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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.