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 UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington D.C.
20549

 FORM 10-K

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

 For the fiscal year ended December 31, 2024

 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

 (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, WA

 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

 Common 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)

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

 Indicate 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

(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

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

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.

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.

 Indicate 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).

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 $0.934 per share of common stock as of June 28, 2024 (the last business
day of the registrant's most recently completed second fiscal quarter) was $ 1,611,150.

 As of March 27, 2025, there were 35,151,440
shares of common stock, par value $ 0.0001 per share, of the registrant issued and outstanding.

 DOCUMENTS INCORPORATED BY REFERENCE

 None.

 Page

 Item 1.

 Business

 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

 i

 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.

 ii

 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 Business

 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 recent years. 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 profitability.

 Business 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 2.5% to $7.42 trillion in 2024 from $7.24 trillion in 2023. U.S. ecommerce sales
increased 6.6% to $1,192.29 billion in 2024 from $1,118.68 billion in 2023.

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

 Formation

 The
Company was founded in 2013 by Sam Lai, our Chairman of the Board, Chief Executive Officer, interim Chief Financial Officer and significant
stockholder, and Maggie Yu, our Senior Vice President, a member of our Board of Directors and a significant stockholder. With their vision,
leadership, and software development skills, the Company grew rapidly. From 2013 to 2024, net sales grew from $0 to $138,252,861.

 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.

 Competitive Advantage

 Among
the approximately 1.9 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 2024 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

)%

 %

 2024

 $

 138,252,861

 %

 $

 %

 NA

 In 2024 and 2023, approximately
99% and 99%, respectively, 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.

 Business 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: 15% 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 2.5% to $7.42 trillion in 2024 from $7.24 trillion in 2023. U.S. ecommerce sales
increased 6.6% to $1,192.29 billion in 2024 from $1,118.68 billion in 2023.

 In 2024, total U.S. ecommerce
sales reached 1,192.29 billion, representing a 6.6% year-over-year increase from $1,118.68
billion in 2023. This is less than the U.S. ecommerce growth rate of 2023, during which total sales increased by 7% year-over-year from
2022.

 Despite the slowdown, total
U.S. ecommerce sales in 2024 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 2024,
annual U.S. ecommerce sales multiplied by approximately 10 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 increased, peaking at 16.4% in the second quarter of 2020.
By the fourth quarter of 2024, it accounted for 16.4%, indicating a sustained and significant presence in the retail sector. Total U.S.
retail sales increased 2.5% to $7.42 trillion in 2024 from $7.24 trillion in 2023. Consumers spent $1,192.29 billion online with U.S.
merchants in 2024, which is around 16.07% of total U.S. retail sales for the year compared to 15.45% in 2023.

 Amazon accounted for approximately
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

 Amazon has over 180 million
Prime members in the U.S., and we were seeing continuous year-over-year growth over the past years.

 Operational Advantages

 As
of March 27, 2025, Hour Loop was recognized as one of the top 23 third-party sellers on U.S. Amazon, according to Marketplace Pulse,
highlighting its continued growth, industry leadership, and outstanding sales performance.

 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 reviews, 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 set up or install anything on
the client-side.

 Cost Advantage

 Access to Low Product Costs

 We lower our product average
costs by directly importing 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 purchasing 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.

 Amazon Vendor Central

 Amazon 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 reacting 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.,
Singh Logistics Inc, Founder, 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

 In 2024, the U.S. e-commerce
market continued its upward trajectory. In addition to our sales-driven initiatives, we have been optimizing our procurement strategy
by transitioning from preordering to a restocking model, implementing stringent inventory controls to maintain optimal levels and mitigate
overstock risks. By adopting a more selective approach to product sourcing, we aim to sustain profitability and ensure robust cash flow.
As product costs are projected to decline and market competition stabilizes, we anticipate maintaining a steady workforce, with potential
slight increases through natural attrition. In 2025, we will continue executing these strategic initiatives, emphasizing profit maximization
over revenue expansion.

 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. As of December 31,
2024, the aggregate principal amount of the BofA Note outstanding was $-0-. On June 30, 2024, the Company paid accrued interest in full.

 Taishin International
Bank

 On August 18, 2022, Flywheel
entered into a line of credit agreement in the amount of $6,940,063 with Taishin of America Loa. The line of credit initially matured
on August 30, 2023. On August 11, 2023, the line of credit was extended for an additional year, revising the maturity date to August 30,
2024. On May 28, 2024, the term of the loan was revised such that maturity date was extended to November 24, 2024.

 On November 25, 2024, the
term of the loan was revised such that maturity date was extended to May 23, 2025. The line of credit bears interest at a rate of 3.33%
per annum.

 As of December 31, 2024 and
2023, the outstanding balance under the Taishin line of credit was $610,967 and $652,422, respectively.

 Affiliated Loans

 From
time to time, the Company receives loans and advances from its stockholders to fund its operations. As of December 31, 2024, the Company had a total of $4,192,995 due to related parties, which included $3,499,418 in stockholder payables and
$693,577 accrued for bonuses. 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.

 December 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 approximately 94.9% 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. On December 31, 2024, the Company,
Mr. Lai and Ms. Yu agreed to extend the term of the loan, with the new maturity date of December 31, 2025. As amended, the annual interest
rate of the loan is 5.5%.

 Employees

 As of December 31, 2024, our
headcount stands at 151, signaling a modest reduction compared to 2023. We have intentionally opted for a less aggressive approach in
terms of headcount. Looking ahead, we anticipate a planned increase to approximately 180 in 2025 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

 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.
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, 2025. 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. The terms of this service provide for a base payment that is charged based on our usage. Flywheel, our
wholly owned subsidiary, had four office leases in Taiwan in 2024. The respective lease terms are February 9, 2023 to March 8, 2025, March
1, 2024 to June 30, 2025, June 1, 2024 to May 31, 2025, and August 1, 2024 to July 31, 2025 and the total contract amounts are $28,652,
$123,107, $52,434 and $73,175 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 a significant stockholder, and Maggie Yu, our Senior Vice President, a member of our Board of Directors and a significant stockholder, 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

 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 2024 and 2023, 99% and 99%, 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
on reimbursements from Amazon and any change in Amazon's policy regarding reimbursement could adversely impact our ability to generate
profits.

 Amazon 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, 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
provide 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 provide 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 from pursuing
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 a significant stockholder, and Maggie Yu, our Senior Vice President,
a member of our Board of Directors and a significant stockholder, who are husband and wife, to control our business may limit or eliminate
minority stockholders' ability to influence corporate affairs.

 As of March 27, 2025,
Sam Lai, our Chairman of the Board, Chief Executive Officer, and Interim Chief Financial Officer, and a significant stockholder, and Maggie
Yu, our Senior Vice President, member of the Board, and a significant stockholder, who are husband and wife, together beneficially owned
an aggregate of 33,381,462 shares of our common stock, which represents approximately 94.9% 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 27, 2025, Mr. Lai, our Chairman of the Board, Chief Executive Officer, Interim Chief Financial Officer, and a significant
stockholder, and Ms. Yu, our Senior Vice President, a member of the Board, and a significant stockholder, who are husband and wife, together
beneficially owned an aggregate of 33,381,462 shares of our common stock, which represents approximately 94.9% 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, 2024, we owe $-0- in sales taxes along with penalties and interest.

 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.

 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, which could have a material
adverse effect on the price of our common stock.

 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 that 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 Part II, Item 5 "Market for
Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividends."

 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 outlined in this section are limited to the personal and business information belonging to or maintained
by the Company (collectively, "Confidential Information"), the Company's critical third-party systems and services supporting
or used by the Company (collectively, "Critical Systems"), and service providers.

 We will develop and implement
a cybersecurity risk management program to safeguard the confidentiality, integrity, and availability of our Confidential Information
and Critical Systems. Our cybersecurity risk management program will be integrated into our broader enterprise risk management framework
and includes a cybersecurity incident response plan.

 Our cybersecurity risk management
program shall include:

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

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

 cybersecurity awareness training including spear-phishing resistance for employees, and senior management;

 a cybersecurity incident response plan outlining procedures for detecting, responding to, and mitigating cybersecurity incidents; and

 a vendor management policy to oversee cybersecurity risks associated with service providers.

 We have no t
identified any known cybersecurity threats, including prior incidents, that have materially affected or are reasonably likely to
materially affect our operations, business strategy, results of operations, or financial condition. However, we recognize that
cybersecurity threats pose ongoing risks which, if realized, could have a material adverse impact on our business, financial
condition and results of operations.

 Cybersecurity Governance

 Our executive management team,
in collaboration with our managed information technology service provider, is responsible for assessing and managing cybersecurity risks
to the Company, including our Confidential Information and Critical Systems. The team holds primary responsibility for our cybersecurity
risk management program and works closely with our IT service provider to ensure its effective implementation.

 Our management team meets
regularly with our IT service provider to review current cybersecurity issues. These discussions may cover efforts to prevent, detect,
mitigate, and remediate cybersecurity risks and incidents through various means, including:

 threat intelligence from governmental, public private, and external sources

 alerts and reports generated by security tools deployed in the IT environment, including a spear-phishing
report.

 Our Board incorporates cybersecurity
risks into its broader risk oversight responsibility.

 Our Board oversees the implementation
of our cybersecurity risk management program. The executive management team provides updates to the Board, as needed, on significant cybersecurity
incidents.

 Our Board receives periodic reports from management
on cybersecurity risks and the 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, 2025. 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. The terms of this service provide for a base payment that is charged based on our usage.

 Flywheel, our wholly owned
subsidiary, had four office leases in Taiwan in 2024. The respective lease terms are February 9, 2023 to March 8, 2025, March 1, 2024
to June 30, 2025, June 1, 2024 to May 31, 2025, and August 1, 2024 to July 31, 2025 and the total contract amounts are $28,652, $123,107,
$52,434 and $73,175 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

 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 26,
2025 was $2.00.

 Holders

 As of March 27, 2025,
there were 35,151,440 shares of common stock issued and outstanding, and we had approximately 5 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 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 ("RSUs"), 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 27, 2025, there were 8,097,909 shares
authorized for issuance under the 2021 Plan, and 8,097,909 shares available for issuance under the 2021 Plan.

 Recent Sales of Unregistered Securities

 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

 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.

 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.

 On March 29, 2024, the Company
issued 2,251 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 $1.3330 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 July 1, 2024, the Company
issued 2,946 shares of Company common stock to each of Sam Lai and Maggie Yu (both of whom are executive officers, directors and significant
stockholders of the Company), and Michael Lenner, Douglas Branch, Alan Gao and Hillary Bui (each of whom was a director of the Company
as of such date), with a fair market value of $1.0185 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. Subsequently, on July
22, 2024, Mr. Branch resigned his position as a member of the Company's Board of Directors.

 On July 25, 2024, following
Mr. Branch's resignation, the Company issued 6,000 shares of restricted common stock to Mr. Branch as compensation for services
rendered.

 On October 1, 2024, the Company
issued 2,196 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Alan Gao and Hillary Bui, with a fair market
value of $1.3660 per share as compensation for the services as executives or directors of the Company pursuant to the terms of their respective

 The above issuances were made
pursuant to an exemption from registration as set forth in Rule 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 Business

 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.

 Business 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 2.5% to $7.42 trillion in 2024 from $7.24 trillion in 2023. Consumers spent $1,192.29 billion online with
U.S. merchants in 2024, which is around 16.07% of total U.S. retail sales for the year compared to 15.45% in 2023.

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

 Formation

 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 2024, sales grew from $0 to $138,252,861.

 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.

 Competitive Advantage

 Among
the approximately 1.9 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, 2024 and 2023, we generated net revenues of $138,252,861 and $132,124,202, respectively, and reported net income (loss) of
$657,447 and $(2,429,694), respectively, and cash flow provided by (used in) operating activities of $313,140 and $(2,063,375), respectively.
As noted in our consolidated financial statements, as of December 31, 2024, we had retained earnings of $(595,175).

 Results of Operations

 Year Ended December 31, 2024 Compared to
Year Ended December 31, 2023

 The following table shows a comparison of our
2024 and 2023 income statements.

 Year
Ended December 31,

 2024

 2023

 Statement of Operations Data

 Total revenues

 $
 138,252,861

 $
 132,124,202

 Total cost of goods sold

 (66,242,153
)

 (65,606,947
)

 Gross profit

 72,010,708

 66,517,255

 Total operating expenses

 71,279,768

 69,520,678

 Income (loss) from operations

 730,940

 (3,003,423
)

 Total other non-operating income (expense)

 228,621

 (157,031
)

 Income tax (expense) benefit

 (302,114
)

 730,760

 Net income (loss)

 (2,429,694
)

 Other comprehensive loss

 (25,644
)

 (2,597
)

 Total comprehensive income (loss)

 $
 631,803

 $
 (2,432,291
)

 Revenue

 We generated $138,252,861
in revenues in 2024, as compared to $132,124,202 in revenues in the same period in 2023. This represents an increase in revenues of $6,128,659,
or 4.64%. We attribute this increase to our continued growth and maturity in our operating model, despite an overall e-commerce traffic
slowdown and intense competition. Our total orders in 2024 were approximately 6,337,492, as compared to 5,749,107 orders in 2023, representing
an increase of 10.23%. 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 revenues during the period.
The 10.23% 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, 2024 totaled $66,242,153, as compared to $65,606,947 for the year ended December 31, 2023. Cost of goods sold
includes the cost of the merchandise sold and shipping costs, as well as estimated losses due to damage to goods.

 Operating Expense

 Operating expenses for the
year ended December 31, 2024 totaled $71,279,768, representing a $1,759,090, or 2.53%, increase from the $69,520,678 of operating expenses
for the year ended December 31, 2023. This change was caused by an increase in platform fees and fees paid to Amazon. The Amazon fees
are proportional to revenues. The increase in revenues in 2024 over the same period in 2023 drove the increase in platform fees and higher
Amazon fees.

 Other Expenses, Net

 Other expenses, net for the
year ended December 31, 2024 was $228,621, as compared to $(157,031) for the year ended December 31, 2023.

 Total Comprehensive income (loss)

 Total comprehensive income
(loss) for the year ended December 31, 2024 was $631,803, as compared to $(2,432,291) for the year ended December 31, 2023. The decrease
in total comprehensive loss was attributed to an increase in the Company's gross revenues in 2024, compared to 2023.

 Liquidity and Capital Resources

 Cash Flows for the Years Ended December
31, 2024 and 2023

 Liquidity is the ability of
an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had cash of $2,119,581 and $2,484,153 as
of December 31, 2024 and 2023, 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, 2024 and 2023.

 Year Ended
 December 31,

 2024

 2023

 Statement of Cash Flows

 Net cash provided by (used in) operating activities

 $
 313,140

 $
 (2,063,375
)

 Net cash used in investing activities

 $
 (35,996
)

 $
 (14,823
)

 Net cash used in financing activities

 $
 (671,000
)

 $
 -

 Effect of changes in foreign currency rates

 $
 29,284

 $
 (238
)

 Net decrease in cash

 $
 (364,572
)

 $
 (2,078,436
)

 Cash - beginning of the period

 $

 $
 4,562,589

 Cash - end of the period

 $
 2,119,581

 $

 Net Cash Provided by (used in) Operating Activities

 For the fiscal year ended
December 31, 2024, cash provided by (used in) operating activities amounted to $313,140, as compared to $(2,063,375) for the year ended
December 31, 2023. This was driven by our net income (loss) of $657,447 for the year ended December 31, 2024, as compared to $(2,429,694)
for the same period in 2023.

 Despite the increase in revenue
to $138,252,861 for the year ended December 31, 2024, as compared to $132,124,202 for the year ended December 31, 2023, the revenue increase
was offset by a corresponding increase in cost of goods sold of $635,206 and an increase in operating expenses of $1,759,090.

 Net Cash Used in Investing Activities

 For the fiscal year ended
December 31, 2024, $35,996 in cash was used in investing activities, as compared to $14,823 in cash used in investing activities for the
fiscal year ended December 31, 2023.

 Net Cash Used in Financing Activities

 For the fiscal year ended
December 31, 2024, cash used in financing activities amounted to $671,000, as compared to $-0- cash used in financing activities for the
fiscal year ended December 31, 2023.

 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. As of December 31,
2024, the aggregate principal amount of the BofA Note outstanding was $-0-. On June 30, 2024, the Company paid accrued interest in full.

 Taishin International
Bank

 On August 18, 2022, Flywheel
entered into a line of credit agreement in the amount of $6,940,063 with Taishin of America Loa. The line of credit initially matured
on August 30, 2023. On August 11, 2023, the line of credit was extended for an additional year, revising the maturity date to August 30,
2024. On May 28, 2024, the term of the loan was revised such that maturity date was extended to November 24, 2024.

 On November 25, 2024, the
term of the loan was revised such that maturity date was extended to May 23, 2025. The line of credit bears interest at a rate of 3.33%
per annum.

 As of December 31, 2024 and
2023, the outstanding balance under the Taishin line of credit was $610,967 and $652,422, respectively.

 Affiliated Loans

 From
time to time, the Company receives loans and advances from its stockholders to fund its operations. As of December 31, 2024, the Company had a total of $4,192,995 due to related parties, which included $3,499,418 in stockholder payables and
$693,577 accrued for bonuses. 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.

 December 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 approximately 94.9% 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 a new maturity date of December 31, 2024. On December 31, 2024, the Company,
Mr. Lai and Ms. Yu agreed to extend the term of the loan, with a new maturity date of December 31, 2025. As amended, the annual interest
rate of the loan is 5.5%.

 Leases

 The Company has four operating
leases (Flywheel has four offices lease in Taiwan). The respective lease terms are February 9, 2023 to March
8, 2025, March 1, 2024 to June 30, 2025, June 1, 2024 to May 31, 2025, and August 1, 2024 to July 31, 2025, respectively.

 For the Year Ending December 31,

 Amount

 2025

 $
 115,652

 2026

 -

 2027

 -

 2028 and thereafter

 -

 Total minimum lease payments

 115,652

 Less: effect of discounting

 (1,112
)

 Present value of the future minimum lease payment

 114,540

 Less: operating lease liabilities-current

 (114,540
)

 Total operating lease liabilities-non-current

 $
 -

 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, 2024, we owed $-0- in sales taxes, along with penalties and interest.

 Critical Accounting Policies and Estimates

 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 and Cash Equivalents - The
Company considers all highly liquid financial instruments purchased with original maturities of three months or less to be cash. 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. Cash equivalents and marketable securities are
comprised of time deposits, money market funds, highly liquid government bonds, corporate debt securities, mortgage-backed and asset-backed
securities, and marketable equity securities. Our cash and cash equivalents primarily consisted of cash and money market funds. Such amounts
are recorded at fair value.

 Accounts Receivable
and Allowance for Credit Losses - 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
the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("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, 2024 and 2023, the Company did not deem it necessary to have an allowance for credit loss.

 Inventory 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 unaudited 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, 2024 and 2023, $560,293
and $675,886, respectively, were written down from the cost of inventories to their net realizable values. 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, 2024 and 2023.

 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 an 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.

 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 and cash equivalents, 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 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 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.

 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, 2024 and 2023 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 7.19% and 6.45% of gross sales for the years ended December 31, 2024 and 2023, 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 $31,480,104 and $31,187,009 for the years ended December 31,
2024 and 2023, 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.

 Deferred 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.

 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, 2024 and 2023, it owed $-0- 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 cash equivalents and accounts
receivable. The Company maintains cash and cash equivalents 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, 2024 and 2023, the
Company had no customer that accounted for 10% or more of total net revenues. In addition, as of December 31, 2024 and 2023, the Company
had no customer that accounted for 10% or more of gross accounts receivable. As of December 31, 2024 and 2023, 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, 2024 and 2023, approximately 99% and 99%, respectively, 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 $5,323,886 and $4,605,629 for
the years ended December 31, 2024 and 2023, 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, 2024 and 2023. Therefore,
the diluted earnings per share is the same as the basic earnings per share.

 Shares 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.

 ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 Reference is made to pages
F-1 through F-24 comprising a portion of this annual report on Form 10-K.

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

 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, 2024, pursuant
to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2024,
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, 2024. 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, 2024, 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

 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

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

 Sau Kuen (Maggie) Yu

 Senior Vice President and Director

 Michael Lenner

 Independent Director

 Minghui (Alan) Gao

 Independent Director

 Hilary (Hui-Chong) Bui

 Independent Director

 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.

 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 33,381,462 shares
of the Company's common stock, representing approximately 94.9% 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 five directors (Sam Lai and Maggie Yu) are non-independent directors of the
Company and three of its five directors (Michael Lenner, Minghui (Alan) Gao, and Hilary (Hui-Chong) Bui) are independent directors of
the Company. The Company's audit committee consists of the three independent directors: Mr. Lenner, Mr. 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 the 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 three independent directors: Mr. Lenner, Mr. 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

 Our audit committee is authorized
to:

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

 review the proposed scope and results of the audit;

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

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

 review 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.

 Compensation 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:

 review 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

 review 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;

 review 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.

 Director 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.

 Compensation 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

 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

 2024 Summary Compensation Table

 The following summary compensation
table provides information regarding the compensation earned during our fiscal years ended December 31, 2024 and 2023 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

Compensation

($)

 Non-

qualified

Deferred

Compensation

Earnings

($)

 All

Other

Compensation

($)

 Total

($)

 2024

 500,000

 600,000

 -

 -

 -

 -

 15,546

 (1)

 $

 1,115,546

 Chief Executive Officer and Interim Chief Financial Officer

 2023

 500,000

 100,000

 -

 -

 -

 -

 24,884

 (2)

 624,884

 Maggie Yu

 2024

 450,000

 550,000

 -

 -

 -

 -

 16,991

 (3)

 1,016,991

 Senior Vice President

 2023

 450,000

 550,000

 -

 -

 -

 -

 25,651

 (4)

 1,025,651

 (1)

 Includes healthcare benefits and 401(k) contribution of $8,827 and $6,719, respectively, for the fiscal year ended December 31, 2024.

 (2)

 Includes healthcare benefits and 401(k) contribution of $9,307 and $15,577, respectively, for the fiscal year ended December 31, 2023.

 (3)

 Includes healthcare benefits and 401(k) contribution of $10,332 and $6,659, respectively, for the fiscal year ended December 31, 2024.

 (4)

 Includes healthcare benefits and 401(k) contribution of $11,113 and $14,538, respectively, for the fiscal year ended December 31, 2023

 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, as amended, provides that he
will serve as the Chief Executive Officer of the Company and Ms. Yu's agreement, as amended, provides that she will serve as the
Senior Vice President of the Company.

 Each of the employment agreements,
as amended, 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, as amended,
is "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 initial annual base salary of $500,000, and Ms. Yu's agreement provided for an initial 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.

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

 Pursuant
to the terms of the Lai Addendum No. 2, 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
February 20, 2023, the Company entered into Addendum No. 2 to the Executive Employment Agreement, as amended, with Ms. Yu (the "Yu
Addendum No. 2").

 Pursuant
to the terms of the Yu Addendum No. 2, 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.

 On February 26, 2024, entered
into Addendum No. 3 (the "Lai Addendum No. 3") to Executive Employment Agreement, as amended, with Mr. Lai. Pursuant to the
terms of the Lai Addendum No. 3, Mr. Lai's bonus targets and payments were set as follows:

 If
 the Company achieves breakeven (net profits (excluding taxes) is at least $0) during the
 2024 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 $500,000 during the 2024
 fiscal year, Mr. Lai will receive a bonus equal to 100% of base salary.

 In addition, pursuant to the
terms of the Lai Addendum No. 3, Mr. Lai was entitled to receive a guaranteed bonus of $100,000 on December 27, 2024.

 Also on February 26, 2024,
the Company entered into Addendum No. 3 (the "Yu Addendum No. 3") to Executive Employment Agreement, as amended, with Ms.
Yu. Pursuant to the terms of the Yu Addendum No. 3, Ms. Yu's bonus targets and payments were set as follows:

 If the Company acquires at least 100 new vendors during the 2024 fiscal year, Ms. Yu will receive a bonus
equal to 50% of base salary.

 If the Company acquires at least 135 new vendors during the 2024 fiscal year, Ms. Yu will receive a bonus
equal to 100% of base salary.

 In addition, pursuant to the
terms of the Yu Addendum No. 3, Ms. Yu was entitled to receive a guaranteed bonus of $100,000 on December 27, 2024.

 Each of Mr. Lai's and
Ms. Yu's agreements, as amended, 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, as amended, 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.

 Mr. Lai's and Ms. Yu's
agreements, as amended, 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, as amended, 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.

 Pursuant to their agreements,
as amended, 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, as amended, 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 (the
"Excise Tax") under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), 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, as amended, 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, as amended, 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, as amended, 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.

 Director Agreements

 On June 1, 2021, the Company
entered into a Director Agreement with Mr. Lenner in connection with his services as a director 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.

 Pursuant to their respective
agreements, each of Messrs. Lenner 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 2024 and 2023:

 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 2024 and 2023 is listed in "—2024 Summary Compensation Table."

 Bonuses. For
the year ended December 31, 2024, the Company paid Mr. Lai and Ms. Yu a bonus of $600,000 and $550,000, respectively. For the year ended
December 31, 2023, the Company paid Mr. Lai and Ms. Yu a bonus of $100,000 and $550,000, respectively.

 The bonuses for 2024 and
2023 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 $670,877 to $3,367,310 as updated on February 1, 2025. The $1,100,000 and $600,000
compensation (base salary and bonus) paid to Mr. Lai for 2024 and 2023, respectively, fell within such range and we believed such
compensation to be reasonable due to the revenue growth in the Company in 2024 and 2023, 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 $380,458 and $1,489,736, as updated February 1, 2025. The $1,100,000 and $1,000,000 compensation (base
salary and bonus) paid to Ms. Yu for 2024 and 2023, 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 2024 and 2023, respectively.

 Stock Awards. 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.

 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.

 On March 29, 2024, the Company
issued 2,251 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 $1.3330 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 July 1, 2024, the Company
issued 2,946 shares of Company common stock to each of Sam Lai and Maggie Yu (both of whom are executive officers, directors and significant
stockholders of the Company), and Michael Lenner, Douglas Branch, Alan Gao and Hillary Bui (each of whom was a director of the Company
as of such date), with a fair market value of $1.0185 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. Subsequently, on July
22, 2024, Mr. Branch resigned his position as a member of the Company's Board of Directors.

 On July 25, 2024, following
Mr. Branch's resignation, the Company issued 6,000 shares of restricted common stock to Mr. Branch as compensation for services
rendered.

