized for issuance under the 2021 Plan, and 8,097,909 shares available for issuance under the 2021 Plan. 37 Recent Sales of Unregistered Securities On January 4, 2023, the Company issued 1,001 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch, and Alan Gao, with a fair market value of $2.9985 per share as compensation for the services as executives or directors to the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
Added
As of March 24, 2026, there were 9,152,213 shares available for issuance under the 2021 Plan.
Removed
On April 3, 2023, the Company issued 1,365, 1,365, 1,365, 1,365, 1,365 and 606 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch, Alan Gao and Hillary Bui, respectively, with a fair market value of $2.1985 per share as compensation for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
Removed
On March 29, 2024, the Company issued 2,251 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch, Alan Gao and Hillary Bui, with a fair market value of $1.3330 per share as compensation for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
Removed
On July 1, 2024, the Company issued 2,946 shares of Company common stock to each of Sam Lai and Maggie Yu (both of whom are executive officers, directors and significant stockholders of the Company), and Michael Lenner, Douglas Branch, Alan Gao and Hillary Bui (each of whom was a director of the Company as of such date), with a fair market value of $1.0185 per share as compensation for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
Removed
Subsequently, on July 22, 2024, Mr. Branch resigned his position as a member of the Company’s Board of Directors. On July 25, 2024, following Mr. Branch’s resignation, the Company issued 6,000 shares of restricted common stock to Mr.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

77 edited+3 added−16 removed28 unchanged
Biggest changeThe Company estimates that as of December 31, 2024 and 2023, it owed $-0- and $288,466, respectively, in sales taxes along with penalties and interest resulting from late filings. 50 Concentration of Credit Risks - Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.
Biggest changeConcentration of Credit Risks - Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We maintain cash and cash equivalents with various domestic and foreign financial institutions of high credit quality.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Special Note Regarding Forward-Looking Statements All statements other than statements of historical fact included in this annual report on Form 10-K, including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Special Note Regarding Forward-Looking Statements All statements other than statements of historical fact included in this annual report on Form 10-K, including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements.
The Company’s chief operating decision maker has been identified as the chief executive officer of the Company who reviews financial information of separate operating segments based on U.S. GAAP. The chief operating decision maker now reviews results analyzed by customers. This analysis is only presented at the revenue level with no allocation of direct or indirect costs.
Our chief operating decision maker has been identified as the chief executive officer of the Company who reviews financial information of separate operating segments based on U.S. GAAP. The chief operating decision maker now reviews results analyzed by customers. This analysis is only presented at the revenue level with no allocation of direct or indirect costs.
When used in this annual report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management.
When used in this annual report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management.
Such amounts are recorded at fair value. Accounts Receivable and Allowance for Credit Losses - Accounts receivable are stated at historical cost less allowance for doubtful accounts.
Such amounts are recorded at fair value. 38 Accounts Receivable and Allowance for Credit Losses - Accounts receivable are stated at historical cost less allowance for doubtful accounts.
The merchandise with terms of FOB shipping point from vendors was recorded as the inventory-in-transit when inventory left the shipping dock of the vendors but not yet reached the receiving dock of the Company. Management continually evaluates its estimates and judgments including those related to merchandise inventory.
The merchandise with terms of FOB shipping point from vendors was recorded as the inventory-in-transit when inventory left the shipping dock of the vendors but not yet reached our receiving dock. Management continually evaluates its estimates and judgments including those related to merchandise inventory.
Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
Related parties also include our principal owners, our management, members of the immediate families of our principal owners and our management and other parties with which we may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
There were no dilutive securities or other items that would affect earnings per share for the years ended December 31, 2024 and 2023. Therefore, the diluted earnings per share is the same as the basic earnings per share.
There were no dilutive securities or other items that would affect earnings per share for the years ended December 31, 2025 and 2024. Therefore, the diluted earnings per share is the same as the basic earnings per share.
In 2019, we formed a wholly owned subsidiary, Flywheel Consulting Ltd. (“Flywheel”), to provide business operating consulting services, exclusively to Hour Loop. On April 7, 2021, Hour Loop converted from a Washington corporation to a Delaware corporation.
In 2019, we formed Flywheel, a wholly owned subsidiary, to provide business operating consulting services exclusively to Hour Loop. On April 7, 2021, Hour Loop converted from a Washington corporation to a Delaware corporation.
The Company recognizes revenue in accordance with ASC Topic 606, which provided a five-step model for recognizing revenue from contracts with customers as follows: ● Identify the contract with a customer. ● Identify the performance obligations in the contract. ● Determine the transaction price. ● Allocate the transaction price to the performance obligations in the contract. ● Recognize revenue when or as performance obligations are satisfied.
