UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 2.02. Results of Operations and Financial Condition.
On March 26, 2024, Hour Loop, Inc. (the “Company”) issued a press release announcing its financial results for the year ended December 31, 2023. 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 March 26, 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: March 26, 2024 | By: | /s/ Sam Lai |
| Name: | Sam Lai | |
| Title: | Chief Executive Officer and Interim Chief Financial Officer | |
Exhibit 99.1
Hour Loop Reports Full Year 2023 Results
Demonstrates Strong Revenue Growth Despite Challenging
e-Commerce Environment
Provides Full Year 2024 Revenue and Net Income Guidance
Redmond, WA, March 26, 2024 – Hour Loop, Inc. (NASDAQ: HOUR) (“Hour Loop”), a leading online retailer, announces its financial and operational results for the year ended December 31, 2023.
Financial Highlights for 2023:
| ● | Net revenues increased 37.7% to $132.1 million, compared to $95.9 million in 2022; |
| ● | Net loss totaled $2.4 million, compared to net loss $1.5 million in 2022; and |
| ● | Cash used for operating activities was $2.1 million and $11.6 million for the year ended December 31, 2023 and 2022, respectively. |
Management Commentary
“We are pleased to report our full year 2023 results, in which we continued to deliver significant revenue growth,” said Sam Lai, CEO of Hour Loop. “The revenue growth rate for 2023 was 37.7%, compared with 2022, and outperformed most peers that we know.”
“However, our gross margin, compared with 2022, was negatively affected by the inflation impacted macroeconomy, a challenging e-commerce environment, intense competition across the industry, and more aggressive clearance sales during the holiday season.
Our operating expenses percentage decreased compared with 2022 because of efforts made for expense management this year amid higher Amazon related fees. Overall, we believe we’ve built a solid foundation to continue generating strong growth. We also aim to continue making improvements on profitability.”
“Looking forward, we’re cautiously optimistic. Despite an uncertain economy, we continue to see strong demand for our products so far in 2024. We are confident in our ability to continue delivering value to our vendors, customers, and shareholders.”
Full Year 2023 Financial Results
Net revenues in 2023 were $132.1 million, compared to $95.9 million in 2022. The increase was primarily due to continued growth and maturity in our operating model, despite intense competition.
Gross margin decreased 0.8% to 50.3%, compared to 51.1%, of net revenues in 2022. The decrease was a function of increased market competition and more aggressive clearance sales during the holiday season.
Operating expenses percentage decreased 0.5% to 52.6%, compared to 53.1%, of net revenues in 2022. The decrease reflected better management of shipping charges, advertising expenses, and labor costs amid higher Amazon related fees.
Net loss in 2023 was $2.4 million, or $0.07 per diluted share, compared to $1.5 million, or $0.04 per diluted share, in 2022. The decrease was driven by decreased gross margin as a result of the reasons mentioned above despite efforts made for expense management.
As of December 31, 2023, the Company had $2.5 million in cash, compared to $4.6 million as of December 31, 2022 due to operating loss.
Inventories as of December 31, 2023, were $14.3 million, compared to $18.8 million as of December 31, 2022. The decrease is due to sales made throughout the year.
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 2024 net income 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
finance@hourloop.com
HOUR LOOP, INC.
CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars, except for share data)
As of December 31, 2023 and 2022
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 2,484,153 | $ | 4,562,589 | ||||
| Accounts receivable, net | 747,650 | 352,379 | ||||||
| Inventory, net | 14,276,555 | 18,801,529 | ||||||
| Prepaid expenses and other current assets | 504,973 | 741,243 | ||||||
| Total current assets | 18,013,331 | 24,457,740 | ||||||
| Property and equipment, net | 148,788 | 274,195 | ||||||
| Deferred tax assets | 1,304,215 | 549,320 | ||||||
| Operating lease right-of-use lease assets | 83,946 | 450,721 | ||||||
| Total non-current assets | 1,536,949 | 1,274,236 | ||||||
| TOTAL ASSETS | $ | 19,550,280 | $ | 25,731,976 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 3,812,954 | $ | 6,651,721 | ||||
| Credit cards payable | 4,404,445 | 5,231,532 | ||||||
| Short-term loan | 652,422 | 652,316 | ||||||
| Operating lease liabilities-current | 82,269 | 385,216 | ||||||
| Accrued expenses and other current liabilities | 1,972,512 | 1,742,972 | ||||||
