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 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington
D.C. 20549

 FORM

 ANNUAL
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2023

 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

 (Exact
name of registrant as specified in its charter)

 Delaware

 47-2869399

 (State
 or other jurisdiction of

 incorporation
 or organization)

 (I.R.S.
 Employer

 Identification
 No.)

 8201
 164 th Ave. NE

 Redmond,
 VA

 98052-7615

 (Address
 of principal executive offices)

 (Zip
 Code)

 (206) 385-0488, ext. 100

 (Registrant's
telephone number, including area code)

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

 Title
 of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

 Stock

 HOUR

 The
 Nasdaq Capital Market

 Securities
registered pursuant to section 12(g) of the Act:

 N/A

 (Title
 of class)

 N/A

 (Title
 of class)

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes No

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes No

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

 Large
 accelerated filer

 Accelerated
 filer

 Non-accelerated
 filer

 Smaller
 reporting company

 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.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to Sec. 240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 The
aggregate market value of the voting and non-voting common equity held by non-affiliates based upon the closing price of $1.66 per share
of common stock as of June 30, 2023 (the last business day of the registrant's most recently completed second fiscal quarter) was
$ 58,217,488.

 As
of March 26, 2024, there were 35,095,298 shares of common stock, par value $0.0001 per share, of the registrant issued and outstanding.

 DOCUMENTS
INCORPORATED BY REFERENCE

 None.

 Table
of Contents

 Page

 Item
 1.

 Item
 1A.

 Risk Factors

 Item
 1B.

 Unresolved Staff Comments

 Item
 1C.

 Cybersecurity

 Item
 2.

 Properties

 Item
 3.

 Legal Proceedings

 Item
 4.

 Mine Safety Disclosures

 Item
 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item
 6.

 Reserved

 Item
 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item
 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item
 8.

 Financial Statements and Supplementary Data

 Item
 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item
 9A.

 Controls and Procedures

 Item
 9B.

 Other Information

 Item
 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item
 10.

 Directors, Executive Officers and Corporate Governance

 Item
 11.

 Executive Compensation

 Item
 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item
 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item
 14.

 Principal Accountant Fees and Services

 Item
 15.

 Exhibit and Financial Statement Schedules

 Item
 16.

 Form 10-K Summary

 Signatures

 CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS

 Some
of the statements contained in this annual report may constitute "forward-looking statements" for purposes of the federal
securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team's
expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts
or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The
words "anticipate," "believe," "continue," "could," "estimate," "expect,"
"intend," "may," "might," "plan," "possible," "potential," "predict,"
"project," "should," "would" and similar expressions may identify forward-looking statements, but
the absence of these words does not mean that a statement is not forward-looking.

 The
forward-looking statements contained in this annual report are based on our current expectations and beliefs concerning future developments
and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated.
These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions
that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
These risks and uncertainties include, but are not limited to, the following risks, uncertainties and other factors:

 the
 level of demand for our products and services;

 competition
 in our markets;

 our
 ability to grow and manage growth profitably;

 our
 ability to access additional capital;

 changes
 in applicable laws or regulations;

 our
 ability to attract and retain qualified personnel;

 the
 possibility that we may be adversely affected by other economic, business, and/or competitive factors; and

 other
 risks and uncertainties, including those listed under the captions "Business," "Risk Factors," and "Management's
 Discussion and Analysis of Financial Condition and Results of Operations."

 Should
one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in
material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities
laws.

 PART
I

 ITEM
1. BUSINESS

 This
Business section, along with other sections of this annual report on Form 10-K, includes statistical and other industry and market data
that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party
research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although
they do not guarantee the accuracy or completeness of such information. While we believe that these industry publications and third-party
research, surveys and studies are reliable, we have not independently verified such data and we do not make any representation as to
the accuracy of the information. Unless the context
otherwise requires, "Hour Loop," "we," "us," "our," or the "Company" refers
to Hour Loop, Inc. and its consolidated subsidiaries.

 Overview

 Our

 We
are an online retailer engaged in e-commerce retailing in the U.S. market. We have operated as a third-party seller on www.amazon.com
 since 2013. We have also sold merchandise on our website at www.hourloop.com since 2013. We expanded our operations to other
marketplaces such as Walmart, eBay and Etsy in 2020, 2022, and 2023, respectively. To date, we have generated practically all of our
revenue as a third-party seller on www.amazon.com and only a negligible amount of revenue from our operations on our website at
www.hourloop.com and as a third-party seller on other marketplaces. We manage more than 100,000 stock-keeping units ("SKUs").
Product categories include home/garden d cor, toys, kitchenware, apparels, and electronics. Our primary strategy is to bring most
of our vendors product selections to the customers. We have advanced software that assists us in identifying product gaps so we can keep
such products in stock year-round including the entirety of the last quarter (holiday season) of the calendar year ("Q4").
In upcoming years, we plan to expand our business by increasing the number of business managers, vendors and SKUs while improving on
profitability.

Model

 There
are three main types of business models on Amazon: wholesale, private label and retail arbitrage. Our business model is wholesale, also
known as reselling, which refers to buying products in bulk directly from the brand or manufacturer at a wholesale price and making a
profit by selling the product on Amazon. We sell merchandise on Amazon and the sales are fulfilled by Amazon. We pay Amazon fees for
allowing us to sell on their platform. Our relationship with Walmart is also similar. We pay Walmart fees for allowing us to sell our
merchandise on their platform. As stated above, to date, we have generated only a negligible amount of revenues as a third-party seller
on www.walmart.com.

 The
advantages of selling via a wholesale model:

 Purchase
 lower unit quantities with wholesale orders than private label products.

 Selling
 wholesale is less time intensive and easier to scale than sourcing products via retail arbitrage.

 More
 brands will want to work with us because we can provide broader Amazon presence.

 The
challenges of selling via a wholesale model:

 Fierce
 competition on listing for Buy Box on amazon.com (as described below).

 Developing
 and maintaining relationships with brand manufacturers.

 Market
Description/Opportunities

 According
to Marketplace Pulse, total U.S. retail sales increased 2% to $7.24 trillion in 2023 from $7.09 trillion in 2022. U.S. ecommerce
sales increased 7% to $1,118.68 billion in 2023 from $1,039.75 billion in 2022.

accounted for nearly 37.6% of all e-commerce in the United States and that makes Amazon the biggest ecommerce giant currently in the
market.

 Formation

 We
were originally incorporated under the laws of the State of Washington on January 13, 2015. In 2019, we formed a wholly owned subsidiary,
Flywheel Consulting Ltd. ("Flywheel"), to provide business operating consulting services, exclusively to Hour Loop. On April
7, 2021, Hour Loop converted from a Washington corporation to a Delaware corporation. The
Company was founded in 2013 by Sam Lai and Maggie Yu. With their vision, leadership, and software development skills, the Company grew
rapidly. From 2013 to 2023, net sales grew from $0 to $132,124,202.

 Competitive
Advantage

 Among
more than 2 million active third-party sellers on Amazon, we believe we have two main competitive advantages:

 First,
 we have strong operations and sales teams experienced in listing, shipment, advertising, reconciliation and sales. By delivering
 high quality results and enhancing procedures through the process, our teams are competitive.

 Second,
 we believe our proprietary software system gives us an advantage over our competition. The system is highly customized to our business
 model; it collects and processes large amounts of data every day to optimize our operation and sales. Through advanced software,
 we can identify product gaps and keep them in stock all year round.

 With
respect to our advertising strategy, we advertise those products that we estimate will have greater demand based on our experience. This
lets us allocate our advertising budget in a fashion that delivers positive value. We advertise our products on Amazon. We allocate our
advertising dollars prudently. This is accomplished by advertising items that deliver the most return for our advertising spending. We
monitor the items being advertised by our competitors. On the operations side, we constantly refine our processes based on learnings
from historical data. The combination of managing the business operations effectively along with allocating our advertising budget to
high value items allows us to grow profitably. In cases where the advertising is fierce, we allocate the spending appropriately. Our
strategy for competing with larger competitors is to monitor their pricing and not compete with them when their pricing is low or at
a loss. Competitors sell at low prices or at a loss due to a variety of reasons, including, but not limited to, their desire to liquidate
inventory or achieve short term increase in revenue. During these times, we avoid matching their prices. This strategy allows us to stay
profitable.

 Historical
Performance

 Our
year end net revenues and net income (loss) from 2013 through 2023 is presented in the table below:

 Year

 Net Revenue

 Year-over-
 Year %

 Net Income (loss)

 Net Income (loss) %

 Year-over
 -Year %

 2013

 $
 26,135

 -

 $
 4,682

 %

 -

 2014

 $
 1,102,237

 4117
 %

 $
 150,300

 %

 3110
 %

 2015

 $
 2,567,267

 %

 $
 228,009

 %

 %

 2016

 $
 7,337,012

 %

 $
 77,752

 %

 NA

 2017

 $
 17,487,124

 %

 $
 (122,176
)

 (1
)%

 (257
)%

 2018

 $
 24,402,144

 %

 $
 657,821

 %

 NA

 2019

 $
 26,564,693

 %

 $
 (423,073
)

 (2
)%

 (165
)%

 2020

 $
 38,655,264

 %

 $
 3,820,698

 %

 NA

 2021

 $
 62,792,981

 %

 $
 4,783,773

 %

 %

 2022

 $
 95,930,091

 %

 $
 (1,477,623
)

 (2
)%

 (131
)%

 2023

 $
 132,124,202

 %

 $
 (2,429,694
)

 (2
)%

 %

 In
2023 and 2022, approximately 99% and 100% of our revenue was through or with the Amazon sales platform.

 Pricing
Strategy and Policies

 In
an ideal world, we would like to price our products at key stone pricing or double wholesale cost. However, we operate in a hyper competitive
environment and we must stay competitive. Therefore, we must draw a good balance between gross margin and revenue. Our main objectives
focus on increasing volume and maximizing profits, which is achieved with a customized auto pricing system we developed internally, in
combination with well-trained business managers' judgment on pricing skills as well as constant monitoring. One principal feature
of the pricing system is that it automatically syncs public data of competing offers from Amazon regularly, so business managers can
make price settings and adjustments based on accurate data, and thus be able to set optimal selling prices for products. In addition,
the system is constantly improved with new features and optimizations.

 At
a high level, our automated pricing tool helps us stay competitive while our business managers mainly focus on increasing gross margins.
Our proprietary repricing tool analyze sales trend, projected sales, inventory age, inventory cost, potential profits, Fulfillment by
Amazon ("FBA") fees, competing offers, and seasonality and determines an urgency level, then depending on the level of urgency,
it automatically adjusts prices accordingly.

managers, after establishing the bases for prices, begin to develop pricing strategies for each product while taking the current market
conditions, company goals (e.g., increasing short-term or long-term profits) and strategies into consideration. Furthermore, business
managers consider different marketing segments such as costs and competitions in order to develop effective pricing strategies and policies.

 The
following subsections provide more insight into various pricing strategies we have developed over the years. Our internal training mainly
focuses on competition-based pricing policy and value-based pricing policy.

 1.

 Competition-Based
 Pricing Policy: 20% of our products are toys, which are extremely popular and competitive. In this type of environment where
 volume is high but gross margin is low, our main strategy is to purchase large quantities, so we can increase sales volume and price
 competitively while maintaining an average return on investment ("ROI") of at least 15%. We are using the competition-based
 pricing policy to match competitors' prices, which means constantly winning Buy Box (as described below). Our pricing system
 is capable of automatically matching all Buy Box.

 2.

 Promotional
 Pricing Policy: To boost lagging sales, we adapted our own promotional pricing policy, which involves offering modest discounts
 on products with inventory age over 45 days, which proves to be cost-effective at reducing the number of low turn-over SKUs.

 3.

 Value-Based
 Pricing Policy: We incorporate a value-based pricing strategy when inventories are constrained, which can happen when customer
 demand suddenly spikes due to external factors, supply shortage, or seasonal spikes. We set prices to reflect the value perceived
 by customers, especially on products under gift categories when consumer demands are higher. Contrary to a typical seller, we opt
 to maintain high gross margin instead of marking down prices and running special deals during the high-demand season during Q4. Therefore,
 business managers can achieve increases in both sales and high average ROI of 40%.

 Buy
Box on amazon.com is the top right section on a product page where customers can directly add items to their shopping carts. Since
many sellers on amazon.com can sell the same product, they must compete to "win the Buy Box" for a certain product.
Winning the Amazon Buy Box simply means that you were chosen for the Buy Box placement. When you win this placement, customers have a
button to directly add your product to their carts, giving you an advantage over competing sellers. For a seller to be eligible for the
Buy Box, they must meet a set of performance-based requirements, including order defect rate, customer shopping experience, time and
experience on the Amazon selling platform, and status as a professional seller.

 Overview
of Market & Competition

 According
to Marketplace Pulse, total U.S. retail sales increased 2% to $7.24 trillion in 2023 from $7.09 trillion in 2022. U.S. ecommerce sales
increased 7% to $1,118.68 billion in 2023 from $1,039.75 billion in 2022.

 In
2023, total U.S. ecommerce sales reached $ 1,118.68 billion, an 7% year-over-year increase
from $1,039.75 billion in 2022. This is significantly less than the U.S. ecommerce growth rate of 2022, during which total sales increased
by 16% year-over-year from 2021.

 Despite
the slowdown, total U.S. ecommerce sales in 2023 still marked the highest on record. This is an impressive increase from a decade ago
in 2011 when online sales in the U.S. totaled $199.3 billion. A year later, it breached the $200 billion mark for the very first time.
From 2011 to 2023, annual U.S. ecommerce sales multiplied by approximately five times.

 Target
Market Size

 Total
Addressable Market

 As
an e-commerce company retailing in the U.S. market, our total addressable market covers all U.S. residents with Internet access, which
segmentally includes repeat customers and new customers to online shopping every year.

 Growth
of E-commerce vs. Total Retail Sales

 According
to U.S. Department of Commerce data, e-commerce's share of total retail sales has steadily been on the rise and peaked at 16.4%
in the second quarter of 2020. Total U.S. retail sales increased 2% to $7.24 trillion in 2023 from $7.09 trillion in 2022. Consumers
spent $1,118.68 billion online with U.S. merchants in 2023, which is around 15.45% of total U.S. retail sales for the year compared to
14.66% in 2022.

accounted for nearly 40% of all e-commerce in the United States and that makes Amazon the biggest ecommerce giant currently in the market.

 Growth
of Amazon Prime Members

has over 200 million Prime Members in the U.S., and we were seeing continuous year-over-year growth over the past years.

 Operational
Advantages

 Although
Hour Loop was among the top 10 third-party sellers on U.S. Amazon in 2022, according to Marketplace Pulse data as of January 29, 2024,
we continue to perform well, maintaining a position within the top 15.

 Automation

 We
developed a proprietary software that is tailor made to all our operational needs. This includes managing order review process, shipment
management, inventory management, accounting, and complete end-to-end third-party integrations. This allows us to scale, reduce cost,
and improve quality.

 Profitability
Management

 We
have experienced operations managers tracking team performances with key performance indicators. We have departments specializing in
logistic costs, advertising, marketing, and product management. We hold monthly process reviews to identify early red flags and look
for areas to optimize. Each quarter we set increasingly difficult bars both to grow gross margin and further reduce expenses.

 Continuous
Process Optimization

 In
order to improve operating efficiencies, we have effective process optimization adapting to the changing policies of the e-commerce marketplace.
We continuously analyze our performance based on data. We conduct pricing, inventory planning and profitability analysis using this data.
This analysis provides us with insights on the processes that add the most value. Using these insights, we develop guidelines that help
us improve our operations. These guidelines are incorporated into our operations which include (but are not limited to), identifying
and ordering at optimal inventory levels, managing merchandise storage costs, optimizing transit times, and pricing at appropriate levels.
Our operations staff follows these guidelines which help them perform optimally. By continuously analyzing data, we are able to find
insights for improving our business. This drives continuous process optimization and its implementation into our operations. In addition,
our proprietary software allows us to continually accelerate process effectiveness based on specific requirements. Over time, our system
eliminates unnecessary procedures that could be replaced by an advanced algorithm. For instance, we simplify the FBA shipment process
through application programming interface ("API") integration. Our self-developed system also tracks insightful analysis
of our profitability, clearer visualizes the drivers and optimums to better manage operational costs. We monitor operational parameters
that drive our business and proactively try to optimize them. These include fine tuning our item selection, managing our inventory levels,
estimating demand and pricing to maximize our profitability.

 Data-Driven
Approach

 We
make decisions based on analysis and interpretation of the data sets rather than observations over the market trend. By standardizing
processes and combine data-driven management, we can ensure the organization maintains consistency that is high quality. Our business
managers use historical data and sales projection provided by our proprietary software to find potential product gaps and keep products
in stock all year round. This advantage enables powerful predictive insights in correlating real-time data with past sales patterns.

 Training
Programs

 Our
effective training programs accelerate employees' professional development and enable the Company to hire new graduates or people
without experience. Our training programs are very task-specific and we continually improve the materials in order to fit new industry
needs. Other than the training material, we assign mentors to evaluate and monitor trainees' performance at each stage of the training
program.

 Task
Generalization

 By
generalizing each task with a standard process, we are able to shift assignments at regular intervals in order to find the most suitable
employee for each specific task. Moreover, business managers are also able to rotate the vendors they manage easily. This allows our
organization to effectively and consistently manage a vendor when a key employee who previously managed such vendor is no longer with
the company. In addition, the task generalization allows the company to hire remote teams to further reduce labor costs.

 Multicultural
Management

 We
have a multicultural management team that is linguistically and culturally diverse in order to make judgments from different perspectives.
Our remote teams in Taiwan and the Philippines provide diverse professional insights on specific tasks.

 Technological
advantages

 Our
software architecture was designed from the ground up to be scalable, secured, and easily extensible. By using JRuby on Rails, we can
make use of the best parts of Java, Ruby, and Rails without paying for their disadvantages. For example, we can use the massive collections
of Java library, portability, speed, multi-threading, and maturity, but we do not have to be tied down with verbose code and strict typing.
Rails allow us to quickly build web pages and integrate both the frontend and the backend. The application runs on Amazon Web Services
("AWS") and can be easily scaled up to as many hosts as needed. It is accessible from a browser, so there is no need to setup
or install anything on the client-side.

 Cost
Advantage

 Access
to Low Product Costs

 We
lower our product average costs by direct import items that have high volume, purchasing in bulk with better prices, and negotiating
discounts or rebates over increased purchase volume every year. Our strong growth of purchase every year allows us to negotiate better
discounts than the rivals. Therefore, we have the cost advantages to compete at low prices.

 Efficient
Processes and Technologies

 Our
proprietary software allows us to tailor make tools based on our specific use cases and leverage technologies to greatly reduce manual
operations. We also saved the expense of using third-party software in managing inventory, orders, product listings, and especially the
advertising analytic tool.

 Low
Distribution and Logistic costs

 We
saved the cost of managing the warehouse, shipping, and product distribution as we are enrolled in Amazon's FBA program. The program
allows us to reduce fixed costs of the physical assets and quickly scale up the business without thinking much about infrastructure complexity.
Apart from using the FBA program, we also use FedEx, Amazon partnered carrier, Amazon Freight, and Amazon Global Logistics to reduce
expense. The competitive shipping rates we secured provide us a cost-efficient way to deliver shipments from overseas and domestic to
Amazon warehouse.

 Efficiently
Managed Operations

 We
have a good management structure within the firm and a data-driven system that allows employees to manage tasks quickly and cost-efficiently.

 Reduced
Labor Costs

 We
leverage third-party logistic companies to forward or prep our shipments to Amazon, which reduces our logistic operation labor costs.
We also work with a labor outsourcing partner located in the Philippines that provides virtual assistants to help us with data entry
and repetitive work, which is a very cost-effective way to do a lot of grunt work.

 Key
Competitors by Market Size/Share

 Our
key competitor is Amazon Retail. Amazon Retail frequently buys from the same brands we sell and sells them at a loss. Amazon Retail offers
can be identified by the "Sold by Amazon" tag on Amazon's site, and they are formed by two components: (i) Amazon Vendor
Central, and (ii) the Sold by Amazon ("SBA") program. We do not consider other third-party sellers as key competitors, because
none of them represents enough market share to influence sales outcome. The addressable market is incredibly vast; thus we believe there
are plenty of opportunities for everyone.

Vendor Central

Vendor Central allows manufacturers and brand owners to sell directly to Amazon as a first-party seller. This is one of the key competitive
factors as Amazon usually buys bulk from the brands and sells at a very low price, which leads to hyper-competitive pricing. On pricing
control, Amazon does not always follow the minimum advertised pricing ("MAP") guidelines from manufacturers, which also puts
us at a disadvantage when selling the same products.

 Sold
by Amazon Program

 With
the rise of e-commerce platforms, Amazon is looking for opportunities to attract customers away from its retail store rivals. In 2019,
Amazon rolled out its new SBA program to help sellers grow their business. This program gives brand owners the control of inventory management
and listings with Amazon having the authority to constantly monitor and change the price to make sure customers are getting the best
deals. Once the products are enrolled in the SBA program, Amazon will set the minimum gross proceeds ("MGP") to pay sellers
the lowest possible amount on each unit sold. This new program is another threat to our company as Amazon is the one taking control of
pricing, and they set the price very low in order to compete with competitors' low price strategy.

 Competitor
Strengths and Weaknesses

 Strengths
of Sold by Amazon

 First,
ship from and SBA creates competition for potential customers who prefer to buy products from Amazon rather than a third-party seller.
Secondly, Amazon monitors and manages pricing which makes the product price range at a highly competitive level. In fact, the chance
of Amazon winning buy box is even higher as they have the best deal for customers. Finally, Amazon is not restricted by its policy to
third-party sellers. One of the critical policies is the restock limit. Amazon limits certain items' restock quantities based on
recent sales activity, and this affects the in-stock rate of popular items that needs a greater volume.

 Weaknesses
of Sold by Amazon

 As
Amazon focuses on sales more than relationships with vendors, they do not follow vendors' MAP strictly. We believe this has led
to the devaluation of brands and will have a negative impact on building a long-term relationship with the vendors. Once the vendor hands
over their price control to Amazon, we believe it is unlikely for them to sell at their original target price further, and it influences
their offline sales. And in fact, it makes a huge difference in profitability to both Amazon and the vendor when reacts to the competitive
pricing changes.

 Apart
from the weaknesses of business relationships, we believe Amazon also has disadvantages in the niche marketplaces, where product offerings
are narrower and more personalized. As a third-party seller, we cooperate with vendors in developing custom projects that bring product
differentiation and scarcity effect. However, we believe Amazon only concentrates on the masses, which gives them the deficiency of having
products that are targeted in certain market segments.

 Potential
Substitute Products Posing Credible Threat to Company Products

 No
potential substitute products would pose a credible threat to our company as we have developed a wide product diversification.

 As
a company that focuses on reselling wholesale products, we have the resilience to find substitution of products or brands. We established
product diversification by managing wide range of SKUs and continually expand our product categories. Our business strategy allows us
to mitigate risk and generate significant profit by selling low volumes items diversified across a large variety of products.

 In
contrast, private label sellers manage small number of SKUs that have large volumes in return with higher profit per unit. However, private
labels have much higher risk when experiencing stagnant or declining sales as they would have lower capability to find sales replacements
that are already established.

 Strength
of Barriers to Entry

 Higher
Capital, Low Margin: Selling online is generally low margin, but it requires high capital investment in order to purchase goods and
run advertising.

 Product
Differentiation: Our proprietary software allows us to manage a huge number of SKUs. This allows us to participate in profitable
long-tail products in addition to well-known popular ones. The turnover rate for long-tail products is slow, so newcomers are not likely
to enter. It also requires a sophisticated system to manage. Furthermore, vendor relationships do not happen overnight.

 Advanced
System: We have already developed a highly sophisticated system which has been refined over time to become highly effective. Even
if a new entrant has a team of the best software engineers in the world, it will still take them many years to refine their system. There
is a myriad of intricacies as to the effectiveness of a system. Even if the new entrants have the system built, it will still take them
years to collect historical sales data. By the time new entrants have done all that, our system would have continued to mature. This
means we would be able to manage more SKUs more profitably with lower costs.

 Risk
of Entry- Potential Entrants

 Vendor
Vertical Integration: A vendor may forward integrate into the e-commerce marketplace in order to directly engage with their online
customers.

 Multichannel
E-commerce: There is a chance of established online retail firms such as sellers on eBay, Walmart, and Etsy expanding their business
to the Amazon marketplace.

 Brick-and-Mortar:
 As online retail is growing and offline retail is contracting, there are more brick-and-mortar stores migrating from offline to online.

 Improving
Sales of Popular Items and Securing the Inventories Without Paying Higher Storage Fees By Engaging the Services of Third Party Warehouses

 As
a retailer, our success is heavily influenced by the inventory control of our suppliers (vendors). However, many of our suppliers are
having difficulties maintaining their stock level due to various reasons, such as the shortage of shipping containers, lack of labor,
or disruption in manufacturing. The situation exacerbates during the pandemic and in peak season. In order to secure the inventories,
we start to order large quantities of popular items or buying them out to store in the Amazon fulfillment center. However, the monthly
storage fee of the Amazon fulfillment center in peak season (Q4) is 3.5 times higher than normal season, which puts pressure on our profits.
To maintain the balance of inventory level and margins, we are currently contracting the warehousing services of third-party warehouses,
including, Rahl Distribution, Inc., Rite Prep Shipping, 3Plzen, Carolina Prep & Ship, and Shenzhen Linkhub Co., Ltd to support our
overall stock planning process. By doing this, we can improve sales by preventing popular items from going out of stock, since we had
secured adequate inventories ahead of time. Furthermore, we can also avoid paying higher Amazon storage fees in Q4.

 Growth
Objectives

 Since
2023, in light of the fact that many economists and business leaders had a pessimistic outlook, we are not looking for tremendous growth.
Instead, we will aim to generate consistent profits and maintain cash flow as we become much more selective on product purchasing. We
also expect product costs to go down and competitions to ease. We anticipate that our headcounts will remain or go down slightly through
attrition. In 2024, we expect to carry on similar strategies and focus on profit generation than revenue growth.

 Bank
of America Loan

 On
June 18, 2019, the Company issued a Promissory Note (the "BofA Note") in the amount of $785,000 to Bank of America for a
loan in the amount of $785,000. The BofA Note matures on June 18, 2024 and bears interest at a rate of 8.11% per annum. The monthly payment
is $15,963, consisting of $11,398 of principal and $4,565 of interest. As of December 31, 2023, the aggregate principal amount of the
BofA Note outstanding was $-0-. As of December 31, 2023, there was an outstanding balance of deferred interest of $27,996.

 Taishin
International Bank

 On
August 18, 2022, Flywheel, entered into a line of credit agreement in the amount of $6,940,063 with Taishin International Bank ("Taishin").
The line of credit matured on August 30, 2023. As of December 31, 2023, the outstanding balance under the Taishin line of credit was
$652,422, and bears interest at a rate of 3.2% per annum.

 On
August 11, 2023, the term of the loan was extended for an additional year, revising the maturity date to August 30, 2024. The annual
interest rate remains at 3.2%. Also, Flywheel has accrued interest expense of $1,715 as of December 31, 2023.

 Affiliated
Loans

 From
time to time, the Company receives loans and advances from its stockholders to fund its operations. As of December 31, 2023, the Company
had $4,170,418 due to related parties. While stockholder payables are generally non-interest bearing and payable on demand, the Company
and stockholders entered into loan agreements for loans with terms over one year.

2020 Loan

 On
December 30, 2020 and later modified on September 16, 2021, the Company, Mr. Lai and Ms. Yu entered into a loan agreement of $1,041,353
and converted it into a retroactive interest-bearing (2%) loan with a repayment date of December 31, 2021. On January 18, 2022 and January
27, 2023, the Company repaid the loan principal and accrued interest in full. Together, Mr. Lai and Ms. Yu hold over 95% of the Company's
outstanding shares. Mr. Lai is the Company's Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer.
Ms. Yu is the Company's Senior Vice President and a member of the Company's Board of Directors.

 July
2021 Loan

 On
July 27, 2021, the Company, Mr. Lai and Ms. Yu entered into a loan agreement with a principal amount of $4,170,418. The loan is subordinated.
The original annual interest rate was 2% and the original repayment date was December 31, 2022. On December 28, 2022, the Company, Mr.
Lai and Ms. Yu agreed to extend the term of the loan, with the new maturity date of December 31, 2024. As amended, the annual interest
rate of the loan is 5.5%.

 Approval
of the Hour Loop, Inc. 2021 Equity Incentive Plan

 On
June 27, 2021, our Board of Directors and stockholders holding a majority of our outstanding shares of common stock approved the Hour
Loop, Inc. 2021 Equity Incentive Plan (the "2021 Plan"). Under the 2021 Plan, a total of 4,995,000 shares of common stock
were originally authorized for issuance pursuant to the grant of stock options, stock appreciation rights, restricted stock, restricted
stock units, performance units, performance shares or other cash- or stock-based awards to officers, directors, employees and eligible
consultants to the Company or its subsidiaries. Pursuant to the terms if the 2021 Plan and subject to adjustment as provided in the 2021
Plan, the maximum aggregate number of shares that may be issued under the 2021 Plan will be cumulatively increased on January 1, 2022
and on each subsequent January 1, by a number of shares equal to the smaller of (i) 3% of the number of shares of common stock issued
and outstanding on the immediately preceding December 31, or (ii) an amount determined by our Board of Directors. As of March 26,
2024, there were 7,045,435 shares of common stock authorized for issuance under the 2021 Plan, and 7,045,435 shares available for
issuance under the 2021 Plan.