We recognize revenue in accordance with ASC Topic 606, which provided a five-step model for recognizing revenue from contracts with customers as follows: ● Identify the contract with a customer. ● Identify the performance obligations in the contract. ● Determine the transaction price. ● Allocate the transaction price to the performance obligations in the contract. ● Recognize revenue when or as performance obligations are satisfied.
The 10.23% increase in orders reflects strong customer demand, but our pricing strategy, including competitive pricing pressure and discounts offered during the period, resulted in lower prices for products sold. As a consequence, even with the significant order volume increase, the revenue growth was slightly shy of fully matching this proportion.
The 3.95% increase in orders reflects strong customer demand, but our pricing strategy, including competitive pricing pressure and discounts offered during the period, resulted in lower prices for products sold. As a consequence, even with the significant order volume increase, the revenue growth was slightly shy of fully matching this proportion.
The impairment loss is measured as the excess of the carrying amount over the asset’s (or asset group’s) fair value. The Company did not record any impairment charges for the years ended December 31, 2024 and 2023. Leases - Leases are classified at lease commencement date as either a finance lease or an operating lease.
The impairment loss is measured as the excess of the carrying amount over the asset’s (or asset group’s) fair value. We did not record any impairment charges for the years ended December 31, 2025 and 2024. Leases - Leases are classified at lease commencement date as either a finance lease or an operating lease.
Management has evaluated its tax positions and has concluded that the Company had taken no uncertain tax positions that could require adjustment or disclosure in the financial statements to comply with provisions set forth in ASC section 740, Income Taxes . Deferred tax assets represent amounts available to reduce income taxes payable in future periods.
Management has evaluated our tax positions and has concluded that we had taken no uncertain tax positions that could require adjustment or disclosure in the financial statements to comply with provisions set forth in ASC Section 740, Income Taxes. Deferred tax assets represent amounts available to reduce income taxes payable in future periods.
This surge in orders has played a pivotal role in driving the overall revenue growth. The substantial increase in order quantity indicates a rising demand for our products, leading to a corresponding increase in revenue generated from these sales. As a result, the increase in orders has directly contributed to the overall growth in the Company’s revenues during the period.
This growth in orders has played a pivotal role in driving the overall revenue growth. The meaningful increase in order quantity indicates a rising demand for our products, leading to a corresponding increase in revenue generated from these sales. As a result, the increase in orders has directly contributed to the overall growth in our revenues during the period.
Related Parties - The Company accounts for related party transactions in accordance with FASB ASC Topic 850 (Related Party Disclosures). A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company.
Related Parties - We account for related party transactions in accordance with FASB ASC Topic 850 (Related Party Disclosures). A party is considered to be related to us if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company.
For the period in which the Company reports net losses, diluted net loss per share attributable to stockholders is the same as basic net loss per share attributable to stockholders, because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.
For the period in which we report net losses, diluted net loss per share attributable to stockholders is the same as basic net loss per share attributable to stockholders, because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.
The Company evaluated principal versus agent considerations to determine whether it is appropriate to record platform fees paid to Amazon as an expense or as a reduction of revenue.
We evaluated principal versus agent considerations to determine whether it is appropriate to record platform fees paid to Amazon as an expense or as a reduction of revenue.
Consequently, the Company has determined that it has only one operating segment. Income Taxes - Income tax expense includes U.S. (federal and state) and foreign income taxes. The Company also complied with state tax codes and regulations, including with respect to California franchise taxes.
Consequently, we have determined that it has only one operating segment. Income Taxes - Income tax expense includes U.S. (federal and state) and foreign income taxes. We also complied with state tax codes and regulations, including with respect to California franchise taxes.
Inventories are stated at the lower of cost or net realizable value. Cost is principally determined on a first-in-first-out basis. The Company’s costs include the amounts it pays manufacturers for product, tariffs and duties associated with transporting product across national borders, and freight costs associated with transporting the product from its manufacturers to its warehouses, as applicable.
Inventories are stated at the lower of cost or net realizable value. Cost is principally determined on a first-in-first-out basis. Our costs include the amounts we pay manufacturers for product, tariffs and duties associated with transporting product across national borders, and freight costs associated with transporting the product from its manufacturers to its warehouses, as applicable.
The Company can, at any time, direct Amazon, similarly, other third-party logistics providers (“Logistics Providers”), to return the Company’s inventories to any location specified by the Company. It is the Company’s responsibility to make any returns made by customers directly to Logistics Providers and the Company retains the back-end inventory risk.
We can, at any time, direct Amazon, similarly, other third-party logistics providers (“Logistics Providers”), to return our inventories to any location specified by the Company. It is our responsibility to make any returns made by customers directly to Logistics Providers and we retain the back-end inventory risk.
Under this arrangement, The Company does not hold ownership of the leased assets but instead pays rent for the right to use them. For a lessee, a lease is recognized as an operating lease right-of-use asset with a corresponding liability at lease commencement date.