| Total current liabilities | 10,924,602 | 14,663,757 | ||||||
| Non-current liabilities | ||||||||
| Operating lease liabilities-non-current | 2,363 | 64,945 | ||||||
| Due to related parties | 4,170,418 | 4,170,418 | ||||||
| Total non-current liabilities | 4,172,781 | 4,235,363 | ||||||
| Total liabilities | 15,097,383 | 18,899,120 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock: $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding as of December 31, 2023 and 2022 | - | - | ||||||
| Common stock: $0.0001 par value, 300,000,000 shares authorized, 35,082,464 and 35,047,828 shares issued and outstanding as of December 31, 2023 and 2022, respectively | 3,508 | 3,506 | ||||||
| Additional paid-in capital | 5,727,650 | 5,675,320 | ||||||
| (Accumulated deficit) retained earnings | (1,252,622 | ) | 1,177,072 | |||||
| Accumulated other comprehensive loss | (25,639 | ) | (23,042 | ) | ||||
| Total stockholders’ equity | 4,452,897 | 6,832,856 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 19,550,280 | $ | 25,731,976 | ||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
HOUR LOOP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In U.S. Dollars, except for share and per share data)
For the years Ended December 31, 2023 and 2022
| 2023 | 2022 | |||||||
| Revenues, net | $ | 132,124,202 | $ | 95,930,091 | ||||
| Cost of revenues | (65,606,947 | ) | (46,942,770 | ) | ||||
| Gross profit | 66,517,255 | 48,987,321 | ||||||
| Operating expenses | ||||||||
| Selling and marketing | 61,135,227 | 42,221,425 | ||||||
| General and administrative | 8,385,451 | 8,681,682 | ||||||
| Total operating expenses | 69,520,678 | 50,903,107 | ||||||
| Loss from operations | (3,003,423 | ) | (1,915,786 | ) | ||||
| Other (expenses) income | ||||||||
| Other expense | (9,542 | ) | (9,950 | ) | ||||
| Interest expense | (248,779 | ) | (144,479 | ) | ||||
| Other income | 101,290 | 130,429 | ||||||
| Total other expenses | (157,031 | ) | (24,000 | ) | ||||
| Loss before income taxes | (3,160,454 | ) | (1,939,786 | ) | ||||
| Income tax benefit | 730,760 | 462,163 | ||||||
| Net loss | (2,429,694 | ) | (1,477,623 | ) | ||||
| Other comprehensive loss | ||||||||
| Foreign currency translation adjustments | (2,597 | ) | (15,171 | ) | ||||
| Total comprehensive loss | $ | (2,432,291 | ) | (1,492,794 | ) | |||
| Basic and diluted loss per common share | $ | (0.07 | ) | (0.04 | ) | |||
| Weighted-average number of common shares outstanding | 35,066,592 | 34,991,666 | ||||||
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 years Ended December 31, 2023 and 2022
| 2023 | 2022 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (2,429,694 | ) | $ | (1,477,623 | ) | ||
| Reconciliation of net loss to net cash used in operating activities: | ||||||||
| Depreciation expenses | 138,001 | 79,084 | ||||||
| Amortization of Operating lease right-of-use lease assets | 387,446 | 310,161 | ||||||
| Deferred tax assets | (754,895 | ) | (503,832 | ) | ||||
| Stock-based compensation | 52,332 | 91,013 | ||||||
| Inventory allowance | 675,886 | 657,543 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (395,271 | ) | (226,388 | ) | ||||
| Inventory | 3,849,088 | (12,417,208 | ) | |||||
| Prepaid expenses and other current assets | 236,270 | (352,113 | ) | |||||
| Accounts payable | (2,838,767 | ) | 1,445,824 | |||||
| Credit cards payable | (827,087 | ) | 898,171 | |||||
| Accrued expenses and other current liabilities | 229,540 | 175,436 | ||||||
| Operating lease liabilities | (386,224 | ) | (283,244 | ) | ||||
| Net cash used in operating activities | (2,063,375 | ) | (11,603,176 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (14,823 | ) | (339,518 | ) | ||||
| Net cash used in investing activities | (14,823 | ) | (339,518 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payments to related parties | - | (1,024,188 | ) | |||||
| Repayments from related parties | - | 138,854 | ||||||
| Proceeds from Issuance of shares | - | 6,156,360 | ||||||
| Proceeds from Short-term debt | - | 652,316 | ||||||
| Net cash provided by financing activities | - | 5,923,342 | ||||||
| Effect of changes in foreign currency exchange rates | (238 | ) | (10,631 | ) | ||||
| Net change in cash | (2,078,436 | ) | (6,029,983 | ) | ||||
| Cash at beginning of year | 4,562,589 | 10,592,572 | ||||||
| Cash at end of year | $ | 2,484,153 | $ | 4,562,589 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | 406,103 | $ | 4,300 | ||||
| Cash paid for income tax | $ | 1,696 | $ | 470,601 | ||||
| Noncash investing and financing activities: | ||||||||
| Operating lease right-of-use of assets and operating lease liabilities recognized | $ | 27,249 | $ | 701,526 | ||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements.