HOUR Hour Loop Inc

 

 

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): November 13, 2023

 

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 November 13, 2023, Hour Loop, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 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 November 13, 2023.
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: November 13, 2023	By:	/s/ Sam Lai
	Name:	Sam Lai
	Title:	Chief Executive Officer and Interim Chief Financial Officer

 

 

 

 

Exhibit 99.1

 

 

Hour Loop Reports Third Quarter 2023 Results

 

Demonstrates Strong Revenue Growth Despite Challenging

e-Commerce Environment

 

Increases Full Year 2023 Revenue Guidance

 

Redmond, WA, November 13, 2023 – Hour Loop, Inc. (NASDAQ: HOUR) (“Hour Loop”), a leading online retailer, announces its financial and operational results for the quarter ended September 30, 2023.

 

Financial Highlights for Third Quarter 2023:

 

●	Net revenues increased 66.1% to $29.2 million, compared to $17.6 million in the year-ago period;
●	Net loss totaled $0.02 million, compared to net income $0.15 million in the year-ago period; and
●	Cash used for operating activities was $3.8 million and $14.5 million for the nine months ended September 30, 2023 and 2022, respectively.

 

Management Commentary

 

“We are pleased to report our third quarter 2023 results, in which we continued to deliver significant revenue growth,” said Sam Lai, CEO of Hour Loop. “The revenue growth rate for the third quarter was 66.1%, compared with the year-ago period, and outperformed most peers that we know.”

 

“However, our gross margin, compared with the year-ago period, was negatively affected by the inflation impacted macroeconomy, a challenging e-commerce environment and intense competition across the industry. Nevertheless, our QoQ margin improvement remained. Gross margin for the third quarter was 52.6%, compared with 50.7% and 45.6% in the second and first quarters of 2023, respectively.

 

Our operating expenses percentage was reduced compared with the year-ago period because of efforts made for expense management this year. 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 2023. We are confident in our ability to continue delivering value to our vendors, customers, and shareholders.”

 

 

Third Quarter 2023 Financial Results

 

Net revenues in the third quarter of 2023 were $29.2 million, compared to $17.6 million in the year-ago period. The increase was primarily due to continued growth and maturity in our personnel and operating model, despite intense competition.

 

Gross profit percentage decreased 5.8% to 50.7%, compared to 56.5%, of net revenues in the comparable period a year ago. The decrease was a function of increased market competition, and higher Amazon fees.

 

Operating expenses percentage decreased 1.7% to 52.5%, compared to 54.2%, of net revenues in the year-ago period. The decrease reflected better management of shipping charges and labor costs.

 

Net loss in the third quarter of 2023 was $0.02 million, or $0.0004 per diluted share, compared to net income $0.15 million, or $0.01 per diluted share, in the comparable year-ago period. The decrease was driven by decreased gross margin as a result of the reasons mentioned above despite efforts made for expense management.

 

As of September 30, 2023, the Company had $0.6 million in cash, compared to $4.6 million as of December 31, 2022. This decrease was driven by inventory purchases in view of the revenue potential for the upcoming holiday season.

 

Inventories as of September 30, 2023, were $23.8 million, compared to $18.8 million as of December 31, 2022. The increase is due to the preparation of revenue potential for the upcoming holiday season.

 

Full Year 2023 Financial Outlook

 

For the full year 2023, Hour Loop increased its guidance for gross revenue to be in the range of $145 million to $153 million, representing 40% to 48% year-over-year growth. In the meantime, the Company maintained its guidance for 2023 net income to be in the range of $0.5 million to $4 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 September 30, 2023 and December 31, 2022

(Unaudited)

 

		September 30,				December 31,
		2023				2022
ASSETS
Current assets
Cash		$	562,612			$	4,562,589
Accounts receivable, net			737,154				352,379
Inventory, net			23,725,207				18,801,529
Prepaid expenses and other current assets			1,153,552				741,243
Total current assets			26,178,525				24,457,740
Property and equipment, net			175,139				274,195
Deferred tax assets			1,057,710				549,320
Right-of-use lease assets			195,047				450,721
Total non-current assets			1,427,896				1,274,236
TOTAL ASSETS		$	27,606,421			$	25,731,976
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term loan		$	620,732			$	652,316
Accounts payable			16,909,757				11,883,253
Accrued expenses and other current liabilities			900,654				1,742,972
Operating lease liabilities-current			171,626				385,216
Total current liabilities			18,602,769				14,663,757
Non-current liabilities
Operating lease liabilities-non-current			5,598				64,945
Due to related parties			4,170,418				4,170,418
Total non-current liabilities			4,176,016				4,235,363
Total liabilities			22,778,785				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 September 30, 2023 and December 31, 2022			-				-
Common stock: $0.0001 par value, 300,000,000 shares authorized, 35,070,776 and 35,047,828 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively			3,507				3,506
Additional paid-in capital			5,709,652				5,675,320
(Accumulated deficit) retained earnings			(842,596	)			1,177,072
Accumulated other comprehensive loss			(42,927	)			(23,042	)
Total stockholders’ equity			4,827,636				6,832,856
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	27,606,421			$	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 Three and Nine Months Ended September 30, 2023 and 2022