Under this arrangement, we do not hold ownership of the leased assets but instead pays rent for the right to use them. 39 For a lessee, a lease is recognized as an operating lease right-of-use asset with a corresponding liability at lease commencement date.
As a result, the Company has a present and unconditional right to payment and record the amount due from the customer in accounts receivable. 49 The customer can return the products within 30 days after the products are delivered and estimated sales returns are calculated based on the expected returns.
As a result, we have a present and unconditional right to payment and record the amount due from the customer in accounts receivable. The customer can return the products within 30 days after the products are delivered and estimated sales returns are calculated based on the expected returns.
The Company’s business is reliant on one key vendor which currently provides the Company with its sales platform, logistics and fulfillment operations, including certain warehousing for the Company’s net goods, and invoicing and collection of its revenue from the Company’s end customers.
Our business is reliant on one key vendor which currently provides us with our sales platform, logistics and fulfillment operations, including certain warehousing for our net goods, and invoicing and collection of its revenue from our end customers.
The following trends are reasonably likely to result in changes in our liquidity over the near- to long-term: ● An increase in working capital requirements to finance the rapid growth in our current business, ● An increase in fees paid to Amazon and other partners as our sales grows ● The cost of being a public company; ● Marketing and advertising expenses for attracting new customers; and ● Capital requirements for the development of additional infrastructure Since inception, we have generated liquidity from the profitability of our ongoing business and from debt to fund our operations. 43 The following table shows a summary of our cash flows for the years ended December 31, 2024 and 2023.
The following trends are reasonably likely to result in changes in our liquidity over the near- to long-term: ● An increase in working capital requirements to finance the rapid growth in our current business, ● An increase in fees paid to Amazon and other partners as our sales grows ● The cost of being a public company; ● Marketing and advertising expenses for attracting new customers; and ● Capital requirements for the development of additional infrastructure Since inception, we have generated liquidity from the profitability of our ongoing business and from debt to fund our operations.
Revenue is measured as the amount of consideration for which the Company expects to be entitled in exchange for transferring goods. Consistent with this policy, the Company reduces the amount of these discounts from the gross revenue to calculate the net revenue recorded on the statement of operations.
Revenue is measured as the amount of consideration for which we expect to be entitled in exchange for transferring goods. Consistent with this policy, we reduce the amount of these discounts from the gross revenue to calculate the net revenue recorded on the statement of operations.
We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
Off-Balance Sheet Financing Arrangements We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
Segment Information – The Company has only one segment, which is online retail (e-commerce). The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments.
Segment Information – We only have one segment, which is online retail (e-commerce). We use the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by our chief operating decision maker for making operating decisions and assessing performance as the source for determining our reportable segments.
The majority of the Company’s property and equipment is computers, and the estimated useful life is 3 years. 47 Impairment of Long-lived Assets - In accordance with ASC 360-10-35-17, if the carrying amount of an asset or asset group (in use or under development) is evaluated and found not to be fully recoverable (the carrying amount exceeds the estimated gross, undiscounted cash flows from use and disposition), then an impairment loss must be recognized.
Impairment of Long-lived Assets - In accordance with ASC 360-10-35-17, if the carrying amount of an asset or asset group (in use or under development) is evaluated and found not to be fully recoverable (the carrying amount exceeds the estimated gross, undiscounted cash flows from use and disposition), then an impairment loss must be recognized.
Formation The Company was founded in 2013 by Sam Lai and Maggie Yu. With their vision, leadership, and software development skills, the Company grew rapidly. From 2013 to 2024, sales grew from $0 to $138,252,861. 40 We were originally incorporated under the laws of the State of Washington on January 13, 2015.
Formation The Company was founded in 2013 by Sam Lai and Maggie Yu. With their vision, leadership, and software development skills, the Company grew rapidly. From 2013 to 2025, sales grew from $0 to $142,440,236. We were originally incorporated under the laws of the State of Washington on January 13, 2015.
When none of the foregoing criteria is met, the lease shall be classified as an operating lease. The Company typically utilizes operating leases for its office space requirements. This means that the Company leases office space, categorizing the lease arrangement as an operating lease.
When none of the foregoing criteria is met, the lease shall be classified as an operating lease. We typically utilize operating leases for our office space requirements. This means that we lease office space, categorizing the lease arrangement as an operating lease.
As of December 31, 2024 and 2023, $560,293 and $675,886, respectively, were written down from the cost of inventories to their net realizable values. Full inventory allowance is recorded for the inventory SKU not sold for more than one year.
As of December 31, 2025 and 2024, $447,841 and $560,293, respectively, were written down from the cost of inventories to our net realizable values. Full inventory allowance is recorded for the inventory SKU not sold for more than one year.
Earnings per Share - The Company computes basic earnings per common share using the weighted-average number of shares of common stock outstanding during the period.
Earnings per Share - We compute basic earnings per common share using the weighted-average number of shares of common stock outstanding during the period.
A performance obligation, defined as the promise to transfer a distinct good, is the unit of account in ASC Topic 606. The Company treats shipping and handling as fulfillment activities, not separate performance obligations. Costs for shipping and handling were $31,480,104 and $31,187,009 for the years ended December 31, 2024 and 2023, respectively, recorded as selling and marketing expenses.
A performance obligation, defined as the promise to transfer a distinct good, is the unit of account in ASC Topic 606. We treat shipping and handling as fulfillment activities, not separate performance obligations. Costs for shipping and handling were $32,050,121 and $31,480,104 for the years ended December 31, 2025 and 2024, respectively, recorded as selling and marketing expenses.
Property and Equipment - Property and equipment are recorded at cost and depreciated or amortized over the estimated useful life of the asset using the straight-line method. The Company elected to expense any individual property and equipment items under $2,500.
Property and Equipment - Property and equipment are recorded at cost and depreciated or amortized over the estimated useful life of the asset using the straight-line method. We elected to expense any individual property and equipment items under $2,500. The majority of our property and equipment is computers, and the estimated useful life is three years.
The Company does not hedge foreign currency translation risk in the net assets and income reported from these sources. Advertising and Promotion Expenses – Our policy is to recognize advertising costs as they are incurred. Advertising and promotion expenses were $5,323,886 and $4,605,629 for the years ended December 31, 2024 and 2023, respectively.
We do not hedge foreign currency translation risk in the net assets and income reported from these sources. Advertising and Promotion Expenses – Our policy is to recognize advertising costs as they are incurred. Advertising and promotion expenses were $5,777,969 and $5,323,886 for the years ended December 31, 2025 and 2024, respectively.
As noted in our consolidated financial statements, as of December 31, 2024, we had retained earnings of $(595,175). 41 Results of Operations Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table shows a comparison of our 2024 and 2023 income statements.
As noted in our consolidated financial statements, as of December 31, 2025, we had retained earnings of $1,109,674. Results of Operations Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 The following table shows a comparison of our 2025 and 2024 income statements.
The challenges of selling via a wholesale model: ● Fierce competition on listing for Buy Box on amazon.com (as described below). ● Developing and maintaining relationships with brand manufacturers. Market Description/Opportunities Total U.S. retail sales increased 2.5% to $7.42 trillion in 2024 from $7.24 trillion in 2023.
The challenges of selling via a wholesale model: ● Fierce competition on listing for Buy Box on amazon.com (as described below). ● Developing and maintaining relationships with brand manufacturers. Market Description/Opportunities According to Marketplace Pulse (based on U.S. Census Bureau data), total U.S. retail sales increased 3.5% to approximately $7.68 trillion in 2025, from $7.42 trillion in 2024.
The rates of sales returns were 7.19% and 6.45% of gross sales for the years ended December 31, 2024 and 2023, respectively. From time to time, the Company offers price discounts on certain selected items to stimulate the sales of those items.
The rates of sales returns were 7.26% and 7.19% of gross sales for the years ended December 31, 2025 and 2024, respectively. From time to time, we offer price discounts on certain selected items to stimulate the sales of those items.
Level 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. 48 Revenue Recognition - The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”).
Level 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. Revenue Recognition - We account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). We adopted ASC Topic 606 as of January 1, 2019.
Consumers spent $1,192.29 billion online with U.S. merchants in 2024, which is around 16.07% of total U.S. retail sales for the year compared to 15.45% in 2023. Amazon accounted for approximately 40% of all e-commerce in the United States and that makes Amazon the biggest ecommerce giant currently in the market.
Consumers spent $1,233.7 billion online with U.S. merchants in 2025, which represents approximately 16.4% of total U.S. retail sales for the year, compared to 16.07% in 2024. Amazon accounted for approximately 40% of all e-commerce in the United States and that makes Amazon the biggest e-commerce giant currently in the market.
The Company performs on-going evaluations of its customers and maintains an allowance for credit losses as the Company deems necessary or appropriate. As of December 31, 2024 and 2023, the Company did not deem it necessary to have an allowance for credit loss. Inventory and Cost of Goods Sold - The Company’s inventory consists mainly of finished goods.
We perform on-going evaluations of our customers and maintains an allowance for credit losses as we deem necessary or appropriate. As of December 31, 2025 and 2024, we did not deem it necessary to have an allowance for credit loss. Inventory and Cost of Goods Sold – Our inventory consists mainly of finished goods.
Further, the Company is subject to credit risk (i.e., credit card chargebacks), establishes prices of its products, can determine who fulfills the goods to the customer (Amazon or the Company) and can limit quantities or stop selling the goods at any time. Based on these considerations, the Company is the principal in this arrangement.
Further, we are subject to credit risk (i.e., credit card chargebacks), establishes prices of its products, can determine who fulfills the goods to the customer (Amazon or the Company) and can limit quantities or stop selling the goods at any time.
During the years ended December 31, 2024 and 2023, approximately 99% and 99%, respectively, of the Company’s revenue was through or with the Amazon sales platform. Foreign Currency Exchange Risk - The Company is exposed to foreign currency exchange risk through its foreign subsidiary in Taiwan.
During the years ended December 31, 2025 and 2024, approximately 98% and 99%, respectively, of our revenue was through or with the Amazon sales platform. Foreign Currency Exchange Risk - We are exposed to foreign currency exchange risk through our foreign subsidiary in Taiwan.
Shares Issued for Services – Stock-based compensation cost for all equity-classified stock awards expected to vest is measured at fair value on the date of grant and recognized over the service period. 51 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable.
Shares Issued for Services – Stock-based compensation cost for all equity-classified stock awards expected to vest is measured at fair value on the date of grant and recognized over the service period.
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported.
GAAP”). U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates.
This was driven by our net income (loss) of $657,447 for the year ended December 31, 2024, as compared to $(2,429,694) for the same period in 2023.
This was driven by our net income of $1,704,849 for the year ended December 31, 2025, as compared to $657,447 for the same period in 2024.
For all of the Company’s sales and distribution channels, revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment date.
Customer confirmations are executed at the time an order is placed through third-party online channels. For all of our sales and distribution channels, revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment date.
The Company adopted ASC Topic 606 as of January 1, 2019. The standard did not affect the Company’s consolidated financial position, or cash flows. There were no changes to the timing of revenue recognition as a result of the adoption.
The standard did not affect our consolidated financial position, or cash flows. There were no changes to the timing of revenue recognition as a result of the adoption.
Deposits are insured up to $250,000 per depositor, per FDIC-insured bank, per ownership category. Cash equivalents and marketable securities are comprised of time deposits, money market funds, highly liquid government bonds, corporate debt securities, mortgage-backed and asset-backed securities, and marketable equity securities. Our cash and cash equivalents primarily consisted of cash and money market funds.
Cash equivalents and marketable securities are comprised of time deposits, money market funds, highly liquid government bonds, corporate debt securities, mortgage-backed and asset-backed securities, and marketable equity securities. Our cash and cash equivalents primarily consisted of cash and money market funds.
The advantages of selling via a wholesale model: ● Purchase lower unit quantities with wholesale orders than private label products. ● Selling wholesale is less time intensive and easier to scale than sourcing products via retail arbitrage. ● More brands will want to work with us because we can provide broader Amazon presence.
As stated above, to date, we have generated only a negligible amount of revenues as a third-party seller on www.walmart.com . 33 The advantages of selling via a wholesale model: ● Purchase lower unit quantities with wholesale orders than private label products. ● Selling wholesale is less time intensive and easier to scale than sourcing products via retail arbitrage. ● More brands will want to work with us because we can provide broader Amazon presence.
This represents an increase in revenues of $6,128,659, or 4.64%. We attribute this increase to our continued growth and maturity in our operating model, despite an overall e-commerce traffic slowdown and intense competition. Our total orders in 2024 were approximately 6,337,492, as compared to 5,749,107 orders in 2023, representing an increase of 10.23%.
This represents an increase in revenues of $4,187,375, or 3.03%. We attribute this increase to our continued growth and maturity in our operating model, despite an overall e-commerce traffic slowdown and intense competition. Our total orders in 2025 were approximately 6,588,014, as compared to 6,337,492 orders in 2024, representing an increase of 3.95%.
We have operated as a third-party seller on www.amazon.com since 2013. We have also sold merchandise on our website at www.hourloop.com since 2013. We expanded our operations to www.walmart.com in October 2020.
Overview Our Business We are an online retailer engaged in e-commerce retailing in the U.S. market. We have operated as a third-party seller on www.amazon.com since 2013. We have also sold merchandise on our website at www.hourloop.com since 2013. We expanded our operations to www.walmart.com in October 2020.
Despite the increase in revenue to $138,252,861 for the year ended December 31, 2024, as compared to $132,124,202 for the year ended December 31, 2023, the revenue increase was offset by a corresponding increase in cost of goods sold of $635,206 and an increase in operating expenses of $1,759,090.
Despite the increase in revenue to $142,440,236 for the year ended December 31, 2025, as compared to $138,252,861 for the year ended December 31, 2024, the revenue increase was offset by a corresponding increase in cost of goods sold of $1,564,412 and an increase in operating expenses of $892,973.
Year Ended December 31, 2024 2023 Statement of Cash Flows Net cash provided by (used in) operating activities $ 313,140 $ (2,063,375 ) Net cash used in investing activities $ (35,996 ) $ (14,823 ) Net cash used in financing activities $ (671,000 ) $ - Effect of changes in foreign currency rates $ 29,284 $ (238 ) Net decrease in cash $ (364,572 ) $ (2,078,436 ) Cash - beginning of the period $ 2,484,153 $ 4,562,589 Cash - end of the period $ 2,119,581 $ 2,484,153 Net Cash Provided by (used in) Operating Activities For the fiscal year ended December 31, 2024, cash provided by (used in) operating activities amounted to $313,140, as compared to $(2,063,375) for the year ended December 31, 2023.
Year Ended December 31, 2025 2024 Statement of Cash Flows Net cash provided by operating activities $ 2,581,256 $ 313,140 Net cash used in investing activities $ (75,097 ) $ (35,996 ) Net cash used in financing activities $ (839,000 ) $ (671,000 ) Effect of changes in foreign currency rates $ 5,293 $ 29,284 Net increase (decrease) in cash $ 1,672,452 $ (364,572 ) Cash - beginning of the period $ 2,119,581 $ 2,484,153 Cash - end of the period $ 3,792,033 $ 2,119,581 36 Net Cash Provided by Operating Activities For the fiscal year ended December 31, 2025, cash provided by operating activities amounted to $2,581,256, as compared to $313,140 for the year ended December 31, 2024.
Policy for inventory allowance: The Company writes down the cost of obsolete and slow-moving inventories to the estimated net realizable value, based on inventory obsolescence trends, historical experience, forecasted consumer demand and application of the specific identification method.
The “Cost of revenues” line item in the unaudited consolidated statements of operations is principally inventory sold to customers during the reporting period. Policy for inventory allowance: We write down the cost of obsolete and slow-moving inventories to the estimated net realizable value, based on inventory obsolescence trends, historical experience, forecasted consumer demand and application of the specific identification method.
Actual results could materially differ from those estimates. 46 Cash and Cash Equivalents - The Company considers all highly liquid financial instruments purchased with original maturities of three months or less to be cash. Our cash is held in the bank and covered by the Federal Deposit Insurance Corporation (“FDIC”), subject to applicable limits.
Cash and Cash Equivalents – We consider all highly liquid financial instruments purchased with original maturities of three months or less to be cash. Our cash is held in the bank and covered by the Federal Deposit Insurance Corporation (“FDIC”), subject to applicable limits. Deposits are insured up to $250,000 per depositor, per FDIC-insured bank, per ownership category.
Affiliated Loans From time to time, the Company receives loans and advances from its stockholders to fund its operations. As of December 31, 2024, the Company had a total of $4,192,995 due to related parties, which included $3,499,418 in stockholder payables and $693,577 accrued for bonuses.
As of December 31, 2025, we had a total of $3,810,418 due to related parties, which included $2,660,418 in stockholder payables and $1,150,000 accrued for bonuses. As of December 31, 2024, we had a total of $4,192,995 due to related parties, which included $3,499,418 in stockholder payables and $693,577 accrued for bonuses.
While stockholder payables are generally non-interest bearing and payable on demand, the Company and stockholders entered into loan agreements for loans with terms over one year. December 2020 Loan On December 30, 2020 and later modified on September 16, 2021, the Company, Mr. Lai and Ms.
While stockholder payables are generally non-interest bearing and payable on demand, we and our stockholders entered into loan agreements for loans with terms over one year. July 2021 Loan On July 27, 2021, the Company, Mr. Lai and Ms. Yu entered into a loan agreement with a principal amount of $4,170,418. The loan is subordinated.
Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Unless the context otherwise requires, “Hour Loop,” “we,” “us,” “our,” or the “Company” refers to Hour Loop, Inc. and its consolidated subsidiaries. 39 Overview Our Business We are an online retailer engaged in e-commerce retailing in the U.S. market.
Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Unless the context otherwise requires, “Hour Loop,” “we,” “us,” “our,” or the “Company” refers to Hour Loop, Inc., together with Flywheel Consulting Limited, its wholly owned subsidiary (“Flywheel”).
Net Cash Used in Investing Activities For the fiscal year ended December 31, 2024, $35,996 in cash was used in investing activities, as compared to $14,823 in cash used in investing activities for the fiscal year ended December 31, 2023.
Net Cash Used in Investing Activities For the fiscal year ended December 31, 2025, $75,097 in cash was used in investing activities, as compared to $35,996 in cash used in investing activities for the fiscal year ended December 31, 2024. The increase primarily reflects higher purchases of property and equipment for the year ended December 31, 2025.
We had cash of $2,119,581 and $2,484,153 as of December 31, 2024 and 2023, respectively. Our primary uses of cash have been for inventory, payments to Amazon related to sales and shipping of products, for services provided, payments for marketing and advertising and salaries paid to our employees.
Our primary uses of cash have been for inventory, payments to Amazon related to sales and shipping of products, for services provided, payments for marketing and advertising and salaries paid to our employees. We have received funds from the sales of products that we sell online.