 On October 1, 2024, the Company issued 2,196 shares
of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Alan Gao and Hillary Bui, with a fair market value of $1.3660 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.

 Other Benefits.
In fiscal years 2024 and 2023, Mr. Lai and Ms. Yu were reimbursed for healthcare expenses. The amounts paid to Mr. Lai and Ms. Yu in 2024
and 2023 in respect of these benefits is reflected above in the "All Other Compensation" column of the Summary Compensation
Table.

 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. As of March 27, 2025, there were 8,097,909 shares of common stock
authorized for issuance pursuant to the 2021 Plan, and 8,097,909 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, 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, RSUs, 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 27, 2025 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 35,151,440 shares of our common stock issued and outstanding as of March 27, 2025. 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

 33,381,462

 (2)

 94.9

 %

 Maggie Yu

 33,381,462

 (2)

 94.9

 %

 Michael Lenner

 21,959

 *

 Minghui (Alan) Gao

 20,918

 *

 Hillary (Hui-Chong) Bui

 15,434

 *

 All executive officers and directors as a group (5 persons)

 33,439,773

 (3)

 %

 *

 less than 1%.

 (1)

 The percentages in the table have been calculated based on 35,151,440 shares of our common stock outstanding on March 2 7, 2025. 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 2 7, 2025. 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 33,381,462 shares of the Company's common stock representing 94.9% of the voting power of the Company's outstanding common stock. Each of Mr. Lai and Ms. Yu individually holds (i) 16,671,981 shares of common stock, and (ii) the right to acquire 18,750 shares of common stock within 60 days of March 27, 2025 upon exercise of an option (75% of which is vested). Therefore, each of Mr. Lai and Ms. Yu beneficially holds 33,381,462 shares of the Company's common stock, as each of them is deemed to indirectly beneficially own the other's 16,671,981 shares of common stock, and the other's right to acquire 18,750 shares of common stock upon exercise of an option.

 (3)

 Includes 37,500 shares of common stock that may be acquired within 60 days of March 27, 2025 upon exercise of vested options.

 Securities Authorized for Issuance under Equity
Compensation Plans

 The following table provides
information as of December 31, 2024, 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

 -

 -

 8,097,909

 Total

 -

 $

 -

 8,097,909

 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 initially authorized for issuance pursuant to the grant of stock options, stock appreciation
rights, restricted stock, RSUs, 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 27,
2025, 8,097,909 shares of common stock are authorized for issuance under the 2021 Plan, and 8,097,909 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 1% 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, 2024 and 2023, and any proposed transactions, requiring disclosure pursuant to Item 404 of Regulation S-K.

 Affiliated Loans

 December 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 a new maturity date of December 31, 2024. On December 31, 2024, the Company, Mr. Lai and Ms. Yu agreed to
extend the term of the loan, with a new maturity date of December 31, 2025. As amended, the annual interest rate of the loan is 5.5%.

 As
of December 31, 2024 and March 27, 2025, the outstanding principal balance was $3,499,418 and $3,160,418, respectively,
on the July 2021 Loan.

 Issuances

 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

 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.

 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.

 On March 29, 2024, the Company
issued 2,251 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 $1.3330 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 July 1, 2024, the Company
issued 2,946 shares of Company common stock to each of Sam Lai and Maggie Yu (both of whom are executive officers, directors and significant
stockholders of the Company), and Michael Lenner, Douglas Branch, Alan Gao and Hillary Bui (each of whom was a director of the Company
as of such date), with a fair market value of $1.0185 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. Subsequently, on July
22, 2024, Mr. Branch resigned his position as a member of the Company's Board of Directors.

 On July 25, 2024, following
Mr. Branch's resignation, the Company issued 6,000 shares of restricted common stock to Mr. Branch as compensation for services
rendered.

 On
October 1, 2024, the Company issued 2,196 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Alan Gao and
Hillary Bui, with a fair market value of $1.3660 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.

 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 33,381,462 shares
of the Company's common stock, representing approximately 94.9% 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 five directors (Sam Lai and Maggie Yu) are non-independent directors of the
Company and three of its five directors (Michael Lenner, Minghui (Alan) Gao, and Hilary (Hui-Chong) Bui) are independent directors of
the Company. The Company's audit committee consists of the three independent directors: Messrs. Lenner and 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

 On September 13, 2023, the
Audit Committee appointed HTL International, LLC ("HTL") as the Company's independent registered accounting firm. Prior
to September 13, 2023, TPS Thayer, LLC ("TPS") served as our independent registered public accounting firm. The following
is a summary of fees paid or to be paid to TPS and HTL for the fiscal years ended December 31, 2024 and 2023.

 HTL

 TPS

 Year Ended December 31,

 Year Ended December 31,

 2024

 2023

 2024

 2023

 Audit Fees

 $
 168,750

 $
 150,000

 $
 -

 $
 190,000

 Audit-Related Fees

 -

 -

 -

 -

 Tax Fees

 -

 -

 -

 -

 All Other Fees

 -

 -

 -

 -

 Total

 $
 168,750

 $
 150,000

 $
 -

 $
 190,000

 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).

 ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 (a)

 The following documents are filed or furnished 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 INDEX

 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 registrat ion 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 registrat ion 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 registrat ion 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 registration 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 registration 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 registration 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 registration 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 registration 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 registration 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 registration 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 registration 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 registrat ion 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 registration 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 registration 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 registration 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 registration 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 registrat ion 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 registration 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 registration 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 registration statement on Form S-1 (File No. 333-260540), filed with the SEC on October 28, 2021).