 Initial
Public Offering

 On
January 11, 2022, we closed our initial public offering (the "IPO") of 1,725,000 shares of common stock, which included the
full exercise of the underwriter's over-allotment option, at a public offering price of $4.00 per share, for aggregate gross proceeds
of $6,900,000, prior to deducting underwriting discounts, commissions, and other offering expenses. Our common stock began trading on
The Nasdaq Capital Market on January 7, 2022, under the symbol "HOUR". EF Hutton, division of Benchmark Investments, LLC,
acted as sole book-running manager for the offering. The net proceeds of the offering, after deducting expenses of $743,640, were $6,156,360.
Meanwhile, other costs incurred in the IPO totaled $576,168, the main nature of which was professional fees. As a result, common stock
increased by $172, and additional paid-in capital increased by $5,580,020.

 Employees

 As
of December 31, 2023, our headcount stands at 178, signaling a modest reduction compared to 2022. We have intentionally opted for a less
aggressive approach in terms of headcount. Looking ahead, we anticipate a planned increase to approximately 250 in 2024 to support the
growth of our GMS. Our strategic focus is to enhance overall competency without a proportional increase in headcount.

 Executive
Officers

 Set
forth below is certain information regarding our executive officers.

 Name

 Age

 Position

 Sam
 Lai

 Chairman
 of the Board, Chief Executive Officer and Interim Chief Financial Officer

 Sau
 Kuen (Maggie) Yu

 Senior
 Vice President and Director

 Sam
Lai. Mr. Lai has served as our Chief Executive Officer and been a member of our Board of Directors since June 2013 and our Chairman
of Board since April 2021. He has served as our Interim Chief Financial Officer since March 29, 2022. He is a seasoned software engineer
who has designed and built software and code from the ground up at Hour Loop, Inc., Amazon.com, Inc., UnifiedEdge, Inc., Kits, and Applied
Research Labs for the past 18 years. From December 2009 through June 2017, Mr. Lai served as a Software Development Engineer for Amazon.com,
Inc. From March 2009 through December 2009, he served as a Senior Java Developer at UnifiedEdge, Inc. From February 2007 through March
2009, Mr. Lai served as a Senior Java Developer at Kits. From September 2005 through February 2007, he served as a Software Development
Engineer for Amazon.com, Inc. From March 2003 through January 2004, Mr. Lai served as a Research Engineer Scientist Assistant at Applied
Research Labs. Mr. Lai graduated with a Bachelor Degree in Computer Science from University of Texas at Austin in 2003 and a Masters
Degree in Computer Science from University of California, San Diego in 2004. Mr. Lai does not hold, and has not previously held, any
directorships in any reporting companies.

 Sau
Kuen (Maggie) Yu. Ms. Yu has served as our Senior Vice President and has been a member of our Board of Directors since June 2013.
Since graduating from University of California, San Diego until June 2013, Ms. Yu has no employment history. Ms. Yu graduated with a
Bachelor Degree in Computer Science from University of California, San Diego in 2004. Ms. Yu does not hold, and has not previously held,
any directorships in any reporting companies.

 Mr.
Lai and Ms. Yu are married.

 Legal
Proceedings

 From
time to time, we are involved in various claims and legal actions arising in the ordinary course of business. To the knowledge of our
management, there are no legal proceedings currently pending against us which we believe would have a material effect on our business,
financial position or results of operations and, to the best of our knowledge, there are no such legal proceedings contemplated or threatened.

 Properties

 Our
corporate headquarters are located at 8201 164th Ave. NE, #200, Redmond, WA 98052-7615, where we rent a virtual office from an unaffiliated
third party under a virtual office/meeting room agreement. This agreement provides for daily telephone answering, messaging and fax services,
and paid access to conference rooms on an as-needed basis. The virtual office arrangement expires on August 31, 2024. Terms of the virtual
office arrangement provide for a rent payment of $59 per month.

 We
also lease a warehouse located at Qiaojiao Road, No. 1, Qiaojiao Middle Road, Tangxia Town, Dongguan City, Guangdong, China, who handle
our storage and warehousing from an unaffiliated third party. This service expires in January 2024. The terms of this service provide
for a base payment that is charged based on our usage. Flywheel, our wholly owned subsidiary, had three office leases in Taiwan in 2023.
The respective lease terms are June 1, 2022 to May 31, 2024, August 1, 2022 to July 31, 2024, and February 9, 2023 to March 8, 2025 and
the total contract amounts are $$114,016, $157,973, and $28,652 respectively. We believe that these facilities are adequate for our current
and near-term future needs.

 ITEM
1A. RISK FACTORS

 An
investment in our securities carries a significant degree of risk. You should carefully consider the following risks, as well as the
other information contained in this annual report on Form 10-K, including our historical financial statements and related notes included
elsewhere in this annual report on Form 10-K, before you decide to purchase our securities. Any one of these risks and uncertainties
has the potential to cause material adverse effects on our business, prospects, financial condition and operating results which could
cause actual results to differ materially from any forward-looking statements expressed by us and a significant decrease in the value
of our common shares. Refer to "Cautionary Statement Regarding Forward-Looking Statements."

 We
may not be successful in preventing the material adverse effects that any of the following risks and uncertainties may cause. These potential
risks and uncertainties may not be a complete list of the risks and uncertainties facing us. There may be additional risks and uncertainties
that we are presently unaware of, or presently consider immaterial, that may become material in the future and have a material adverse
effect on us. You could lose all or a significant portion of your investment due to any of these risks and uncertainties.

 Below
is a summary of material risks, uncertainties and other factors that could have a material effect on the Company and its operations:

 We
 face intense competition;

 Our
 business depends on our ability to build and maintain strong product listings on e-commerce platforms. We may not be able to maintain
 and enhance our product listings if we receive unfavorable customer complaints, negative publicity or otherwise fail to live up to
 consumers' expectations, which could materially adversely affect our business, results of operations and growth prospects;

 We
 experience significant fluctuations in our operating results and growth rate;

 We
 face risks related to successfully optimizing and operating our fulfillment and customer service operations;

 The
 variability in our retail business places increased strain on our operations;

 Continued
 increases in Amazon Marketplace fulfillment and storage fees could have an adverse impact on our profit margin and results of operations;

 A
 change in one or more of the Company's vendors' policies or the Company's relationship with those vendors could
 adversely affect the Company's results of operations;

 Our
 revenue is dependent upon maintaining our relationship with Amazon and failure to do so, or any restrictions on our ability to offer
 products on the Amazon Marketplace, could have an adverse impact on our business, financial condition and results of operations;

 Loss
 of key personnel or the inability to attract, train and retain qualified employees could adversely affect the Company's results
 of operations;

 We
 may face difficulties in meeting our labor needs to effectively operate our business;

 Our
 business could be adversely affected by increased labor costs, including costs related to an increase in minimum wage and health
 care;

 Breach
 of data security could harm our business and standing with our customers;

 Our
 hardware and software systems are vulnerable to damage, theft or intrusion that could harm our business;

 Our
 inability or failure to protect our intellectual property rights, or any claimed infringement by us of third-party intellectual rights,
 could have a negative impact on our operating results;

 The
 Company's business is influenced by general economic conditions;

 Disruption
 of global capital and credit markets may have a material adverse effect on the Company's liquidity and capital resources;

 The
 Company is dependent upon access to capital for its liquidity needs;

 We
 may complete a future significant strategic transaction that may not achieve intended results or could increase the number of our
 outstanding shares or amount of outstanding debt or result in a change of control;

 Historically,
 we have experienced declines, and we may continue to experience fluctuation in our level of sales and results from operations;

 The
 ability of the Company to satisfy its liabilities and to continue as a going concern will continue to be dependent on the implementation
 of several items, the success of which is not certain;

 Parties
 with whom the Company does business may be subject to insolvency risks or may otherwise become unable or unwilling to perform their
 obligations to the Company;

 Failure
 to comply with legal and regulatory requirements could adversely affect the Company's results of operations;

 Litigation
 may adversely affect our business, financial condition and results of operations;

 The
 effects of natural disasters, terrorism, acts of war, and public health issues may adversely affect our business;

 A
 pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, may materially and adversely affect our business;

 The
 loss of key senior management personnel or the failure to hire and retain highly skilled and other key personnel could negatively
 affect our business;

 The
 ability of Sam Lai, our Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer, and Maggie Yu, our Senior
 Vice President, who are husband and wife, to control our business may limit or eliminate minority stockholders' ability to
 influence corporate affairs;

 Government
 regulation is evolving and unfavorable changes could harm our business;

 We
 are subject to product liability claims when people or property are harmed by the products we sell;

 We
 could face prior period sales tax and corporate tax liabilities, penalties and collection obligations;

 There
 can be no assurance that we will be able to comply with continued listing standards of The Nasdaq Capital Market ("Nasdaq");

 High
 state income tax rates could impact our financials negatively;

 The
 market price of our common stock may be volatile, and you could lose all or part of your investment; and

 Our
 current accounting and inventory tracking systems could impair our ability to file accurate and timely financial statements.

 Risks
Related to Our Business

 We
face intense competition.

 The
online retail business is rapidly evolving and intensely competitive. Some of our current and potential competitors have greater resources,
longer histories, and/or more customers. They may secure better terms from vendors, adopt more aggressive pricing, and devote more resources
to technology, infrastructure, fulfillment, and marketing.

 Competition
continues to intensify, including with the development of new business models and the entry of new and well-funded competitors, and as
our competitors enter into business combinations or alliances and established companies in other market segments expand to become competitive
with our business. In addition, new and enhanced technologies, including search, web and infrastructure computing services, digital content,
and electronic devices continue to increase our competition. The Internet facilitates competitive entry and comparison shopping, which
enhances the ability of new, smaller, or lesser-known businesses to compete against us. As a result of competition, our product offerings
may not be successful, we may fail to gain or may lose business, and we may be required to increase our spending or lower prices, any
of which could materially reduce our sales and profits.

 Our
business depends on our ability to build and maintain strong product listings on e-commerce platforms. We may not be able to maintain
and enhance our product listings if we receive unfavorable customer complaints, negative publicity or otherwise fail to live up to consumers'
expectations, which could materially adversely affect our business, results of operations and growth prospects.

 Maintaining
and enhancing our product listings is critical in expanding and growing our business. However, a significant portion of our perceived
performance to the customer depends on third parties outside of our control, including suppliers and third-party delivery agents as well
as online retailers such as Amazon and Walmart. Because our agreements with our online retail partners are generally terminable at will,
we may be unable to maintain these relationships, and our results of operations could fluctuate significantly from period to period.
Because we rely on third parties to deliver our products, we are subject to shipping delays or disruptions caused by inclement weather,
natural disasters, labor activism, health epidemics or bioterrorism. We may also experience shipping delays or disruptions due to other
carrier-related issues relating to their own internal operational capabilities. Further, we rely on the business continuity plans of
these third parties to operate during pandemics, like the COVID-19 pandemic, and we have limited ability to influence their plans, prevent
delays, and/or cost increases due to reduced availability and capacity and increased required safety measures.

 Customer
complaints or negative publicity about our products, delivery times, or marketing strategies, even if not accurate, especially on blogs,
social media websites and third-party market sites, could rapidly and severely diminish consumer view of our product listings and result
in harm to our brands. Customers may also make safety-related claims regarding products sold through our online retail partners, such
as Amazon, which may result in an online retail partner removing the product from its marketplace. We have from time to time experienced
such removals and such removals may materially impact our financial results depending on the product that is removed and length of time
that it is removed. We also use and rely on other services from third parties, such as our telecommunications services, and those services
may be subject to outages and interruptions that are not within our control.

 We
experience significant fluctuations in our operating results and growth rate.

 We
are not always able to accurately forecast our growth rate. We base our expense levels and investment plans on sales estimates. A significant
portion of our expenses and investments is fixed, and we are not always able to adjust our spending quickly enough if our sales are less
than expected.

 Our
revenue growth may not be sustainable, and our percentage growth rates may decrease. Our revenue and operating profit growth depend on
the continued growth of demand for the products offered by us, and our business is affected by general economic and business conditions.
A softening of demand, whether caused by changes in customer preferences or a weakening of the U.S. economy, may result in decreased
revenue or growth.

 Our
sales and operating results will also fluctuate for many other reasons, including due to factors described elsewhere in this section
and the following:

 our
 ability to retain and increase sales to existing customers, attract new customers, and satisfy our customers' demands;

 our
 ability to retain and expand our network of vendors;

 our
 ability to offer products on favorable terms, manage inventory, and fulfill orders;

 the
 introduction of competitive products, price decreases, or improvements;

 changes
 in usage or adoption rates of the Internet, e-commerce, electronic devices, and web services;

 timing,
 effectiveness, and costs of expansion and upgrades of our systems and infrastructure;

 the
 extent to which we finance, and the terms of any such financing for, our current operations and future growth;

 the
 outcomes of legal proceedings and claims, which may include significant monetary damages or injunctive relief and could have a material
 adverse impact on our operating results;

 variations
 in the mix of products we sell;

 variations
 in our level of merchandise and vendor returns;

 the
 extent to which we offer fast and free delivery and provide additional benefits to our customers;

 factors
 affecting our reputation;

 the
 extent to which we invest in technology and content, fulfillment, and other expense categories;

 increases
 in the prices of fuel and gasoline, as well as increases in the prices of other energy products and commodities like paper and packing
 supplies and hardware products;

 the
 extent to which operators of the networks between our customers and us, the online retailer, successfully charge fees to grant our
 customers unimpaired and unconstrained access to our online services;

 our
 ability to collect amounts owed to us when they become due;

 the
 extent to which new and existing technologies, or industry trends, restrict online advertising or affect our ability to customize
 advertising or otherwise tailor our product and service offerings;

 the
 extent to which use of our services is affected by spyware, viruses, phishing and other spam emails, denial of service attacks, data
 theft, computer intrusions, outages, and similar events; and

 disruptions
 from natural or man-made disasters, extreme weather, geopolitical events and security issues (including terrorist attacks and armed
 hostilities), labor or trade disputes, and similar events.

 We
face risks related to successfully optimizing and operating our fulfillment and customer service operations.

 Failures
to adequately predict customer demand or otherwise optimize and operate our fulfillment and customer service operations successfully
from time to time result in excess or insufficient fulfillment or customer service capacity, increased costs, and impairment charges,
any of which could materially harm our business. As we continue to add fulfillment and customer service capability or add new businesses
with different requirements, our fulfillment and customer service operations become increasingly complex and operating them becomes more
challenging. There can be no assurance that we will be able to operate our operations effectively.

 In
addition, failure to optimize inventory in our fulfillment operations increases our net shipping cost by requiring long-zone or partial
shipments. We may be unable to adequately staff our fulfillment and customer service operations. Our failure to properly handle such
inventory or to accurately forecast product demand may result in us being unable to secure sufficient storage space or to optimize our
fulfillment operations or cause other unexpected costs and other harm to our business and reputation.

 We
rely on a limited number of shipping companies to deliver inventory to us and completed orders to our customers. The inability to negotiate
acceptable terms with these companies or performance problems or other difficulties experienced by these companies or by our own transportation
systems could negatively impact our operating results and customer experience. In addition, our ability to receive inbound inventory
efficiently and ship completed orders to customers also may be negatively affected by natural or man-made disasters, extreme weather,
geopolitical events and security issues, labor or trade disputes, and similar events.

 The
variability in our retail business places increased strain on our operations.

 Demand
for our retail products can fluctuate significantly for many reasons, including as a result of seasonality, promotions, product launches,
or unforeseeable events, such as in response to natural or man-made disasters, extreme weather, or geopolitical events. For example,
we expect a disproportionate amount of our retail sales to occur during our fourth quarter. Our failure to stock or restock popular products
in sufficient amounts such that we fail to meet customer demand could significantly affect our revenue and our future growth. When we
overstock products, we may be required to take significant inventory markdowns or write-offs and incur commitment costs, which could
materially reduce profitability. We regularly experience increases in our net shipping cost due to FBA fee increases, split-shipments,
and additional long-zone shipments necessary to ensure timely delivery for the holiday season. If too many customers access the websites
on which we engage in online retailing within a short period of time due to increased demand, we may experience system interruptions
that make the websites unavailable or prevent us from efficiently fulfilling orders, which may reduce the volume of goods we offer or
sell and the attractiveness of our products. In addition, we may be unable to adequately staff for fulfillment of orders and customer
service during these peak periods and delivery and other fulfillment companies and customer service co-sourcers may be unable to meet
the seasonal demand.

 As
a result of holiday sales, as of December 31 of each year, our cash, cash equivalents, and marketable securities balances typically reach
their highest level (other than as a result of cash flows provided by or used in investing and financing activities). This operating
cycle results in a corresponding increase in accounts payable as of December 31. Our accounts payable balance generally declines during
the first three months of the year, resulting in a corresponding decline in our cash, cash equivalents, and marketable securities balances.

 Continued
increases in Amazon Marketplace fulfillment and storage fees could have an adverse impact on our profit margin and results of operations.

 The
Company utilizes Amazon's FBA platform to store their products at the Amazon fulfillment center and to pack and distribute these
products to customers. If Amazon continues to increase its FBA fees, our profit margin could be adversely affected.

 A
change in one or more of the Company's vendors' policies or the Company's relationship with those vendors could adversely
affect the Company's results of operations.

 The
Company is dependent on its vendors to supply merchandise in a timely and efficient manner. If a vendor fails to deliver on its commitments,
whether due to financial difficulties or other reasons, the Company could experience merchandise shortages that could lead to lost sales.

 Historically,
the Company has not experienced difficulty in obtaining satisfactory sources of supply and management believes that it will continue
to have access to adequate sources of supply. No individual vendor exceeded 15% of purchases in the year ended December 31, 2024.

 Our
revenue is dependent upon maintaining our relationship with Amazon and failure to do so, or any restrictions on our ability to offer
products on the Amazon Marketplace, could have an adverse impact on our business, financial condition and results of operations.

 To
date, we have generated practically all of our revenue as a third-party seller on Amazon Marketplace. In 2023 and 2022, 99% and 100%,
respectively, of our net revenue was through or with the Amazon sales platform. Therefore, we depend entirely on our relationship with
Amazon for growth. In particular, we depend on our ability to offer products on the Amazon Marketplace. We also depend on Amazon for
the timely delivery of products to customers. Any adverse change in our relationship with Amazon, including restrictions on the ability
to offer products or termination of the relationship, could adversely affect our continued growth and financial condition and results
of operations.

 Our
profit is dependent reimbursements from Amazon and any change in Amazon's policy regarding reimbursement could adversely impact
our ability to generate profits.

reimburses us for any lost and damaged merchandise. These reimbursements form a substantial portion of our profits. Any change in Amazon
policy regarding these reimbursements could impact our profit adversely. Additionally, we are dependent on Amazon's ability to
track and process these reimbursements. Any deficiencies in Amazon's ability to process these reimbursements could impact our profits.

 Loss
of key personnel or the inability to attract, train and retain qualified employees could adversely affect the Company's results
of operations.

 The
Company believes that its future prospects depend, to a significant extent, on the services of its executive officers. Our future success
will also depend on our ability to attract and retain qualified key personnel. The loss of the services of certain of the Company's
executive officers and other key management personnel could adversely affect the Company's results of operations.

 In
addition to our executive officers, the Company's business is dependent on our ability to attract, train and retain qualified team
members. Our ability to meet our labor needs while controlling our costs is subject to external factors such as unemployment levels,
health care costs and changing demographics. If we are unable to attract and retain adequate numbers of qualified team members, our operations
and support functions could suffer. Those factors, together with increased wage and benefit costs, could adversely affect our results
of operations.

 We
may face difficulties in meeting our labor needs to effectively operate our business.

 We
are heavily dependent upon our labor workforce. Our compensation packages are designed to provide benefits commensurate with our level
of expected service. However, we face the challenge of filling many positions at wage scales that are appropriate to the industry and
competitive factors. We also face other risks in meeting our labor needs, including competition for qualified personnel, overall unemployment
levels. Changes in any of these factors, including a shortage of available workforce, could interfere with our ability to adequately
service our customers and could result in increasing labor costs.

 Our
business could be adversely affected by increased labor costs, including costs related to an increase in minimum wage and health care.

 Labor
is one of the primary components in the cost of operating our business. Increased labor costs, whether due to competition, unionization,
increased minimum wage, state unemployment rates, health care, or other employee benefits costs may adversely impact our operating expenses.
Additionally, there is no assurance that future health care legislation will not adversely impact our results or operations.

 Breach
of data security could harm our business and standing with our customers.

 The
protection of our supplier (vendor), employee and business data is critical to us. Our business, like that of most companies, involves
confidential information about our employees, our suppliers and our Company. We rely on commercially available systems, software, tools
and monitoring to provide security for processing, transmission and storage of all such data, including confidential information. Despite
the security measures we have in place, our facilities and systems, and those of our third-party service providers, may be vulnerable
to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors, or other similar events.
Unauthorized parties may attempt to gain access to our systems or information through fraud or other means, including deceiving our employees
or third-party service providers. The methods used to obtain unauthorized access, disable or degrade service, or sabotage systems are
also constantly changing and evolving, and may be difficult to anticipate or detect. We have implemented and regularly review and update
our control systems, processes and procedures to protect against unauthorized access to or use of secured data and to prevent data loss.
However, the ever-evolving threats mean we must continually evaluate and adapt our systems and processes, and there is no guarantee that
they will be adequate to safeguard against all data security breaches or misuses of data. Any security breach involving the misappropriation,
loss or other unauthorized disclosure of customer payment card or personal information or employee personal or confidential information,
whether by us or our vendors, could damage our reputation, expose us to risk of litigation and liability, disrupt our operations, harm
our business and have an adverse impact upon our net sales and profitability. As the regulatory environment related to information security,
data collection and use, and privacy becomes increasingly rigorous, with new and changing requirements applicable to our business, compliance
with those requirements could also result in additional costs. Further, if we are unable to comply with the security standards established
by banks and the credit card industry, we may be subject to fines, restrictions and expulsion from card acceptance programs, which could
adversely affect our retail operations.

 We
face risks related to system interruption and lack of redundancy.

 We
experience occasional system interruptions and delays that make the websites on which we engage in online retailing unavailable or slow
to respond and prevent us from efficiently accepting or fulfilling orders or providing services to third parties, which may reduce our
net sales and the attractiveness of our products and services. Steps we take to add software and hardware, upgrade our systems and network
infrastructure, and improve the stability and efficiency of our systems may not be sufficient to avoid system interruptions or delays
that could adversely affect our operating results.

 Our
computer and communications systems and operations in the past have been, or in the future could be, damaged or interrupted due to events
such as natural or man-made disasters, extreme weather, geopolitical events and security issues (including terrorist attacks and armed
hostilities), computer viruses, physical or electronic break-ins, and similar events or disruptions. Any of these events could cause
system interruption, delays, and loss of critical data, and could prevent us from accepting and fulfilling customer orders and providing
services, which could make our product offerings less attractive and subject us to liability. Our systems are not fully redundant and
our disaster recovery planning may not be sufficient. In addition, our insurance may not provide sufficient coverage to compensate for
related losses. Any of these events could damage our reputation and be expensive to remedy.

 Our
hardware and software systems are vulnerable to damage, theft or intrusion that could harm our business.

 Any
failure of our computer hardware or software systems that causes an interruption in our operations or a decrease in inventory tracking
could result in reduced net sales and profitability. Additionally, if any data intrusion, security breach, misappropriation or theft
were to occur, we could incur significant costs in responding to such event, including responding to any resulting claims, litigation
or investigations, which could harm our operating results.

 Our
inability or failure to protect our intellectual property rights, or any claimed infringement by us of third-party intellectual rights,
could have a negative impact on our operating results.

 Our
trademark, trade secrets and other intellectual property, including proprietary software, are valuable assets that are critical to our
success. The unauthorized reproduction or other misappropriation of our intellectual property could cause a decline in our revenue. In
addition, any infringement or other intellectual property claim made against us could be time-consuming to address, result in costly
litigation, cause product delays, require us to enter into royalty or licensing agreements or result in our loss of ownership or use
of the intellectual property.

 The
Company's business is influenced by general economic conditions.

 The
Company's performance is subject to general economic conditions and their impact on levels of discretionary consumer spending.
General economic conditions impacting discretionary consumer spending include, among others, wages and employment, consumer debt, reductions
in net worth, residential real estate and mortgage markets, taxation, fuel and energy prices, interest rates, consumer confidence and
other macroeconomic factors.

 Consumer
purchases of discretionary items generally decline during recessionary periods and other periods where disposable income is adversely
affected. A downturn in the economy affects retailers disproportionately, as consumers may prioritize reductions in discretionary spending,
which could have a direct impact on purchases of our products and services and adversely impact our results of operations. In addition,
reduced consumer spending may drive us and our competitors to offer additional products at promotional prices, which would have a negative
impact on gross profit.

 Disruption
of global capital and credit markets may have a material adverse effect on the Company's liquidity and capital resources.

 Distress
in the financial markets has in the past and can in the future result in extreme volatility in security prices, diminished liquidity
and credit availability. There can be no assurance that our liquidity will not be affected by changes in the financial markets and the
global economy or that our capital resources will at all times be sufficient to satisfy our liquidity needs.

 The
Company is dependent upon access to capital for its liquidity needs.

 The
Company must have sufficient sources of liquidity to fund its working capital requirements and indebtedness. The future availability
of financing will depend on a variety of factors, such as economic and market conditions, the availability of credit and the Company's
credit rating, as well as the Company's reputation with potential lenders. These factors could materially adversely affect the
Company's ability to fund its working capital requirements, costs of borrowing, and the Company's financial position and
results of operations would be adversely impacted.

 We
may complete a future significant strategic transaction that may not achieve intended results or could increase the number of our outstanding
shares or amount of outstanding debt or result in a change of control.

 We
will evaluate and may in the future enter into strategic transactions. Any such transaction could happen at any time following the closing
of the merger, could be material to our business and could take any number of forms, including, for example, an acquisition, merger or
a sale of all or substantially all of our assets.

 Evaluating
potential transactions and integrating completed ones may divert the attention of our management from ordinary operating matters. The
success of these potential transactions will depend, in part, on our ability to realize the anticipated growth opportunities and cost
synergies through the successful integration of the businesses we acquire with our existing business. Even if we are successful in integrating
the acquired businesses, we cannot assure you that these integrations will result in the realization of the full benefit of any anticipated
growth opportunities or cost synergies or that these benefits will be realized within the expected time frames. In addition, acquired
businesses may have unanticipated liabilities or contingencies.

 If
we complete an acquisition, investment or other strategic transaction, we may require additional financing that could result in an increase
in the number of our outstanding shares or the aggregate principal amount of our debt. A strategic transaction may result in a change
in control of our company or otherwise materially and adversely affect our business.

 Historically,
we have experienced declines, and we may continue to experience fluctuation in our level of sales and results from operations.

 A
variety of factors has historically affected, and will continue to affect, our sales results and profit margins. These factors include
general economic conditions; competition; actions taken by our competitors; consumer trends and preferences; access to third party marketplaces;
and new product introductions and changes in our product mix.

 There
is no assurance that we will achieve positive levels of sales and earnings growth, and any decline in our future growth or performance
could have a material adverse effect on our business and results of operations.

 The
ability of the Company to satisfy its liabilities and to continue as a going concern will continue to be dependent on the implementation
of several items, the success of which is not certain.

 The
Company's primary source of liquidity is available cash and cash equivalents, which is limited. Therefore, the ability of the Company
to meet its liabilities and to continue as a going concern is dependent on, among other things, improved profitability, the continued
implementation of its business strategy, the availability of future funding, implementation of one or more corporate initiatives to reduce
costs at the parent company level and other strategic alternatives, including selling all or part of the remaining business or assets
of the Company.

 There
can be no assurance that we will be successful in further implementing our business strategy or that the strategy, including the completed
initiatives, will be successful in sustaining acceptable levels of sales growth and profitability.

 Parties
with whom the Company does business may be subject to insolvency risks or may otherwise become unable or unwilling to perform their obligations
to the Company.

 The
Company is a party to contracts, transactions and business relationships with various third parties, including partners, vendors, suppliers,
service providers and lenders, pursuant to which such third parties have performance, payment and other obligations to the Company. In
some cases, the Company depends upon such third parties to provide essential products, services or other benefits, including with respect
to merchandise, advertising, software development and support, logistics, other agreements for goods and services in order to operate
the Company's business in the ordinary course, extensions of credit, credit card accounts and related receivables, and other vital
matters. Economic, industry and market conditions could result in increased risks to the Company associated with the potential financial
distress or insolvency of such third parties. If any of these third parties were to become subject to bankruptcy, receivership or similar
proceedings, the rights and benefits of the Company in relation to its contracts, transactions and business relationships with such third
parties could be terminated, modified in a manner adverse to the Company, or otherwise impaired. The Company cannot make any assurances
that it would be able to arrange for alternate or replacement contracts, transactions or business relationships on terms as favorable
as the Company's existing contracts, transactions or business relationships, if at all. Any inability on the part of the Company
to do so could negatively affect the Company's cash flows, financial condition and results of operations.

 Failure
to comply with legal and regulatory requirements could adversely affect the Company's results of operations.

 The
Company's business is subject to a wide array of laws and regulations. Significant legislative changes that impact our relationship
with our workforce (none of which is represented by unions) could increase our expenses and adversely affect our operations. Examples
of possible legislative changes impacting our relationship with our workforce include changes to an employer's obligation to recognize
collective bargaining units, the process by which collective bargaining units are negotiated or imposed, minimum wage requirements, health
care mandates, and changes in overtime regulations.

 Our
policies, procedures and internal controls are designed to comply with all applicable laws and regulations, including those imposed by
the Securities and Exchange Commission (the "SEC") and Nasdaq, as well as applicable employment laws. Additional legal and
regulatory requirements increase the complexity of the regulatory environment in which we operate and the related cost of compliance.
Failure to comply with such laws and regulations may result in damage to our reputation, financial condition and market price of our
stock.

