UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______, 20___, to _____, 20___. Commission File Number 001-41204 Hour Loop, Inc. (Exact Name of Registrant as Specified in its Charter) (State or Other Jurisdiction of Incorp ...

Profitability Continues Despite Challenges for the Overall Economy Redmond, WA, Aug 12, 2025 – Hour Loop, Inc. (NASDAQ: HOUR) ("Hour Loop"), a leading online retailer, announces its financial and operational results for the quarter ended June 30, 2025. Financial Highlights for Second Quarter of 2025: Management Commentary Exhibit 99.1 Hour Loop Reports Second Quarter of 2025 Results "The second quarter of 2025 brought meaningful disruption to the retail sector as new U.S. trade actions targeting Chinese imp ...

Profitability Continues Despite Challenges for the Overall Economy Redmond, WA, Aug. 12, 2025 (GLOBE NEWSWIRE) -- Hour Loop, Inc. (NASDAQ: HOUR) ("Hour Loop"), a leading online retailer, announces its financial and operational results for the quarter ended June 30, 2025. Financial Highlights for Second Quarter of 2025: Management Commentary "The second quarter of 2025 brought meaningful disruption to the retail sector as new U.S. trade actions targeting Chinese imports reshaped sourcing dynamics, pressured ...

Group 1: New Content and Specials - Nickelodeon and Spin Master Entertainment are launching five original hour-long PAW Patrol specials, starting with "Valiente: A Tracker Story" featuring Tracker, set to premiere this fall [1][2] - The second special, "A PAW Patrol Christmas," will focus on Rubble and his quest for a new laser drill, premiering during the holiday season [3] - The remaining PAW Patrol specials will be released in 2026, following the announcement of seasons 12 and 13 for the series [1] Group 2: Upcoming Episodes and Programming - New Fire Rescue episodes of PAW Patrol will premiere from June 2 to June 5, 2025, at 10 a.m. (ET/PT) on Nickelodeon [4] - A special titled "Skye's Road Trip Rescue" will air on July 11, 2025, featuring a high-stakes rescue involving a baby moose, rabbit, and bear [4] - PAW Patrol will continue to air regularly throughout the summer, maintaining its schedule of Monday through Thursday at 10 a.m. (ET/PT) [4] Group 3: Brand and Distribution - PAW Patrol has been a top-rated preschool series since its launch on August 12, 2013, and is available in 180 territories, translated into 33 languages [6] - The first spinoff, Rubble & Crew, debuted in 2023, focusing on Rubble and his pup family in Builder Cove [6] - Spin Master Corp. is a leading global children's entertainment company, creating content across toys, entertainment, and digital games [7]

As U.S. tariffs rise and platform competition intensifies, Hour Loop seeks to upgrade supply chain strategy through partnership with Return Helper Redmond, WA, May 13, 2025 (GLOBE NEWSWIRE) -- Hour Loop, Inc. ("Hour Loop" or the "Company") (NASDAQ: HOUR), a leading online retailer, today announced a strategic partnership with Return Helper, aiming to address the challenges of a high-tariff era and enhance the cross-border e-commerce supply chain between Taiwan and the U.S. In 2025, cross-border sellers are ...

PART I - FINANCIAL INFORMATION [Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The unaudited consolidated financial statements for Q1 2025 show decreased net income and total assets, with a shift to negative operating cash flow [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$19.08 million** as of March 31, 2025, while total liabilities also decreased, leading to an increase in stockholders' equity Consolidated Balance Sheet Highlights (in U.S. Dollars) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $1,260,122 | $2,119,581 | | Inventory, net | $15,889,482 | $14,640,632 | | Total current assets | $18,158,531 | $18,738,654 | | **TOTAL ASSETS** | **$19,077,473** | **$19,966,964** | | **Liabilities & Equity** | | | | Accounts payable | $6,859,536 | $4,176,305 | | Credit cards payable | $2,404,365 | $3,389,880 | | Due to related parties | $2,660,418 | $4,192,995 | | Total liabilities | $13,261,750 | $14,807,222 | | Total stockholders' equity | $5,815,723 | $5,159,742 | | **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY** | **$19,077,473** | **$19,966,964** | [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Net revenues increased to **$25.84 million** in Q1 2025, but gross profit and net income decreased, resulting in lower basic and diluted EPS Q1 2025 vs. Q1 2024 Performance (in U.S. Dollars) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenues, net | $25,837,090 | $24,681,122 | | Gross profit | $14,145,298 | $14,452,206 | | Income from operations | $920,865 | $1,538,172 | | Net income | $654,517 | $1,065,814 | | Basic and diluted EPS | $0.02 | $0.03 | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased to **$5.82 million** by March 31, 2025, primarily due to net income and stock-based compensation, partially offset by currency translation loss - Stockholders' equity at March 31, 2025 was **$5,815,723**, up from **$5,159,742** at December 31, 2024[14](index=14&type=chunk) - The change in equity for Q1 2025 was driven by net income of **$654,517**, stock-based compensation of **$15,000**, and a currency translation loss of **$13,536**[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating activities shifted to a net cash outflow of **$23,891** in Q1 2025, leading to a decrease in total cash to **$1.26 million** at period-end Cash Flow Summary (in U.S. Dollars) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(23,891) | $492,943 | | Net cash used in investing activities | $(720) | $(17,798) | | Net cash used in financing activities | $(839,000) | $0 | | **Net change in cash** | **$(859,459)** | **$437,927** | | Cash at end of period | $1,260,122 | $2,922,080 | [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Notes detail accounting policies, including the company's single e-commerce segment, **99%** revenue reliance on Amazon, and inventory valuation methods - The company operates as a technology-enabled consumer products company, primarily selling through online retail channels like Amazon, which constitutes a single e-commerce segment[19](index=19&type=chunk) - Approximately **99%** of the company's revenue for the three months ended March 31, 2025 and 2024 was generated through the Amazon sales platform[56](index=56&type=chunk) Inventory Breakdown (in U.S. Dollars) | Component | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Inventory | $12,499,473 | $12,716,062 | | Inventory-in-transit | $3,887,356 | $2,484,863 | | Allowance | $(497,347) | $(560,293) | | **Total** | **$15,889,482** | **$14,640,632** | Revenue Disaggregation (in U.S. Dollars) | Region/Type | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenue-U.S. | $26,602,547 | $25,459,691 | | Revenue-International | $951,439 | $869,695 | | Revenue-Other | $302,255 | $120,556 | | Sales returns & Discounts | $(2,019,151) | $(1,768,820) | | **Total Net Revenue** | **$25,837,090** | **$24,681,122** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 revenue growth driven by order volume, decreased net income due to higher costs, and strategic adjustments to inventory policy amid tariff uncertainty - The company operates a wholesale (reselling) model, primarily as a third-party seller on Amazon, managing over **100,000** SKUs[105](index=105&type=chunk)[106](index=106&type=chunk) - Competitive advantages are cited as strong operations teams and a proprietary software system for data analysis and identifying product gaps[112](index=112&type=chunk) - In response to tariff volatility, the company expanded its inventory holding policy to **3-6 months**, suspended container exports from China, and implemented measured price increases on select goods[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Q1 2025 net revenues increased **4.68%** to **$25.8 million** due to higher order volume, but increased cost of goods sold led to a **38.9%** decrease in comprehensive income Q1 2025 vs Q1 2024 Key Metrics | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenues | $25,837,090 | $24,681,122 | +4.68% | | Total Orders | 1,229,792 | 1,123,204 | +9.49% | | Cost of Goods Sold | $11,691,792 | $10,228,916 | +14.3% | | Total Comprehensive Income | $640,981 | $1,049,281 | -38.9% | [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Cash decreased to **$1.26 million** as of March 31, 2025, with operating cash flow turning negative, primarily due to working capital changes and debt repayments Cash and Cash Flow Summary (in U.S. Dollars) | Metric | As of/For the Three Months Ended March 31, 2025 | As of/For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Cash | $1,260,122 | $2,922,080 | | Net cash (used in) provided by operating activities | $(23,891) | $492,943 | | Net cash used in financing activities | $(839,000) | $0 | - The company has no off-balance sheet financing arrangements[135](index=135&type=chunk) [Contractual Obligations](index=29&type=section&id=Contractual%20Obligations) Key contractual obligations include a **$603,227** line of credit maturing in May 2025 and **$2.66 million** in related-party loans extended to December 2025 - Flywheel subsidiary has a line of credit with Taishin International Bank, with an outstanding balance of **$603,227** and a maturity date of May 23, 2025[137](index=137&type=chunk)[138](index=138&type=chunk) - The company owes **$2,660,418** to related parties (key executives/stockholders), with the loan term extended to December 31, 2025, at a **5.5%** interest rate[139](index=139&type=chunk)[140](index=140&type=chunk) [Critical Accounting Policies and Estimates](index=30&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section details critical accounting policies, including revenue recognition at shipment, inventory valuation at lower of cost or net realizable value, and the company's single e-commerce segment - Revenue is recognized when control of the product is transferred to the customer, typically at the shipment date, and the company has determined it is the principal in its transactions on third-party platforms[159](index=159&type=chunk)[160](index=160&type=chunk) - Inventory is stated at the lower of cost (FIFO basis) or net realizable value, with an allowance recorded for SKUs not sold for more than one year[146](index=146&type=chunk)[148](index=148&type=chunk) - The company has determined it has only one operating segment: online retail (e-commerce)[165](index=165&type=chunk)[166](index=166&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable to the company for the current reporting period - Not applicable[177](index=177&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of March 31, 2025[178](index=178&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[179](index=179&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to materially affect its business or financial position - To the knowledge of management, there are no pending legal proceedings against the company that would have a material effect on the business[182](index=182&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Hour Loop is not required to disclose material changes to risk factors in this quarterly report - The Company is a smaller reporting company and is not required to disclose material changes to its risk factors in this quarterly report[183](index=183&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On April 1, 2025, the company issued **1,750** shares of common stock to five executives and directors as compensation, exempt from registration - On April 1, 2025, the Company issued **1,750** shares of common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Alan Gao and Hillary Bui as compensation for services, with the issuance exempt from registration under Section 4(a)(2) of the Securities Act[184](index=184&type=chunk) [Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults on any material payments occurred during the period covered by this report - No defaults in any material payments occurred during the covered period[185](index=185&type=chunk) [Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[186](index=186&type=chunk) [Other Information](index=36&type=section&id=Item%205.%20Other%20Information) No other material information is reported, with no changes to board nominee procedures or Rule 10b5-1 trading plans by directors or officers - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the last fiscal quarter[188](index=188&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including officer certifications and Inline XBRL documents - Exhibits filed include CEO and CFO certifications (**31.1**, **31.2**, **32.1**) and various Inline XBRL data files[190](index=190&type=chunk)