Year Ended December 31, 2024 2023 Statement of Operations Data Total revenues $ 138,252,861 $ 132,124,202 Total cost of goods sold (66,242,153 ) (65,606,947 ) Gross profit 72,010,708 66,517,255 Total operating expenses 71,279,768 69,520,678 Income (loss) from operations 730,940 (3,003,423 ) Total other non-operating income (expense) 228,621 (157,031 ) Income tax (expense) benefit (302,114 ) 730,760 Net income (loss) 657,447 (2,429,694 ) Other comprehensive loss (25,644 ) (2,597 ) Total comprehensive income (loss) $ 631,803 $ (2,432,291 ) Revenue We generated $138,252,861 in revenues in 2024, as compared to $132,124,202 in revenues in the same period in 2023.
Year Ended December 31, 2025 2024 Statement of Operations Data Total revenues $ 142,440,236 $ 138,252,861 Total cost of goods sold (67,806,565 ) (66,242,153 ) Gross profit 74,633,671 72,010,708 Total operating expenses 72,172,741 71,279,768 Income from operations 2,460,930 730,940 Total other non-operating (expense) income (63,345 ) 228,621 Income tax expense (692,736 ) (302,114 ) Net income 1,704,849 657,447 Other comprehensive income (loss) 69,267 (25,644 ) Total comprehensive income $ 1,774,116 $ 631,803 Revenue The Company generated $142,440,236 in revenues in 2025, as compared to $138,252,861 in revenues in the same period in 2024.
Transaction prices are evaluated for potential refunds or adjustments, determining the net consideration expected. Revenues for the years ended December 31, 2024 and 2023 were recognized at a point in time. Customer confirmations are executed at the time an order is placed through third-party online channels.
For each contract, the promise to transfer products is identified as the sole performance obligation. Transaction prices are evaluated for potential refunds or adjustments, determining the net consideration expected. Revenues for the years ended December 31, 2025 and 2024 were recognized at a point in time.
Our relationship with Walmart is also similar. We pay Walmart fees for allowing us to sell our merchandise on their platform. As stated above, to date, we have generated only a negligible amount of revenues as a third-party seller on www.walmart.com .
Our relationship with Walmart is also similar. We pay Walmart fees for allowing us to sell our merchandise on their platform.
Significant customers are those which represent more than 10% of the Company’s total net revenue or gross accounts receivable balance at the balance sheet date. During the years ended December 31, 2024 and 2023, the Company had no customer that accounted for 10% or more of total net revenues.
For the years ended December 31, 2025 and 2024, we had no customer that accounted for 10% or more of total net revenues. In addition, as of December 31, 2025 and 2024, we had no customer that accounted for 10% or more of gross accounts receivable.
The decrease in total comprehensive loss was attributed to an increase in the Company’s gross revenues in 2024, compared to 2023. Liquidity and Capital Resources Cash Flows for the Years Ended December 31, 2024 and 2023 Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements.
Liquidity and Capital Resources Cash Flows for the Years Ended December 31, 2025 and 2024 Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had cash of $3,792,033 and $2,119,581 as of December 31, 2025 and 2024, respectively.
Cost of Goods Sold Cost of goods sold for the year ended December 31, 2024 totaled $66,242,153, as compared to $65,606,947 for the year ended December 31, 2023.
Cost of Goods Sold Cost of goods sold for the year ended December 31, 2025 totaled $67,806,565, as compared to $66,242,153 for the year ended December 31, 2024. Cost of goods sold includes the cost of the merchandise sold and shipping costs, as well as estimated losses due to damage to goods.
Our Financial Position For the fiscal years ended December 31, 2024 and 2023, we generated net revenues of $138,252,861 and $132,124,202, respectively, and reported net income (loss) of $657,447 and $(2,429,694), respectively, and cash flow provided by (used in) operating activities of $313,140 and $(2,063,375), respectively.
During these times, we avoid matching their prices. This strategy allows us to stay profitable. 34 Our Financial Position For the fiscal years ended December 31, 2025 and 2024, we generated net revenues of $142,440,236 and $138,252,861, respectively, and reported net income of $1,704,849 and $657,447, respectively, and cash flow provided by operating activities of $2,581,256 and $313,140, respectively.
Therefore, the Company’s accounts receivable are comprised of receivables due from Amazon and the reimbursement from Amazon to the Company usually takes less than 7 days.
As of December 31, 2025 and 2024, all of our accounts receivable were held by our sales platform agent, Amazon, which collects money on our behalf from our customers. Therefore, our accounts receivable are comprised of receivables due from Amazon and the reimbursement from Amazon to the Company usually takes less than seven days.
The Company derives its revenue from the sale of consumer products. The Company sells its products directly to consumers through online retail channels. The Company considers customer order confirmations to be a contract with the customer. For each contract, the promise to transfer products is identified as the sole performance obligation.
