Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 6, 2024

HOUR LOOP, INC.

(Exact name of registrant as specified in its charter)

Delaware

001-41204

47-2869399

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification Number)

8201 164th Ave NE #200, Redmond, WA 98052-7615

(Address of principal executive offices)

(206) 385-0488 ext. 100

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.)

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		HOUR		The Nasdaq Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

On May 6, 2024, Hour Loop, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended March 31, 2024. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information contained in the website is not a part of this current report on Form 8-K.

In accordance with General Instruction B.2 of Form 8-K, the information included in this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.		Description
99.1		Press release issued by the registrant on May 6, 2024.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HOUR LOOP, INC.

Dated: May 6, 2024	By:	/s/ Sam Lai
	Name:	Sam Lai
	Title:	Chief Executive Officer and Interim Chief Financial Officer

Exhibit 99.1

Hour Loop Reports First Quarter 2024 Results

Returns to Profitability Despite Warning Signs for the Overall Economy

Provides Full Year 2024 Revenue and Net Income Guidance

Redmond, WA, May 6, 2024 – Hour Loop, Inc. (NASDAQ: HOUR) (“Hour Loop”), a leading online retailer, announces its financial and operational results for the quarter ended March 31, 2024.

Financial Highlights for First Quarter 2024:

	●	Net revenues increased 17.2% to $24.7 million, compared to $21.1 million in the year-ago period;
	●	Net income totaled $1.1 million, compared to net loss of $1.2 million in the year-ago period; and
	●	Cash provided for operating activities was $0.5 million, compared to cash used in operating activities of $3.3 million in the year-ago period.

Management Commentary

“We are excited to report our first quarter 2024 results, in which we continued to deliver double digit revenue growth,” said Sam Lai, CEO of Hour Loop. “The revenue growth rate for the first quarter was 17.2%, compared with the year-ago period.”

“Moreover, our gross margin and operating margin were both improved because of efforts made for inventory quality and efficiency enhancement, operation efficiency improvement, as well as expenses management. Overall, we believe we’ve built a solid foundation to continue generating satisfactory growth while maintaining profitability.”

“Looking forward, we’re cautiously optimistic. Despite an uncertain economy, we continue to see good demand for our products so far in 2024. We are confident in our ability to continue delivering value to our vendors, customers, and shareholders.”

First Quarter 2024 Financial Results

Net revenues in the first quarter of 2024 were $24.7 million, compared to $21.1 million in the year-ago period. The increase was primarily due to continued growth and maturity in our personnel and operating model, despite the overall e-commerce traffic slowdown and intense competition.

Gross profit percentage increased 12.9% to 58.5%, compared to 45.6% of net revenues in the comparable period a year ago. The increase was a function of improved product costs, enhanced inventory quality and efficiency, and efforts made on margin increase.

Operating expenses as a percentage of net revenues decreased 0.9% to 52.3%, compared to 53.2% of net revenues in the year-ago period. The decrease reflected better management of storage fees and labor costs.

Net income in the first quarter of 2024 was $1.1 million, or $0.03 per diluted share, compared to net loss of $1.2 million, or $0.04 per diluted share, in the comparable year-ago period. The increase was driven by reduced costs as a result of the reasons mentioned above and efforts made for expenses management.

As of March 31, 2024, the Company had $2.9 million in cash and cash equivalents, compared to $2.5 million as of December 31, 2023. This increase was mainly from the combination of an increase due to profitability and a decrease due to payments made to vendors when due.

Inventories as of March 31, 2024, were $11.6 million, compared to $14.3 million as of December 31, 2023. The decrease represented good sales momentum in the first quarter of 2024.

Full Year 2024 Financial Outlook

For the full year 2024, Hour Loop is providing guidance for net revenue to be in the range of $145 million to $172 million, representing 10% to 30% year-over-year growth. The Company expects net income in 2024 to be in the range of $0.5 million to $2 million.

About Hour Loop, Inc.

Hour Loop is an online retailer engaged in e-commerce retailing in the U.S. market. It has operated as a third-party seller on www.amazon.com and has sold merchandise on its website at www.hourloop.com since 2013. Hour Loop further expanded its operations to other marketplaces such as Walmart, eBay, and Etsy. To date, Hour Loop has generated practically all its revenue as a third-party seller on www.amazon.com and only a negligible amount of revenue from its own website and other marketplaces. Hour Loop manages more than 100,000 stock-keeping units (“SKUs”). Product categories include home/garden décor, toys, kitchenware, apparel, and electronics. Hour Loop’s primary strategy is to bring most of its vendors’ product selections to the customers. It has advanced software that assists Hour Loop in identifying product gaps so it can keep such products in stock year-round including the entirety of the last quarter (holiday season) of the calendar year. In upcoming years, Hour Loop plans to expand its business rapidly by increasing the number of business managers, vendors, and SKUs.

Forward-Looking Statements

This press release contains statements that constitute “forward-looking statements” including with respect to Hour Loop’s business strategy, product development and industry trends. Forward-looking statements are subject to numerous conditions, many of which are beyond the control of Hour Loop. While Hour Loop believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to Hour Loop on the date of this release. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including, without limitation, those set forth in Hour Loop’s filings with the Securities and Exchange Commission, as the same may be updated from time to time. Thus, actual results could be materially different. Hour Loop undertakes no obligation to update these statements whether as a result of new information, future events or otherwise, after the date of this release, except as required by law.

Investor Contact

Finance Department, Hour Loop, Inc.

finance@hourloop.com

HOUR LOOP, INC.