[Q1 2025 Earnings Release](index=1&type=section&id=Hour%20Loop%20Reports%20First%20Quarter%20of%202025%20Results) Hour Loop announced its Q1 2025 results, showing revenue growth but a decline in profitability and cash from operations [Financial and Operational Highlights](index=1&type=section&id=Financial%20Highlights%20for%20First%20Quarter%20of%202025) Hour Loop's Q1 2025 net revenues grew 4.7% to $25.8 million, but net income fell to $0.7 million, and operating cash flow turned negative Q1 2025 Key Financial Metrics (YoY) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $25.8 million | $24.7 million | +4.7% | | Net Income | $0.7 million | $1.1 million | -36.4% | | Cash from Operating Activities | ($0.02 million) | $0.5 million | Negative Swing | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management noted revenue growth despite economic challenges, with gross margin impacted by competition and operating expenses rising due to talent retention efforts - Revenue grew **4.7%** despite a cautious consumer outlook and rising tariffs and fees from the marketplace[2](index=2&type=chunk) - Gross margin was negatively affected by a challenging e-commerce environment and intense industry competition[2](index=2&type=chunk) - Operating expenses increased primarily due to amending the profit-sharing frequency to quarterly for talent retention purposes[2](index=2&type=chunk) - The company is cautiously optimistic, citing strong product demand continuing into 2025 despite economic uncertainty[2](index=2&type=chunk) [Detailed Financial Results](index=1&type=section&id=First%20Quarter%20of%202025%20Financial%20Results) Q1 2025 saw net revenue growth to $25.8 million, but gross profit percentage declined, leading to a net income decrease to $0.7 million [Revenue and Gross Profit](index=1&type=section&id=Revenue%20and%20Gross%20Profit) Net revenues grew 4.7% to $25.8 million, but gross profit percentage declined to 54.7% due to competition and higher costs Q1 Revenue and Gross Profit (YoY) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Revenues | $25.8 million | $24.7 million | | Gross Profit % | 54.7% | 58.6% | [Operating Expenses and Net Income](index=2&type=section&id=Operating%20Expenses%20and%20Net%20Income) Operating expenses as a percentage of revenue improved, yet net income decreased to $0.7 million ($0.02 per diluted share) due to higher overall costs Q1 Profitability Metrics (YoY) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating Expenses (% of Revenue) | 51.2% | 52.3% | | Net Income | $0.7 million | $1.1 million | | Diluted EPS | $0.02 | $0.03 | [Balance Sheet and Cash Position](index=2&type=section&id=Balance%20Sheet%20and%20Cash%20Position) Cash and cash equivalents decreased to $1.3 million by March 31, 2025, while inventories strategically increased to $15.9 million Key Balance Sheet Items (QoQ) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1.3 million | $2.1 million | | Inventories | $15.9 million | $14.6 million | [Full Year 2025 Financial Outlook](index=2&type=section&id=Full%20Year%202025%20Financial%20Outlook) Hour Loop will not provide full-year 2025 financial guidance due to ongoing economic uncertainty and current tariff conditions - The company is not able to provide forward-looking guidance for the full year 2025 due to ongoing economic uncertainty, primarily influenced by current tariff conditions[8](index=8&type=chunk) [About Hour Loop, Inc.](index=2&type=section&id=About%20Hour%20Loop%2C%20Inc.) Hour Loop is a US e-commerce retailer primarily operating as a third-party seller on Amazon, managing over 100,000 SKUs with plans for rapid expansion - Operates as an online retailer, primarily as a third-party seller on www.amazon.com, which generates practically all its revenue[9](index=9&type=chunk) - Manages over **100,000 SKUs** in categories including home/garden, toys, kitchenware, apparel, and electronics[9](index=9&type=chunk) - Future plans involve rapid business expansion by increasing the number of business managers, vendors, and SKUs[9](index=9&type=chunk) [Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Consolidated%20Financial%20Statements) This section presents Hour Loop's unaudited consolidated balance sheets, statements of operations, and cash flows for the relevant periods [Consolidated Balance Sheets](index=3&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2025, total assets decreased to $19.1 million, total liabilities decreased to $13.3 million, and stockholders' equity increased to $5.8 million Balance Sheet Summary (as of March 31, 2025 vs. Dec 31, 2024) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash | $1,260,122 | $2,119,581 | | Inventory, net | $15,889,482 | $14,640,632 | | Total Assets | $19,077,473 | $19,966,964 | | Total Liabilities | $13,261,750 | $14,807,222 | | Total Stockholders' Equity | $5,815,723 | $5,159,742 | [Consolidated Statements of Operations](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME) Q1 2025 net revenues increased to $25.8 million, but gross profit and income from operations declined, resulting in net income of $654,517 Statement of Operations Summary (Three Months Ended March 31) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Revenues, net | $25,837,090 | $24,681,122 | | Gross Profit | $14,145,298 | $14,452,206 | | Income from Operations | $920,865 | $1,538,172 | | Net Income | $654,517 | $1,065,814 | | Basic and Diluted EPS | $0.02 | $0.03 | [Consolidated Statements of Cash Flows](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For Q1 2025, operating activities used $23,891 in cash, a reversal from the prior year, leading to a net cash decrease of $859,459 and an ending balance of $1.26 million Cash Flow Summary (Three Months Ended March 31) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($23,891) | $492,943 | | Net cash used in investing activities | ($720) | ($17,798) | | Net cash used in financing activities | ($839,000) | $0 | | **Net change in cash** | **($859,459)** | **$437,927** | | **Cash at end of period** | **$1,260,122** | **$2,922,080** |

Core Insights - Hour Loop, Inc. reported a revenue growth of 4.7% in Q1 2025, reaching $25.8 million compared to $24.7 million in the same period last year [4][9] - The company's gross profit margin decreased to 54.7% from 58.6% due to increased competition and higher inbound costs [5][9] - Net income fell to $0.7 million, or $0.02 per diluted share, down from $1.1 million, or $0.03 per diluted share, in the prior year [6][9] Financial Performance - Net revenues for Q1 2025 were $25.8 million, an increase from $24.7 million in Q1 2024 [4][9] - Gross profit for the quarter was $14.1 million, with a gross profit percentage of 54.7%, down from 58.6% in the previous year [5][16] - Operating expenses as a percentage of net revenues decreased to 51.2% from 52.3% year-over-year [5][9] Operational Insights - The company experienced an increase in operating expenses primarily due to changes in profit-sharing frequency aimed at talent retention [3] - Cash and cash equivalents decreased to $1.3 million as of March 31, 2025, from $2.1 million at the end of 2024, attributed to loan repayments and inventory growth [6][9] - Inventories rose to $15.9 million from $14.6 million as of December 31, 2024, reflecting strategic investments in inventory [7] Future Outlook - Hour Loop is unable to provide forward-looking guidance for the full year 2025 due to ongoing economic uncertainty influenced by current tariff conditions [8]

Part I [Business](index=5&type=section&id=Item%201.%20Business) Hour Loop is a US e-commerce retailer on Amazon, achieving profitability in FY2024 with **$138.3 million** revenue [Business Overview and Model](index=5&type=section&id=Item%201.%20Business%23Business%20Overview%20and%20Model) - Hour Loop is an online retailer primarily operating as a **third-party seller on Amazon.com since 2013**, with negligible revenue from other platforms like Walmart, eBay, Etsy, or its own website[16](index=16&type=chunk) - The company's business model is **wholesale**, also known as **reselling**. It involves buying products in bulk directly from brands or manufacturers and selling them on platforms like Amazon, which also handles sales fulfillment (FBA)[17](index=17&type=chunk) - The company manages **over 100,000 stock-keeping units (SKUs)** across categories such as home/garden décor, toys, kitchenware, apparel, and electronics[16](index=16&type=chunk) - The company was founded in **2013** by **Sam Lai (CEO)** and **Maggie Yu (SVP)**. It was incorporated in Washington in **2015** and reincorporated in Delaware in **2021**[21](index=21&type=chunk)[22](index=22&type=chunk) [Historical Performance and Market Opportunity](index=6&type=section&id=Item%201.%20Business%23Historical%20Performance%20and%20Market%20Opportunity) Historical Financial Performance (2022-2024) | Year | Net Revenue | YoY % | Net Income (Loss) | Net Income (Loss) % | | :--- | :--- | :--- | :--- | :--- | | 2022 | $95,930,091 | 53% | $(1,477,623) | (2)% | | 2023 | $132,124,202 | 38% | $(2,429,694) | (2)% | | 2024 | $138,252,861 | 5% | $657,447 | 0% | - In **2024**, U.S. e-commerce sales grew **6.6%** to **$1.19 trillion**, representing **16.07%** of total U.S. retail sales, up from **15.45%** in **2023**[19](index=19&type=chunk)[37](index=37&type=chunk) - **Amazon** accounts for approximately **40%** of all e-commerce in the United States, making it the largest player in the market[20](index=20&type=chunk)[38](index=38&type=chunk) - For both **2024** and **2023**, approximately **99% of the company's revenue** was generated through the **Amazon sales platform**[25](index=25&type=chunk) [Strategy and Competitive Advantages](index=6&type=section&id=Item%201.%20Business%23Strategy%20and%20Competitive%20Advantages) - The company's two main competitive advantages are its **experienced operations/sales teams** and its **proprietary software system** that collects and processes large amounts of data to optimize operations and identify product gaps[24](index=24&type=chunk) - Pricing strategy is managed by a **customized auto-pricing system** that analyzes sales trends, inventory, costs, and competition to balance gross margin and revenue. This includes competition-based, promotional, and value-based pricing policies[26](index=26&type=chunk)[27](index=27&type=chunk)[33](index=33&type=chunk) - Operational advantages include **automation through proprietary software**, **profitability management with KPIs**, **continuous process optimization**, a **data-driven approach**, and **effective employee training programs**[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - Cost advantages are achieved through **direct importing**, **bulk purchasing**, **efficient processes using proprietary software**, and leveraging **Amazon's FBA program** and other logistics partners to reduce distribution and labor costs[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[55](index=55&type=chunk) [Competition and Growth](index=12&type=section&id=Item%201.%20Business%23Competition%20and%20Growth) - The key competitor is identified as **Amazon Retail** (both Vendor Central and the "Sold by Amazon" program), which often sells the same brands at a loss. Other third-party sellers are not considered key competitors due to the vast market size[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) - The company believes **Amazon Retail's weakness** lies in its focus on sales over vendor relationships, often not following MAP pricing, and its lack of focus on niche marketplaces, which provides an opportunity for third-party sellers[61](index=61&type=chunk)[62](index=62&type=chunk) - Barriers to entry for new competitors include **high capital requirements for inventory and advertising**, the need for **product differentiation through a large number of SKUs**, and the time required to develop a **sophisticated management system and vendor relationships**[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk) - The company's **2025 growth objective** is to continue emphasizing **profit maximization over revenue expansion** by optimizing procurement, maintaining stringent inventory controls, and selectively sourcing products[73](index=73&type=chunk) [Corporate Information](index=14&type=section&id=Item%201.%20Business%23Corporate%20Information) - As of **December 31, 2024**, the company had **151 employees**, a modest reduction from **2023**. It anticipates increasing headcount to approximately **180** in **2025** to support growth[82](index=82&type=chunk) - The company's executive officers are **Sam Lai (CEO)** and **Maggie Yu (SVP)**[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - The company has a line of credit with **Taishin International Bank** with an outstanding balance of **$610,967** as of **Dec 31, 2024**, maturing in **May 2025**[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - The company has a subordinated loan from its principal stockholders, **Mr. Lai and Ms. Yu**, with a principal amount of **$4,170,418**. The loan matures on **December 31, 2025**, with an annual interest rate of **5.5%**[81](index=81&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from Amazon dependence, competition, operational issues, and its "controlled company" status [Risks Related to Business and Operations](index=19&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Related%20to%20Business%20and%20Operations) - The company is heavily dependent on its relationship with **Amazon**, as **99% of its net revenue** in **2024** and **2023** was through the **Amazon sales platform**. Any adverse change in this relationship could significantly impact the business[111](index=111&type=chunk) - The online retail business is **intensely competitive**. Competitors may have greater resources, secure better terms from vendors, and adopt more aggressive pricing[95](index=95&type=chunk) - The business depends on maintaining **strong product listings**, which can be affected by unfavorable customer complaints or negative publicity. A significant portion of performance perception depends on third parties like suppliers and delivery agents[97](index=97&type=chunk) - Continued increases in **Amazon Marketplace fulfillment (FBA) and storage fees** could adversely impact the company's profit margin and results of operations[108](index=108&type=chunk) - The company's profits are dependent on **reimbursements from Amazon for lost and damaged merchandise**. Any change in Amazon's reimbursement policy could adversely impact profitability[113](index=113&type=chunk) [Risks Related to Finance, Personnel, and Technology](index=22&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Related%20to%20Finance%2C%20Personnel%2C%20and%20Technology) - The company's ability to continue as a **going concern** depends on improved profitability, implementation of its business strategy, and the availability of future funding[134](index=134&type=chunk) - The loss of **key personnel**, particularly **CEO Sam Lai** and **SVP Maggie Yu**, or the inability to attract and retain qualified employees, could adversely affect operations[114](index=114&type=chunk)[155](index=155&type=chunk) - Hardware and software systems are vulnerable to **damage, theft, or intrusion**. System interruptions could prevent the company from efficiently fulfilling orders, and a breach of data security could harm the business and customer standing[118](index=118&type=chunk)[119](index=119&type=chunk)[121](index=121&type=chunk) - The company is dependent on **access to capital** for its liquidity needs to fund working capital and indebtedness. Disruption of credit markets could materially affect liquidity[126](index=126&type=chunk)[127](index=127&type=chunk) [Risks Related to Governance and Common Stock](index=29&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Related%20to%20Governance%20and%20Common%20Stock) - **CEO Sam Lai** and **SVP Maggie Yu**, who are married, beneficially own approximately **94.9% of the company's voting power**, making it a "**controlled company**." This allows them to significantly influence all matters requiring stockholder approval and limits minority stockholders' influence[156](index=156&type=chunk) - As a "**controlled company**," Hour Loop is exempt from certain **Nasdaq corporate governance rules**, such as having a majority of independent directors or maintaining separate compensation and nominating committees composed entirely of independent directors[157](index=157&type=chunk)[339](index=339&type=chunk) - As an "**emerging growth company**," the company is permitted to rely on exemptions from certain disclosure requirements, such as not requiring an auditor report on internal controls, which may make its securities less attractive to some investors[181](index=181&type=chunk)[185](index=185&type=chunk) - The company has **never paid dividends** on its common stock and has **no plans to do so in the future**, intending to retain earnings for business operations and expansion[196](index=196&type=chunk) [Unresolved Staff Comments](index=39&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments - None[198](index=198&type=chunk) [Cybersecurity](index=39&type=section&id=Item%201C.%20Cybersecurity) The company is developing a cybersecurity risk management program with executive oversight, having identified no material threats - The company is developing and implementing a **cybersecurity risk management program** to safeguard confidential information and critical systems[200](index=200&type=chunk) - The program includes **risk assessments**, a **dedicated security team**, **employee training**, an **incident response plan**, and **vendor management**[201](index=201&type=chunk) - **Executive management**, along with an **IT service provider**, is responsible for managing cybersecurity risks, with **oversight provided by the Board of Directors**[203](index=203&type=chunk)[205](index=205&type=chunk) - The company has **not identified any known cybersecurity threats** that have materially affected or are reasonably likely to materially affect its operations, strategy, or financial condition[202](index=202&type=chunk) [Properties](index=40&type=section&id=Item%202.%20Properties) The company operates from a virtual HQ in Redmond, leases a warehouse in China, and has offices in Taiwan - Corporate headquarters is a **virtual office** located at **8201 164th Ave. NE, 200, Redmond, WA 98052-7615**, with a monthly rent of **$59**[207](index=207&type=chunk) - The company leases a **warehouse in Dongguan, China**, for storage and warehousing, with payments based on usage[208](index=208&type=chunk) - The company's subsidiary, **Flywheel**, had **four office leases in Taiwan** in **2024** with varying terms and contract amounts[209](index=209&type=chunk) [Legal Proceedings](index=41&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings, nor is it aware of any threatened actions - To the knowledge of management, there are **no legal proceedings currently pending** against the company that would have a material effect on its business[211](index=211&type=chunk) [Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[212](index=212&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=41&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq, with **35.15 million** shares outstanding and an equity incentive plan, but no dividends paid - The company's common stock trades on **The Nasdaq Capital Market** under the symbol "**HOUR**"[214](index=214&type=chunk) - As of **March 27, 2025**, there were **35,151,440 shares** of common stock