 19.1

 Policy on Insider Trading (incorporated by reference to Exhibit 19.1 to the registrant's Quarterly Report on Form 10-Q filed with the SEC on May 6, 2024).

 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 (incorporated by reference to Exhibit 97.1 to the registrant's Annual Report on Form 10-K filed with the SEC on March 26, 2024).

 101.INS*

 101.SCH*

 101.CAL*

 101.DEF*

 101.LAB*

 101.PRE*

 104*

 * Filed herewith

 **Furnished herewith

 Management contracts, compensation plans
and arrangements.

 Item
16. Form 10-K Summary

 Index to Financial Statements

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

 Consolidated Balance Sheets as of December 31, 2 024 and 2023

 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2 024 and 2023

 Consolidated Statements of
 Stockholders' Equity for the years ended December 31, 2 024 and 2023

 Consolidated Statements of Cash Flows for the years ended December 31, 2 024 and 2023

 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, 2024 and 2023, and the related consolidated
statement of operations and comprehensive income (loss), stockholders' equity, and cash flows for the year ended December 31, 2024 and 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, 2024 and 2023 and the consolidated results of
its operations and its cash flows for the year ended December 31, 2024 and 2023, in conformity with accounting principles generally accepted in
the United States of America.

 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

 F- 2

 HOUR LOOP,
INC.

 CONSOLIDATED BALANCE SHEETS

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

 As of December 31, 2024 and 2023

 December
 31, 2024

 December
 31, 2023

 ASSETS

 Current assets

 Cash

 $

 2,119,581

 $

 Accounts receivable, net

 1,650,547

 747,650

 Inventory, net

 14,640,632

 14,276,555

 Prepaid expenses and other current assets

 327,894

 504,973

 Total current assets

 18,738,654

 18,013,331

 Property and equipment, net

 56,797

 148,788

 Deferred tax assets

 1,060,104

 1,304,215

 Operating lease right-of-use lease assets

 111,409

 83,946

 Total non-current assets

 1,228,310

 1,536,949

 TOTAL ASSETS

 $

 19,966,964

 $

 19,550,280

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities

 Accounts payable

 $

 4,176,305

 $

 3,812,954

 Credit cards payable

 3,389,880

 4,404,445

 Short-term loan

 610,967

 652,422

 Operating lease liabilities-current

 114,540

 82,269

 Accrued expenses and other current liabilities

 2,322,535

 1,972,512

 Due to related parties

 4,192,995

 -

 Total current liabilities

 14,807,222

 10,924,602

 Non-current liabilities

 Operating lease liabilities-non-current

 -

 2,363

 Due to related parties

 -

 4,170,418

 Total non-current liabilities

 -

 4,172,781

 Total liabilities

 14,807,222

 15,097,383

 Commitments and contingencies

 -

 Stockholders' equity

 Preferred stock: $ 0.0001 par value, 10,000,000 shares authorized, none issued and outstanding as of December 31, 2024 and 2023

 -

 -

 Common stock: $ 0.0001 par value, 300,000,000 shares authorized, 35,143,460 and 35,082,464 shares issued and outstanding as of December 31, 2024 and 2023, respectively

 3,514

 3,508

 Additional paid-in capital

 5,802,686

 5,727,650

 Accumulated deficit

 ( 595,175)

 ( 1,252,622

)

 Accumulated other comprehensive loss

 ( 51,283)

 ( 25,639

)

 Total stockholders' equity

 5,159,742

 4,452,897

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 $

 19,966,964

 $

 19,550,280

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

 F- 3

 CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

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

 For the Years Ended December 31, 2024 and 2023

 2024

 2023

 Revenues, net

 $
 138,252,861

 $
 132,124,202

 Cost of revenues

 ( 66,242,153
)

 ( 65,606,947
)

 Gross profit

 72,010,708

 66,517,255

 Operating expenses

 Selling and marketing

 61,808,979

 61,135,227

 General and administrative

 9,470,789

 8,385,451

 Total operating expenses

 71,279,768

 69,520,678

 Income (loss) from operations

 730,940

 ( 3,003,423
)

 Other (expenses) income

 Other expense

 ( 12,695
)

 ( 9,542
)

 Interest expense

 ( 249,587
)

 ( 248,779
)

 Other income

 490,903

 101,290

 Total other expenses, net

 228,621

 ( 157,031
)

 Income (loss) before income taxes

 959,561

 ( 3,160,454
)

 Income tax (expense) benefit

 ( 302,114
)

 730,760

 Net income (loss)

 ( 2,429,694
)

 Other comprehensive loss

 Foreign currency translation adjustments

 ( 25,644
)

 ( 2,597
)

 Total comprehensive income (loss)

 $
 631,803

 ( 2,432,291
)

 Basic and diluted income (loss) per common share

 $
 0.02

 ( 0.07
)

 Weighted-average number of common shares outstanding

 35,119,761

 35,066,592

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

 F- 4

 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY

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

 For the Years Ended December 31, 2024 and 2023

 Common
 Stock

 Common
 Stock

 Additional
 Paid-In

 Retained Earnings (Accumulated

 Accumulated
 Other
 Comprehensive

 Total
 Stockholders'

 Shares

 Amount

 Capital

 Deficit)

 Loss

 Equity

 BALANCE AT DECEMBER 31, 2022

 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
)