 The
certificate of incorporation and bylaws provides that state or federal court located within the state of Delaware will be the sole and
exclusive forum for substantially all disputes between us and our stockholders, which could limit its stockholders' ability to
obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.

 Section
21 of our certificate of incorporation and Section 7.4 of our bylaws provides that "[u]nless the corporation consents in writing
to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf
of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of
the Corporation to the Corporation or the Corporation's stockholders, (iii) any action asserting a claim arising pursuant to any
provision of the DGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court
located in the county in which the principal office of the corporation in the State of Delaware is established, in all cases subject
to the court's having personal jurisdiction over the indispensable parties named as defendants. Notwithstanding the foregoing,
the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Securities Exchange of
1934, as amended (the "Exchange Act"), the Securities Act of 1933, as amended (the "Securities Act"), or any
claim for which the federal courts have exclusive or concurrent jurisdiction." Therefore, the exclusive forum provision in our
certificate of incorporation and our bylaws will not relieve us of our duty to comply with the federal securities laws and the rules
and regulations thereunder, and stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.

 This
exclusive forum provision may limit a stockholder's ability to bring a claim in a judicial forum of its choosing for disputes with
us or our directors, officers or other employees, which may discourage lawsuits against us or our directors, officers or other employees.
In addition, stockholders who do bring a claim in the state or federal court in the State of Delaware could face additional litigation
costs in pursuing any such claim, particularly if they do not reside in or near Delaware. The state or federal court of the State of
Delaware may also reach different judgments or results than would other courts, including courts where a stockholder would otherwise
choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders. However, the enforceability
of similar exclusive forum provisions in other companies' certificates of incorporation have been challenged in legal proceedings,
and it is possible that a court could find this type of provision to be inapplicable to, or unenforceable in respect of, one or more
of the specified types of actions or proceedings. If a court were to find the exclusive forum provision contained in our certificate
of incorporation and our bylaws to be inapplicable or unenforceable in an action, we might incur additional costs associated with resolving
such action in other jurisdictions.

 By
purchasing our common stock, you are bound by the fee-shifting provision contained in our bylaws, which may discourage you to pursue
actions against us and could discourage stockholder lawsuits that might otherwise benefit the Company and its stockholders.

 Section
7.4 of our bylaws provides that "[i]f any action is brought by any party against another party, relating to or arising out of these
Bylaws, or the enforcement hereof, the prevailing party shall be entitled to recover from the other party reasonable attorneys'
fees, costs and expenses incurred in connection with the prosecution or defense of such action, provided that the provisions of this
sentence shall not apply with respect to 'internal corporate claims' as defined in Section 109(b) of the DGCL."

 Our
bylaws provide that for this section, the term "attorneys' fees" or "attorneys' fees and costs" means
the fees and expenses of counsel to the Company and any other parties asserting a claim subject to Section 7.4 of the bylaws, which may
include printing, photocopying, duplicating and other expenses, air freight charges, and fees billed for law clerks, paralegals and other
persons not admitted to the bar but performing services under the supervision of an attorney, and the costs and fees incurred in connection
with the enforcement or collection of any judgment obtained in any such proceeding.

 We
adopted the fee-shifting provision to eliminate or decrease nuisance and frivolous litigation. We intend to apply the fee-shifting provision
broadly to all actions except for claims brought under
the Exchange Act and the Securities Act.

 There
is no set level of recovery required to be met by a plaintiff to avoid payment under this provision. Instead, whoever is the prevailing
party is entitled to recover the reasonable attorneys' fees, costs and expenses incurred in connection with the prosecution or
defense of such action. Any party who brings an action, and the party against whom such action is brought under Section 7.4 of our bylaws,
which could include, but is not limited to former and current stockholders, Company directors, officers, affiliates, legal counsel, expert
witnesses and other parties, are subject to this provision. Additionally, any party who brings an action, and the party against whom
such action is brought under Section 7.4 of our bylaws, which could include, but is not limited to former and current stockholders, Company
directors, officers, affiliates, legal counsel, expert witnesses and other parties, would be able to recover fees under this provision.

 In
the event you initiate or assert a claim against us, in accordance with the dispute resolution provisions contained in our Bylaws, and
you do not, in a judgment prevail, you will be obligated to reimburse us for all reasonable costs and expenses incurred in connection
with such claim, including, but not limited to, reasonable attorney's fees and expenses and costs of appeal, if any. Additionally,
this provision in Section 7.4 of our bylaws could discourage stockholder lawsuits that might otherwise benefit the Company and its stockholders.

 THE
FEE SHIFTING PROVISION CONTAINED IN THE BYLAWS IS NOT INTENDED TO BE DEEMED A WAIVER BY ANY HOLDER OF COMMON STOCK OF THE COMPANY'S
COMPLIANCE WITH THE U.S. FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE FEE SHIFTING PROVISION CONTAINED
IN THE BYLAWS DO NOT APPLY TO CLAIMS BROUGHT UNDER THE EXCHANGE ACT AND SECURITIES ACT.

 Litigation
may adversely affect our business, financial condition and results of operations.

 Our
business is subject to the risk of litigation by employees, consumers, partners, suppliers, competitors, stockholders, government agencies
or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation. The outcome of
litigation, particularly class action lawsuits and regulatory actions, is difficult to assess or quantify. We may incur losses relating
to these claims, and in addition, these proceedings could cause us to incur costs and may require us to devote resources to defend against
these claims that could adversely affect our results of operations.

 The
effects of natural disasters, terrorism, acts of war, and public health issues may adversely affect our business.

 Natural
disasters, including earthquakes, hurricanes, floods, and tornadoes may affect store and distribution center operations. In addition,
acts of terrorism, acts of war, and military action both in the United States and abroad can have a significant effect on economic conditions
and may negatively affect our ability to purchase merchandise from suppliers for sale to our customers. Public health issues, such as
flu or other pandemics, whether occurring in the United States or abroad, could disrupt our operations and result in a significant part
of our workforce being unable to operate or maintain our infrastructure or perform other tasks necessary to conduct our business. Additionally,
public health issues may disrupt, or have an adverse effect on, our suppliers' operations, our operations, our customers, or customer
demand. Our ability to mitigate the adverse effect of these events depends, in part, upon the effectiveness of our disaster preparedness
and response planning as well as business continuity planning. However, we cannot be certain that our plans will be adequate or implemented
properly in the event of an actual disaster. We may be required to suspend operations in some or all our locations, which could have
a material adverse effect on our business, financial condition, and results of operations. Any significant declines in public safety
or uncertainties regarding future economic prospects that affect customer spending habits could have a material adverse effect on customer
purchases of our products.

 A
pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, may materially and adversely affect our business.

 Our
business, results of operations, and financial condition may be materially adversely impacted if a public health outbreak, including
the recent COVID-19 pandemic, interferes with our ability, or the ability of our employees, contractors, suppliers, and other business
partners to perform our and their respective responsibilities and obligations relative to the conduct of our business.

 The
COVID-19 pandemic has adversely affected and may continue to adversely affect the economies and financial markets worldwide, resulting
in an economic downturn that could impact our business, financial condition and results of operations. As a result, our ability to fund
through public or private equity offerings, debt financings, and through other means at acceptable terms, if at all, may be disrupted,
in the event our financing needs for the foreseeable future are not able to be met by our balances of cash, cash equivalents and cash
generated from operations.

 In
addition, the continuation of the COVID-19 pandemic and various governmental responses in the United States has adversely affected and
may continue to adversely affect our business operations, including our ability to carry on business development activities, restrictions
in business-related travel, delays or disruptions in our on-going projects, and unavailability of the employees of the Company or third
parties with whom we conduct business, due to illness or quarantines, among others. Our business was negatively impacted by disruptions
in our supply chain, which limited our ability to source merchandise, and limits on products fulfillment placed by Amazon. For example,
we may be unable to launch new products, replenish inventory for existing products, ship into or receive inventory in our third-party
warehouses in each case on a timely basis or at all. The extent to which COVID-19 could impact our business will depend on future developments,
which are highly uncertain and cannot be predicted with confidence, and will depend on many factors, including the duration of the outbreak,
the effect of travel restrictions and social distancing efforts in the United States and other countries, the scope and length of business
closures or business disruptions, and the actions taken by governments to contain and treat the disease. As such, we cannot presently
predict the scope and extent of any potential business shutdowns or disruptions. Possible effects may include, but are not limited to,
disruption to our customers and revenue, absenteeism in our labor workforce, unavailability of products and supplies used in our operations,
shutdowns that may be mandated or requested by governmental authorities, and a decline in the value of our assets, including various
long-lived assets.

 The
loss of key senior management personnel or the failure to hire and retain highly skilled and other key personnel could negatively affect
our business.

 We
depend on our senior management and other key personnel, particularly Sam Lai, our Chairman of the Board, Chief Executive Officer and
Interim Chief Financial Officer. We do not have "key person" life insurance policies. We also rely on other highly skilled
personnel. Competition for qualified personnel in the technology industry has historically been intense, particularly for software engineers,
computer scientists, and other technical staff. The loss of any of our executive officers or other key employees or the inability to
hire, train, retain, and manage qualified personnel, could harm our business.

 The
ability of Sam Lai, our Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer, and Maggie Yu, our Senior
Vice President, who are husband and wife, to control our business may limit or eliminate minority stockholders' ability to influence
corporate affairs.

 As
of March 26, 2024, Mr. Sam Lai, our Chairman of the Board, Chief Executive Officer, and Interim Chief Financial Officer, and Maggie
Yu, our Senior Vice President and member of the Board, who are husband and wife, beneficially owned an aggregate of 33,325,984 shares
of our common stock, which represents approximately 95% of the voting power of our outstanding common stock. Because of this voting control
through the shares of the common stock they beneficially own, they are able to significantly influence membership of our Board of Directors,
as well as all other matters requiring stockholder approval. The interests of our Chief Executive Officer and Senior Vice President may
differ from the interests of other stockholders with respect to the issuance of shares, business transactions with or sales to other
companies, selection of other officers and directors and other business decisions. The minority stockholders will have no way of overriding
decisions made by our Chief Executive Officer and our Senior Vice President.

 As
a controlled company, we are not subject to all of Nasdaq's corporate governance rules.

 The
"controlled company" exception to the Nasdaq rules provides that a company of which more than 50% of the voting power is
held by an individual, group or another company, a "controlled company," need not comply with certain requirements of the
Nasdaq corporate governance rules. As of March 26, 2024, Mr. Sam Lai, our Chairman of the Board, Chief Executive Officer, and
Interim Chief Financial Officer, and Maggie Yu, our Senior Vice President and member of the Board, who are husband and wife, beneficially
owned an aggregate of 33,325,984 shares of our common stock, which represents approximately 95% of the voting power of our outstanding
common stock. We are a "controlled company" within the meaning of Nasdaq's corporate governance rules. Controlled companies
are exempt from Nasdaq's corporate governance rules requiring that listed companies have (i) a majority of the board of directors
consist of "independent" directors under the Nasdaq listing standards, (ii) a nominating/corporate governance committee composed
entirely of independent directors and a written nominating/corporate governance committee charter meeting Nasdaq's requirements,
and (iii) a compensation committee composed entirely of independent directors and a written compensation committee charter meeting the
Nasdaq requirements. We currently utilize and presently intend to continue to utilize these exemptions. As a result, we may not have
a majority of independent directors, our nomination and corporate governance committee and compensation committee may not consist entirely
of independent directors and such committees may not be subject to annual performance evaluations. Accordingly, you may not have the
same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq. See
"Management—Board Committees and Director Independence—Controlled Company and Director Independence".

 Government
regulation is evolving and unfavorable changes could harm our business.

 We
are subject to general business regulations and laws, as well as regulations and laws specifically governing the Internet and e-commerce.
These regulations and laws cover taxation, privacy, data protection, data security, network security, consumer protection, pricing, content,
copyrights, distribution, transportation, mobile communications, electronic device certification, electronic waste, energy consumption,
environmental regulation, electronic contracts and other communications, competition, employment, trade and protectionist measures, web
services, the provision of online payment services, registration, licensing, and information reporting requirements, unencumbered Internet
access to our services or access to our facilities, the design and operation of websites, health, safety, and sanitation standards, the
characteristics, legality, and quality of products and services, product labeling, the commercial operation of unmanned aircraft systems,
and other matters. It is not clear how existing laws governing issues such as property ownership, libel, privacy, data protection, data
security, network security, and consumer protection apply to aspects of our operations such as the Internet, e-commerce, digital content,
web services, electronic devices, advertising, and artificial intelligence technologies and services. A large number of jurisdictions
regulate our operations, and the extent, nature, and scope of such regulations is evolving and expanding as the scope of our businesses
expands. Unfavorable regulations, laws, decisions, or interpretations by government or regulatory authorities applying those laws and
regulations, or inquiries, investigations, or enforcement actions threatened or initiated by them, could cause us to incur substantial
costs, expose us to unanticipated civil and criminal liability or penalties (including substantial monetary fines), diminish the demand
for, or availability of, our products, increase our cost of doing business, require us to change our business practices in a manner materially
adverse to our business, damage our reputation, impede our growth, or otherwise have a material effect on our operations.

 We
are subject to product liability claims when people or property are harmed by the products we sell.

 Some
of the products we sell expose us to product liability claims relating to personal injury, illness, death, or environmental or property
damage, and can require product recalls or other actions. Although we maintain liability insurance, we cannot be certain that our coverage
will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms,
or at all. Some of our agreements with our vendors do not indemnify us from product liability.

 We
could face prior period sales tax and corporate tax liabilities, penalties and collection obligations.

 We
make an assessment of sales tax payable including any related interest and penalties and accrues these estimates on the financial statements.
Pursuant to the Wayfair decision, each state enforced sales tax collection at different dates. We collect and remit sales tax in accordance
with the state regulations. We estimate that as of December 31, 2023, we owe $288,466 in sales taxes along with penalties and interest.
The Company has made some progress filing historical sales tax returns and targets completion of filings for all jurisdictions in 2024.

 We
are subject to a variety of taxes and tax collection obligations in the U.S. (federal and state). We may recognize additional tax expense
and be subject to additional tax liabilities, including other liabilities for tax collection obligations due to changes in laws, regulations,
administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition,
and other laws and accounting rules in various jurisdictions. Such changes could come about as a result of economic, political, and other
conditions. An increasing number of jurisdictions are considering or have adopted laws or administrative practices that impose new tax
measures, including revenue-based taxes, targeting online commerce and the remote selling of goods and services. These include new obligations
to collect sales, consumption, value added, or other taxes on online marketplaces and remote sellers, or other requirements that may
result in liability for third party obligations. Our results of operations and cash flows could be adversely affected by additional taxes
of this nature imposed on us prospectively or retroactively or additional taxes or penalties resulting from the failure to comply with
any collection obligations or failure to provide information about our customers, suppliers, and other third parties for tax reporting
purposes to various government agencies. In some cases, we also may not have sufficient notice to enable us to build systems and adopt
processes to properly comply with new reporting or collection obligations by the effective date.

 Our
tax expense and liabilities are also affected by other factors, such as changes in our business operations, acquisitions, investments,
entry into new businesses and geographies, intercompany transactions, losses incurred in jurisdictions for which we are not able to realize
related tax benefits, the applicability of special or extraterritorial tax regimes, changes in foreign currency exchange rates, changes
in our stock price, changes to our forecasts of income and loss and the mix of jurisdictions to which they relate, and changes in our
tax assets and liabilities and their valuation. In the ordinary course of our business, there are many transactions and calculations
for which the ultimate tax determination is uncertain. Significant judgment is required in evaluating and estimating our tax expense,
assets, and liabilities.

 We
are also subject to tax controversies in various jurisdictions that can result in tax assessments against us. Developments in an audit,
investigation, or other tax controversy can have a material effect on our operating results or cash flows in the period or periods for
which that development occurs, as well as for prior and subsequent periods. We regularly assess the likelihood of an adverse outcome
resulting from these proceedings to determine the adequacy of our tax accruals. Although we believe our tax estimates are reasonable,
the final outcome of audits, investigations, and any other tax controversies could be materially different from our historical tax accruals.

 Our
current accounting and inventory tracking systems could impair our ability to file accurate and timely financial statements.

 The
capabilities of our inventory systems to track prior period costs at an item level have not been operationalized for the purposes of
calculating inventory value. This could hinder our ability to accurately track inventory value and could impact our ability to provide
accurate financial statements in a timely manner. The Company uses Quickbooks Online as both its accounting system and inventory tracking
system. The Company currently does not conduct the period end review and accounting month end close using this accounting system. These
procedures are done outside of the accounting system using spreadsheets. The manual nature of these procedures could lead to delay as
well as errors in our financial reporting. These errors could include incorrect unit cost data for FIFO inventory valuation.

 The
Company currently values inventory by using estimates of the number of units and cost per unit. Our ability to accurately estimate unit
costs in a timely manner is dependent on our inventory tracking systems. The Company plans on operationalizing an inventory tracking
system in the next nine months. The Company plans to start conducting the period end review and accounting month end close using the
accounting system in the near future.

 Related
to Ownership of Our Common Stock and Lack of Liquidity

 There
can be no assurance that we will be able to comply with Nasdaq's continued listing standards.

 There
is no guarantee that we will be able to maintain our Nasdaq listing for any period of time by perpetually satisfying Nasdaq's continued
listing requirements. Our failure to continue to meet these requirements may result in our common stock being delisted from Nasdaq.

 The
market price of our common stock may be volatile, and you could lose all or part of your investment.

 We
cannot predict the prices at which our common stock will trade in the future. The market price of our common stock may fluctuate substantially
and will depend on a number of factors, including those described in this "Risk Factors" section, many of which are beyond
our control and may not be related to our operating performance. In addition, the limited public float of our common stock will tend
to increase the volatility of the trading price of our common stock. These fluctuations could cause you to lose all or part of your investment
in our common stock, since you might not be able to sell your shares. Factors that could cause fluctuations in the market price of our
common stock include, but are not limited to, the following:

 actual
 or anticipated changes or fluctuations in our results of operations;

 the
 financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections;

 announcements
 by us or our competitors of new products or new or terminated significant contracts, commercial relationships, or capital commitments;

 industry
 or financial analyst or investor reaction to our press releases, other public announcements, and filings with the SEC;

 rumors
 and market speculation involving us or other companies in our industry;

 price
 and volume fluctuations in the overall stock market from time to time;

 changes
 in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;

 the
 expiration of market stand-off or contractual lock-up agreements and sales of shares of our common stock by us or our stockholders;

 failure
 of industry or financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company,
 or our failure to meet these estimates or the expectations of investors;

 actual
 or anticipated developments in our business, or our competitors' businesses, or the competitive landscape generally;

 litigation
 involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;

 developments
 or disputes concerning our intellectual property rights, our products, or third-party proprietary rights;

 announced
 or completed acquisitions of businesses or technologies by us or our competitors;

 new
 laws or regulations or new interpretations of existing laws or regulations applicable to our business;

 any
 major changes in our management or our board of directors, particularly with respect to Mr. Lai;

 general
 economic conditions and slow or negative growth of our markets; and

 other
 events or factors, including those resulting from war, incidents of terrorism, or responses to these events.

 In
addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate
to the operating performance of companies. Broad market and industry factors may seriously affect the market price of our common stock,
regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market and the
market prices of a particular company's securities, securities class action litigation has often been instituted against that company.
Securities litigation, if instituted against us, could result in substantial costs and divert our management's attention and resources
from our business. This could materially adversely affect our business, financial condition, results of operations, and prospects.

 Our
common stock may be subject to the "penny stock" rules in the future. It may be more difficult to resell securities classified
as "penny stock."

 Our
common stock may be subject to "penny stock" rules (generally defined as non-exchange traded stock with a per-share price
below $5.00) in the future. While our common stock is not currently considered "penny stock" since it is listed on the Nasdaq,
if we are unable to maintain that listing and our common stock is no longer listed on the Nasdaq, unless we maintain a per-share price
above $5.00, our common stock will become "penny stock." These rules impose additional sales practice requirements on broker-dealers
that recommend the purchase or sale of penny stocks to persons other than those who qualify as "established customers" or
"accredited investors." For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments
in penny stocks. Broker-dealers must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, a standardized
risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also
must provide the customer with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and
its salesperson in the transaction, furnish monthly account statements showing the market value of each penny stock held in the customer's
account, provide a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser's
written agreement to the transaction.

 Legal
remedies available to an investor in "penny stocks" may include the following:

 If a "penny stock" is sold to the investor in violation of the requirements listed above, or other federal or states
 securities laws, the investor may be able to cancel the purchase and receive a refund of the investment.

 If a "penny stock" is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms
 that committed the fraud for damages.

 These
requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes
subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers
from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements
may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.

 Many
brokerage firms will discourage or refrain from recommending investments in penny stocks. Most institutional investors will not invest
in penny stocks. In addition, many individual investors will not invest in penny stocks due, among other reasons, to the increased financial
risk generally associated with these investments.

 For
these reasons, penny stocks may have a limited market and, consequently, limited liquidity. We can give no assurance at what time, if
ever, our common stock will not be classified as a "penny stock" in the future.

 If
the benefits of any proposed acquisition do not meet the expectations of investors, stockholders or financial analysts, the market price
of our common stock may decline.

 If
the benefits of any proposed acquisition do not meet the expectations of investors or securities analysts, the market price of our common
stock prior to the closing of the proposed acquisition may decline. The market values of our common stock at the time of the proposed
acquisition may vary significantly from their prices on the date the acquisition target was identified.

 In
addition, broad market and industry factors may materially harm the market price of our common stock irrespective of our operating performance.
The stock market in general has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating
performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be
predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive
to be similar to us could depress our stock price regardless of our business, prospects, financial conditions or results of operations.
A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability
to obtain additional financing in the future.

 Changes
in accounting principles and guidance, or their interpretation, could result in unfavorable accounting charges or effects, including
changes to our previously filed financial statements, which could cause our stock price to decline.

 We
prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America
("GAAP"). These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate
accounting principles and guidance. A change in these principles or guidance, or in their interpretations, may have a significant effect
on our reported results and retroactively affect previously reported results.

 As
an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012, as amended (the "JOBS Act"),
we are permitted to rely on exemptions from certain disclosure requirements.

 We
qualify as an "emerging growth company" under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions
from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

 have
 an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002,
 as amended (the "Sarbanes-Oxley Act");

 comply
 with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation
 or a supplement to the auditors' report providing additional information about the audit and the consolidated financial statements
 (i.e., an auditor discussion and analysis);

 submit
 certain executive compensation matters to stockholder advisory votes, such as "say-on-pay" and "say-on-frequency";
 and

 disclose
 certain executive compensation related items such as the correlation between executive compensation and performance and comparisons
 of the chief executive officer's compensation to median employee compensation.

 In
addition, Section 102 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period
provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging
growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We have elected to take advantage of the benefits of this extended transition period. Our consolidated financial statements may therefore
not be comparable to those of companies that comply with such new or revised accounting standards.

 We
will remain an emerging growth company until the earliest to occur of: (i) the end of the first fiscal year in which our annual gross
revenue is $1.07 billion or more; (ii) the end of the fiscal year in which the market value of our common shares that are held by non-affiliates
is at least $700.0 million as of the last business day of our most recently completed second fiscal quarter; (iii) the date on which
we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; and (iv) the end of the fiscal
year during which the fifth anniversary of our initial public offering occurs.

 Until
such time, however, we cannot predict if investors will find our securities less attractive because we may rely on these exemptions.
If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the
price of our securities may be more volatile.

 If
we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy
and completeness of our financial reports and have an adverse effect on the value of our securities.

 As
a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such
internal control. Further, we are required to report any changes in internal controls on a quarterly basis. In addition, we are required
to furnish a report by management on the effectiveness of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley
Act. We have, and will continue to, design, implement, and test the internal control over financial reporting required to comply with
these obligations. If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with
the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our
independent registered public accounting firm is unable to express an opinion as to the effectiveness of its internal control over financial
reporting when required, investors may lose confidence in the accuracy and completeness of our financial reports and the value of our
securities could be negatively affected. We also could become subject to investigations by the SEC or other regulatory authorities, which
could require additional financial and management resources.

 As
an emerging growth company, our auditor will not be required to attest to the effectiveness of our internal controls.

 Our
independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial
reporting while we are an emerging growth company. This means that the effectiveness of our financial operations may differ from our
peer companies in that they may be required to obtain independent registered public accounting firm attestations as to the effectiveness
of their internal controls over financial reporting and we are not. While our management will be required to attest to internal control
over financial reporting and we will be required to detail changes to our internal controls on a quarterly basis, we cannot provide assurance
that the independent registered public accounting firm's review process in assessing the effectiveness of our internal controls
over financial reporting, if obtained, would not find one or more material weaknesses or significant deficiencies. Further, once we cease
to be an emerging growth company and cease to be a smaller reporting company (as described below), we will be subject to independent
registered public accounting firm attestation regarding the effectiveness of our internal controls over financial reporting. Even if
management finds such controls to be effective, our independent registered public accounting firm may decline to attest to the effectiveness
of such internal controls and issue a qualified report.

 We
are a smaller reporting company and accordingly, are exempt from certain disclosure requirements, which could make our common stock less
attractive to potential investors.

 Rule
12b-2 of the Exchange Act defines a "smaller reporting company" as an issuer that is not an investment company, an asset-backed
issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that:

 had
 a public float of less than $250 million as of the last business day of its most recently completed second fiscal quarter, computed
 by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the
 price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market
 for the common equity; or

 in
 the case of an initial registration statement under the Securities Act or the Exchange Act for shares of its common equity, had a
 public float of less than $250 million as of a date within 30 days of the date of the filing of the registration statement, computed
 by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of
 a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public
 offering price of the shares; or

 in
 the case of an issuer whose public float as calculated under the first or second bullets was zero or whose public float was less
 than $700 million, had annual revenues of less than $100 million during the most recently completed fiscal year for which audited
 financial statements are available.

 As
a smaller reporting company, we are not required, and may not include, a Compensation Discussion and Analysis section in our proxy statements;
we will provide only two years of financial statements; and we need not provide the table of selected financial data. We also will have
other "scaled" disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies
which could make our common stock less attractive to potential investors, which could make it more difficult for our stockholders to
sell their shares.

 We
incur significant increased costs as a result of operating as a public company, and our management is required to devote substantial
time to new compliance initiatives.

 As
a public company, we incur significant legal, accounting and other expenses. In addition, the Sarbanes-Oxley Act has imposed various
requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls. Our
management and other personnel must devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations
have increased and will continue to increase our legal and financial compliance costs and will make some activities more time-consuming
and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain directors'
and officers' liability insurance, which could make it more difficult for us to attract and retain qualified members of our board
of directors. We cannot predict or estimate the amount of additional costs we will incur as a public company or the timing of such costs.

 The
Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure
controls and procedures. In particular, we must perform system and process evaluation and testing of our internal control over financial
reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section
404 of the Sarbanes-Oxley Act. In addition, we are required to have our independent registered public accounting firm attest to the effectiveness
of our internal control over financial reporting on the later of our second annual report on Form 10-K or the first annual report on
Form 10-K following the date on which we are no longer an emerging growth company or a smaller reporting company. Our compliance with
Section 404 of the Sarbanes-Oxley Act will require that we incur substantial accounting expense and expend significant management efforts.
We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate
public company experience and technical accounting knowledge. If we are not able to comply with the requirements of Section 404 in a
timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial
reporting that are deemed to be material weaknesses, the value of our securities could decline and we could be subject to sanctions or
investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

 Our
ability to successfully implement our business plan and comply with Section 404 requires us to be able to prepare timely and accurate
financial statements. We expect that we will need to continue to improve existing controls, and implement new operational and financial
systems, procedures and controls to manage our business effectively. Any delay in the implementation of, or disruption in the transition
to, new or enhanced systems, procedures or controls, may cause our operations to suffer and we may be unable to conclude that our internal
control over financial reporting is effective and to obtain an unqualified report on internal controls from our auditors as required
under Section 404 of the Sarbanes-Oxley Act. This, in turn, could have an adverse impact on value of our securities, and could adversely
affect our ability to access the capital markets.

 Anti-takeover
provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

 The
Company's certificate of incorporation and bylaws contain provisions that could have the effect of delaying or preventing changes
in control or changes in our management without the consent of our board of directors. These provisions include:

 no
 cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

 the
 exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors
 or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our board of
 directors;

 the
 ability of our board of directors to determine whether to issue shares of our preferred stock and to determine the price and other
 terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly
 dilute the ownership of a hostile acquirer;

 limiting
 the liability of, and providing indemnification to, our directors and officers;

 providing
 that a special meeting of the stockholders may only be called by a majority of the board of directors;

 providing
 that directors may be removed prior to the expiration of their terms by the affirmative vote of the holders of not less than 2/3
 of the voting power of the issued and outstanding stock entitled to vote; and

 advance
 notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters
 to be acted upon at a stockholders' meeting, which may discourage or deter a potential acquirer from conducting a solicitation
 of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of the Company.

 These
provisions, alone or together, could delay hostile takeovers and changes in control of the Company or changes in our board of directors
and management.

 Any
provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control
could limit the opportunity for our security holders to receive a premium for their securities and could also affect the price that some
investors are willing to pay for our securities.

 We
have never paid dividends on our common stock and have no plans to do so in the future.

 Holders
of shares of our common stock are entitled to receive such dividends as may be declared by our board of directors. To date, we have paid
no cash dividends on our shares of common stock and we do not expect to pay cash dividends on our common stock in the foreseeable future.
We intend to retain future earnings, if any, to provide funds for operation of our business. Therefore, any return investors in our common
stock may have will be in the form of appreciation, if any, in the market value of their shares of common stock. See "Dividend
Policy."

 We
will indemnify and hold harmless our officers and directors to the maximum extent permitted by Delaware law.