outstanding[215](index=215&type=chunk) - The company has **never paid cash dividends** and does **not intend to in the foreseeable future**, planning to retain earnings for business expansion[216](index=216&type=chunk) - The **2021 Equity Incentive Plan** had **8,097,909 shares** authorized and available for issuance as of **March 27, 2025**[217](index=217&type=chunk) - Throughout **2023** and **2024**, the company issued shares of common stock to its **executives and directors** as part of their compensation packages under their respective agreements[219](index=219&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2024, Hour Loop's net revenues grew to **$138.3 million**, achieving **$0.66 million** net income and positive operating cash flow [Results of Operations (2024 vs 2023)](index=46&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Results%20of%20Operations%20%282024%20vs%202023%29) Consolidated Statement of Operations Data (2024 vs 2023) | | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | **Total revenues** | $138,252,861 | $132,124,202 | | **Gross profit** | $72,010,708 | $66,517,255 | | **Income (loss) from operations** | $730,940 | $(3,003,423) | | **Net income (loss)** | $657,447 | $(2,429,694) | | **Total comprehensive income (loss)** | $631,803 | $(2,432,291) | - Revenues increased by **$6.1 million (4.64%)** in **2024**, attributed to a **10.23% increase in total orders** (from **5.75 million** to **6.34 million**), which was partially offset by competitive pricing pressure[246](index=246&type=chunk) - Cost of goods sold increased slightly to **$66.2 million** in **2024** from **$65.6 million** in **2023**[247](index=247&type=chunk) - Operating expenses increased by **2.53%** to **$71.3 million**, primarily due to higher platform fees and Amazon fees which are proportional to revenue[249](index=249&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Liquidity%20and%20Capital%20Resources) Summary of Cash Flows (2024 vs 2023) | | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | **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) | $-0- | | **Net decrease in cash** | $(364,572) | $(2,078,436) | | **Cash at end of period** | $2,119,581 | $2,484,153 | - The significant improvement in cash from operating activities was driven by the shift from a net loss of **$2.4 million** in **2023** to a **net income** of **$0.66 million** in **2024**[257](index=257&type=chunk) - Cash used in financing activities in **2024** consisted of **payments to related parties**[260](index=260&type=chunk)[512](index=512&type=chunk) - The company's primary sources of liquidity are **cash from operations** and **debt financing**[253](index=253&type=chunk) [Contractual Obligations and Commitments](index=49&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Contractual%20Obligations%20and%20Commitments) - The company fully paid off its **$785,000 Bank of America loan** in **June 2024**[264](index=264&type=chunk) - The subsidiary **Flywheel** has a line of credit with **Taishin International Bank**, with an outstanding balance of **$610,967** as of **Dec 31, 2024**. The maturity date was extended to **May 23, 2025**, with an interest rate of **3.33%**[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) - The company has a loan from its principal stockholders (**Mr. Lai and Ms. Yu**) with an original principal of **$4,170,418**. The maturity date was extended to **Dec 31, 2025**, and the interest rate is **5.5%**[270](index=270&type=chunk) - The company has **four operating leases for offices in Taiwan** with total minimum lease payments of **$115,652** due in **2025**[271](index=271&type=chunk)[272](index=272&type=chunk) [Critical Accounting Policies](index=50&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Critical%20Accounting%20Policies) - **Revenue Recognition**: Revenue from product sales is recognized at a point in time when control transfers to the customer, typically at the shipment date. The company acts as the **principal** in its transactions on the Amazon platform[291](index=291&type=chunk)[292](index=292&type=chunk) - **Inventory**: Inventories are stated at the **lower of cost** (determined on a **first-in-first-out basis**) or **net realizable value**. An allowance is recorded for obsolete and slow-moving inventory, with a **full allowance for SKUs not sold for more than one year**[278](index=278&type=chunk)[280](index=280&type=chunk) - **Concentration of Risk**: The company's business is highly reliant on **Amazon**, which provides its sales platform, logistics, and fulfillment. Approximately **99% of revenue** was generated through Amazon in both **2024** and **2023**[306](index=306&type=chunk)[559](index=559&type=chunk) - **Sales Tax**: The company owed **$-0-** in sales taxes, penalties, and interest as of **Dec 31, 2024**, a significant reduction from the **$288,466** owed as of **Dec 31, 2023**[302](index=302&type=chunk)[554](index=554&type=chunk) [Controls and Procedures](index=56&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024 - Management, including the **Certifying Officers**, concluded that the company's **disclosure controls and procedures were effective** as of **December 31, 2024**[316](index=316&type=chunk) - Management assessed the effectiveness of **internal control over financial reporting** based on the **COSO 2013 framework** and concluded that it was **adequate in material aspects** as of **December 31, 2024**[321](index=321&type=chunk) - There were **no changes in internal control over financial reporting** during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[322](index=322&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=57&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Hour Loop is a "controlled company" with CEO Sam Lai and SVP Maggie Yu holding **94.9%** voting power, exempt from certain Nasdaq governance rules - The company's executive officers are **Sam Lai (Chairman, CEO, Interim CFO)** and **Sau Kuen (Maggie) Yu (SVP, Director)**. The board consists of these two officers and three independent directors: **Michael Lenner, Minghui (Alan) Gao, and Hilary (Hui-Chong) Bui**[327](index=327&type=chunk)[329](index=329&type=chunk) - The company is a "**controlled company**" because **CEO Sam Lai** and **SVP Maggie Yu** (who are married) together beneficially own **~94.9% of the voting power**[339](index=339&type=chunk) - As a **controlled company**, Hour Loop is exempt from and avails itself of exemptions from certain **Nasdaq governance requirements**, including having a **majority-independent board** and **independent compensation or nominating committees**[340](index=340&type=chunk)[341](index=341&type=chunk) - The company has an **Audit Committee** composed of its **three independent directors**, with **Ms. Bui** serving as chair and qualifying as an "**audit committee financial expert**"[343](index=343&type=chunk)[347](index=347&type=chunk) [Executive Compensation](index=63&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation for CEO Sam Lai and SVP Maggie Yu included significant bonuses in 2024, alongside an equity incentive plan [Compensation Summary and Agreements](index=63&type=section&id=Item%2011.%20Executive%20Compensation%23Compensation%20Summary%20and%20Agreements) 2024 and 2023 Named Executive Officer Compensation | Name and Position | Year | Salary ($) | Bonus ($) | All Other Comp. ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Sam Lai** | 2024 | 500,000 | 600,000 | 15,546 | 1,115,546 | | CEO & Interim CFO | 2023 | 500,000 | 100,000 | 24,884 | 624,884 | | **Maggie Yu** | 2024 | 450,000 | 550,000 | 16,991 | 1,016,991 | | Senior Vice President | 2023 | 450,000 | 550,000 | 25,651 | 1,025,651 | - **Mr. Lai's 2024 bonus** was tied to achieving **breakeven or net profit targets**, while **Ms. Yu's** was based on acquiring a certain number of **new vendors**[376](index=376&type=chunk)[377](index=377&type=chunk)[378](index=378&type=chunk) - Employment agreements for **Mr. Lai** and **Ms. Yu** have **three-year terms** with automatic **one-year renewals** and provide for base salaries of **$500,000** and **$450,000**, respectively[368](index=368&type=chunk)[369](index=369&type=chunk)[370](index=370&type=chunk) - The agreements include provisions for **severance payments** upon termination without "Cause" or for "Good Reason," as well as a tax "**Gross-Up Payment**" for any "excess parachute payments" under Section 280G of the Code[385](index=385&type=chunk)[387](index=387&type=chunk) [Equity Incentive Plan](index=71&type=section&id=Item%2011.%20Executive%20Compensation%23Equity%20Incentive%20Plan) - The company adopted the **2021 Equity Incentive Plan** on **June 27, 2021**, to grant stock options, RSUs, and other awards to employees, directors, and consultants[416](index=416&type=chunk) - As of **March 27, 2025**, there were **8,097,909 shares** authorized and available for issuance under the **2021 Plan**[419](index=419&type=chunk) - The plan includes an "**evergreen**" provision that automatically increases the number of available shares each **January 1st** by the lesser of **3% of outstanding shares** or an amount determined by the Board[419](index=419&type=chunk) - The plan includes provisions for **adjustments in case of capitalization changes, dissolution, or a change in control**, and is subject to a **clawback policy**[434](index=434&type=chunk)[436](index=436&type=chunk)[439](index=439&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=77&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) CEO Sam Lai and SVP Maggie Yu beneficially own **94.9%** of the company's common stock, maintaining controlling interest Beneficial Ownership as of March 27, 2025 | Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Outstanding Common Stock | | :--- | :--- | :--- | | Sam Lai | 33,381,462 | 94.9% | | Maggie Yu | 33,381,462 | 94.9% | | All executive officers and directors as a group (5 persons) | 33,439,773 | 95% | - Ownership percentages are based on **35,151,440 shares** of common stock outstanding as of **March 27, 2025**[445](index=445&type=chunk) - As of **December 31, 2024**, there were **no outstanding options, warrants, or rights** under any equity compensation plans[450](index=450&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=79&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company engages in related party transactions, including a **$3.5 million** loan from its controlling stockholders, reviewed by the Audit Committee - The **Audit Committee** is responsible for reviewing and approving any transaction between the company and a related person[454](index=454&type=chunk) - The company has a loan from **CEO Sam Lai** and **SVP Maggie Yu**, originally for **$4,170,418**. The loan was extended to mature on **December 31, 2025**, with an amended interest rate of **5.5%**[459](index=459&type=chunk) - As of **December 31, 2024**, the outstanding principal balance on the loan from **Mr. Lai and Ms. Yu** was **$3,499,418**[460](index=460&type=chunk) - The company reiterates its status as a "**controlled company**" due to the **~94.9% combined ownership** of **Mr. Lai and Ms. Yu**, and confirms that **three of its five directors are independent**[472](index=472&type=chunk)[475](index=475&type=chunk) [Principal Accountant Fees and Services](index=82&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) HTL International, LLC is the company's auditor, with **$168,750** in audit fees for FY2024, all pre-approved by the Audit Committee Accountant Fees (2024 vs 2023) | | HTL (Current Auditor) | TPS (Former Auditor) | | :--- | :--- | :--- | | **FY 2024 Audit Fees** | $168,750 | $- | | **FY 2023 Audit Fees** | $150,000 | $190,000 | - **HTL International, LLC** was appointed as the company's independent registered accounting firm on **September 13, 2023**[476](index=476&type=chunk) - All audit and non-audit services are **pre-approved by the company's audit committee**[481](index=481&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=84&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section references consolidated financial statements and the Exhibit Index, detailing key corporate and contractual documents - This section lists the **financial statements, schedules, and exhibits** filed with the annual report[483](index=483&type=chunk)[485](index=485&type=chunk) - Key exhibits include the **Certificate of Incorporation, Bylaws, employment agreements with executive officers, director agreements, the 2021 Equity Incentive Plan, and various loan agreements**[487](index=487&type=chunk)[491](index=491&type=chunk) [Form 10-K Summary](index=86&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company - Not applicable[490](index=490&type=chunk) Financial Statements [Consolidated Financial Statements](index=89&type=section&id=Consolidated%20Financial%20Statements) Hour Loop returned to profitability in 2024 with **$0.66 million** net income and positive operating cash flow, increasing equity Consolidated Balance Sheet Highlights (As of Dec 31) | | 2024 | 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $18,738,654 | $18,013,331 | | **Total Assets** | $19,966,964 | $19,550,280 | | **Total Current Liabilities** | $14,807,222 | $10,924,602 | | **Total Liabilities** | $14,807,222 | $15,097,383 | | **Total Stockholders' Equity** | $5,159,742 | $4,452,897 | Consolidated Statement of Operations Highlights (For the Year Ended Dec 31) | | 2024 | 2023 | | :--- | :--- | :--- | | **Revenues, net** | $138,252,861 | $132,124,202 | | **Gross Profit** | $72,010,708 | $66,517,255 | | **Net income (loss)** | $657,447 | $(2,429,694) | | **Basic and diluted EPS** | $0.02 | $(0.07) | Consolidated Statement of Cash Flows Highlights (For the Year Ended Dec 31) | | 2024 | 2023 | | :--- | :--- | :--- | | **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) | $-0- | [Notes to Consolidated Financial Statements](index=93&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revenue disaggregation, related party debt, and inventory, highlighting Amazon dependence and a **$3.5 million** stockholder loan - **Revenue Disaggregation**: For **2024**, gross revenue was primarily from **America ($144.8M)** and **International ($4.9M)**, with net revenue of **$138.3M** after returns and discounts[599](index=599&type=chunk) - **Inventory**: As of **Dec 31, 2024**, net inventory was **$14.64 million**, including an allowance of **$560,293** for obsolete and slow-moving items[569](index=569&type=chunk) - **Related Party Transactions**: As of **Dec 31, 2024**, the company owed **$4,192,995** to related parties (**Mr. Lai and Ms. Yu**), which includes **$3,499,418** in stockholder payables and **$693,577** in accrued bonuses[596](index=596&type=chunk) - **Income Taxes**: The company recorded an income tax expense of **$302,114** in **2024**, compared to a tax benefit of **$730,760** in **2023**. It has deferred tax assets of **$1,060,104** as of **Dec 31, 2024**, primarily from net loss carryforwards[601](index=601&type=chunk)[603](index=603&type=chunk)[605](index=605&type=chunk)

[Hour Loop Full Year 2024 Results](index=1&type=section&id=Hour%20Loop%20Reports%20Full%20Year%202024%20Results) [Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) The company achieved revenue growth to $138.3 million and returned to profitability in 2024 through improved operational efficiencies FY 2024 Key Financial Metrics | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $138.3 million | $132.1 million | +4.6% | | Net Income (Loss) | $0.66 million | ($2.43 million) | Turnaround to Profit | | Cash from Operations | $0.3 million | ($2.1 million) | Turnaround to Positive | - Management attributes the positive results to **enhanced inventory quality, operational efficiency improvements, and disciplined expense management**[2](index=2&type=chunk) - Despite economic and logistical challenges, the company **achieved revenue growth** and built a solid foundation for continued performance[2](index=2&type=chunk) [Full Year 2024 Financial Results Analysis](index=1&type=section&id=Full%20Year%202024%20Financial%20Results%20Analysis) Revenue grew to $138.3 million and gross margin improved to 52.1%, driving a turnaround to a net income of $0.66 million - Revenue growth was attributed to the **continued maturity of the company's personnel and operating model**[3](index=3&type=chunk) Profitability Margin Improvement (YoY) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Gross Margin | 52.1% | 50.3% | | Operating Expense % of Revenue | 51.6% | 52.6% | Net Income and EPS (YoY) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net Income (Loss) | $0.66 million | ($2.43 million) | | Diluted EPS | $0.02 | ($0.07) | [Financial Condition and Liquidity](index=2&type=section&id=Financial%20Condition%20and%20Liquidity) Cash decreased to $2.1 million due to loan repayments, while inventory levels remained stable at $14.6 million - **Cash and cash equivalents stood at $2.1 million** as of December 31, 2024, down from $2.5 million, primarily due to loan repayment[7](index=7&type=chunk) - **Inventories were $14.6 million** at year-end 2024, remaining consistent with the $14.3 million reported at year-end 2023[8](index=8&type=chunk) [Full Year 2025 Financial Outlook](index=2&type=section&id=Full%20Year%202025%20Financial%20Outlook) The company projects 2025 net revenue of $145-$160 million and net income between $0.5 million and $2 million Full Year 2025 Guidance | Metric | Guidance Range | Implied YoY Growth | | :--- | :--- | :--- | | Net Revenue | $145M - $160M | 5% - 15% | | Net Income | $0.5M - $2M | N/A | [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) Audited statements show improved stockholders' equity, a return to operating income, and positive operating cash flow for 2024 [Consolidated Balance Sheets](index=3&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Total assets grew slightly to $19.97 million while liabilities decreased, improving total stockholders' equity to $5.16 million Balance Sheet Summary (As of Dec 31) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Total Current Assets | $18,738,654 | $18,013,331 | | Total Assets | $19,966,964 | $19,550,280 | | Total Current Liabilities | $14,807,222 | $10,924,602 | | Total Liabilities | $14,807,222 | $15,097,383 | | Total Stockholders' Equity | $5,159,742 | $4,452,897 | [Consolidated Statements of Operations](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME%20(LOSS)) The company reported net revenues of $138.3 million and successfully swung from an operating loss to an income of $730,940 Statement of Operations Summary (Year Ended Dec 31) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Revenues, net | $138,252,861 | $132,124,202 | | Gross Profit | $72,010,708 | $66,517,255 | | Income (loss) from operations | $730,940 | ($3,003,423) | | Net income (loss) | $657,447 | ($2,429,694) | | Basic and diluted EPS | $0.02 | ($0.07) | [Consolidated Statements of Cash Flows](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The company generated positive operating cash flow of $313,140, a significant recovery driven by the return to net income Cash Flow Summary (Year Ended Dec 31) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash from 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) | $0 | | Net change in cash | ($364,572) | ($2,078,436) | | Cash at end of year | $2,119,581 | $2,484,153 |