Based on these considerations, the Company is the principal in this arrangement. 40 We derive our revenue from the sale of consumer products. We sell our products directly to consumers through online retail channels. We consider customer order confirmations to be a contract with the customer.
As of December 31, 2024, the aggregate principal amount of the BofA Note outstanding was $-0-. On June 30, 2024, the Company paid accrued interest in full. Taishin International Bank On August 18, 2022, Flywheel entered into a line of credit agreement in the amount of $6,940,063 with Taishin of America Loa.
Taishin International Bank On August 18, 2022, Flywheel entered into a line of credit agreement in the amount of $6,940,063 with Taishin International Bank (“Taishin”). As amended, the line of credit matures on May 18, 2026 and bears interest at a rate of 3.42% per annum.
Other Expenses, Net Other expenses, net for the year ended December 31, 2024 was $228,621, as compared to $(157,031) for the year ended December 31, 2023. Total Comprehensive income (loss) Total comprehensive income (loss) for the year ended December 31, 2024 was $631,803, as compared to $(2,432,291) for the year ended December 31, 2023.
This change was caused by an increase in operating efficiency. 35 Other (Expenses) Income, Net Other (expenses) income, net for the year ended December 31, 2025 was $(63,345), as compared to $228,621 for the year ended December 31, 2024.
Cost of goods sold includes the cost of the merchandise sold and shipping costs, as well as estimated losses due to damage to goods. 42 Operating Expense Operating expenses for the year ended December 31, 2024 totaled $71,279,768, representing a $1,759,090, or 2.53%, increase from the $69,520,678 of operating expenses for the year ended December 31, 2023.
Operating Expense Operating expenses for the year ended December 31, 2025 totaled $72,172,741, representing a $892,973, or 1.25%, increase from the $71,279,768 of operating expenses for the year ended December 31, 2024.
Net Cash Used in Financing Activities For the fiscal year ended December 31, 2024, cash used in financing activities amounted to $671,000, as compared to $-0- cash used in financing activities for the fiscal year ended December 31, 2023. 44 Off-Balance Sheet Financing Arrangements We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements.
Net Cash Used in Financing Activities For the fiscal year ended December 31, 2025, cash used in financing activities amounted to $1,339,000, as compared to $671,000 cash used in financing activities for the fiscal year ended December 31, 2024. The increase in cash outflows was primarily due to repayments made to related parties for the year ended December 31, 2025.
For the Year Ending December 31, Amount 2025 $ 115,652 2026 - 2027 - 2028 and thereafter - Total minimum lease payments 115,652 Less: effect of discounting (1,112 ) Present value of the future minimum lease payment 114,540 Less: operating lease liabilities-current (114,540 ) Total operating lease liabilities-non-current $ - Sales Taxes We make an assessment of sales tax payable, including any related interest and penalties, and accrue these estimates on the financial statements.
For the Year Ending December 31, Amount 2026 $ 94,036 2027 61,330 2028 26,890 2029 and thereafter - Total minimum lease payments 182,256 Less: effect of discounting (6,623 ) Present value of the future minimum lease payment 175,633 Less: operating lease liabilities-current (92,362 ) Total operating lease liabilities-non-current $ 83,271 Critical Accounting Policies and Estimates The preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“U.S.
Yu agreed to extend the term of the loan, with a new maturity date of December 31, 2025. As amended, the annual interest rate of the loan is 5.5%. Leases The Company has four operating leases (Flywheel has four offices lease in Taiwan).
As amended, the loan matures on December 31, 2026 and has an annual interest rate of 4.75%. Leases We have two operating leases (Flywheel has two offices lease in Taiwan). The respective lease terms are June 10, 2025 to July 9, 2027, and December 1, 2025 to November 30, 2028, respectively.
The Company maintains cash and cash equivalents with various domestic and foreign financial institutions of high credit quality. The Company performs periodic evaluations of the relative credit standing of all of the aforementioned institutions. The Company maintains reserves for potential credit losses on customer accounts when deemed necessary.
We perform periodic evaluations of the relative credit standing of all of the aforementioned institutions. 41 We maintain reserves for potential credit losses on customer accounts when deemed necessary. Significant customers are those which represent more than 10% of our total net revenue or gross accounts receivable balance at the balance sheet date.
Removed
During these times, we avoid matching their prices. This strategy allows us to stay profitable.
Added
Total Comprehensive Income Total comprehensive income for the year ended December 31, 2025 was $1,774,116, as compared to $631,803 for the year ended December 31, 2024. The increase in total comprehensive income was attributed to an increase in our gross revenues in 2025, compared to 2024.
Removed
This change was caused by an increase in platform fees and fees paid to Amazon. The Amazon fees are proportional to revenues. The increase in revenues in 2024 over the same period in 2023 drove the increase in platform fees and higher Amazon fees.

… 16 more changes not shown on this page.

Other HOUR 10-K year-over-year comparisons