 Our
certificate of incorporation provides that we will indemnify and hold harmless our officers and directors against claims arising from
our activities, to the maximum extent permitted by Delaware law. If we were called upon to perform under our indemnification obligations,
then the portion of our assets expended for such purpose would reduce the amount otherwise available for our business.

 ITEM
1B. UNRESOLVED STAFF COMMENTS

 None.

 ITEM
1C. CYBERSECURITY

 Cybersecurity
Risk Management and Strategy

 The
cybersecurity risk management program, processes and strategy described in this section are limited to the personal and business information
belonging to or maintained by the Company (collectively, "Confidential Information"), our own third-party critical systems
and services supporting or used by the Company (collectively, "Critical Systems"), and service providers.

 We
[have developed and implemented/will develop and implement] a cybersecurity risk management program intended to protect the confidentiality,
integrity, and availability of our Confidential Information and Critical Systems. Our cybersecurity risk management program [will be/is]
integrated into our overall enterprise risk management program and includes a cybersecurity incident response plan.

 Our
cybersecurity risk management program [includes/shall include]:

 risk
 assessments designed to help identify material cybersecurity risks to our Confidential Information, Critical Systems and the broader
 enterprise IT environment;

 a
 security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and
 (3) our response to cybersecurity incidents;

 cybersecurity
 awareness and spear-phishing resistance training of our employees, and senior management;

 a
 cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and

 a
 vendor management policy for service providers.

 [We
have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially
affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial
condition.] We face risks from cybersecurity threats that, if realized, could have a material adverse effect on us including an adverse
effect on our business, financial condition and results of operations.

 Cybersecurity
Governance

 Our
executive management team, along with our managed information technology service provider, is responsible for assessing and managing
risks from cybersecurity threats to the Company, including our Confidential Information and Critical Systems. The team has primary responsibility
for our overall cybersecurity risk management program. Our management team works closely with our information technology service provider.

 Our
management team meets with our information technology service provider periodically to discuss then-current cybersecurity issues, which
may include efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, including threat
intelligence and other information obtained from governmental, public or private sources, and external service providers engaged by us;
and alerts and reports produced by security tools deployed in the information technology environment including a spear-phishing report.

 Our
Board considers cybersecurity risk as part of its risk oversight function and oversight of cybersecurity and other information technology
risks.

 Our
Board oversees management's implementation of our cybersecurity risk management program. Our executive management team is responsible
for updating the Board, as necessary, regarding significant cybersecurity incidents.

 Our
Board shall also receive period reports from management on our cybersecurity risks and cybersecurity risk management program.

 ITEM
2. PROPERTIES

 Our
corporate headquarters are located at 8201 164th Ave. NE, #200, Redmond, WA 98052-7615, where we rent a virtual office from an unaffiliated
third party under a virtual office/meeting room agreement. This agreement provides for daily telephone answering, messaging and fax services,
and paid access to conference rooms on an as-needed basis. The virtual office arrangement expires on August 31, 2024. Terms of the virtual
office arrangement provide for a rent payment of $59 per month. We also lease a warehouse located at Qiaojiao Road, No. 1, Qiaojiao Middle
Road, Tangxia Town, Dongguan City, Guangdong, China, who handle our storage and warehousing from an unaffiliated third party. This service
expires in January 2024. The terms of this service provide for a base payment that is charged based on our usage. Flywheel, our wholly
owned subsidiary, had three office leases in Taiwan in 2023. The respective lease terms are June 1, 2022 to May 31, 2024, August 1, 2022
to July 31, 2024, and February 9, 2023 to March 8, 2025 and the total contract amounts are $114,016, $157,973, and $28,652 respectively.
We believe that these facilities are adequate for our current and near-term future needs.

 ITEM
3. LEGAL PROCEEDINGS

 From
time to time, we are involved in various claims and legal actions arising in the ordinary course of business. To the knowledge of our
management, there are no legal proceedings currently pending against us which we believe would have a material effect on our business,
financial position or results of operations and, to the best of our knowledge, there are no such legal proceedings contemplated or threatened.

 ITEM
4. MINE SAFETY DISCLOSURES

 Not

 PART
II

 ITEM
5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 Market
Information

 Our
common stock is listed The Nasdaq Capital Market and its stock symbol is "HOUR." The closing price of our common stock on
Nasdaq on March 25, 2024 was $1.5399.

 Holders

 As
of March 26, 2024, there were 35,095,298 shares of common stock issued and outstanding, and we had approximately 6 holders of
record of our common stock. The number of record holders does not include beneficial owners of common stock whose shares are held in
the names of banks, brokers, nominees or other fiduciaries.

 Dividends

 We
have not paid any cash dividends on our common stock and do not currently anticipate paying cash dividends in the foreseeable future.
We intend to retain future earnings, if any, for reinvestment in the development and expansion of our business.

 Securities
Authorized for Issuance Under Equity Compensation Plans

 On
June 27, 2021, our Board of Directors and stockholders holding a majority of our outstanding shares of common stock approved the 2021
Plan. Under the 2021 Plan, a total of 4,995,000 shares of common stock were originally authorized for issuance pursuant to the grant
of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares or other
cash- or stock-based awards to officers, directors, employees and eligible consultants to the Company or its subsidiaries. Pursuant to
the terms of the 2021 Plan and subject to adjustment as provided in the 2021 Plan, the maximum aggregate number of shares that may be
issued under the 2021 Plan will be cumulatively increased on January 1, 2022 and on each subsequent January 1, by a number of shares
equal to the smaller of (i) 3% of the number of shares of common stock issued and outstanding on the immediately preceding December 31,
or (ii) an amount determined by our Board of Directors. As of March 26, 2024, there were 7,045,435 shares authorized for issuance
under the 2021 Plan, and 7,045,435 shares available for issuance under the 2021 Plan.

 Recent
Sales of Unregistered Securities

 In
connection with our conversion from a Washington corporation to a Delaware corporation on April 7, 2021, we issued 5,000,000 (pre-stock
splits) shares of common stock to each of Sam Lai, our Chief Executive Officer, and Maggie Yu, our Senior Vice President (for an aggregate
of 10,000,000 (pre-stock splits) shares of common stock).

 On
September 22, 2021, our board of directors and stockholders approved a forward stock split in a ratio of 4.44-for-1 ("Forward Stock
Split") and on September 27, 2021, we filed a certificate of amendment to our Certificate of Incorporation implementing the Forward
Stock Split in a ratio of 4.44-for-1, effective September 27, 2021. Therefore, on September 27, 2021, following the Forward Stock Split,
Sam Lai, our Chief Executive Officer, and Maggie Yu, our Senior Vice President, each held 22,200,000 shares of common stock (for an aggregate
of 44,400,000 shares of common stock).

 On
November 29, 2021, our board of directors and stockholders approved a reverse stock split in a ratio of 0.75-for-1 ("Reverse Stock
Split") and on December 1, 2021, we filed a certificate of amendment to our Certificate of Incorporation implementing the Reverse
Stock Split in a ratio of 0.75-for-1, effective December 3, 2021. Therefore, on December 3, 2021, following the Reverse Stock Split,
Sam Lai, our Chief Executive Officer, and Maggie Yu, our Senior Vice President, each held 16,650,000 shares of common stock (for an aggregate
of 33,300,000 shares of common stock).

 On
February 1, 2022, the Company issued 1,772 shares of Company common stock to each of Sam Lai, our Chief Executive Officer, and Maggie
Yu, our Senior Vice President, with a fair market value of $4.00 per share as compensation for the services to the Company pursuant to
the terms of their Executive Employment Agreements with the Company.

 On
February 1, 2022, the Company issued 1,750, 1,750, and 709 shares of Company common stock to Michael Lenner, Douglas Branch, and Alan
Gao, respectively, with a fair market value of $4.00 per share as compensation for the services as directors to the Company pursuant
to the terms of their Director Agreements with the Company.

 On
May 20, 2022, the Company issued 916 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch, and
Alan Gao, with a fair market value of $3.2745 per share as compensation for the services as executives or directors to the Company pursuant
to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
June 30, 2022, the Company issued 1,049 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
and Alan Gao, with a fair market value of $2.8605 per share as compensation for the services as executives or directors to the Company
pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
September 30, 2022, the Company issued 1,050 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
and Alan Gao, with a fair market value of $2.8565 per share as compensation for the services as executives or directors to the Company
pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
January 4, 2023, the Company issued 1,001 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
and Alan Gao, with a fair market value of $2.9985 per share as compensation for the services as executives or directors to the Company
pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
April 3, 2023, the Company issued 1,365, 1,365, 1,365, 1,365, 1,365 and 606 shares of Company common stock to each of Sam Lai, Maggie
Yu, Michael Lenner, Douglas Branch, Alan Gao and Hillary Bui, respectively, with a fair market value of $2.1985 per share as compensation
for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements
or Director Agreements with the Company.

 On
June 30, 2023, the Company issued 1,752 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $1.7125 per share as compensation for the services as executives or directors of
the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
October 2, 2023, the Company issued 1,948 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $1.54 per share as compensation for the services as executives or directors of
the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 The
above issuances were made pursuant to an exemption from registration as set forth in 506 of Regulation D and Section 4(a)(2) of the Securities
Act.

 Purchases
of Equity Securities by the Issuer and Affiliated Purchasers

 None.

 Transfer
Agent and Registrar

 The
Company's transfer agent is Nevada Agency and Transfer Company. The transfer agent's address is 50 West Liberty Street, Suite
880, Reno, Nevada 89501, and its telephone number is (775) 322-0626.

 ITEM
6. RESERVED

 ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 Special
Note Regarding Forward-Looking Statements

 All
statements other than statements of historical fact included in this annual report on Form 10-K, including, without limitation, statements
under "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's
financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements.
When used in this annual report, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to us or the Company's management, identify forward-looking statements.
Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available
to, the Company's management. Actual results could differ materially from those contemplated by the forward-looking statements
as a result of certain factors detailed in our filings with the SEC.

 The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this annual report on Form 10-K. Certain information contained in the discussion
and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Unless the context otherwise requires,
"Hour Loop," "we," "us," "our," or the "Company" refers to Hour Loop, Inc.
and its consolidated subsidiaries.

 Overview

 Our

 We
are an online retailer engaged in e-commerce retailing in the U.S. market. We have operated as a third-party seller on www.amazon.com
 since 2013. We have also sold merchandise on our website at www.hourloop.com since 2013. We expanded our operations to www.walmart.com
in October 2020. To date, we have generated practically all of our revenue as a third-party seller on www.amazon.com and only
a negligible amount of revenue from our operations on our website at www.hourloop.com and as a third-party seller on www.walmart.com.
We manage more than 100,000 stock-keeping units ("SKUs"). Product categories include home/garden d cor, toys, kitchenware,
apparel, and electronics. Our primary strategy is to bring most of our vendors' product selections to the customers. We have advanced
software that assists us in identifying product gaps so we can keep such products in stock year-round including the entirety of the last
quarter (holiday season) of the calendar year ("Q4"). In upcoming years, we plan to expand our business rapidly by increasing
the number of business managers, vendors and SKUs.

Model

 There
are three main types of business models on Amazon: wholesale, private label and retail arbitrage. Our business model is wholesale, also
known as reselling, which refers to buying products in bulk directly from the brand or manufacturer at a wholesale price and making a
profit by selling the product on Amazon. We sell merchandise on Amazon and the sales are fulfilled by Amazon. We pay Amazon fees for
allowing us to sell on their platform. Our relationship with Walmart is also similar. We pay Walmart fees for allowing us to sell our
merchandise on their platform. As stated above, to date, we have generated only a negligible amount of revenues as a third-party seller
on www.walmart.com.

 The
advantages of selling via a wholesale model:

 Purchase
 lower unit quantities with wholesale orders than private label products.

 Selling
 wholesale is less time intensive and easier to scale than sourcing products via retail arbitrage.

 More
 brands will want to work with us because we can provide broader Amazon presence.

 The
challenges of selling via a wholesale model:

 Fierce
 competition on listing for Buy Box on amazon.com (as described below).

 Developing
 and maintaining relationships with brand manufacturers.

 Market
Description/Opportunities

 Total
U.S. retail sales increased 2% to $7.24 trillion in 2023 from $7.09 trillion in 2022. Consumers spent $1,118.68 billion online with U.S.
merchants in 2023, which is around 15.45% of total U.S. retail sales for the year compared to 14.66% in 2022. Amazon accounted for nearly
37.6% of all e-commerce in the United States and that makes Amazon the biggest ecommerce giant currently in the market.

 Formation

 We
were originally incorporated under the laws of the State of Washington on January 13, 2015. In 2019, we formed a wholly owned subsidiary,
Flywheel Consulting Ltd. ("Flywheel"), to provide business operating consulting services, exclusively to Hour Loop. On April
7, 2021, Hour Loop converted from a Washington corporation to a Delaware corporation. The Company was founded in 2013 by Sam Lai and
Maggie Yu. With their vision, leadership, and software development skills, the Company grew rapidly. From 2013 to 2023, sales grew from
$0 to $132,124,202.

 Competitive
advantage

 Among
more than 2 million active third-party sellers on Amazon, we believe we have two main competitive advantages:

 First,
 we have strong operations and sales teams experienced in listing, shipment, advertising, reconciliation and sales. By delivering
 high quality results and enhancing procedures through the process, our teams are competitive.

 Second,
 we believe our proprietary software system gives us an advantage over our competition. The system is highly customized to our business
 model; it collects and processes large amounts of data every day to optimize our operation and sales. Through advanced software,
 we can identify product gaps and keep them in stock all year round.

 With
respect to our advertising strategy, we advertise those products that we estimate will have greater demand based on our experience. This
lets us allocate our advertising budget in a fashion that delivers positive value. We advertise our products on Amazon. We allocate our
advertising dollars prudently. This is accomplished by advertising items that deliver the most return for our advertising spending. We
monitor the items being advertised by our competitors. On the operations side, we constantly refine our processes based on learnings
from historical data. The combination of managing the business operations effectively along with allocating our advertising budget to
high value items allows us to grow profitably. In cases where the advertising is fierce, we allocate the spending appropriately. Our
strategy for competing with larger competitors is to monitor their pricing and not compete with them when their pricing is low or at
a loss. Competitors sell at low prices or at a loss due to a variety of reasons, including, but not limited to, their desire to liquidate
inventory or achieve short term increase in revenue. During these times, we avoid matching their prices. This strategy allows us to stay
profitable.

 Our
Financial Position

 For
the fiscal years ended December 31, 2023 and 2022, we generated net revenues of $132,124,202 and $95,930,091, respectively, and
reported net loss of $2,429,694 and $1,477,623, respectively, and cash flow used in operating activities of $2,063,375 and
$11,603,176, respectively. As noted in our consolidated financial statements, as of December 31, 2023, we had retained earnings of
$(1,252,622).

 Results
of Operations

 Year
Ended December 31, 2023 Compared to Year Ended December 31, 2022

 The
following table shows a comparison of our 2023 and 2022 income statements.

 Year Ended

 December 31, 2023

 December 31, 2022

 Statement of Operations Data

 Total revenues

 $
 132,124,202

 $
 95,930,091

 Total cost of goods sold

 (65,606,947
)

 (46,942,770
)

 Gross profit

 66,517,255

 48,987,321

 Total operating expenses

 69,520,678

 50,903,107

 Loss from operations

 (3,003,423
)

 (1,915,786
)

 Total other non-operating income

 (157,031
)

 (24,000
)

 Income tax provisions

 730,760

 462,163

 (2,429,694
)

 (1,477,623
)

 Other comprehensive loss

 (2,597
)

 (15,171
)

 Total comprehensive loss

 $
 (2,432,291
)

 $
 (1,492,794
)

 Revenue

 We
generated $132,124,202 in 2023, as compared to $95,930,091 in revenue in 2022. This represents an increase in revenues of $36,194,111
or 37.73%. We attribute this increase to our continued growth and maturity in our operating model, despite the overall e-commerce traffic
slowdown and intense competition. Our total orders in 2023 were approximately 5,749,107, as compared to 3,879,711 orders in 2022, representing
an increase of 48.18%. This surge in orders has played a pivotal role in driving the overall revenue growth. The substantial increase
in order quantity indicates a rising demand for our products, leading to a corresponding increase in revenue generated from these sales.
As a result, the increase in orders has directly contributed to the overall growth in the Company's revenue during the period.
The 48.18% increase in orders reflects strong customer demand, but our pricing strategy, including competitive pricing pressure and discounts
offered during the period, resulted in lower prices for products sold. As a consequence, even with the significant order volume increase,
the revenue growth was slightly shy of fully matching this proportion.

 Cost
of Goods Sold

 Cost
of goods sold for the year ended December 31, 2023 totaled $65,606,947, as compared to $46,942,770 for the year ended December 31, 2022.
Cost of goods sold includes the cost of the merchandise sold and shipping costs, as well as estimated losses due to damage to goods.
The rise in the cost of goods sold can be attributed to an increase in the overall cost of doing business, particularly with increased
product costs and other expenses within the supply chain.

Expense

expenses for the year ended December 31, 2023 totaled $69,520,678, representing a $18,617,571, or 36.57%, increase from the $50,903,107
of operating expenses for the year ended December 31, 2022. This change was caused by an increase in platform fees and fees paid to Amazon.
The Amazon fees are proportional to revenues. In 2023, Amazon made strategic adjustments to its Fulfillment by Amazon ("FBA")
fees and costs, which had a direct impact on our operating expenses. The increase in revenues in 2023 over the same period in 2022 drove
the increase in platform fees and higher Amazon fees.

 Other
Expense

 Other
expense for the year ended December 31, 2023 was $157,031, as compared to $24,000 for the year ended December 31, 2022. The increase
was mainly due to accrued interest from due to related parties.

 Total
Comprehensive Loss

 Total
comprehensive loss for the year ended December 31, 2023 was $2,432,291, as compared to $1,492,794 for the year ended December 31, 2021.
The increase in total comprehensive loss was driven by an increase in the Company's operating expenses in 2023, compared to 2022.

 Liquidity
and Capital Resources

 Cash
Flows for the Years Ended December 31, 2023 and 2022

 Liquidity
is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had cash of $2,484,153
and $4,562,589 as of December 31, 2023 and 2022, respectively.

 Our
primary uses of cash have been for inventory, payments to Amazon related to sales and shipping of products, for services provided, payments
for marketing and advertising and salaries paid to our employees. We have received funds from the sales of products that we sell online.
The following trends are reasonably likely to result in changes in our liquidity over the near to long term:

 An
 increase in working capital requirements to finance the rapid growth in our current business,

 An
 increase in fees paid to Amazon and other partners as our sales grows

 The
 cost of being a public company;

 Marketing
 and advertising expenses for attracting new customers; and

 Capital
 requirements for the development of additional infrastructure

 Since
inception, we have generated liquidity from the profitability of our ongoing business and from debt to fund our operations.

 The
following table shows a summary of our cash flows for the years ended December 31, 2023 and 2022.

 Year Ended

 December 31, 2023

 December 31, 2022

 Statement of Cash Flows

 Net cash used in operating activities

 $
 (2,063,375
)

 $
 (11,603,176
)

 Net cash used in investing activities

 $
 (14,823
)

 $
 (339,518
)

 Net cash (used in) provided by financing activities

 $
 -

 $
 5,923,342
)

 Effect of changes in foreign currency rates

 $
 (238
)

 $
 (10,631
)

 Net decrease in cash

 $
 (2,078,436
)

 $
 (6,029,983
)

 Cash - beginning of the period

 $

 $
 10,592,572

 Cash - end of the period

 $
 2,484,153

 $

 Net
Cash used in from Operating Activities

 For
the fiscal year ended December 31, 2023, cash used in by operating activities amounted to $2,063,375, as compared to $11,603,176 for
the year ended December 31, 2022. This was driven by our net loss of $2,429,694 and as we continue to invest in inventory growth while
at the same time, pay off accounts payable for the year ended December 31, 2022, as compared to $1,477,623 for the same period in 2022.

 Despite
the increase in revenue to $132,124,202 for the year ended December 31, 2023, as compared to $95,930,091 for the year ended December
31, 2022, the revenue increase was offset by a corresponding increase in cost of goods sold of $18,664,177 and an increase in operating
expenses of $18,617,571.

 Net
Cash Used in Investing Activities

 For
the fiscal year ended December 31, 2023, $14,823 in cash was used in investing activities, as compared to $339,518 cash used in investing
activities for the fiscal year ended December 31, 2022.

 Net
Cash (Used in) Provided by Financing Activities

 For
the fiscal year ended December 31, 2023, cash used in financing activities amounted to $-0-, as compared to cash provided by financing
activities of $5,923,342 for the fiscal year ended December 31, 2022. The cash provided by financing activities in 2022 related to the proceeds of the Company's initial public offering
of $6,156,360.

 Off-balance
sheet financing arrangements

 We
have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions
that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which
would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance
sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased
any non-financial assets.

 Contractual
Obligations

 Except
as set forth below, we do not have any long-term capital lease obligations, operating lease obligations or long-term liabilities.

 Bank
of America Loan

 On
June 18, 2019, the Company issued a Promissory Note (the "BofA Note") in the amount of $785,000 to Bank of America for a
loan in the amount of $785,000. The BofA Note matures on June 18, 2024 and bears interest at a rate of 8.11% per annum. The monthly payment
is $15,963, consisting of $11,398 of principal and $4,565 of interest. As of December 31, 2023, the aggregate principal amount of the
BofA Note outstanding was $-0-. As of December 31, 2023,there was an outstanding balance of deferred interest of $27,996.

 Taishin
International Bank

 On
August 18, 2022, Flywheel, entered into a line of credit agreement in the amount of $6,940,063 with Taishin International Bank ("Taishin").
The line of credit matured on August 30, 2023. As of December 31, 2023, the outstanding balance under the Taishin line of credit was
$652,422, and bears interest at a rate of 3.2% per annum.

 On
August 11, 2023, the term of the loan was extended for an additional year, revising the maturity date to August 30, 2024. The annual
interest rate remains at 3.2%. Also, Flywheel has accrued interest expense of $1,715 as of December 31, 2023.

 Affiliated
Loans

 From
time to time, the Company receives loans and advances from its stockholders to fund its operations. As of December 31, 2023, the Company
had $4,170,418 due to related parties. While stockholder payables are generally non-interest bearing and payable on demand, the Company
and stockholders entered into loan agreements for loans with terms over one year.

2020 Loan

 On
December 30, 2020 and later modified on September 16, 2021, the Company, Mr. Lai and Ms. Yu entered into a loan agreement of $1,041,353
and converted it into a retroactive interest-bearing (2%) loan with a repayment date of December 31, 2021. On January 18, 2022 and January
27, 2023, the Company repaid the loan principal and accrued interest in full. Together, Mr. Lai and Ms. Yu hold over 95% of the Company's
outstanding shares. Mr. Lai is the Company's Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer.
Ms. Yu is the Company's Senior Vice President and a member of the Company's Board of Directors.

 July
2021 Loan

 On
July 27, 2021, the Company, Mr. Lai and Ms. Yu entered into a loan agreement with a principal amount of $4,170,418. The loan is subordinated.
The original annual interest rate was 2% and the original repayment date was December 31, 2022. On December 28, 2022, the Company, Mr.
Lai and Ms. Yu agreed to extend the term of the loan, with the new maturity date of December 31, 2024. As amended, the annual interest
rate of the loan is 5.5%.

 Leases

 The
Company has three operating leases (Flywheel has three offices lease in Taiwan). The respective lease terms are June 1, 2022 to May 31,
2024, August 1, 2022 to July 31, 2024 and February 9, 2023 to March 8, 2025, respectively.

 For the Year Ending December 31,

 Amount

 2024

 $
 83,358

 2025

 2,449

 2026

 -

 2027 and thereafter

 -

 Total minimum lease payments

 85,807

 Less: effect of discounting

 (1,175
)

 Present value of the future minimum lease payment

 84,632

 Less: operating lease liabilities-current

 (82,269
)

 Total operating lease liabilities-non-current

 $
 2,363

 Sales
Taxes

 We
make an assessment of sales tax payable, including any related interest and penalties, and accrue these estimates on the financial statements.
Pursuant to the Wayfair decision, each state enforces sales tax collection at different dates. We collect and remit sales tax in accordance
with state regulations. We estimate that as of December 31, 2023, we owed $288,466 in sales taxes, along with penalties and interest.
The Company has made some progress filing historical sales tax returns and targets completion of filings for all jurisdictions in 2024.

 Critical
Accounting Policies

 The
preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted
in the United States of America ("U.S. GAAP"). U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements,
and income and expenses during the periods reported. Actual results could materially differ from those estimates.

 Cash

 The
Company considers all highly liquid financial instruments purchased with original maturities of three months or less to be cash. The
carrying amount of cash approximates fair value.

and Cost of Goods Sold

 Inventories
are stated at the lower of cost or net realizable value. Cost is principally determined on a first-in first-out basis. The Company's
costs include the amounts it pays manufacturers for products, tariffs and duties associated with transporting product across national
borders, and freight costs associated with transporting the product from its manufacturers to its warehouses.

 Cost
of goods sold is comprised of the book value of inventory sold to customers during the reporting period.

 Property
and Equipment

 Property,
plant, and equipment are recorded at cost and depreciated or amortized over the estimated useful life of the asset using the straight-line
method.

 Fair
Value Measurement

 Fair
value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.
The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable, accounts payable and other current liabilities
approximate fair value because of the immediate or short-term maturity of these financial instruments.

 Revenue
Recognition

 The
Company accounts for revenue in accordance with Financial Accounting Standards Board ("FASB") Accounting Standard Codification
("ASC") Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"). The Company adopted ASC Topic 606
as of January 1, 2019. The standard did not affect the Company's consolidated financial position, or cash flows. There were no
changes to the timing of revenue recognition as a result of the adoption.

 The
Company recognizes revenue in accordance with ASC Topic 606, which provided a five-step model for recognizing revenue from contracts
with customers as follows:

 Identify
 the contract with a customer.

 Identify
 the performance obligations in the contract.

 Determine
 the transaction price.

 Allocate
 the transaction price to the performance obligations in the contract.

 Recognize
 revenue when or as performance obligations are satisfied.

 The
Company derives its revenue from the sale of consumer products. The Company sells its products directly to consumers through online retail
channels. The Company considers customer order confirmations to be a contract with the customer. Customer confirmations are executed
at the time an order is placed through third-party online channels. For all of the Company's sales and distribution channels, revenue
is recognized when control of the product is transferred to the customer (i.e., when the Company's performance obligation is satisfied),
which typically occurs at shipment date. As a result, the Company has a present and unconditional right to payment and record the amount
due from the customer in accounts receivable.

 The
Company evaluated principal versus agent considerations to determine whether it is appropriate to record platform fees paid to Amazon
as an expense or as a reduction of revenue. Platform fees are recorded as sales and distribution expenses and are not recorded as a reduction
of revenue because the Company owns and controls all the goods before they are transferred to the customer. The Company can, at any time,
direct Amazon, similarly, other third-party logistics providers ("Logistics Providers"), to return the Company's inventories
to any location specified by the Company. It is the Company's responsibility to make any returns made by customers directly to
Logistic Providers and the Company retains the back-end inventory risk. Further, the Company is subject to credit risk (i.e., credit
card chargebacks), establishes prices of its products, can determine who fulfills the goods to the customer (Amazon or the Company) and
can limit quantities or stop selling the goods at any time. The customer can return the products within 30 days after the products are
delivered and estimated sales returns are calculated based on the expected returns. Based on these considerations, the Company is the
principal in this arrangement.

 Performance
Obligations. A performance obligation is a promise in a contract to transfer a distinct good to the customer and is the unit of account
in ASC Topic 606. A contract's transaction price is recognized as revenue when the performance obligation is satisfied. Each of
the Company's contracts has a single distinct performance obligation, which is the promise to transfer individual goods. For consumer
product sales, the Company has elected to treat shipping and handling as fulfillment activities, and not a separate performance obligation.
The Company bills customers for charges for shipping and handling on certain sales and such charges are recorded as part of net revenue.

 For
each contract, the Company considers the promise to transfer products to be the only identified performance obligation. In determining
the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration
to which the Company expects to be entitled.

Receivable and Allowance for Doubtful Accounts

receivable are stated at historical cost less allowance for doubtful accounts. On a periodic basis, management evaluates its accounts
receivable and determines whether to provide an allowance or if any accounts should be written off based on a past history of write-offs,
collections and current credit conditions. A receivable is considered past due if the Company has not received payments based on agreed-upon
terms. The Company performs on-going evaluations of its customers and maintains an allowance for bad debt and doubtful receivables as
the Company deems necessary or appropriate.

 Leases

 The
Company has elected the adoption under ASC Topic 842, Leases, which allows the Company to apply the transition provision at the Company's
adoption date instead of at the earliest comparative period presented in the financial statements. The Company elected the optional practical
expedient permitted under the transition guidance which allows the Company to carry forward the historical accounting treatment for existing
leases upon adoption.

 Sales
Taxes

 The
Company makes an assessment of sales tax payable including any related interest and penalties. The Company's accounting policy
is to exclude the tax collected and remitted from revenues and cost of revenues. Pursuant to the Wayfair decision, each state enforces
sales tax collection at different dates. The Company collects and remits sales tax in accordance with state regulations. In the past,
where the Company has not collected these taxes, the Company has made estimates of amounts owed and accrued these on the financial statements.
The Company has made some progress of filing historical sales tax returns and targets completion of filings for all jurisdictions in
2024.

 Income
Taxes

 Income
tax expense includes U.S. (federal and state) and foreign income taxes.

 The
Company also complied with state tax regulations, including those relating to California franchise tax. Management has evaluated its
tax positions and has concluded that the Company had taken no uncertain tax.

 Commitments
and Contingencies

 Liabilities
for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable
that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies
are expensed as incurred.

 Related
Parties

 The
Company accounts for related party transactions in accordance with ASC Topic 850 (Related Party Disclosures). A party is considered to
be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is
under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate
families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls
or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might
be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies
of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other
to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a
related party.

 Earnings
per Share

 The
Company computes basic earnings per common share using the weighted-average number of shares of common stock outstanding during the period.
For a period in which the Company reports net losses, diluted net loss per share attributable to stockholders is the same as basic net
loss per share attributable to stockholders, because potentially dilutive common shares are not assumed to have been issued if their
effect is anti-dilutive.

 Foreign
Currency and Currency Translation

 In
case of a functional currency other than the U.S. dollar, the functional currency amounts are translated into U.S. dollars at exchange
rates in effect at quarter-end, with resulting translation gains or losses included within other comprehensive income or loss.

 ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 Not

 ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 Reference
is made to pages F-1 through F-21 comprising a portion of this annual report on Form 10-K.

 ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 Not

 ITEM
9A. CONTROLS AND PROCEDURES

 Evaluation
of Disclosure Controls and Procedures

 Disclosure
controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed
under the Exchange Act, such as this annual report, is recorded, processed, summarized, and reported within the time period specified
in the SEC's rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated
and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely
decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and
chief financial officer (our "Certifying Officers"), the effectiveness of our disclosure controls and procedures as of December
31, 2023, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of
December 31, 2023, our disclosure controls and procedures were effective.

 We
do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and
procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the
disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there
are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure
controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all
our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions.

 Management's
Report on Internal Control Over Financial Reporting

 Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange
Act Rules 13a-15(f) and 14d-14(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles.

 All
internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore,
even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and
financial statement preparation and presentation. In addition, projections of any evaluation of effectiveness to future periods are subject
to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures
may deteriorate.

 Management
assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2023. In making the assessment,
management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO – 2013) in Internal
Control-Integrated Framework. Based on its assessment, management concluded that, as of December 31, 2023, our Company's internal
control over financial reporting was adequate in material aspects.

 Changes
in Internal Control over Financial Reporting

 There
were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

 ITEM
9B. OTHER INFORMATION

 None.

 ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 Not

 PART
III

 ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 Officers
and Directors

 The
following table sets forth the names and ages of the members of our Board of Directors and our executive officers and the positions held
by each. Each director's term continues until his or her successor is elected or qualified at the next annual meeting, unless such
director earlier resigns or is removed.

 Name

 Age

 Position

 Sam
 Lai

 Chairman
 of the Board, Chief Executive Officer and Interim Chief Financial Officer

 Sau
 Kuen (Maggie) Yu

 Senior
 Vice President and Director

 Douglas
 Branch

 Independent

 Michael
 Lenner

 Independent

 Minghui
 (Alan) Gao

 Independent

 Hilary
 (Hui-Chong) Bui

 Independent

 Biographical
information concerning our directors and executive officers listed above is set forth below.

 Sam
Lai. Mr. Lai has served as our Chief Executive Officer and been a member of our Board of Directors since June 2013 and our Chairman
of Board since April 2021. He has served as our Interim Chief Financial Officer since March 29, 2022. He is a seasoned software engineer
who has designed and built software and code from the ground up at Hour Loop, Inc., Amazon.com, Inc., UnifiedEdge, Inc., Kits, and Applied
Research Labs for the past 18 years. From December 2009 through June 2017, Mr. Lai served as a Software Development Engineer for Amazon.com,
Inc. From March 2009 through December 2009, he served as a Senior Java Developer at UnifiedEdge, Inc. From February 2007 through March
2009, Mr. Lai served as a Senior Java Developer at Kits. From September 2005 through February 2007, he served as a Software Development
Engineer for Amazon.com, Inc. From March 2003 through January 2004, Mr. Lai served as a Research Engineer Scientist Assistant at Applied
Research Labs. Mr. Lai graduated with a Bachelor Degree in Computer Science from University of Texas at Austin in 2003 and a Masters
Degree in Computer Science from University of California, San Diego in 2004. Mr. Lai does not hold, and has not previously held, any
directorships in any reporting companies.

 Sau
Kuen (Maggie) Yu. Ms. Yu has served as our Senior Vice President and has been a member of our Board of Directors since June 2013.
Since graduating from University of California, San Diego until June 2013, Ms. Yu has no employment history. Ms. Yu graduated with a
Bachelor Degree in Computer Science from University of California, San Diego in 2004. Ms. Yu does not hold, and has not previously held,
any directorships in any reporting companies.

 Douglas
Branch. Mr. Branch has been an independent member of our Board of Directors since June 1, 2021. Since 1991, Mr. Branch has served
in a number of executive positions (the latest position as Executive Vice President, US Sales) at Gund, a division of Spin Master Inc.
From 2016 through 2018, he served as the Executive Vice President, US Sales at Enesco. Mr. Branch graduated with a Bachelor of Arts Degree
in marketing from University of Massachusetts. Mr. Branch does not hold, and has not previously held, any directorships in any reporting
companies.

 Michael
Lenner. Mr. Lenner has been an independent member of our Board of Directors since June 1, 2021. Since May 2018, Mr. Lenner has
served as Vice President, Software Engineering, Disney Streaming Services at The Walt Disney Company. From August 2017 through May 2018,
he served as Vice President, Software Engineering at BAMTECH Media. From July 2014 through August 2017, Mr. Lenner served as Vice President,
Software Engineering and Senior Director, Software Engineering at Major League Baseball Advanced Media. From February 2011 through June
2014, he served as the Vice President, Engineering at H. Bloom. Mr. Lenner graduated with a Bachelor of Arts Degree in Physics from Binghamton
University and a Masters of Science Degree in Computer Science from Columbia University. Mr. Lenner does not hold, and has not previously
held, any directorships in any reporting companies.

 Minghui
(Alan) Gao. Mr. Gao has been an independent member of our Board of Directors since October 6, 2021. Since October 2021, Mr. Gao
has served as the Chief Technology Officer of Cue Health, Inc. From January 2018 to October 2021, he served as the Chief Technology Officer
of PillPack (which was acquired by Amazon Pharmacy). From October 2016 to January 2018, Mr. Gao served as the Director of Prime Video
at Amazon.com. From September 2013 to October 2016, he served as Engineering Director of Seller Services at Amazon.com. From September
2011 to September 2013, Mr. Gao served as the Chief Technology Officer and Senior Vice President of Product and Engineering at Xiu.com,
an e-commerce company in China. From November 2008 through June 2011, he served as Engineering Director at Amazon.cn in China. From October
2007 to November 2008, Mr. Gao served as Senior Manager, Software Development at Amazon.com. From November 2006 to October 2007, he served
as a Software Development Manager at Amazon.com. From April 2001 to November 2006, Mr. Gao served as Software Design Engineer and Development
Lead. Mr. Gao graduated with a Masters Degree in Computer Science from Baylor university in 1999. Mr. Gao does not hold, and has not
previously held, any directorships in any reporting companies.

 Hilary
(Hui-Chong) Bui. Ms. Bui has been an independent member of our Board of Directors since February 20, 2023. Since November 2022,
Ms. Bui has served as the Senior Finance Manager–North America and US Retail FP&A of Starbucks Corporation. She joined Starbucks
Corporation in 2015 and has served various positions including Finance Manager and Business Analysis Manager of different divisions before
being promoted to the current position. From 2011 to 2015, Ms. Bui served as Senior Finance Analyst and Finance Analyst in different
divisions of General Mills, Inc. From 2007 to 2011, Ms. Bui served as Senior Assurance Associate of PricewaterhouseCoopers, LLP. Ms.
Bui graduated with a bachelor's degree of Accounting from the University of Minnesota in 2007. Ms. Bui does not hold, and has not
previously held, any directorships in any reporting companies.

 Family
Relationships

 Sam
Lai, our Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer, and Maggie Yu, our Senior Vice President
and member of our Board of Directors, are married.

 Involvement
in Certain Legal Proceedings

 No
executive officer, member of the board of directors or control person of our Company has been involved in any legal proceeding listed
in Item 401(f) of Regulation S-K in the past 10 years.

 Board
Committees and Director Independence

 As
a Nasdaq-listed company, we are required to comply with Nasdaq's continued listing standards.

 Controlled
Company and Director Independence

 The
"controlled company" exception to the Nasdaq rules provides that a company of which more than 50% of the voting power is
held by an individual, group or another company, a "controlled company," need not comply with certain requirements of the
Nasdaq corporate governance rules. As stated above, Sam Lai, the Chairman of the Board, Chief Executive Officer and Interim Chief Financial
Officer of the Company, and Maggie Yu, Senior Vice President of the Company and a member of the Board, who are husband and wife, together
beneficially own 33,325,984 shares of the Company's common stock, representing approximately 95% of the voting power of the Company's
outstanding common stock. As a result, the Company is a "controlled company" under the Nasdaq corporate governance standards.
As a controlled company, we do not have to comply with certain corporate governance requirements under the Nasdaq rules, including the
following:

 A
 majority of the Company's Board of Directors to consist of "independent directors" as defined by the applicable
 Nasdaq rules and regulations;

 The
 compensation of the Company's executive officers to be determined, or recommended to the Board of Directors for determination,
 by independent directors constituting a majority of the independent directors of the Board in a vote in which only independent directors
 participate or by a Compensation Committee comprised solely of independent directors; and

 That
 director nominees to be selected, or recommended to the Board of Directors for selection, by independent directors constituting a
 majority of the independent directors of the Board in a vote in which only independent directors participate or by a nomination committee
 comprised solely of independent directors.

 The
Company intends to avail itself of each of these exemptions. More specifically, a majority of the Company's board of directors
will not consist of independent directors and the Company will not have a compensation committee or a nominating and corporate governance
committee. Therefore, for as long as the Company remains a "controlled company," the Company will not have the same protections
afforded to stockholders of companies that are subject to all of these corporate governance requirements. If at any time the Company
ceases to be a "controlled company" under the Nasdaq rules, the Company's Board of Directors will take all action necessary
to comply with the Nasdaq corporate governance rules, including establishing certain committees composed entirely of independent directors,
subject to a permitted "phase-in" period.

 Notwithstanding
the Company's status as a controlled company, the Company will remain subject to the Nasdaq corporate governance standard that
requires the Company to have an audit committee with at least three independent directors as well as composed entirely of independent
directors. As a result, the Company was required, at the time of listing on Nasdaq, to have at least one independent director on our
audit committee, at least two independent directors within 90 days of listing on Nasdaq, and at least three independent directors within
one year of listing on Nasdaq, where at least one of the independent directors qualifies as an audit committee financial expert under
SEC rules and as a financially sophisticated audit committee member under the Nasdaq rules.

 The
Company's Board of Directors has affirmatively determined that two of its six directors (Sam Lai and Maggie Yu) are non-independent
directors of the Company and four of its six directors (Douglas Branch, Michael Lenner, Minghui (Alan) Gao, and Hilary (Hui-Chong) Bui)
are independent directors of the Company. The Company's audit committee consists of the four independent directors: Messrs. Branch,
Lenner, Gao, and Ms. Bui Ms. Bui is the chair of the audit committee and qualifies as an audit committee financial expert under SEC rules
and as a financially sophisticated audit committee member under the Nasdaq rules.

 Board
Leadership Structure and Board's Role in Risk Oversight

 We
have not separated the positions of Chairman of the Board and Chief Executive Officer. Mr. Lai has served as our Chairman of the Board
of Directors since April 2021 and Chief Executive Officer since June 2013. We believe that combining the positions of Chairman and Chief
Executive Officer allows for focused leadership of our organization which benefits us in our relationships with investors, customers,
suppliers, employees and other constituencies. We believe that consolidating the leadership of the Company under Mr. Lai is the appropriate
leadership structure for our Company and that any risks inherent in that structure are balanced by the oversight of our other independent
directors on our Board. However, no single leadership model is right for all companies and at all times. The Board recognizes that depending
on the circumstances, other leadership models, such as the appointment of a lead independent director, might be appropriate. Accordingly,
the Board may periodically review its leadership structure. In addition, the Board holds executive sessions in which only independent
directors are present.

 Our
Board is generally responsible for the oversight of corporate risk in its review and deliberations relating to our activities. Our principal
source of risk falls into two categories, financial and product commercialization. The audit committee oversees management of financial
risks; our Board regularly reviews information regarding our cash position, liquidity and operations, as well as the risks associated
with each. The Board regularly reviews plans, results and potential risks related to our business. The Board is also expected to oversee
risk management as it relates to our compensation plans, policies and practices for all employees including executives and directors,
particularly whether our compensation programs may create incentives for our employees to take excessive or inappropriate risks which
could have a material adverse effect on the Company.

 Committees
of the Board of Directors

 Audit
Committee

 We
have established an audit committee which consists of four independent directors: Messrs. Branch, Lenner, Gao, and Ms. Bui. Ms. Bui is
the chair of the audit committee. and qualifies as an "audit committee financial expert." Our audit committee adopted a written
charter, a copy of which is posted on the Corporate Governance section of our website, at www.hourloop.com.

 Our
audit committee is authorized to:

 approve
 and retain the independent auditors to conduct the annual audit of our financial statements;

 the proposed scope and results of the audit;

 and pre-approve audit and non-audit fees and services;

 accounting and financial controls with the independent auditors and our financial and accounting staff;

 and approve transactions between us and our directors, officers and affiliates;

 recognize
 and prevent prohibited non-audit services;

 establish
 procedures for complaints received by us regarding accounting matters; and

 oversee
 internal audit functions, if any.

Committee

 Because
we are a "controlled company" within the meaning of the Nasdaq corporate governance standards, we are not required to have,
and do not currently have, a compensation committee.

 If
and when we are no longer a "controlled company" within the meaning of the Nasdaq corporate governance standards, we will
be required to establish a compensation committee. We anticipate that such a compensation committee would consist of three directors
who will be "independent" under the rules of the SEC, subject to the permitted "phase-in" period pursuant to
Nasdaq rules.

 This
compensation committee would:

 and determine the compensation arrangements for management;

 establish
 and review general compensation policies with the objective to attract and retain superior talent, to reward individual performance
 and to achieve our financial goals;

 administer
 our incentive compensation and benefit plans and purchase plans;

 oversee
 the evaluation of the Board of Directors and management; and

 the independence of any compensation advisers.

 Upon
formation of a compensation committee, we would expect to adopt a compensation committee charter defining the committee's primary
duties in a manner consistent with the rules of the SEC and Nasdaq standards.

 Nominating
and Corporate Governance Committee

 Because
are a "controlled company" within the meaning of the Nasdaq corporate governance standards, we are not required to have,
and do not currently have, a nominating and corporate governance committee.

 If
and when we are no longer a "controlled company" within the meaning of the corporate governance standards of Nasdaq, we will
be required to establish a nominating and corporate governance committee. We anticipate that such a nominating and corporate governance
committee would consist of three directors who will be "independent" under the rules of the SEC, subject to the permitted
"phase-in" period pursuant to Nasdaq rules.

 The
functions of the nominating and corporate governance committee, among other things, would include:

 identifying
 individuals qualified to become board members and recommending director;

 nominees
 and board members for committee membership;

 developing
 and recommending to our board corporate governance guidelines;

 and determine the compensation arrangements for directors; and

 overseeing
 the evaluation of our board of directors and its committees and management.

 Upon
formation of a nominating and corporate governance committee, we would expect to adopt a nominating and corporate governance committee
charter defining the committee's primary duties in a manner consistent with the rules of the SEC and Nasdaq standards.

Nominations

 Our
full Board of Directors recommends candidates for nomination for election at the annual meeting of the stockholders. We have not formally
established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general,
in identifying and evaluating nominees for director, the Board of Directors considers educational background, diversity of professional
experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best
interests of our stockholders.

Committee Interlocks and Insider Participation

 Because
we are a "controlled company" within the meaning of Nasdaq corporate governance standards, we are not required to have, and
do not currently have, a compensation committee. None of our executive officers serves on the board of directors or compensation committee
of a company that has an executive officer that serves on our board or compensation committee. No member of our board is an executive
officer of a company in which one of our executive officers serves as a member of the board of directors or compensation committee of
that company.

 Code
of Ethics

 The
Company has adopted a Code of Ethics and Business Conduct that applies to all of its directors, officers (including our principal executive
officer, principal financial officer, principal accounting officer or controller, and any person performing similar functions) and employees.
The Code of Ethics and Business Conduct is available on our website at www.hourloop.com.

 Limitation
on Liability and Indemnification of Officers and Directors

 Our
certificate of incorporation provides that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware
law, as it now exists or may in the future be amended. In addition, our certificate of incorporation provides that our directors will
not be personally liable for monetary damages to us for breaches of their fiduciary duty as directors, except to the extent such exemption
from liability or limitation thereof is not permitted by the Delaware General Corporation Law ("DGCL").

 Our
certificate of incorporation also permits us to maintain insurance on behalf of any officer, director or employee for any liability arising
out of his or her actions, regardless of whether Delaware law would permit such indemnification. We have purchased a policy of directors'
and officers' liability insurance that insures our officers and directors against the cost of defense, settlement or payment of
a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors.

 These
provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions
also may have the effect of reducing the likelihood of derivative litigation against officers and directors, even though such an action,
if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder's investment may be adversely affected
to the extent we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.

 We
believe that these provisions and the insurance are necessary to attract and retain talented and experienced officers and directors.

 ITEM
11. EXECUTIVE COMPENSATION

 2023
Summary Compensation Table

 The
following summary compensation table provides information regarding the compensation earned during our fiscal years ended December 31,
2023 and 2022 to certain of our executive officers, who we collectively refer to as our "named executive officers", or "NEOs".

 Name and Position

 Year

 Salary ($)

 Bonus ($)

 Stock
 Awards
 ($)

 Option
 Awards
 ($)

 Non-
 Equity
 Incentive
 Plan
 ($)

 Non-
 qualified
 Earnings
 ($)

 All
 Other
 ($)

 Total
 ($)

 Sam Lai

 2023

 500,000

 100,000

 -

 -

 -

 -

 24,884
 (2)

 $
 624,884

 Chief Executive Officer and Interim Chief Financial Officer (1)

 2022

 500,000

 100,000

 -

 -

 -

 -

 14,678
 (4)

 614,678

 Maggie Yu

 2023

 450,000

 550,000

 -

 -

 -

 -

 25,651
 (3)

 1,025,651

 Senior Vice President

 2022

 450,000

 550,000

 -

 -

 -

 -

 15,292
 (5)

 1,015,292

 (1)

 Mr.
 Lai has served as our Chief Executive Officer since June 2013 and as our Interim Chief Financial Officer since March 29, 2022.

 (2)

 healthcare benefits and 401(k) contribution of $9,307.44 and $15,576.84, respectively, for the fiscal year ended December 31, 2023.

 (3)

 healthcare benefits and 401(k) contribution of $11,112.66 and $14,538.44, respectively, for the fiscal year ended December 31, 2023.

 (4)

 healthcare benefits and 401(k) of $6,553.36 and 8,124.99, respectively, for the fiscal year ended December 31, 2022

 (5)

 healthcare benefits and 401(k) of $7,979.91 and 7,312.50, respectively, for the fiscal year ended December 31, 2022.

 Employment
Agreements

 On
May 27, 2021, the Company entered into an Executive Employment Agreement with each of Mr. Lai and Ms. Yu. Mr. Lai's agreement provides
that he will serve as the Chief Executive Officer of the Company and Ms. Yu's agreement provides that she will serve as the Senior
Vice President of the Company.

 Each
of the employment agreements has a three-year term, which automatically extends for additional terms of one year each unless either the
Company or the applicable executive provides notice to the other party of their desire to not so renew term. Each of the employment agreements
are "at will," meaning that either the executive or the Company may terminate the executive's employment at any time
and for any reason, subject to certain payments and other actions as set forth below.

 Mr.
Lai's agreement provided for an annual base salary of $500,000, and Ms. Yu's agreement provided for an annual base salary
of $450,000. Each of the base salaries may be subject to annual adjustments as determined in the discretion of the Board. Pursuant to
their agreements, on December 31, 2021, each of Mr. Lai and Ms. Yu were also entitled to receive a guaranteed bonus of $50,000, subject
to the applicable agreement being in effect at that time. Additionally, pursuant to their agreements, Mr. Lai and Ms. Yu were entitled
to each receive a guaranteed bonus of $100,000 on December 31, 2022, subject to the applicable agreement being in effect at that time.

 On
January 20, 2022, the Company entered into Addendum No. 1 to Mr. Lai's agreement, pursuant to which Mr. Lai's 2022 bonus
targets and payments were set as follows:

 If
 the Company grows its net profits (excluding taxes) to at least $7,000,000 during the 2022 fiscal year, Mr. Lai will receive a bonus
 equal to 50% of base salary.

 If
 the Company grows its net profits (excluding taxes) to at least $8,500,000 during the 2022 fiscal year, Mr. Lai will receive a bonus
 equal to 100% of base salary.

 Mr.
Lai did not meet the above conditions for the 2022 fiscal year.

 On
February 20, 2023, the Company entered into Addendum No. 2 to the Executive Employment Agreement with Mr. Lai (the "Lai Addendum").

to the terms of the Lai Addendum, the parties agreed that for the Company's 2023 fiscal year, Mr. Lai's bonus targets and
payments will be as follows:

 If
 the Company grows its net profits (excluding taxes) to at least $1,500,000 during the 2023 fiscal year with minimum annual revenue
 growth rate of 20%, Mr. Lai will receive a bonus equal to 50% of his base salary.

 If
 the Company grows its net profits (excluding taxes) to at least $5,000,000 during the 2023 fiscal year with minimum annual revenue
 growth rate of 20%, Mr. Lai will receive a bonus equal to 100% of his base salary.

 Mr.
Lai did not meet the above conditions for the 2023 fiscal year.

 On
January 20, 2022, the Company entered into Addendum No. 1 to Ms. Yu's agreement, pursuant to which Ms. Yu's 2022 bonus targets
and payments were set as follows:

 If
 the Company acquires at least 75 but fewer than 100 new vendors during the 2022 fiscal year, Ms. Yu will receive a bonus equal to
 50% of base salary.

 If
 the Company acquires 100 or more new vendors during the 2022 fiscal year, Ms. Yu will receive a bonus equal to 100% of base salary.

 The
Board determined the satisfaction of the above conditions for the 2022 fiscal year as the Company acquired more than 600 new vendors
during 2022. Ms. Yu received a bonus amount of 100% of her base salary.

 On
February 20, 2023, the Company entered into Addendum No. 2 to the Executive Employment Agreement with Ms. Yu (the "Yu Addendum").

to the terms of the Yu Addendum, the parties agreed that for the Company's 2023 fiscal year, Ms. Yu's bonus targets and payments
will be as follows:

 If
 the Company acquires at least 100 new vendors during the 2023 fiscal year, Ms. Yu will receive a bonus equal to 50% of her base salary.

 If
 the Company acquires at least 135 new vendors during the 2023 fiscal year, Ms. Yu will receive a bonus equal to 100% of her base
 salary.

 The
Board determined the satisfaction of the above conditions for the 2023 fiscal year as the Company acquired more than 150 new vendors
during 2023. Ms. Yu received a bonus amount of 100% of her base salary.

 Each
of Mr. Lai's and Ms. Yu's agreements provides that if at the Company's request the executive attends any trade shows,
events, or meetings which are independent of the executive's responsibility under the applicable agreement, the Company will pay
the executive $1,000 in cash per full day for such attendance or $500 in cash for a half day.

 Each
of Mr. Lai's and Ms. Yu's agreements provides that at the end of each calendar quarter during the term, the Company will
issue to the applicable executive a number of shares of common stock having a fair market value of $3,000 as of such date (with any partial
quarter being pro-rated). The market value of the shares is determined as follows: (a) if the common stock is then listed for trading
on the OTC Markets or a United States national securities exchange (as applicable, the "Trading Market"), the daily volume
weighted average closing price of the common stock during the 20 trading day period immediately prior to the calculation date, (b) if
the common stock is not then listed or quoted for trading on a Trading Market, and if prices for the common stock are then reported in
the "Pink Sheets" published by OTC Markets Group, Inc., the most recent bid price per share of the common stock so reported,
or (c) in all other cases, the fair market value of a share of common stock as is determined in good faith by the Board, without the
involvement of the executive if the executive is then serving on the Board, after taking into consideration factors it deems appropriate.
A "Trading Day" is any day on which the Trading Market is generally open for business and on which the common stock is then
traded.

 Notwithstanding
the forgoing, the shares issuable to Mr. Lai and Ms. Yu with respect to the period from the execution of their agreements to December
31, 2021 will be determined, and will be issued, on January 3, 2022, based on the market value as determined on December 31, 2021. IPO
price at $4 per share was used as the market value.

 Each
of the employment agreements provides that, on the last business day prior to the commencement of the Company's first firm-commitment
underwritten initial public offering of common stock pursuant to a registration statement filed under the Securities Act (the "IPO"),
which condition will be satisfied by this offering, and subject to the applicable agreement not having expired or having been terminated
as of such time, the Company will issue to the applicable executive an option to acquire shares of common stock. This will be an option
to acquire 25,000 shares of common stock. These options will vest in four equal annual installments, subject to earlier acceleration
and forfeiture as set forth below and in the applicable employment agreement and in the option agreement, if and when signed. The exercise
price per share will be equal to the offering price per share of common stock in the IPO. On January 6, 2022, the Board granted Mr. Lai
and Ms. Yu an option to purchase 25,000 shares of the Company's common stock, respectively. The option vests in four equal annual
installments, with the first installment vesting on the first anniversary of the grant.

 Mr.
Lai's and Ms. Yu's agreements each provides that they will be entitled to fringe benefits consistent with the practices of
the Company, and to the extent the Company provides similar benefits to the Company's executive officers; that the Company will
reimburse each of them for all reasonable and necessary out-of-pocket business, entertainment and travel expenses incurred in connection
with the performance of their duties; that they are entitled to a number of vacation days as generally provided to other executive officers
of the Company from time to time; and that they are each, together with their spouses and legal dependents, entitled to participate equally
in the health, dental and other benefit plans, which are available to senior managers of the Company.

 Mr.
Lai's and Ms. Yu's agreements provide for different results and payments on termination, based on whether the applicable
agreement was terminated by the Company with or without "Cause", or by the applicable executive with or without "Good
Reason".

 For
purposes of their agreements, "Cause" means any of the following:

 a
 violation of any material written rule or policy of the Company for which violation any employee may be terminated pursuant to the
 written policies of the Company reasonably applicable to an executive employee;

 misconduct
 by the executive to the material detriment of the Company;

 the
 executive's conviction (by a court of competent jurisdiction, not subject to further appeal) of, or pleading guilty to, a felony;

 the
 executive's gross negligence in the performance of their duties and responsibilities to the Company as described in the applicable
 agreement; or

 the
 executive's material failure to perform their duties and responsibilities to the Company as described in the agreement (other
 than any such failure resulting from the their incapacity due to physical or mental illness or any such failure subsequent to the
 executive being delivered a notice of termination without Cause by the Company or delivering a notice of termination for Good Reason
 to the Company), in either case after written notice from the Board (in the case of Mr. Lai) or from the Chief Executive Officer
 (in the case of Ms. Yu), which specifies the nature of such material failure and the executive's failure to cure such material
 failure within 10 days following receipt of such notice.

 For
purposes of their agreements, "Good Reason" means any of the following:

 a
 material diminution by the Company of compensation and benefits (taken as a whole) provided to the executive;

 a
 reduction in base salary or target or maximum bonus, other than as part of an across-the-board reduction in salaries of management
 personnel;

 the
 relocation of the executive's principal executive office to a location more than 50 miles further from the executive's
 principal executive office immediately prior to such relocation; or

 a
 material breach by the Company of any of the terms and conditions of the applicable employment agreement which the Company fails
 to correct within 10 days after the Company receives written notice from the executive of such violation.

 In
the event that the Company terminates the applicable agreement for "Cause", or the applicable executive terminates their
agreement without "Good Reason", then the Company will pay to the applicable executive any unpaid base salary and benefits
then owed or accrued, and any unreimbursed expenses, will issue to the applicable executive the shares as described above (i.e., the
$3,000 of value of shares per calendar quarter) which have accrued as of such date; and any unvested portion of any equity granted to
the applicable executive will be forfeited.

 In
the event that the Company terminates the applicable agreement without "Cause", or the applicable executive terminates their
agreement for "Good Reason", in addition to the payments and issuances above, the Company will pay to the applicable executive,
in one lump sum, an amount equal to the base salary that they would have been paid for the remainder of the initial 3-year term (if such
termination occurs during that initial term) or the one year renewal term (if such termination occurs during a renewal term), as applicable,
and any equity grant already made to the executive shall, to the extent not already vested, be deemed automatically vested.

to their agreements, in the event of Mr. Lai's or Ms. Yu's death or total disability, the applicable agreement will terminate
on the date of death or total disability and the Company will shall pay to the applicable executive (or their estate) any unpaid base
salary and benefits then owed or accrued and any unreimbursed expenses for which the Company has agreed to reimburse the applicable executive,
plus a pro-rata bonus for the year of termination based on the executive's target bonus for such year and the portion of such year
in which the executive was employed through the date of such termination; and any unvested portion of any equity granted to the applicable
executive will be forfeited as of the termination date.

 If
it is determined that any payment or benefit provided to either Mr. Lai or Ms. Yu under their respective agreements would constitute
an "excess parachute payment" within the meaning of section 280G of the Code, such that the payment would be subject to an
excise tax under section 4999 of the Code (the "Excise Tax"), the Company will pay to the applicable executive an additional
amount (the "Gross-Up Payment") such that the net amount of the Gross-Up Payment retained by the applicable executive after
the payment of any Excise Tax and any federal, state and local income and employment tax on the Gross-Up Payment, will be equal to the
Excise Tax due on the payment and any interest and penalties in respect of such Excise Tax. For purposes of determining the amount of
the Gross-Up Payment, the applicable executive will be deemed to pay federal income tax and employment taxes at the highest marginal
rate of federal income and employment taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income
taxes at the highest marginal rate of taxation in the state and locality of the applicable executive's residence (or, if greater,
the state and locality in which the applicable executive is required to file a nonresident income tax return with respect to the payment)
in the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes that may be obtained
from the deduction of such state and local taxes.