(Unaudited)

 

		Three Months				Three Months				Nine Months				Nine Months
		Ended				Ended				Ended				Ended
		September 30,				September 30,				September 30,				September 30,
		2023				2022				2023				2022
Revenues, net		$	29,152,360			$	17,556,053			$	72,637,417			$	44,710,554
Cost of revenues			(13,819,798	)			(7,999,769	)			(36,331,604	)			(20,340,948	)
Gross profit			15,332,562				9,556,284				36,305,813				24,369,606
Operating expenses
Selling and marketing			13,632,333				7,779,145				33,385,216				19,785,872
General and administrative			1,682,242				1,740,427				5,353,403				5,692,033
Total operating expenses			15,314,575				9,519,572				38,738,619				25,477,905
Income (Loss) from operations			17,987				36,712				(2,432,806	)			(1,108,299	)
Other (expenses) income
Other expense			(3,702	)			(6,651	)			(18,419	)			(16,045	)
Interest expense			(62,476	)			(22,876	)			(185,964	)			(127,001	)
Other income			70,683				155,983				109,131				176,676
Total other income (expenses), net			4,505				126,456				(95,252	)			33,630
Income (Loss) before income taxes			22,492				163,168				(2,528,058	)			(1,074,669	)
Income tax (expense) benefit			(37,548	)			(12,963	)			508,390				266,579
Net (loss) income			(15,056	)			150,205				(2,019,668	)			(808,090	)
Other comprehensive (loss) income
Foreign currency translation adjustments			(12,032	)			12,441				(19,885	)			8,399
Total comprehensive (loss) income		$	(27,088	)		$	162,646			$	(2,039,553	)		$	(799,691	)
Basic and diluted (loss) income per common share		$	(0.00	)		$	0.01			$	(0.06	)		$	(0.02	)
Weighted-average number of common shares outstanding			35,058,340				33,300,058				35,061,286				34,973,580

 

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 and Nine Months Ended September 30, 2023 and 2022

(Unaudited)

 

		Nine Months				Nine Months
		Ended				Ended
		September 30,				September 30,
		2023				2022
Cash flows from operating activities
Net loss		$	(2,019,668	)		$	(808,090	)
Reconciliation of net loss to net cash used in operating activities:
Depreciation expenses			100,441				39,993
Amortization of right-of-use lease assets			262,913				212,126
Deferred tax assets			(508,390	)			(266,709	)
Stock-based compensation			34,333				76,013
Inventory allowance			130,319				605,316
Changes in operating assets and liabilities:
Accounts receivable			(384,775	)			(137,434	)
Inventory			(5,053,997	)			(14,921,838	)
Prepaid expenses and other current assets			(412,309	)			(467,412	)
Accounts payable			5,026,504				1,474,511
Accrued expenses and other current liabilities			(683,276	)			(152,606	)
Operating lease liabilities			(280,333	)			(179,701	)
Net cash used in operating activities			(3,788,238	)			(14,525,831	)
Cash flows from investing activities:
Purchases of property and equipment			(14,024	)			(268,342	)
Net cash used in investing activities			(14,024	)			(268,342	)
Cash flows from financing activities:
Payments to related parties			(159,042	)			(898,583	)
Proceeds from Short-term debt			-				630,915
Proceeds from issuance of shares			-				6,156,360
Net cash provided by financing activities			(159,042	)			5,888,692
Effect of changes in foreign currency exchange rates			(38,673	)			17,015
Net change in cash			(3,999,977	)			(8,888,466	)
Cash at beginning of period			4,562,589				10,592,572
Cash at end of period		$	562,612			$	1,704,106
Supplemental disclosures of cash flow information:
Cash paid for interest		$	172,964			$	-
Cash paid for income tax		$	362			$	-
Noncash investing and financing activities:
Right-of-use of assets and operating lease liabilities recognized		$	27,330			$	688,440

 

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

 

 

 

 

v3.23.3

Cover	Nov. 13, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 13, 2023
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

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