CONSOLIDATED BALANCE SHEETS

(In U.S. Dollars, except for share data)

As of March 31, 2024 and December 31, 2023

(Unaudited)

	March 31, 2024			December 31, 2023

ASSETS
Current assets
Cash and cash equivalents	$	2,922,080		$	2,484,153
Accounts receivable, net		537,517			747,650
Inventory, net		11,618,489			14,276,555
Prepaid expenses and other current assets		428,882			504,973
Total current assets		15,506,968			18,013,331

Property and equipment, net		125,451			148,788
Deferred tax assets		953,088			1,304,215
Operating lease right-of-use lease assets		159,983			83,946
Total non-current assets		1,238,522			1,536,949
TOTAL ASSETS	$	16,745,490		$	19,550,280

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	3,420,221		$	3,812,954
Credit cards payable		1,861,435			4,404,445
Short-term loan		625,978			652,422
Operating lease liabilities-current		144,288			82,269
Income taxes payable		82,374			-
Accrued expenses and other current liabilities		878,603			1,972,512
Total current liabilities		7,012,899			10,924,602

Non-current liabilities
Operating lease liabilities-non-current		23,995			2,363
Due to related parties		4,170,418			4,170,418
Total non-current liabilities		4,194,413			4,172,781
Total liabilities		11,207,312			15,097,383
Commitments and contingencies		-

Stockholders’ equity
Preferred stock: $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding as of March 31, 2024 and December 31, 2023		-			-
Common stock: $0.0001 par value, 300,000,000 shares authorized, 35,108,804 and 35,082,464 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		3,510			3,508
Additional paid-in capital		5,763,648			5,727,650
Accumulated deficit		(186,808	)		(1,252,622	)
Accumulated other comprehensive loss		(42,172	)		(25,639	)
Total stockholders’ equity		5,538,178			4,452,897

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	16,745,490		$	19,550,280

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

HOUR LOOP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In U.S. Dollars, except for share data)

For the Three Months Ended March 31, 2024 and 2023

(Unaudited)

	Three Months Ended March 31, 2024			Three Months Ended March 31, 2023

Revenues, net	$	24,681,122		$	21,067,609
Cost of revenues		(10,228,916	)		(11,451,907	)

Gross profit		14,452,206			9,615,702

Operating expenses
Selling and marketing		11,174,191			9,506,971
General and administrative		1,739,843			1,720,990
Total operating expenses		12,914,034			11,227,961

Income (loss) from operations		1,538,172			(1,612,259	)

Other (expenses) income
Other expense		(1,156	)		(2,880	)
Interest expense		(62,112	)		(61,096	)
Other income		28,034			16,035
Total other expenses, net		(35,234	)		(47,941	)

Income (loss) before income taxes		1,502,938			(1,660,200	)
Income tax (expense) benefit		(437,124	)		424,956

Net income (loss)		1,065,814			(1,235,244	)

Other comprehensive (income) loss
Foreign currency translation adjustments		(16,533	)		1,339

Total comprehensive income (loss)	$	1,049,281		$	(1,233,905	)

Basic and diluted income (loss) per common share	$	0.03		$	(0.04	)
Weighted-average number of common shares outstanding		35,095,602			35,052,666

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

HOUR LOOP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In U.S. Dollars)

For the Three Months Ended March 31, 2024 and 2023

(Unaudited)

	Three Months			Three Months
	Ended			Ended
	March 31, 2024			March 31, 2023

Cash flows from operating activities
Net income (loss)	$	1,065,814		$	(1,235,244	)
Reconciliation of net income (loss) to net cash used in operating activities:
Depreciation expenses		35,273			34,662
Amortization of operating lease right-of-use lease assets		42,892			95,635
Deferred tax assets		351,127			(424,956	)
Stock-based compensation		36,000			16,332
Inventory allowance		637,058			642,145
Changes in operating assets and liabilities:
Accounts receivable		210,133			9,091
Inventory		2,021,008			4,588,505
Prepaid expenses and other current assets		76,091			(92,605	)
Accounts payable		(392,733	)		(1,881,078	)
Credit cards payable		(2,543,010	)		(3,977,569	)
Accrued expenses and other current liabilities		(1,093,909	)		(962,271	)
Operating lease liabilities		(35,175	)		(101,723	)
Income taxes payable		82,374			-
Net cash provided by (used in) operating activities		492,943			(3,289,076	)

Cash flows from investing activities:
Purchases of property and equipment		(17,798	)		(3,379	)
Net cash used in investing activities		(17,798	)		(3,379	)

Effect of changes in foreign currency exchange rates		(37,218	)		4,657

Net change in cash and cash equivalents		437,927			(3,287,798	)

Cash and cash equivalents at beginning of period		2,484,153			4,562,589

Cash and cash equivalents at end of period	$	2,922,080		$	1,274,791

Supplemental disclosures of cash flow information:
Cash paid for interest	$	3,380		$	161,798
Cash paid for income tax	$	-		$	-
Noncash investing and financing activities:
Operating lease right-of-use of assets and operating lease liabilities recognized	$	123,107		$	28,652

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

Cover	May 06, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 06, 2024
Entity File Number	001-41204
Entity Registrant Name	HOUR LOOP, INC.
Entity Central Index Key	0001874875
Entity Tax Identification Number	47-2869399
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	8201 164th Ave NE #200
Entity Address, City or Town	Redmond
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98052-7615
City Area Code	206
Local Phone Number	385-0488 ext. 100
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	HOUR
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false