 As
a result of the uncertainty in the application of sections 4999 and 280G of the Code, it is possible that the Gross-Up Payments either
will have been made which should not have been made, or will not have been made which should have been made, by the Company (an "Excess
Gross-Up Payment" or a "Gross-Up Underpayment," respectively). If it is established pursuant to (A) a final determination
of a court for which all appeals have been taken and finally resolved or the time for all appeals has expired, or (B) an Internal Revenue
Service (the "IRS") proceeding which has been finally and conclusively resolved, that an Excess Gross-Up Payment has been
made, such Excess Gross-Up Payment shall be deemed for all purposes to be a loan to the executive made on the date the executive received
the Excess Gross-Up Payment and the executive shall repay the Excess Gross-Up Payment to the Company either (i) on demand, if the executive
is in possession of the Excess Gross-Up Payment or (ii) upon the refund of such Excess Gross-Up Payment to the executive from the IRS,
if the IRS is in possession of such Excess Gross-Up Payment, together with interest on the Excess Gross-Up Payment at (X) 120% of the
applicable federal rate (as defined in Section 1274(d) of the Code) compounded semi-annually for any period during which the executive
held such Excess Gross-Up Payment and (Y) the interest rate paid to the executive by the IRS in respect of any period during which the
IRS held such Excess Gross-Up Payment. If a Gross-Up Underpayment occurs as determined under one or more of the following circumstances:
(I) such determination is made by the Company (which shall include the position taken by the Company, together with its consolidated
group, on its federal income tax return) or is made by the IRS, (II) such determination is made by a court, or (III) such determination
is made upon the resolution to the executive's satisfaction of the Dispute, then the Company shall pay an amount equal to the Gross-Up
Underpayment to the executive within ten calendar days of such determination or resolution, together with interest on such amount at
120% of the applicable federal rate compounded semi-annually from the date such amount should have been paid to the executive pursuant
to the terms of his or her employment agreement or otherwise, but for the operation of Section 4(c) of the employment agreements, until
the date of payment.

 Each
of the two employment agreements also contains a non-solicitation provision, wherein the executive agrees that, during the term of their
agreement and for three years thereafter, the executive will not, directly or indirectly solicit or discuss with any employee of Company
the employment of such Company employee by any other commercial enterprise other than Company, nor recruit, attempt to recruit, hire
or attempt to hire any such Company employee on behalf of any commercial enterprise other than Company, provided that this provision
will not prohibit the applicable executive from undertaking a general recruitment advertisement provided that it is not targeted towards
any person identified above, or from hiring, employing or engaging any such person who responds to that general recruitment advertisement.

 Each
of the two employment agreements also provides that, during the term, the applicable executive will be entitled to indemnification and
insurance coverage for officers' liability, fiduciary liability and other liabilities arising out of the executive's position
with the Company in any capacity, in an amount not less than the highest amount available to any other executive, and that such coverage
and protections, with respect to the various liabilities as to which the executive has been customarily indemnified prior to termination
of employment, will continue for at least six years following the end of the applicable term.

 Each
of the two employment agreements contains customary representations and warranties by the parties, a provision for resolution of disputes
by arbitration, customary confidentiality provisions, customary provisions relating to the Company's ownership of intellectual
property created by the applicable executive, and other customary miscellaneous provisions.

Agreements

 On
June 1, 2021, the Company entered into Director Agreements with each of Messrs. Lenner and Branch in connection with their services as
directors of the Company. On October 6, 2021, the Company entered into a Director Agreement with Mr. Gao in connection with his services
as a director of the Company. On February 20, 2023, the Company entered into a Director Agreement with Ms. Bui in connection with her
services as a director.

to their respective agreements, each of Messrs. Lenner, Branch and Gao and Ms. Bui agreed to serve as a director of the Company and to
be available to perform the duties consistent with such position pursuant to the Certificate and Bylaws of the Company, and any additional
codes, guidelines or policies of the Company that may be effective now or in the future. Each of the agreements continues in effect until
the earliest of (a) such time as the applicable director resigns or is removed from office and (b) the death of the director.

 Each
agreement provides that, during the term of the applicable agreement, in exchange for their services, the Company shall issue to the
applicable director a number of shares of common stock having a fair market value of $3,000 as of such date (with any partial quarter
being pro-rated). The market value of the shares is determined in the same manner as for the executive's employment agreements
as discussed above.

 Each
of the directors' agreements provides that if at the Company's request the director attends any trade shows, events, or meetings
which are independent of the director's responsibility under the applicable agreement, the Company will pay the director $1,000
in cash per full day for such attendance or $500 in cash for a half day.

 The
director agreements provide that, during the applicable term, the Company will reimburse the applicable director for all reasonable out-of-pocket
expenses incurred by them in attending any in-person meetings, provided that the director complies with the generally applicable policies,
practices and procedures of the Company for submission of expense reports, receipts or similar documentation of such expenses. Any reimbursements
for allocated expenses (as compared to out-of-pocket expenses of the director in excess of $500) must be approved in advance by the Company.

 Each
of the director agreements contains customary confidentiality provisions, customary provisions relating to the Company's ownership
of intellectual property created by the applicable director, customary representations and warranties by the parties and other customary
miscellaneous provisions.

 Elements
of Compensation

 Mr.
Lai and Ms. Yu were provided with the following primary elements of compensation in 2023 and 2022:

 Base
Salary. Mr. Lai and Ms. Yu received a fixed base salary in an amount determined by the Board of Directors based on a number of
factors, including:

 The
 nature, responsibilities and duties of the officer's position;

 The
 officer's expertise, demonstrated leadership ability and prior performance;

 The
 officer's salary history and total compensation, including annual cash bonuses and long-term incentive compensation; and

 The
 competitiveness of the market for the officer's services.

 The
base salary for each of Mr. Lai and Ms. Yu for 2023 and 2022 is listed in "—2023 Summary Compensation Table."

 Bonuses.
 For the year ended December 31, 2023, the Company paid Mr. Lai and Ms. Yu a bonus of $100,000 and $550,000, respectively. For
the year ended December 31, 2022, the Company paid Mr. Lai and Ms. Yu a bonus of $100,000 and $550,000, respectively.

 The
bonuses for 2023 and 2022 were determined based on peer comparable compensation paid in the Seattle, Washington area reported by www.salary.com
( According to www.salary.com, the CEO salary
and bonus range in Seattle was $660,110 to $3,085,339 as updated January 26, 2024. The $500,000 and $600,000 compensation (base salary
and bonus) paid to Mr. Lai for 2023 and 2022, respectively, fell slightly below such range and we believed such compensation to be reasonable
due to the revenue growth in the Company in 2023 and 2022, respectively, due in large part to Mr. Lai's leadership.

 According
to www.salary.com ( the salary and
bonus range for Chief Operating Officer in Seattle was $368,663 and $1,435,179 as updated January 26, 2024. The $450,000 and
$1,000,000 compensation (base salary and bonus) paid to Ms. Yu for 2023 and 2022, respectively, fell within such range and we
believed to be reasonable due to Ms. Yu being instrumental in delivering high growth of new vendors to the Company in 2023 and 2022,
respectively.

 Stock
Awards. On February 1, 2022, the Company issued 1,772 shares of Company common stock to each of Sam Lai, our Chief Executive
Officer, and Maggie Yu, our Senior Vice President, with a fair market value of $4.00 per share as compensation for the services to the
Company pursuant to the terms of their Executive Employment Agreements with the Company.

 On
February 1, 2022, the Company issued 1,750, 1,750, and 709 shares of Company common stock to Michael Lenner, Douglas Branch, and Alan
Gao, respectively, with a fair market value of $4.00 per share as compensation for the services as directors to the Company pursuant
to the terms of their Director Agreements with the Company.

 On
May 20, 2022, the Company issued 916 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch, and
Alan Gao, with a fair market value of $3.2745 per share as compensation for the services as executives or directors to the Company pursuant
to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
June 30, 2022, the Company issued 1,049 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
and Alan Gao, with a fair market value of $2.8605 per share as compensation for the services as executives or directors to the Company
pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
September 30, 2022, the Company issued 1,050 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
and Alan Gao, with a fair market value of $2.8565 per share as compensation for the services as executives or directors to the Company
pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
January 4, 2023, the Company issued 1,001 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
and Alan Gao, with a fair market value of $2.9985 per share as compensation for the services as executives or directors to the Company
pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
April 3, 2023, the Company issued 1,365, 1,365, 1,365, 1,365, 1,365 and 606 shares of Company common stock to each of Sam Lai, Maggie
Yu, Michael Lenner, Douglas Branch, Alan Gao and Hillary Bui, respectively, with a fair market value of $2.1985 per share as compensation
for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements
or Director Agreements with the Company.

 On
June 30, 2023, the Company issued 1,752 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $1.7125 per share as compensation for the services as executives or directors of
the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
October 2, 2023, the Company issued 1,948 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $1.54 per share as compensation for the services as executives or directors of
the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 Stock
Option Grants. On January 6, 2022, the Board granted each of Mr. Lai and Ms. Yu an option to purchase 25,000 shares of the Company's
common stock. The option vests in four equal annual installments, with the first installment vesting on the first anniversary of the
grant. We did not grant any stock options to our directors or executive officers in fiscal year 2023.

 Other
Benefits. In fiscal years 2023 and 2022, Mr. Lai and Ms. Yu were reimbursed for healthcare expenses. The amounts paid to Mr.
Lai and Ms. Yu in 2023 and 2022 in respect of these benefits is reflected above in the "All Other Compensation" column of
the Summary Compensation Table.

Discussion and Analysis

 2021
Equity Incentive Plan

 Overview

 The
Board of Directors and stockholders holding a majority of the Company's voting capital approved and adopted the 2021 Plan on June
27, 2021. The 2021 Plan shall be administered by the Board or one or more committees appointed by the Board or another committee ("Administrator").
The Administrator, in its discretion, selects the individuals to whom awards may be granted, the time or times at which such awards are
granted, and the terms of such awards. The 2021 Plan authorizes the Company to grant stock options, stock appreciation rights, restricted
shares, restricted share unit, cash awards, other awards, and performance-based awards. Awards may be granted to the Company's
officers, employees, directors and consultants.

 The
purpose of the 2021 Plan is to promote the success of the Company and to increase stockholder value by providing an additional means
through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons. The Board may, at
any time, terminate or, from time to time, amend, modify or suspend the 2021 Plan, in whole or in part. To the extent then required by
applicable law or any applicable stock exchange or required under the Code to preserve the intended tax consequences of the 2021 Plan,
or deemed necessary or advisable by the Board, the 2021 Plan and any amendment to the 2021 Plan shall be subject to stockholder approval.
Unless earlier terminated by the Board, the 2021 Plan will terminate 10 years from the date of adoption.

 Authorized
Shares

 A
total of 4,995,000 shares of the Company's common stock were originally authorized for issuance pursuant to the 2021 Plan. Pursuant
to the terms of the 2021 Plan and subject to adjustment as provided in the 2021 Plan, the maximum aggregate number of shares that may
be issued under the 2021 Plan were cumulatively increased on January 1, 2022 and will be cumulatively increased on each subsequent January
1, by a number of shares equal to the smaller of (i) 3% of the number of shares of common stock issued and outstanding on the immediately
preceding December 31, or (ii) an amount determined by the Board. Accordingly, as of March 26, 2024, there were 7,045,435 shares
of common stock authorized for issuance pursuant to the 2021 Plan, and 7,045,435 shares available for issuance under the 2021 Plan.

 Additionally,
if any award issued pursuant to the 2021 Plan expires or becomes unexercisable without having been exercised in full, is surrendered
pursuant to an exchange program, as provided in the 2021 Plan, or, with respect to restricted stock, restricted stock units ("RSUs"),
performance units or performance shares, is forfeited to or repurchased by the Company due to the failure to vest, the unpurchased shares
(or for awards other than stock options or stock appreciation rights the forfeited or repurchased shares) which were subject thereto
will become available for future grant or sale under the 2021 Plan (unless the 2021 Plan has terminated). With respect to stock appreciation
rights, only shares actually issued pursuant to a stock appreciation right will cease to be available under the 2021 Plan; all remaining
shares under stock appreciation rights will remain available for future grant or sale under the 2021 Plan (unless the 2021 Plan has terminated).
Shares that have actually been issued under the 2021 Plan under any award will not be returned to the 2021 Plan and will not become available
for future distribution under the 2021 Plan; provided, however, that if shares issued pursuant to awards of restricted stock, restricted
stock units, performance shares or performance units are repurchased by the Company or are forfeited to the Company due to the failure
to vest, such shares will become available for future grant under the 2021 Plan. Shares used to pay the exercise price of an award or
to satisfy the tax withholdings related to an award will become available for future grant or sale under the 2021 Plan. To the extent
an award under the 2021 Plan is paid out in cash rather than shares, such cash payment will not result in reducing the number of shares
available for issuance under the 2021 Plan.

 Notwithstanding
the foregoing and, subject to adjustment as provided in the 2021 Plan, the maximum number of shares that may be issued upon the exercise
of incentive stock options will equal the aggregate share number stated above, plus, to the extent allowable under Section 422 of the
Code and regulations promulgated thereunder, any shares that become available for issuance under the 2021 Plan in accordance with the
foregoing.

 Plan
Administration

 The
Board or one or more committees appointed by the Board will administer the 2021 Plan. In addition, if the Company determines it is desirable
to qualify transactions under the 2021 Plan as exempt under Rule 16b-3 of the Exchange Act such transactions will be structured with
the intent that they satisfy the requirements for exemption under Rule 16b-3. Subject to the provisions of the 2021 Plan, the administrator
has the power to administer the 2021 Plan and make all determinations deemed necessary or advisable for administering the 2021 Plan,
including the power to determine the fair market value of the Company's common stock, select the service providers to whom awards
may be granted, determine the number of shares covered by each award, approve forms of award agreements for use under the 2021 Plan,
determine the terms and conditions of awards (including the exercise price, the time or times at which the awards may be exercised, any
vesting acceleration or waiver or forfeiture restrictions and any restriction or limitation regarding any award or the shares relating
thereto), construe and interpret the terms of the 2021 Plan and awards granted under it, prescribe, amend and rescind rules relating
to the 2021 Plan, including creating sub-plans and modify or amend each award, including the discretionary authority to extend the post-termination
exercisability period of awards (provided that no option or stock appreciation right will be extended past its original maximum term),
and to allow a participant to defer the receipt of payment of cash or the delivery of shares that would otherwise be due to such participant
under an award. The administrator also has the authority to allow participants the opportunity to transfer outstanding awards to a financial
institution or other person or entity selected by the administrator and to institute an exchange program by which outstanding awards
may be surrendered or cancelled in exchange for awards of the same type which may have a higher or lower exercise price or different
terms, awards of a different type or cash, or by which the exercise price of an outstanding award is increased or reduced. The administrator's
decisions, interpretations and other actions are final and binding on all participants.

 Eligibility

 Awards
under the 2021 Plan, other than incentive stock options, may be granted to employees (including officers) of the Company or a subsidiary,
members of the Company's Board, or consultants engaged to render bona fide services to the Company or a subsidiary. Incentive stock
options may be granted only to employees of the Company or a subsidiary.

 Stock
Options

 Stock
options may be granted under the 2021 Plan. The exercise price of options granted under the 2021 Plan generally must at least be equal
to the fair market value of the Company's common stock on the date of grant. The term of each option will be as stated in the applicable
award agreement; provided, however, that the term may be no more than 10 years from the date of grant. The administrator will determine
the methods of payment of the exercise price of an option, which may include cash, shares or other property acceptable to the administrator,
as well as other types of consideration permitted by applicable law. After the termination of service of an employee, director or consultant,
they may exercise their option for the period of time stated in their option agreement. In the absence of a specified time in an award
agreement, if termination is due to death or disability, the option will remain exercisable for 12 months. In all other cases, in the
absence of a specified time in an award agreement, the option will remain exercisable for three months following the termination of service.
An option may not be exercised later than the expiration of its term. Subject to the provisions of the 2021 Plan, the administrator determines
the other terms of options.

 Stock
Appreciation Rights

 Stock
appreciation rights may be granted under the 2021 Plan. Stock appreciation rights allow the recipient to receive the appreciation in
the fair market value of the Company's common stock between the exercise date and the date of grant. Stock appreciation rights
may not have a term exceeding 10 years. After the termination of service of an employee, director or consultant, they may exercise their
stock appreciation right for the period of time stated in their stock appreciation right agreement. In the absence of a specified time
in an award agreement, if termination is due to death or disability, the stock appreciation rights will remain exercisable for 12 months.
In all other cases, in the absence of a specified time in an award agreement, the stock appreciation rights will remain exercisable for
three months following the termination of service. However, in no event may a stock appreciation right be exercised later than the expiration
of its term. Subject to the provisions of the 2021 Plan, the administrator determines the other terms of stock appreciation rights, including
when such rights become exercisable and whether to pay any increased appreciation in cash or with shares of the Company's common
stock, or a combination thereof, except that the per share exercise price for the shares to be issued pursuant to the exercise of a stock
appreciation right will be no less than 100% of the fair market value per share on the date of grant.

 Restricted
Stock

 Restricted
stock may be granted under the 2021 Plan. Restricted stock awards are grants of shares of the Company's common stock that vest
in accordance with terms and conditions established by the administrator. The administrator will determine the number of shares of restricted
stock granted to any employee, director or consultant and, subject to the provisions of the 2021 Plan, will determine the terms and conditions
of such awards. The administrator may impose whatever conditions to vesting it determines to be appropriate (for example, the administrator
may set restrictions based on the achievement of specific performance goals or continued service to the Company); provided, however,
that the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Recipients
of restricted stock awards generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting,
unless the administrator provides otherwise. Shares of restricted stock that do not vest are subject to the Company's right of
repurchase or forfeiture.

 Restricted
Stock Units

 RSUs
may be granted under the 2021 Plan. RSUs are bookkeeping entries representing an amount equal to the fair market value of one share of
the Company's common stock. Subject to the provisions of the 2021 Plan, the administrator determines the terms and conditions of
RSUs, including the vesting criteria and the form and timing of payment. The administrator may set vesting criteria based upon the achievement
of Company-wide, divisional, business unit or individual goals (including continued employment or service), applicable federal or state
securities laws or any other basis determined by the administrator in its discretion. The administrator, in its sole discretion, may
pay earned RSUs in the form of cash, in shares of the Company's common stock or in some combination thereof. Notwithstanding the
foregoing, the administrator, in its sole discretion, may accelerate the time at which any vesting requirements will be deemed satisfied.

 Performance
Units and Performance Shares

 Performance
units and performance shares may be granted under the 2021 Plan. Performance units and performance shares are awards that will result
in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. The
administrator will establish performance objectives or other vesting criteria in its discretion, which, depending on the extent to which
they are met, will determine the number or the value of performance units and performance shares to be paid out to participants. The
administrator may set performance objectives based on the achievement of Company-wide, divisional, business unit or individual goals
(including continued employment or service), applicable federal or state securities laws or any other basis determined by the administrator
in its discretion. After the grant of a performance unit or performance share, the administrator, in its sole discretion, may reduce
or waive any performance criteria or other vesting provisions for such performance units or performance shares. Performance units shall
have an initial dollar value established by the administrator on or prior to the grant date. Performance shares shall have an initial
value equal to the fair market value of the Company's common stock on the grant date. The administrator, in its sole discretion,
may pay earned performance units or performance shares in the form of cash, in shares or in some combination thereof.

 Non-Employee
Directors

 The
2021 Plan provides that all non-employee directors will be eligible to receive all types of awards (except for incentive stock options)
under the 2021 Plan. The 2021 Plan includes a maximum limit of $750,000 of equity awards that may be granted to a non-employee director
in any fiscal year, increased to $1,500,000 in connection with his or her initial service. For purposes of this limitation, the value
of equity awards is based on the grant date fair value (determined in accordance with accounting principles generally accepted in the
United States). Any equity awards granted to a person for their services as an employee, or for their services as a consultant (other
than as a non-employee director), will not count for purposes of the limitation. The maximum limit does not reflect the intended size
of any potential compensation or equity awards to the Company's non-employee directors.

 Non-transferability
of Awards

 Unless
the administrator provides otherwise, the 2021 Plan generally does not allow for the transfer of awards and only the recipient of an
award may exercise an award during their lifetime. If the administrator makes an award transferable, such award will contain such additional
terms and conditions as the administrator deems appropriate.

 Certain
Adjustments

 In
the event of certain changes in the Company's capitalization, to prevent diminution or enlargement of the benefits or potential
benefits available under the 2021 Plan, the administrator will adjust the number and class of shares that may be delivered under the
2021 Plan or the number, and price of shares covered by each outstanding award and the numerical share limits set forth in the 2021 Plan.

 Dissolution
or Liquidation

 In
the event of the Company's proposed liquidation or dissolution, the administrator will notify participants as soon as practicable
and all awards will terminate immediately prior to the consummation of such proposed transaction.

 Merger
or Change in Control

 The
2021 Plan provides that in the event of the Company's merger with or into another corporation or entity or a "change in control"
(as defined in the 2021 Plan), each outstanding award will be treated as the administrator determines, including, without limitation,
that (i) awards will be assumed, or substantially equivalent awards will be substituted, by the acquiring or succeeding corporation (or
an affiliate thereof) with appropriate adjustments as to the number and kind of shares and prices; (ii) upon written notice to a participant,
that the participant's awards will terminate upon or immediately prior to the consummation of such merger or change in control;
(iii) outstanding awards will vest and become exercisable, realizable or payable, or restrictions applicable to an award will lapse,
in whole or in part, prior to or upon consummation of such merger or change in control and, to the extent the administrator determines,
terminate upon or immediately prior to the effectiveness of such merger or change in control; (iv) (A) the termination of an award in
exchange for an amount of cash or property, if any, equal to the amount that would have been attained upon the exercise of such award
or realization of the participant's rights as of the date of the occurrence of the transaction (and, for the avoidance of doubt,
if as of the date of the occurrence of the transaction the administrator determines in good faith that no amount would have been attained
upon the exercise of such award or realization of the participant's rights, then such award may be terminated by the Company without
payment) or (B) the replacement of such award with other rights or property selected by the administrator in its sole discretion; or
(v) any combination of the foregoing. The administrator will not be obligated to treat all awards, all awards a participant holds, or
all awards of the same type, similarly. In the event that awards (or portion thereof) are not assumed or substituted for in the event
of a merger or change in control, the participant will fully vest in and have the right to exercise all of their outstanding options
and stock appreciation rights, including shares as to which such awards would not otherwise be vested or exercisable, all restrictions
on restricted stock and RSUs will lapse and, with respect to awards with performance-based vesting, all performance goals or other vesting
criteria will be deemed achieved at 100% of target levels and all other terms and conditions met, in all cases, unless specifically provided
otherwise under the applicable award agreement or other written agreement between the participant and the Company or any of the Company's
subsidiaries or parents, as applicable. If an option or stock appreciation right is not assumed or substituted in the event of a merger
or change in control, the administrator will notify the participant in writing or electronically that the option or stock appreciation
right will be exercisable for a period of time determined by the administrator in its sole discretion and the vested option or stock
appreciation right will terminate upon the expiration of such period.

 For
awards granted to an outside director, the outside director will fully vest in and have the right to exercise all of their outstanding
options and stock appreciation rights, all restrictions on restricted stock and RSUs will lapse and, for awards with performance-based
vesting, unless specifically provided for in the award agreement, all performance goals or other vesting criteria will be deemed achieved
at 100% of target levels and all other terms and conditions met.

 Clawback

 Awards
will be subject to any Company clawback policy that the Company is required to adopt pursuant to the listing standards of any national
securities exchange or association on which the Company's securities are listed or as is otherwise required by the Dodd-Frank Wall
Street Reform and Consumer Protection Act or other applicable laws. The administrator also may specify in an award agreement that the
participant's rights, payments or benefits with respect to an award will be subject to reduction, cancellation, forfeiture or recoupment
upon the occurrence of certain specified events. The Board may require a participant to forfeit, return or reimburse the Company all
or a portion of the award or shares issued under the award, any amounts paid under the award and any payments or proceeds paid or provided
upon disposition of the shares issued under the award in order to comply with such clawback policy or applicable laws.

 Amendment
and Termination

 The
administrator has the authority to amend, suspend or terminate the 2021 Plan provided such action does not impair the existing rights
of any participant. The 2021 Plan automatically will terminate on June 27, 2031, unless it is terminated sooner.

 Executive
Compensation Philosophy

 Our
Board of Directors determines the compensation given to our executive officers in its sole determination. Our Board of Directors reserves
the right to pay our executives or any future executives a salary, and/or issue them shares of common stock issued in consideration for
services rendered and/or to award incentive bonuses which are linked to our performance, as well as to the individual executive officer's
performance. This package may also include long-term stock-based compensation to certain executives, which is intended to align the performance
of our executives with our long-term business strategies. Additionally, while our Board of Directors has not granted any performance
base stock options to date, the Board of Directors reserves the right to grant such options in the future, if the Board in its sole determination
believes such grants would be in the best interests of the Company.

 Incentive
Bonus

 The
Board of Directors may grant incentive bonuses to our executive officers and/or future executive officers in its sole discretion, if
the Board of Directors believes such bonuses are in the Company's best interest, after analyzing our current business objectives
and growth, if any, and the amount of revenue we are able to generate each month, which revenue is a direct result of the actions and
ability of such executives.

 Long-Term,
Stock Based Compensation

 In
order to attract, retain and motivate executive talent necessary to support the Company's long-term business strategy, we may award
our executives and any future executives with long-term, stock-based compensation in the future, at the sole discretion of our Board
of Directors.

 ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 The
following table sets forth information regarding the beneficial ownership of our common stock as of March 26, 2024 by:

 each
 person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

 each
 of our executive officers and directors that beneficially owns shares of our common stock; and

 all
 our executive officers and directors as a group.

 In
the table below, percentage ownership is based on 35,095,298 shares of our common stock issued and outstanding as of March 26,
2024. Unless otherwise noted below, the address for each beneficial owner listed on the table is c/o Hour Loop, Inc., 8201 164th Ave
NE #200, Redmond, WA 98052-7615. We have determined beneficial ownership in accordance with the rules of the SEC. We believe, based on
the information furnished to us, that the persons and entities named in the tables below have sole voting and investment power with respect
to all shares of common stock that they beneficially own, subject to applicable community property laws.

 The
business address of each of the beneficial owners listed below is c/o Hour Loop, Inc., 8201 164th Ave. NE #200, Redmond, WA 98052-7615.

 Name and Address of Beneficial Owner

 Number and
 Nature of
 Shares Beneficially
 Owned (1)

 Percentage of Outstanding Common Stock

 Sam Lai

 33,325,984
 (2)

 %

 Maggie Yu

 33,325,984
 (2)

 %

 Douglas Branch

 12,970

 *

 Michael Lenner

 12,970

 *

 Minghui (Alan) Gao

 11,929

 *

 Hillary (Hui-Chong) Bui

 6,445

 *

 All executive officers and directors as a group (6 persons)

 33,370,298
 (3)

 95.1
 %

 *

 less
 than 1%.

 (1)

 The
 percentages in the table have been calculated based on 35,095,298 shares of our common stock outstanding on March 26, 2024.
 To calculate a stockholder's percentage of beneficial ownership, we include in the numerator and denominator the common stock
 outstanding and all shares of our common stock issuable to that person in the event of the exercise of outstanding options and other
 derivative securities owned by that person which are exercisable within 60 days of March 26, 2024. Common stock options and
 derivative securities held by other stockholders are disregarded in this calculation. Therefore, the denominator used in calculating
 beneficial ownership among our stockholders may differ. Unless we have indicated otherwise, each person named in the table has sole
 voting power and sole investment power for the shares listed opposite such person's name.

 (2)

 Sam
 Lai and Maggie Yu are husband and wife, and together beneficially own 33,325,984 shares of the Company's common stock representing
 95% of the voting power of the Company's outstanding common stock. Each of Mr. Lai and Ms. Yu individually holds (i) 16,662,992
 shares of common stock, and (ii) the right to acquire 18,750 shares of common stock within 60 days of March 26, 2024 upon exercise
 of an option (75% of which is vested). Therefore, each of Mr. Lai and Ms. Yu beneficially holds 33,325,984 shares of the Company's
 common stock, as each of them is deemed to indirectly beneficially own the other's 16,662,992 shares of common stock, and the
 other's right to acquire 18,750 shares of common stock upon exercise of an option.

 (3)

 37,500 shares of common stock that may be acquired within 60 days of March 26, 2024 upon exercise of vested options.

 Securities
Authorized for Issuance under Equity Compensation Plans

 The
following table provides information as of December 31, 2023, regarding our compensation plans under which equity securities are authorized
for issuance:

 Plan category

 Number of
 securities to
 be issued upon
 exercise of
 outstanding options,
 warrants and rights

 Weighted-average
 exercise price of
 outstanding options,
 warrants and rights

 Number of securities
 remaining available
 for future issuance
 under equity
 compensation
 plans (excluding
 securities reflected
 in column (a))

 (a)

 (b)

 (c)

 Equity compensation plans approved by security holders

 -

 $
 -

 -

 Equity compensation plans not approved by security holders

 -

 -

 7,045,435

 Total

 -

 $
 -

 7,045,435

 On
June 27, 2021, our Board of Directors and stockholders holding a majority of our outstanding shares of common stock approved the 2021
Plan. Under the 2021 Plan, a total of 4,995,000 shares of common stock were authorized for issuance pursuant to the grant of stock options,
stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares or other cash- or stock-based
awards to officers, directors, employees and eligible consultants to the Company or its subsidiaries. Pursuant to the terms of the 2021
Plan and subject to adjustment as provided in the 2021 Plan, the maximum aggregate number of shares that may be issued under the 2021
Plan will be cumulatively increased on January 1, 2022 and on each subsequent January 1, by a number of shares equal to the smaller of
(i) 3% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (ii) an amount determined
by our Board of Directors. As of March 26, 2024, 7,045,435 shares of common stock are authorized for issuance under the 2021 Plan,
and 7,045,435 shares are available for issuance under the 2021 Plan.

 ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 Policies
and Procedures for Related Party Transactions

 Under
Item 404 of SEC Regulation S-K, a related person transaction is any actual or proposed transaction, arrangement or relationship or series
of similar transactions, arrangements or relationships, including those involving indebtedness not in the ordinary course of business,
to which we or our subsidiaries were or are a party, or in which we or our subsidiaries were or are a participant, in which the amount
involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed
fiscal years and in which any of our directors, nominees for director, executive officers, beneficial owners of more than 5% of any class
of our voting securities (a "significant stockholder"), or any member of the immediate family of any of the foregoing persons,
had or will have a direct or indirect material interest.

 We
recognize that transactions between us and any of our directors or executives or with a third party in which one of our officers, directors
or significant stockholders has an interest can present potential or actual conflicts of interest and create the appearance that our
decisions are based on considerations other than the best interests of our Company and stockholders.

 The
Audit Committee of the Board of Directors is charged with responsibility for reviewing, approving and overseeing any transaction between
the Company and any related person (as defined in Item 404 of Regulation S-K), including the propriety and ethical implications of any
such transactions, as reported or disclosed to the Audit Committee by the independent auditors, employees, officers, members of the Board
of Directors or otherwise, and to determine whether the terms of the transaction are not less favorable to us than could be obtained
from an unaffiliated party.

 From
time to time, we engage in transactions with related parties. The following is a summary of the related party transactions during the
fiscal years ended December 31, 2023 and 2022, and any proposed transactions, requiring disclosure pursuant to Item 404 of Regulation
S-K.

 Conversion
of S Corporation to C Corporation

 On
June 30, 2021, the Company completed a corporate reorganization to convert its status from a S corporation to a C corporation with an
effective date of July 27, 2021. Retained earnings in the amount of $4,170,418 were distributed by the Company to the S corporation stockholders
($2,085,209 to each of Mr. Lai and Ms. Yu) on July 27, 2021.

 Affiliated
Loans

2020 Loan

 On
December 31, 2020, Sam Lai, our Chief Executive Officer, and Maggie Yu, our Senior Vice President, made a loan ("December 2020
Loan") to us of $1,041,353 in a single payment ($520,676 attributable to each of Mr. Lai and Mrs. Yu). The loan is memorialized
in a Loan Agreement dated December 31, 2020. Pursuant to the terms of the Loan Agreement, the loan bore no interest and was payable on
demand.

 On
September 16, 2021, Sam Lai, our Chief Executive Officer, and Maggie Yu, our Senior Vice President, and the Company amended and restated
the Loan Agreement to modify the terms of the December 2020 Loan, whereby the interest rate became 2% per annum (applied retroactively)
rather than non-interest bearing and maturity date became December 31, 2021 rather than payable on demand.

 On
January 18, 2022 and January 27, 2023, the Company repaid the loan principal and accrued interest in full

 July
2021 Loan

 On
July 27, 2021, Sam Lai, our Chief Executive Officer, and Maggie Yu, our Senior Vice President, made a loan ("July 2021 Loan")
to us of the outstanding retained earnings of approximately $4,170,418 in a single payment ($2,085,209 attributable to each of Mr. Lai
and Mrs. Yu). Pursuant to the terms of the Loan Agreement, the loan bears interest of 2% per annum and the principal of the loan ($4,170,418)
and accrued interest becomes due and payable on December 31, 2022. On December 28, 2022, the Company, Mr. Lai and Ms. Yu agreed to extend
the term of the loan, with the new maturity date of December 31, 2024. As amended, the annual interest rate of the loan is 5.5%.

 As
of March 26, 2024, the outstanding principal balance was approximately $4,170,418 on the July 2021 Loan.

 Issuances

 On
January 4, 2023, the Company issued 1,001 restricted shares of Company common stock to each of Sam Lai, our Chief Executive Officer,
Interim Chief Financial Officer and Chairman of the Board, and Maggie Yu, our Senior Vice President and Board member, with a fair market
value of $2.9985 per share as compensation for the past services to the Company pursuant to the terms of their Executive Employment Agreements
with the Company.

 On
January 4, 2023, the Company issued 1,001 restricted shares of Company common stock to each of Douglas Branch, Minghui (Alan) Gao and
Michael Lenner, with a fair market value of $$2.9985 per share as compensation for the past services as directors to the Company pursuant
to the terms of their Director Agreements with the Company.

 On
April 3, 2023, the Company issued 1,365 restricted shares of Company common stock to each of Sam Lai, our Chief Executive Officer, Interim
Chief Financial Officer and Chairman of the Board, and Maggie Yu, our Senior Vice President and Board member, with a fair market value
of $2.1985 per share as compensation for the past services to the Company pursuant to the terms of their Executive Employment Agreements
with the Company.

 On
April 3, 2023, the Company issued 1,365 restricted shares of Company common stock to each of Douglas Branch, Minghui (Alan) Gao and Michael
Lenner, with a fair market value of $2.1985 per share as compensation for the past services as directors to the Company pursuant to the
terms of their Director Agreements with the Company. In addition, on April 3, 2023, the Company issued 606 restricted shares of Company
common stock to Hillary Bui, a member of the Company's Board, with a fair market value of $2.1985 per share as compensation for
her past services as a director to the Company pursuant to the terms of her Director Agreement with the Company.

 On
June 30, 2023, the Company issued 1,752 restricted shares of Company common stock to each of Sam Lai, our Chief Executive Officer, Interim
Chief Financial Officer and Chairman of the Board, and Maggie Yu, our Senior Vice President and Board member, with a fair market value
of $1.7125 per share as compensation for the past services to the Company pursuant to the terms of their Executive Employment Agreements
with the Company.

 On
June 30, 2023, the Company issued 1,752 restricted shares of Company common stock to each of Douglas Branch, Hillary Bui, Minghui (Alan)
Gao and Michael Lenner, with a fair market value of $1.7125 per share as compensation for the past services as directors to the Company
pursuant to the terms of their Director Agreements with the Company.

 On
October 2, 2023, the Company issued 1,948 restricted shares of Company common stock to each of Sam Lai, our Chief Executive Officer,
Interim Chief Financial Officer and Chairman of the Board, and Maggie Yu, our Senior Vice President and Board member, with a fair market
value of $1.54 per share as compensation for the past services to the Company pursuant to the terms of their Executive Employment Agreements
with the Company.

 On
October 2, 2023, the Company issued 1,948 restricted shares of Company common stock to each of Douglas Branch, Hillary Bui, Minghui (Alan)
Gao and Michael Lenner, with a fair market value of $1.54 per share as compensation for the past services as directors to the Company
pursuant to the terms of their Director Agreements with the Company.

Independence

 As
a Nasdaq-listed company, we are required to comply with Nasdaq's continued listing standards.

 Controlled
Company and Director Independence

 The
"controlled company" exception to the Nasdaq rules provides that a company of which more than 50% of the voting power is
held by an individual, group or another company, a "controlled company," need not comply with certain requirements of the
Nasdaq corporate governance rules. As stated above, Sam Lai, the Chairman of the Board, Chief Executive Officer and Interim Chief Financial
Officer of the Company, and Maggie Yu, Senior Vice President of the Company and a member of the Board, who are husband and wife, together
beneficially own 33,325,984 shares of the Company's common stock, representing approximately 95% of the voting power of the Company's
outstanding common stock. As a result, the Company is a "controlled company" under the Nasdaq corporate governance standards.
As a controlled company, we do not have to comply with certain corporate governance requirements under the Nasdaq rules, including the
following:

 A
 majority of the Company's Board of Directors to consist of "independent directors" as defined by the applicable
 Nasdaq rules and regulations;

 The
 compensation of the Company's executive officers to be determined, or recommended to the Board of Directors for determination,
 by independent directors constituting a majority of the independent directors of the Board in a vote in which only independent directors
 participate or by a Compensation Committee comprised solely of independent directors; and

 That
 director nominees to be selected, or recommended to the Board of Directors for selection, by independent directors constituting a
 majority of the independent directors of the Board in a vote in which only independent directors participate or by a nomination committee
 comprised solely of independent directors.

 The
Company intends to avail itself of each of these exemptions. More specifically, a majority of the Company's board of directors
will not consist of independent directors and the Company will not have a compensation committee or a nominating and corporate governance
committee. Therefore, for as long as the Company remains a "controlled company," the Company will not have the same protections
afforded to stockholders of companies that are subject to all of these corporate governance requirements. If at any time the Company
ceases to be a "controlled company" under the Nasdaq rules, the Company's Board of Directors will take all action necessary
to comply with the Nasdaq corporate governance rules, including establishing certain committees composed entirely of independent directors,
subject to a permitted "phase-in" period.

 Notwithstanding
the Company's status as a controlled company, the Company will remain subject to the Nasdaq corporate governance standard that
requires the Company to have an audit committee with at least three independent directors as well as composed entirely of independent
directors. As a result, the Company was required, at the time of listing on Nasdaq, to have at least one independent director on our
audit committee, at least two independent directors within 90 days of listing on Nasdaq, and at least three independent directors within
one year of listing on Nasdaq, where at least one of the independent directors qualifies as an audit committee financial expert under
SEC rules and as a financially sophisticated audit committee member under the Nasdaq rules.

 The
Company's Board of Directors has affirmatively determined that two of its six directors (Sam Lai and Maggie Yu) are non-independent
directors of the Company and four of its six directors (Douglas Branch, Michael Lenner, Minghui (Alan) Gao, and Hilary (Hui-Chong) Bui)
are independent directors of the Company. The Company's audit committee consists of the four independent directors: Messrs. Branch,
Lenner, Gao and Ms. Bui. Ms. Bui is the chair of the audit committee. and qualifies as an audit committee financial expert under SEC
rules and as a financially sophisticated audit committee member under the Nasdaq rules.

 ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 TPS
Thayer, LLC serves as our independent registered public accounting firm for the initial two quarters. Subsequently, commencing from the
third quarter onward, this role has been assumed by HTL International, LLC. The following is a summary of fees paid or to be paid to
TPS Thayer, LLC for the fiscal years ended December 31, 2023 and 2022.

 Year Ended December 31,

 2023

 2022

 Audit Fees

 $
 190,000

 $
 115,000

 Audit Related Fees

 $
 -

 $
 -

 Tax Fees

 $
 -

 $
 -

 All Other Fees

 $
 -

 $
 -

 Total

 $
 190,000

 $
 115,000

 The
following is a summary of fees paid or to be paid to HTL International, LLC for the fiscal years ended December 31, 2023 and 2022.

 Year Ended December 31,

 2023

 2022

 Audit Fees

 $
 150,000

 $
 -

 Audit Related Fees

 $
 -

 $
 -

 Tax Fees

 $
 -

 $
 -

 All Other Fees

 $
 -

 $
 -

 Total

 $
 150,000

 $
 -

 Audit
Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and
services that are normally provided by our independent registered public accounting firm in connection with regulatory filings. The above
amounts include interim procedures and audit fees, as well as attendance at Audit Committee meetings.

 Audit-Related
Fees. Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance
of the audit or review of our financial statements and are not reported under "Audit Fees." These services include attest
services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards.

 Tax
Fees. Tax fees consist of fees billed for tax planning services and tax advice. The board of directors must specifically approve
all other tax services.

 All
Other Fees. Other services are services provided by the independent registered public accounting firm that do not fall within the
established audit, audit-related, and tax services categories. The board of directors preapproves specified other services that do not
fall within any of the specified prohibited categories of services.

 Pre-Approval
Policy

 Since
formation of our audit committee, all of the foregoing services were pre-approved by our audit committee. Our audit committee will pre-approve
all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject
to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to
the completion of the audit).

 PART
IV

 ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 (a)

 The
 following documents are filed as part of this annual report:

 (1)

 Financial
 Statements

 Report of Independent Registered Public Accounting Firm

 Consolidated Balance Sheets

 Consolidated Statements of Operations and Comprehensive Loss

 Consolidated Statements of Stockholders' Equity

 Consolidated Statements of Cash Flows

 Notes to Consolidated Financial Statements

 (2)

 Financial
 Statements Schedules

 All
 financial statements schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the
 required information is presented in the financial statements and notes thereto beginning on page F-1 of this annual report.

 (3)

 Exhibits

 We
 hereby file as part of this annual report the exhibits listed in the Exhibit Index below. Exhibits which are incorporated herein
 by reference can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580,
 Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Section of the SEC, 100 F Street,
 N.E., Washington, D.C. 20549, at prescribed rates or on the SEC website at www.sec.gov.

 EXHIBIT

 Exhibit
 No.

 Exhibit

 3.1

 Certificate of Incorporation of Hour Loop, Inc. filed with the Washington Secretary of State on January 13, 2015 (incorporated by reference to Exhibit 3.1 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 3.2

 Certificate of Conversion of Hour Loop, Inc. filed with the Delaware Secretary of State on April 7, 2021 (incorporated by reference to Exhibit 3.2 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 3.3

 Certificate of Incorporation of Hour Loop, Inc. filed with the Delaware Secretary of State on April 7, 2021 (incorporated by reference to Exhibit 3.3 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 3.4

 Certificate of Amendment to Certificate of Incorporation of Hour Loop, Inc. filed with the Delaware Secretary of State on September 23, 2021 (incorporated by reference to Exhibit 3.4 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 3.5

 Certificate of Amendment to Certificate of Incorporation of Hour Loop, Inc. filed with the Delaware Secretary of State on November 30, 2021 (incorporated by reference to Exhibit 3.5 to Amendment No. 1 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on December 16, 2021).

 3.6

 Bylaws (incorporated by reference to Exhibit 3.5 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 3.7

 Amendment to Bylaws (incorporated by reference to Exhibit 3.7 to Amendment No. 1 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on January 3, 2022).

 4.1

 Description of Capital Stock

 10.1

 Employment Agreement, dated May 27, 2021, by and between Hour Loop, Inc. and Sam Lai (incorporated by reference to Exhibit 10.1 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 10.2

 Employment Agreement, dated May 27, 2021, by and between Hour Loop, Inc. and Maggie Yu (incorporated by reference to Exhibit 10.2 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 10.3

 Director Agreement, dated June 21, 2021, by and between Hour Loop, Inc. and Michael Lenner (incorporated by reference to Exhibit 10.4 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 10.4

 Director Agreement, dated June 21, 2021, by and between Hour Loop, Inc. and Douglas Branch (incorporated by reference to Exhibit 10.5 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 10.5

 Director Agreement, dated October 6, 2021, by and between Hour Loop, Inc. and Minghui (Alan) Gao (incorporated by reference to Exhibit 10.6 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 10.6

 Hour Loop, Inc. 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.7 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 10.7

 Amazon Services Business Solutions Agreement between Amazon.com, Inc. and Hour Loop, Inc. (incorporated by reference to Exhibit 10.8 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 10.8

 Changes to Amazon Services Business Solutions Agreement effective November 7, 2020 between Amazon.com, Inc. and Hour Loop, Inc. (incorporated by reference to Exhibit 10.9 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 10.9

 Loan Agreement, dated December 31, 2020, among the Company and Sam Lai and Maggie Yu (incorporated by reference to Exhibit 10.10 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 10.10

 Amended and Restated Loan Agreement, dated September 16, 2021, among the Company and Sam Lai and Maggie Yu (incorporated by reference to Exhibit 10.11 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 10.11

 Amended and Restated Loan Agreement, dated December 31, 2021, among the Company and Sam Lai and Maggie Yu (incorporated by reference to Exhibit 10.12 to Amendment No. 2 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on January 3, 2022).

 10.12

 Loan Agreement, dated October 15, 2021, among the Company and Sam Lai and Maggie Yu (incorporated by reference to Exhibit 10.12 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 10.13

 Addendum No. 1 to Executive Employment Agreement, dated as of January 20, 2022, by and between the registrant and Sam Lai (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on January 26, 2022).

 10.14

 Addendum No. 1 to Executive Employment Agreement, dated as of January 20, 2022, by and between the registrant and Sau Kuen Yu (incorporated by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K filed with the SEC on January 26, 2022).

 10.15

 Director Agreement, dated as of February 20, 2023, by and between the registrant and Hillary Bui (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on February 24, 2023).

 10.16

 Addendum No. 2 to Executive Employment Agreement, dated as of February 20, 2023, by and between the registrant and Sam Lai. (incorporated by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K filed with the SEC on February 24, 2023).

 10.17

 Addendum No. 2 to Executive Employment Agreement, dated as of February 20, 2023, by and between the registrant and Sau Kuen Yu (incorporated by reference to Exhibit 10.3 to the registrant's Current Report on Form 8-K filed with the SEC on February 24, 2023).

 14.1

 Code of Ethics (incorporated by reference to Exhibit 14.1 to the registrant's registrant statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 21.1

 List of Subsidiaries *

 24.1

 Power of Attorney (included on the signature page) *

 31.1

 Rule 13a-14(a) Certification of Principal Executive Officer *

 31.2

 Rule 13a-14(a) Certification of Principal Financial Officer *

 32.1

 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Principal Executive Officer and Principal Financial Officer **

 97.1

 Compensation Recovery Policy.

 101.INS

 101.SCH

 101.CAL

 101.DEF

 101.LAB

 101.PRE

 Cover

 *
Filed herewith

 **Furnished
herewith

Management contracts, compensation plans and arrangements.

 Item
16. Form 10-K Summary

 Not

 HOUR

to Financial Statements

 Report of Independent Registered Public Accounting Firm PCAOB ID No.: 7000

 Report of Independent Registered Public Accounting Firm PCAOB ID No.: 6706

 Consolidated Balance Sheets as of December 31, 2023 and 2022

 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022

 Consolidated Statements of Stockholders' Equity for years ended December 31, 2023 and 2022

 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

 Notes to Audited Consolidated Financial Statements

 F- 1

 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To
the Board of Directors and Shareholders of

Hour Loop, Inc.

 Opinion
on the Financial Statements

 We
have audited the accompanying consolidated balance sheet of Hour Loop, Inc. and its subsidiaries (the "Company") as of December
31, 2023, and the related consolidated statement of operations and comprehensive income (loss), stockholders' equity, and cash
flows for the year ended December 31, 2023, and the related notes (collectively referred to as the financial statements). In our opinion,
the financial statements present fairly, in all material respects, the consolidated financial positions of the Company as of December
31, 2023 and the consolidated results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting
principles generally accepted in the United States of America.

 Going
Concern

 The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company has negative cash flow from operating activities and net loss, that raises substantial doubt
about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis
for Opinion

 These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit,
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides
a reasonable basis for our opinion.

 /s/ HTL International, LLC

 We have served as the Company's auditor since 2023.

 Houston, Texas

 March 26, 2024

 F- 2

 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To
the Board of Directors and Stockholders of

 Hour
Loop, Inc

 Opinion
on the Financial Statements

 We
have audited the accompanying consolidated balance sheets of Hour
Loop, Inc (the Company) as of December 31, 2022, and 2021, and the related consolidated statements of operations and comprehensive income
(loss), stockholders' equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes
(collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects,
the consolidated financial position of the Company as of December 31, 2022 and 2021, and the consolidated results of its operations and
its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted
in the United States of America.

 Going
Concern

 The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company has negative cash flow from operating activities and net loss, that raises substantial doubt
about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis
for Opinion

 These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.

 /s/
 TPS Thayer, LLC

 We
have served as the Company's auditor since 2021

 Sugar
Land, TX

 March
31, 2023

 F- 3

 Item
1. Financial Statements.

 HOUR

 CONSOLIDATED
BALANCE SHEETS

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

 31,

 31,

 2023

 2022

 ASSETS

 Current
 assets

 Cash

 $
 2,484,153

 $

 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

 tax assets

 1,304,215

 549,320

 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

 payable

 $
 3,812,954

 $
 6,651,721

 Credit
 cards payable

 4,404,445

 5,231,532

 Short-term
 loan

 652,422

 652,316

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

 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

 -

 -

 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

 F- 4

 HOUR

 CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

 (In
US Dollars, except for shares 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

 13 0,429

 Total other expenses

 ( 157,031
)

 ( 24,000
)

 Loss before income taxes

 ( 3,160,454
)

 ( 1,939,786
)

 Income tax benefit

 730,760

 462,163

 ( 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

 F- 5

 HOUR

 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY

 (In
US Dollars, except for shares data)

 For
the years Ended December 31, 2023 and 2022

 Stock

 Stock

 Additional
 Paid-In

 Retained Earnings (Accumulated

 Accumulated
 Other
 Comprehensive

 Total
 Stockholders'

 Shares

 Amount

 Capital

 Deficit)

 (Loss)

 Equity

 BALANCE AT DECEMBER 31, 2021

 33,300,000

 $
 3,330

 $
 4,291

 $
 2,654,695

 $
 ( 7,871
)

 $
 2,654,445

 Issuance of shares

 1,725,000

 5,580,020

 -

 -

 5,580,192

 Stock-based compensation

 22,828

 91,009

 -

 -

 91,013

 Currency translation adjustments

 -

 -

 -

 -

 ( 15,171
)

 ( 15,171
)

 -

 -

 -

 ( 1,477,623
)

 -

 ( 1,477,623
)

 BALANCE AT DECEMBER 31, 2022

 35,047,828

 $
 3,506

 $
 5,675,320

 $
 1,177,072

 $
 ( 23,042
)

 $
 6,832,856

 Balance

 35,047,828

 $
 3,506

 $
 5,675,320

 $
 1,177,072

 $
 ( 23,042
)

 $
 6,832,856

 Stock-based compensation

 34,636

 52,330

 -

 -

 52,332

 Currency translation adjustments

 -

 -

 -

 -

 ( 2,597
)

 ( 2,597
)

 -

 -

 -

 ( 2,429,694
)

 -

 ( 2,429,694
)

 BALANCE AT DECEMBER 31, 2023

 35,082,464

 $
 3,508

 $
 5,727,650

 $
 ( 1,252,622
)

 $
 ( 25,639
)

 $
 4,452,897

 Balance

 35,082,464

 $
 3,508

 $
 5,727,650

 $
 ( 1,252,622
)

 $
 ( 25,639
)

 $
 4,452,897

 F- 6

 HOUR

 CONSOLIDATED
STATEMENTS OF CASH FLOWS

 (In
US Dollars)

 For
the years Ended December 31, 2023 and 2022

 2023

 2022

 Cash flows from operating activities

 $
 ( 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
)

 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

 10,592,572

 Cash at end of year

 $
 2,484,153

 $

 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

 F- 7

 HOUR

 NOTES

 NOTE
1 - Nature of Operations and Summary of Significant Accounting Policies

 Hour
Loop, Inc. ("Hour Loop" or the "Company") is a technology-enabled consumer products company that uses machine
learning and data analytics to design, develop, market and sell products. Hour Loop predominantly operates through online retail channels
such as Amazon, Walmart, and Hourloop.com. The Company, as an Internet marketplace seller, sells products in multiple categories, including
home/garden d cor, toys, kitchenware, apparel, and electronics. The Company has only one segment, which is online retail (e-commerce).

 The
Company was incorporated on January 13, 2015 under the laws of the state of Washington. On April 7, 2021, the Company was converted from
a Washington corporation to a Delaware corporation.

 In
2019, Hour Loop formed a wholly owned subsidiary, Flywheel Consulting Ltd. ("Flywheel") located in Taiwan, to provide business
operating consulting services exclusively to Hour Loop.

 Basis
of Presentation - The audited consolidated financial statements and accompanying notes of the Company have been prepared in accordance
with the accounting principles generally accepted in the United States of America ("US GAAP").

 Principles
of Consolidation - The audited consolidated financial statements include the accounts of Hour Loop and Flywheel. All material inter-company
accounts and transactions were eliminated in consolidation.

 Foreign
Currency and Currency Translation - The assets and liabilities of Flywheel, having a functional currency other than the U.S. dollar,
are translated into U.S. dollars at exchange rates in effect at period-end, with resulting translation gains or losses included within
other comprehensive income or loss. Revenues and expenses are translated into U.S. dollars at average monthly rates of exchange in effect
during each period. All of the Company's foreign operations use their local currency as their functional currency. Currency gains
or losses resulting from transactions executed in currencies other than the functional currency are included in General and administrative
in the consolidated statement of operations and other comprehensive income.

 The
relevant exchange rates are listed below:

 Schedule of Foreign Currency Exchange Rates

 2023

 2022

 Period NTD: USD exchange rate

 30.655

 30.660

 Period Average NTD: USD exchange rate

 31.221

 30.618

 F- 8

 HOUR

 NOTES

 Going
Concern Consideration

 For
the year ended December 31, 2023, the Company had negative cash flows of $ 2,063,375 from its operations and had net loss of $ 2,429,694.
These conditions raise substantial doubt about the Company's ability to continue as a going concern. Therefore, the Company may
be unable to realize its assets and discharge its liabilities in the normal course of business.

 Most
of the Company's borrowings as of December
31, 2023 were from the related parties, which will not be repayable within the next 12 months and are subject to
renewal. Management is confident that these borrowings can be renewed upon expiration.

 In
order to strengthen the Company's liquidity in the foreseeable future, the Company has taken the following measures:

 i.

 Taking
 various cost control measures to tighten the costs of operations; and

 ii.

 Implementing
 various strategies to enhance sales and profitability.

 Management
believes that there is sufficient working capital to sustain operations longer than twelve months, and the majority shareholders are
committed to provide additional funding when needed.

 Use
of Estimates - The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 Significant
estimates, include but not limited to, estimates associated with the collectability of accounts receivable, useful life of property and
equipment, impairment of long lived assets, valuation allowance for deferred tax assets, inventory valuation and inventory provision.

 Reclassification -
Certain amounts in the consolidated financial statements for the prior financials have been reclassified to conform to the current
interim review presentation. These reclassifications had no impact on consolidated net earnings, consolidated financial position, or
consolidated cash flows. Proposed changes involve presenting accrued interest as a current liability, foreign currency gain or loss
as a General and administrative and segregating account payable into separate categories: accounts payable and credit cards payable.

 Cash
 - The Company considers all highly liquid financial instruments purchased with original maturities of three months or less to be
cash. The carrying amount of cash approximates fair value. Our cash is held in the bank and covered by the Federal Deposit Insurance
Corporation ("FDIC"), subject to applicable limits. Deposits are insured up to $ 250,000 per depositor, per FDIC-insured bank,
per ownership category.

Receivable and Allowance for Doubtful Accounts - Accounts receivable are stated at historical cost less allowance for
doubtful accounts. On a periodic basis, management evaluates its accounts receivable and determines whether to provide an allowance
for credit losses in accordance with ASC Topic 326, credit losses based on a past history of write-offs, collections, current credit
conditions, current economic conditions, reasonable and supportable forecasts of future economic conditions. The evaluation is
performed on a collective basis where similar characteristics exist, primarily based on similar services or products offerings. We adopted the standard effective January 1, 2023. The impact of the
adoption was not considered material to the financial statements and primarily resulted in new/enhanced disclosures only. A
receivable is considered past due if the Company has not received payments based on agreed-upon terms. The Company generally does
not require any security or collateral to support its receivables. The collection is primarily through Amazon and the collection
period is usually less than 7 days. The Company performs on-going evaluations of its customers and maintains an allowance for credit
losses as the Company deems necessary or appropriate. As of December 31, 2023 and 2022, the Company did not deem it necessary to
have an allowance for bad debt or doubtful accounts.

 F- 9

 HOUR

 NOTES

and Cost of Goods Sold - The Company's inventory consists mainly of finished goods. Inventories are stated at the lower of
cost or net realizable value. Cost is principally determined on a first-in-first-out basis. The Company's costs include the amounts
it pays manufacturers for product, tariffs and duties associated with transporting product across national borders, and freight costs
associated with transporting the product from its manufacturers to its warehouses, as applicable. The merchandise with terms of FOB shipping
point from vendors was recorded as the inventory-in-transit when inventory left the shipping dock of the vendors but not yet reached
the receiving dock of the Company. Management continually evaluates its estimates and judgments including those related to merchandise
inventory.

 The
"Cost of revenues" line item in the audited consolidated statements of operations is principally inventory sold to customers
during the reporting period.

 Policy
for inventory allowance: The Company writes down the cost of obsolete and slow-moving inventories to the estimated net realizable value,
based on inventory obsolescence trends, historical experience, forecasted consumer demand and application of the specific identification
method. As of December 31, 2023 and 2022, $ 675,886 and $ 842,263 was written down from the cost of inventories to their net realizable
values, respectively. Full inventory allowance is recorded for the inventory SKU not sold for more than one year.

 Property
and Equipment - Property and equipment are recorded at cost and depreciated or amortized over the estimated useful life of the asset
using the straight-line method. The Company elected to expense any individual property and equipment items under $ 2,500.

 The
majority of the Company's property and equipment is computers, and the estimated useful life is 3 years.

 Impairment
of Long lived assets - In accordance with ASC 360-10-35-17, if the carrying amount of an asset or asset group (in use or under development)
is evaluated and found not to be fully recoverable (the carrying amount exceeds the estimated gross, undiscounted cash flows from use
and disposition), then an impairment loss must be recognized. The impairment loss is measured as the excess of the carrying amount over
the asset's (or asset group's) fair value. The Company did not record any impairment charges for the years ended December
31, 2023 and 2022.

 Leases
- Leases are classified at lease commencement date as either a finance lease or an operating lease. A lease is a finance lease if
it meets any of the following criteria: (a) the lease transfers ownership of the underlying asset to the lessee by the end of the lease
term, (b) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (c)
the lease term is for the major part of the remaining economic life of the underlying asset, (d) the present value of the sum of the
lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds
substantially all of the fair value of the underlying asset or (e) the underlying asset is of such a specialized nature that it is expected
to have no alternative use to the lessor at the end of the lease term. When none of the foregoing criteria is met, the lease shall be
classified as an operating lease.

 The
Company typically utilizes operating leases for its office space requirements. This means that the Company leases office space, categorizing
the lease arrangement as an operating lease. Under this arrangement, The Company does not hold ownership of the leased assets but instead
pays rent for the right to use them.

 For
a lessee, a lease is recognized as a Operating lease right-of-use asset with a corresponding liability at lease commencement date. The
lease liability is calculated at the present value of the lease payments not yet paid by using the lease term and discount rate determined
at lease commencement. The Operating lease right-of-use asset is calculated as the lease liability, increased by any initial direct costs,
and prepaid lease payments, reduced by any lease incentives received before lease commencement. The Operating lease right-of-use asset
itself is amortized on a straight-line basis unless another systematic method better reflects how the underlying asset will be used by
and benefits the lessee over the lease term.

 F- 10

 HOUR

 NOTES

 Fair
Value Measurement - Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability
(an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
at the measurement date. The carrying amounts reported in the consolidated balance sheets for cash, accounts
receivable, accounts payable, due to related parties and short-term debt at fair value or cost, which approximates fair value because
of the short period of time between the origination of such instruments and their expected realization and their current market rates
of interest.

 Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes
the inputs to valuation methodologies used to measure fair value:

 i.

 Level
 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.

 ii.

 Level
 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets
 and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active,
 or other inputs that are observable or can be corroborated by observable market data.

 iii.

 Level
 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions
 made by other market participants. These valuations require significant judgment.

 Revenue
Recognition - The Company accounts for revenue in accordance with FASB Accounting Standard Codification ("ASC") Topic
606, Revenue from Contracts with Customers ("ASC Topic 606"). The Company adopted ASC Topic 606 as of January 1, 2019. The
standard did not affect the Company's consolidated financial position, or cash flows. There were no changes to the timing of revenue
recognition as a result of the adoption.

 The
Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which provided a five-step model
for recognizing revenue from contracts with customers as follows:

 Identify
 the contract with a customer.

 Identify
 the performance obligations in the contract.

 Determine
 the transaction price.

 Allocate
 the transaction price to the performance obligations in the contract.

 Recognize
 revenue when or as performance obligations are satisfied.

 The
Company evaluated principal versus agent considerations to determine whether it is appropriate to record platform fees paid to Amazon
as an expense or as a reduction of revenue. Platform fees are recorded as sales and distribution expenses and are not recorded as a reduction
of revenue because the Company as principal owns and controls all the goods before they are transferred to the customer. The Company
can, at any time, direct Amazon, similarly, other third-party logistics providers ("Logistics Providers"), to return the
Company's inventories to any location specified by the Company. It is the Company's responsibility to make any returns made
by customers directly to Logistics Providers and the Company retains the back-end inventory risk. Further, the Company is subject to
credit risk (i.e., credit card chargebacks), establishes prices of its products, can determine who fulfills the goods to the customer
(Amazon or the Company) and can limit quantities or stop selling the goods at any time. Based on these considerations, the Company is
the principal in this arrangement.

 F- 11

 HOUR

 NOTES

 The
Company derives its revenue from the sale of consumer products. The Company sells its products directly to consumers through online retail
channels. The Company considers customer order confirmations to be a contract with the customer. For each contract, the promise to transfer
products is identified as the sole performance obligation. Transaction prices are evaluated for potential refunds or adjustments, determining
the net consideration expected. Revenues for the years ended December 31, 2023 and 2022 were recognized at a point in time. Customer
confirmations are executed at the time an order is placed through third-party online channels. For all of the Company's sales and
distribution channels, revenue is recognized when control of the product is transferred to the customer (i.e., when the Company's
performance obligation is satisfied), which typically occurs at shipment date. As a result, the Company has a present and unconditional
right to payment and record the amount due from the customer in accounts receivable.

 The
customer can return the products within 30 days after the products are delivered and estimated sales returns are calculated based on
the expected returns. The rates of sales returns were 6.45 % and 5.78 % of gross sales for the years ended December 31, 2023 and 2022,
respectively.

 From
time to time, the Company offers price discounts on certain selected items to stimulate the sales of those items. Revenue is measured
as the amount of consideration for which the Company expects to be entitled in exchange for transferring goods. Consistent with this
policy, the Company reduces the amount of these discounts from the gross revenue to calculate the net revenue recorded on the statement
of operations.

 A
performance obligation, defined as the promise to transfer a distinct good, is the unit of account in ASC Topic 606. The Company treats
shipping and handling as fulfillment activities, not separate performance obligations. Costs for shipping and handling were $ 31,187,009
and $ 21,145,605 for the years ended December 31, 2023 and 2022, respectively, recorded as selling and marketing expenses.

 Segment
Information – The Company has only one segment, which is online retail (e-commerce).

 The
Company uses the "management approach" in determining reportable operating segments. The management approach considers the
internal organization and reporting used by the Company's chief operating decision maker for making operating decisions and assessing
performance as the source for determining the Company's reportable segments. The Company's chief operating decision maker
has been identified as the chief executive officer of the Company who reviews financial information of separate operating segments based
on U.S. GAAP. The chief operating decision maker now reviews results analyzed by customers. This analysis is only presented at the revenue
level with no allocation of direct or indirect costs. Consequently, the Company has determined that it has only one operating segment.

 Income
Taxes - Income tax expense includes U.S. (federal and state) and foreign income taxes.

 The
Company also complied with state tax codes and regulations, including with respect to California franchise taxes. Management has evaluated
its tax positions and has concluded that the Company had taken no uncertain tax positions that could require adjustment or disclosure
in the financial statements to comply with provisions set forth in ASC section 740, Income Taxes.

tax assets represent amounts available to reduce income taxes payable in future periods. Deferred tax assets are evaluated for future
realization and reduced by a valuation allowance to the extent we believe they will not be realized. We consider many factors when assessing
the likelihood of future realization of our deferred tax assets, including recent cumulative loss experience and expectations of future
earnings, capital gains and investment in such jurisdiction, the carry-forward periods available to us for tax reporting purposes, and
other relevant factors.

 Presentation
of Sales Taxes - Governmental authorities impose sales tax on all of the Company's sales to nonexempt customers. The Company
collects sales tax from customers and remits the entire amount to the governmental authorities. The Company's accounting policy
is to exclude the tax collected and remitted from revenues and cost of revenues.

 F- 12

 HOUR

 NOTES

 The
Company assesses sales tax payable including any related interest and penalties and accrues these estimates on its financial statements.
Pursuant to the Wayfair decision, each state enforces sales tax collection at different dates. The Company collects and remits sales
tax in accordance with state regulations. The Company estimates that as of December 31, 2023 and 2022, it owed $ 288,466 and $ 288,466,
respectively, in sales taxes along with penalties and interest resulting from late filings.

 Concentration
of Credit Risks - Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of
cash and accounts receivable. The Company maintains cash with various domestic and foreign financial institutions of high credit quality.
The Company performs periodic evaluations of the relative credit standing of all of the aforementioned institutions.

 The
Company maintains reserves for potential credit losses on customer accounts when deemed necessary. Significant customers are those which
represent more than 10% of the Company's total net revenue or gross accounts receivable balance at the balance sheet date. During
the years ended December 31, 2023 and 2022, the Company had no customer that accounted for 10% or more of total net revenues. In addition,
as of December 31, 2023 and 2022, the Company had no customer that accounted for 10% or more of gross accounts receivable. As of December
31, 2023 and 2022, all of the Company's accounts receivable were held by the Company's sales platform agent, Amazon, which
collects money on the Company's behalf from its customers. Therefore, the Company's accounts receivable are comprised of
receivables due from Amazon and the reimbursement from Amazon to the Company usually takes less than 7 days.

 The
Company's business is reliant on one key vendor which currently provides the Company with its sales platform, logistics and fulfillment
operations, including certain warehousing for the Company's net goods, and invoicing and collection of its revenue from the Company's
end customers. During the years ended December 31, 2023 and 2022, approximately 96 % and 100 % of the Company's revenue was through
or with the Amazon sales platform.

 Foreign
Currency Exchange Risk - The Company is exposed to foreign currency exchange risk through its foreign subsidiary in Taiwan.
The Company does not hedge foreign currency translation risk in the net assets and income reported from these sources.

 Advertising
and Promotion Expenses – Our policy is to recognize advertising costs as they are incurred. Advertising and promotion expenses
were $ 4,605,629 and $ 3,539,946 for the years ended December 31, 2023 and 2022, respectively.

 Commitments
and Contingencies - Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other
sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred
in connection with loss contingencies are expensed as incurred.

 Related
Parties - The Company accounts for related party transactions in accordance with FASB ASC Topic 850 (Related Party Disclosures).
A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls,
is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management,
members of the immediate families of principal owners of the Company and its management and other parties with which the Company may
deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of
the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence
the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties
and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing
its own separate interests is also a related party.

 Earnings
per Share - The Company computes basic earnings per common share using the weighted-average number of shares of common stock outstanding
during the period. For the period in which the Company reports net losses, diluted net loss per share attributable to stockholders is
the same as basic net loss per share attributable to stockholders, because potentially dilutive common shares are not assumed to have
been issued if their effect is anti-dilutive. There were no dilutive securities or other items that would affect earnings per share for
the years ended December 31, 2023 and 2022. Therefore, the diluted earnings per share is the same as the basic earnings per share.

 F- 13

 HOUR

 NOTES

 Share
Issued for Services – Stock-based compensation cost for all equity-classified stock awards expected to vest is measured at
fair value on the date of grant and recognized over the service period.

 NOTE
2 - Recent Accounting Pronouncements Not Yet Adopted

 In
December 2023, the FASB issued ASU 2023-07 on Improvements to Reportable Segment Disclosures for entities that are managed as a single
reportable segment that governs when an entity is expected to conclude that consolidated net income is the measure of segment profit
or loss consistent with U.S. GAAP. The Updates are effective for annual periods beginning after January 1, 2024. The Company will adopt
and apply the guidance in fiscal year 2024. There is no material impact expected to our results of operations, cash flows and financial
condition at the time of adoption, however the Company is still assessing the disclosure impact. In December 2023, the FASB issued ASU
2023-09 on Improvements to Income Tax Disclosures that require greater disaggregation of income tax disclosures to the income rate tax
rate reconciliation and income taxes paid. The Updates are effective for annual periods beginning after December 15, 2024. The Company
will adopt and apply the guidance in fiscal year 2025. There is no material impact expected to our results of operations, cash flows
and financial condition at the time of adoption, however the Company is still assessing the disclosure impact.

 NOTE
3 - Cash

 Cash
was comprised of the following as of December 31, 2023 and 2022, respectively:

 Schedule of Cash and Cash Equivalents

 2023

 2022

 Checking account

 $
 338,733

 $
 939,323

 Savings account and cash on hand

 2,145,420

 3,623,266

 Total

 $
 2,484,153

 $

 NOTE
4 - Inventory

was comprised of the following as of December 31, 2023 and 2022, respectively:

 Schedule of Inventory

 2023

 2022

 $
 13,377,530

 $
 14,911,735

 Inventory-in-transit

 1,574,911

 4,732,057

 Allowance

 ( 675,886
)

 ( 842,263
)

 Total

 $
 14,276,555

 $
 18,801,529

 As
of December 31, 2023 and 2022, $ 675,886 and $ 842,263, was written down from the cost of inventories to their net realizable values, respectively.
Full inventory allowance is recorded for the inventory SKU not sold for more than one year.

 The
allowance of inventory is recorded under cost of goods sold in the income statement.

 F- 14

 HOUR

 NOTES

 NOTE
5 - Prepaid Expenses and Other Current Assets

 Prepaid
expenses and other current assets was comprised of the following as of December 31, 2023 and 2022, respectively:

 Schedule of Prepaid Expenses and Other Current Assets

 2023

 2022

 Advance to suppliers

 $
 49,298

 $
 182,105

 Prepaid expenses-other

 61,739

 55,731

 Lease refundable deposit

 81,522

 80,235

 Tax receivable

 305,253

 413,895

 Other current assets

 7,161

 9,277

 Total

 $
 504,973

 $
 741,243

 As
of December 31, 2023 and 2022, there was a tax receivable of $ 305,253 and $ 413,895, respectively, due to prepaid income taxes.

 NOTE
6 - Property and Equipment

 Property
and equipment were comprised of the following as of December 31, 2023 and 2022, respectively:

of Property and Equipment

 2023

 2022

 Property and equipment

 $
 368,729

 $
 353,574

 Accumulated depreciation and amortization

 ( 219,941
)

 ( 79,379
)

 Total property and equipment, net

 $
 148,788

 $
 274,195

 For
the years ended December 31, 2023 and 2022, the Company purchased $ 14,823 and $ 339,518, for fixtures and equipment, respectively.

 For
the years ended December 31, 2023 and 2022, the Company had $ 138,001 and $ 79,084, for depreciation, respectively.

 For
the years ended December 31, 2023 and 2022, the Company had no disposal or pledge, respectively.

 NOTE
7 - Short-Term Loan

 Line
of Credit

 On
June 18, 2019, the Company signed a line of credit agreement in the amount of $ 785,000 with Bank of America. The line of credit matures
on June 18, 2024 and bears interest at a rate of 8.11 % per annum.

 F- 15

 HOUR

 NOTES

 As
of December 31, 2023 and 2022, the outstanding balance under the Bank of America line of credit was $- 0 - and $- 0 -, respectively. Also,
the Company had accrued interest expense of $ 27,996 as of December 31, 2023 that is due on June 18, 2024. Accrued interest expense has
been recorded in the accrued expenses on the balance sheet.

 On
August 18, 2022, Flywheel signed a line of credit agreement in the amount of $ 6,940,063 with Taishin International Bank. The line of
credit matures on August 30, 2023 and bears interest at a rate of 3.2 % per annum.

 On
August 11, 2023, the term of the loan was extended for an additional year, revising the maturity date to August 30, 2024. The annual
interest rate remains at 3.2 %.

 As
of December 31, 2023 and 2022, the outstanding balance under the Taishin International Bank line of credit was $ 652,422 and $ 652,316,
respectively. On December 31, 2023, the Company accrued interest expense of $ 1,715.

 NOTE
8 - Accounts Payable and Credit Cards Payable

of Accounts Payable and Credit Cards Payable

 2023

 2022

 Accounts payable

 $
 3,812,954

 $
 6,651,721

 Credit cards payable

 4,404,445

 5,231,532

 The
company's accounts payable represent amounts owed to suppliers or other creditors for goods or services purchased but not yet paid
for. As of December 31, 2023 and 2022, there were accounts payable of $ 3,812,954 and $ 6,651,721, respectively.

 The
Company's credit cards payable consisted of outstanding balances on credit cards held by the Company. As of December 31, 2023 and
2022, there was a credit cards payable of $ 4,404,445 and $ 5,231,532, respectively.

 NOTE
9 - Accrued Expenses and Other Current Liabilities

 Accrued
expenses and other current liabilities were comprised of the following as of December 31, 2023 and 2022, respectively:

of Accrued Expenses and Other Current Liabilities

 2023

 2022

 Sales tax payable

 $
 288,466

 $
 288,466

 Refund liability

 708,629

 285,009

 Accrued payroll

 297,059

 295,673

 Accrued bonus

 399,067

 468,209

 Accrued expenses

 215,485

 182,294

 Accrued interest

 29,712

 159,042

 Other payables

 34,094

 64,279

 Total

 $
 1,972,512

 $
 1,742,972

 The
Company made an assessment of sales tax payable, including any related interest and penalties, and accrued those estimates on the financial
statements. Of the sales tax payable, $ 78,947 and $ 78,947 are related to interest and penalties as of December 31, 2023 and 2022, respectively.

 F- 16

 HOUR

 NOTES

 As
of December 31, 2023, and 2022, the Company has accounted for Refund Liability, $ 708,629 and $ 285,009, respectively, in a proactive approach
towards potential future refunds.

 A
bonus expense is accrued on an annual basis, when the Company's financial or operational performance meets the required performance
level. The Company has $ 399,067 and $ 468,209 accrued for bonuses as of December 31, 2023 and 2022, respectively.

 NOTE
10 - Leases

 The
Company had three operating leases (Flywheel's office leases in Taiwan) as of December 31, 2023. The leased assets in Flywheel
are presented as Operating lease right-of-use assets.

 The
table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years
to the operating lease liabilities recorded in the statements of financial position as of December 31, 2023:

 Schedule of Operating Leases Cost

 Flywheel

 Flywheel

 Flywheel

 June 2022

 August 2022

 February 2023

 Initial lease term

 to May 2024

 to July 2024

 to March 2025

 Initial recognition of Operating lease right-of-use assets

 $
 105,632

 $
 147,547

 $
 28,652

 Weighted-average remaining lease term at

 December 31, 2023

 0.42

 0.58

 1.17

 Weighted-average discount rate at

 December 31, 2023

 8.11
 %

 2.50
 %

 3.20
 %

lease liabilities-current as of December 31, 2023 and 2022 were $ 82,269 and $ 385,216, respectively. Operating lease liabilities-non-current
as of December 31, 2023 and 2022 were $ 2,363 and $ 64,945, respectively. The Operating lease right-of-use assets balance as of December
31, 2023 and 2022, were $ 83,946 and $ 450,721, respectively.

 For
the years ended December 31, 2023 and 2022, the amortization of the Operating lease right-of-use asset was $ 387,446 and $ 310,161, respectively.
These amounts were recorded in general and administrative expenses. Additionally, for the years ended December 31, 2023 and 2022, the
Company made lease payments of $ 386,224 and $ 283,244, respectively, which were included in the operating cash flows statement.

 The
future minimum lease payment schedule for all operating leases as of December 31, 2023, is as disclosed below.

 Schedule of Operating Lease Liabilities

 For the Year Ending December 31,

 Amount

 2024

 $
 83,358

 2025

 2,449

 2026

 -

 2027 and thereafter

 -

 Total minimum lease payments

 85,807

 Less: effect of discounting

 ( 1,175
)

 Present value of the future minimum lease payment

 84,632

 Less: operating lease liabilities-current

 ( 82,269
)

 Total operating lease liabilities-non-current

 $
 2,363

 F- 17

 HOUR

 NOTES

 NOTE
11 - Related Party Balances and Transactions

 From
time to time, the Company receives loans and advances from its stockholders to fund its operations. Stockholder loans and advances are
non-interest bearing and payable on demand. As of December 31, 2023 and 2022, the Company had $ 4,170,418 and $ 4,170,418 due to related
parties (Sam Lai, the Company's Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer and a significant
stockholder of the Company; and Maggie Yu, the Company's Senior Vice President, a member of the Company's Board of Directors
and a significant stockholder of the Company), respectively. The loan is memorialized in a Loan Agreement dated October 15, 2021. The
annual interest rate is 2 % and the repayment date is December 31, 2022.

 On
December 28, 2022, the Company, Mr. Lai and Ms. Yu agreed to extend the term of the loan for another two years, with a revised maturity
date of December 31, 2024. The annual interest rate is 5.5 %. On December 31, 2023, the Company paid accrued interest in full.

 On
December 30, 2020, the Company and its then-sole stockholders (Sam Lai and Maggie Yu) entered into a loan agreement in the original principal
amount of $ 1,041,353. The loan was later modified on September 16, 2021, and converted into an interest-bearing ( 2 %) loan with a repayment
date of December 31, 2021. On January 18, 2022 and January 27, 2023, the Company repaid the loan principal and accrued interest in full.

 For
the years ended on December 31, 2023 and 2022, the Company made repayments to related parties of $- 0 - and $ 1,024,188, respectively.

 NOTE
12 – Disaggregation of Revenue

 Revenue
was comprised of the following for the years ended December 31, 2023 and 2022, respectively:

of Revenue

 2023

 2022

 Revenue-America

 $
 138,079,203

 $
 101,476,365

 Revenue-International

 4,379,801

 1,262,045

 Revenue-Other

 930,191

 529,603

 Sales returns

 ( 9,248,586
)

 ( 5,973,689
)

 Discounts

 ( 2,016,407
)

 ( 1,364,233
)

 Total

 $
 132,124,202

 $
 95,930,091

 F- 18

 HOUR

 NOTES

 NOTE
13 - Income Tax

 The
components of income taxes benefit are as follows:

of Effective Income Tax Rate Reconciliation

 2023

 2022

 Federal rate

 21.00
 %

 21.00
 %

 Blended state tax rate

 4.11
 %

 3.83
 %

 Effective tax rate

 25.11
 %

 24.83
 %

 Schedule of Effective Tax Rate Reconciliation

 Effective tax Rate Reconciliation, for the Year Ending December 31, 2023

 %

 $

 Pretax Book Income

 (3,160,454
)

 21.00
 %

 ( 663,695
)

 Permanent Differences

 78,048

 - 0.52
 %

 16,390

 PY Federal Perm True-up

 73,914

 - 0.49
 %

 15,522

 State income tax

 24,136

 3.12
 %

 ( 98,586
)

 Other Deferred adjustment

 -

 0.01
 %

 ( 391
)

 Total Tax benefits

 23.12
 %

 ( 730,760
)

 Effective tax Rate Reconciliation, for the Year Ending December 31, 2022

 %

 $

 Pretax Book Income

 (1,939,786
)

 21.00
 %

 ( 407,354
)

 Permanent Differences

 27,363

 - 0.30
 %

 5,746

 PY Federal Perm True-up

 95,840

 - 1.04
 %

 20,126

 State income tax

 10,741

 3.55
 %

 ( 68,890
)

 Other Deferred adjustment

 -

 0.61
 %

 ( 11,791
)

 Total Tax benefits

 23.83
 %

 ( 462,163
)

 Schedule of Tax Expense Summary

 Current

 Total

 Tax Expense Summary, for the Year Ended December 31, 2023

 Expense

 Benefit

 Benefit

 Federal

 $
 ( 637,242
)

 $
 -

 $
 ( 637,242
)

 State

 ( 117,654
)

 24,136

 ( 93,518
)

 Total tax expense (benefit)

 $
 ( 754,896
)

 $
 24,136

 $
 ( 730,760
)

 Current

 Total

 Tax Expense Summary, for the Year Ended December 31, 2022

 Expense

 Benefit

 Benefit

 Federal

 30,928

 ( 426,457
)

 ( 395,529
)

 State

 10,741

 ( 77,375
)

 ( 66,634
)

 Total Tax Expense (Benefit)

 41,669

 ( 503,832
)

 ( 462,163
)

 F- 19

 HOUR

 NOTES

 The
tax effects of temporary differences that give rise to significant portions of the deferred tax assets at December 31, 2023 and 2022
were as follows:

of Deferred Tax Assets and Liabilities

 Deferred Tax

 Deferred Tax

 Assets

 Assets

 Deferred Tax Assets summary

 2023

 2022

 Federal

 $
 1,101,836

 $
 464,594

 State

 202,379

 84,726

 Total

 $
 1,304,215

 $
 549,320

 Deferred Tax

 Deferred Tax

 Assets

 Assets

 Deferred Tax Assets summary

 2023

 2022

 Operating lease right of use lease assets

 $

 $
 ( 139
)

 Inventories allowance

 169,725

 209,131

 Net loss carry forward

 1,134,318

 340,328

 Total

 $
 1,304,215

 $
 549,320

 The
Company files income tax return in the U.S. federal jurisdiction and various state jurisdictions. Based on management's evaluation,
there is no provision necessary for material uncertain tax position for the Company at December 31, 2023 and 2022.

 For
the years ended December 31, 2023 and 2022, the Company reported net operating losses of $ 2,429,694 and $ 1,477,623, respectively. The
net operating loss carryforward is not subject to any expiration period under federal regulations, while at the state level, the expiration
period usually ranges up to 20 years, or there may be no expiration period at all.

 The
Company expects to generate sufficient taxable income in future periods against which the deferred tax assets can be utilized. Accordingly,
a valuation allowance may not be needed.

 NOTE
14 - Stockholders' Equity

 Preferred
Stock

 As
of December 31, 2023 and 2022, the Company had 10,000,000 shares of preferred stock, $ 0.0001 par value per share, authorized. The Company
did no t have any preferred shares issued and outstanding as of December 31, 2023 and 2022. The holders of the preferred stock are entitled
to receive dividends, if and when declared by the Board of Directors.

Stock

 As
of December 31, 2023 and 2022, the Company had 300,000,000 shares of common stock, $ 0.0001 par value per share, authorized. As of December
31, 2023 and 2022, there were 35,082,464 and 35,047,828 shares of common stock issued and outstanding, respectively.

 F- 20

 HOUR

 NOTES

 Share
Issuances for Stock Compensation

 On
February 1, 2022, the Company issued 1,772 shares of Company common stock to each of Sam Lai, our Chief Executive Officer, and Maggie
Yu, our Senior Vice President, with a fair market value of $ 4.00 per share as compensation for the services to the Company pursuant to
the terms of their Executive Employment Agreements with the Company.

 On
February 1, 2022, the Company issued 1,750, 1,750, and 709 shares of Company common stock to Michael Lenner, Douglas Branch, and Alan
Gao, respectively, with a fair market value of $ 4.00 per share as compensation for the services as directors to the Company pursuant
to the terms of their Director Agreements with the Company.

 On
May 20, 2022, the Company issued 916 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch, and
Alan Gao, with a fair market value of $ 3.2745 per share as compensation for the services as executives or directors to the Company pursuant
to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
June 30, 2022, the Company issued 1,049 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
and Alan Gao, with a fair market value of $ 2.8605 per share as compensation for the services as executives or directors to the Company
pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
September 30, 2022, the Company issued 1,050 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
and Alan Gao, with a fair market value of $ 2.8565 per share as compensation for the services as executives or directors to the Company
pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
January 4, 2023, the Company issued 1,001 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
and Alan Gao, with a fair market value of $ 2.9985 per share as compensation for the services as executives or directors to the Company
pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
April 3, 2023, the Company issued 1,365, 1,365, 1,365, 1,365, 1,365 and 606 shares of Company common stock to each of Sam Lai, Maggie
Yu, Michael Lenner, Douglas Branch, Alan Gao and Hillary Bui, respectively, with a fair market value of $ 2.1985 per share as compensation
for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements
or Director Agreements with the Company.

 On
June 30, 2023, the Company issued 1,752 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $ 1.7125 per share as compensation for the services as executives or directors of
the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 On
October 2, 2023, the Company issued 1,948 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $ 1.5400 per share as compensation for the services as executives or directors of
the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 IPO
Proceeds

 On
January 11, 2022, we closed our initial public offering (the "IPO") of 1,725,000 shares of common stock, which included the
full exercise of the underwriter's over-allotment option, at a public offering price of $ 4.00 per share, for aggregate gross proceeds
of $ 6,900,000, prior to deducting underwriting discounts, commissions, and other offering expenses. Our common stock began trading on
The Nasdaq Capital Market on January 7, 2022, under the symbol "HOUR". EF Hutton, division of Benchmark Investments, LLC,
acted as sole book-running manager for the offering. The net proceeds of the offering, after deducting expenses of $ 743,640, were $ 6,156,360.
Meanwhile, other costs incurred in the IPO totaled $ 576,168, the main nature of which was professional fees. As a result, common stock
increased by $ 172, and additional paid-in capital increased by $ 5,580,020.

 F- 21

 HOUR

 NOTES

 NOTE
15 - Commitments and Contingencies

 As
of December 31, 2023 and 2022, the Company had no material or significant commitments outstanding.

 From
time-to-time, the Company is subject to various litigation and other claims in the normal course of business. The Company establishes
liabilities in connection with legal actions that management deems to be probable and estimable. As of December 31, 2023 and 2022, the
Company had no pending legal proceedings. No amounts have been accrued in the audited consolidated financial statements with respect
to any such matters.

 NOTE
16 - Subsequent Events

 On
January 2, 2024, the Company issued 2,139 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $ 1.4025 per share as compensation for the services as executives or directors of
the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.

 The
Company has evaluated subsequent events from the balance sheet date through March 26, 2024, the date at which the financial statements
were available to be issued, and determined that, apart from the events mentioned above, there are no other subsequent events to disclose.

 F- 22

 SIGNATURES

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

 HOUR

 Dated:
 March 26, 2024

 By:

 /s/
 Sam Lai

 Sam
 Lai

 Chief
 Executive Officer and Interim Chief Financial Officer

 POWER
OF ATTORNEY

 Each
person whose signature appears below hereby appoints Sam Lai as attorney-in-fact with full power of substitution to execute in the name
and on behalf of the registrant and each such person, individually and in each capacity stated below, one or more amendments to the annual
report on Form 10-K, which amendments may make such changes in the report as the attorney-in-fact acting deems appropriate and to file
any such amendment to the annual report on Form 10-K with the Securities and Exchange Commission. Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

 Signature

 Title

 Date

 /s/
 Sam Lai

 Chief
 Executive Officer, Interim Chief Financial Officer and Chairman of the Board (principal executive officer,

 March

 Sam
 Lai

 principal
 financial officer and principal accounting officer)

 /s/
 Sau Kuen (Maggie) Yu

 March

 Sau
 Kuen (Maggie) Yu

 /s/
 Douglas Branch

 March

 Douglas
 Branch

 /s/
 Michael Lenner

 March

 Michael
 Lenner

 /s/
 Minghui (Alan) Gao

 March

 Minghui
 (Alan) Gao

 / s/
 Hilary (Hui-Chong) Bui

 March

 Hilary
 (Hui-Chong) Bui