 Net loss

 -

 -

 -

 ( 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

 Stock-based compensation

 60,996

 75,036

 -

 -

 75,042

 Currency translation adjustments

 -

 -

 -

 -

 ( 25,644
)

 ( 25,644
)

 Net income

 -

 -

 -

 -

 Net income (loss)

 -

 -

 -

 -

 BALANCE AT DECEMBER 31, 2024

 35,143,460

 $
 3,514

 $
 5,802,686

 $
 ( 595,175
)

 $
 ( 51,283
)

 $
 5,159,742

 Balance

 35,143,460

 $
 3,514

 $
 5,802,686

 $
 ( 595,175
)

 $
 ( 51,283
)

 $
 5,159,742

 The accompanying notes are an integral part of these consolidated
financial statements

 F- 5

 CONSOLIDATED
STATEMENTS OF CASH FLOWS

 (In U.S. Dollars)

 For the Years Ended December 31, 2024 and
2023

 2024

 2023

 Cash flows from operating activities

 Net income (loss)

 $

 $
 ( 2,429,694
)

 Reconciliation of net income (loss) to net cash used in operating activities:

 Depreciation expenses

 119,064

 138,001

 Amortization of operating lease right-of-use lease assets

 211,348

 387,446

 Deferred tax assets

 244,111

 ( 754,895
)

 Stock-based compensation

 75,042

 52,332

 Inventory allowance

 560,293

 675,886

 Unrealized Foreign Exchange Gain

 ( 87,520
)

 -

 Changes in operating assets and liabilities:

 Accounts receivable

 ( 902,897
)

 ( 395,271
)

 Inventory

 ( 924,370
)

 3,849,088

 Prepaid expenses and other current assets

 177,079

 236,270

 Accounts payable

 363,351

 ( 2,838,767
)

 Credit cards payable

 ( 1,014,565
)

 ( 827,087
)

 Accrued expenses and other current liabilities

 1,043,600

 229,540

 Operating lease liabilities

 ( 208,843
)

 ( 386,224
)

 Net cash provided by (used in) operating activities

 313,140

 ( 2,063,375
)

 Cash flows from investing activities:

 Purchases of property and equipment

 ( 35,996
)

 ( 14,823
)

 Net cash used in investing activities

 ( 35,996
)

 ( 14,823
)

 Cash flows from financing activities:

 Payments to related parties

 ( 671,000
)

 -

 Net cash used in financing activities

 ( 671,000
)

 -

 Effect of changes in foreign currency exchange rates

 29,284

 ( 238
)

 Net change in cash

 ( 364,572
)

 ( 2,078,436
)

 Cash at beginning of year

 4,562,589

 Cash at end of year

 $
 2,119,581

 $

 Supplemental disclosures of cash flow information:

 Cash paid for interest

 $
 249,296

 $
 406,103

 Cash paid for income tax

 $
 211,911

 $
 1,696

 Noncash investing and financing activities:

 Operating lease right-of-use of assets and operating lease liabilities recognized

 $
 248,716

 $
 27,249

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

 F- 6

 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 Flywheel Consulting
Ltd. ("Flywheel"), a wholly owned subsidiary 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 ("U.S. 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:

of Foreign Currency Exchange Rates

 Period NTD: USD exchange rate

 32.735

 30.655

 Period Average NTD: USD exchange rate

 32.526

 31.221

 F- 7

 Use of Estimates - The preparation of financial
statements in conformity with U.S. 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.

 Cash and Cash Equivalents - The Company
considers all highly liquid financial instruments purchased with original maturities of three months or less to be cash. 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. Cash equivalents and marketable securities are comprised
of time deposits, money market funds, highly liquid government bonds, corporate debt securities, mortgage-backed and asset-backed securities,
and marketable equity securities. Our cash and cash equivalents primarily consisted of cash and money market funds. Such amounts are recorded
at fair value.

 Accounts Receivable and Allowance for Credit
Losses - Accounts receivable are stated at historical cost less allowance for credit loss. On a periodic basis, management evaluates
its accounts receivable and determines whether to provide an allowance for credit losses in accordance with the Financial Accounting Standards
Board's ("FASB") Accounting Standards Codification ("ASC") Topic 326. Credit losses are provided 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, 2024 and 2023, the Company did not deem it necessary to have an allowance for credit loss.

 Inventory 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.

 F- 8

 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, 2024 and 2023, $ 560,293
and $ 675,886, respectively, were written down from the cost of inventories to their net realizable values. 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 no t record any impairment charges for the years ended December 31, 2024 and 2023.

 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 an 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- 9

 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 and cash equivalents, 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 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.

 F- 10

 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.

 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, 2024 and 2023 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 7.19 % and 6.45 % of gross sales for the years ended December 31, 2024 and 2023, 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 $ 31,480,104 and $ 31,187,009 for the years ended December 31,
2024 and 2023, respectively, recorded as selling and marketing expenses.

 F- 11

 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.

 Deferred 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.

 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, 2024 and 2023, it owed $- 0 - 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 cash equivalents and accounts
receivable. The Company maintains cash and cash equivalents 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.

 F- 12

 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, 2024 and 2023, the
Company had no customer that accounted for 10% or more of total net revenues. In addition, as of December 31, 2024 and 2023, the Company
had no customer that accounted for 10% or more of gross accounts receivable. As of December 31, 2024 and 2023, 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, 2024 and 2023, approximately 99 % and 99 %, respectively, 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 $ 5,323,886 and $ 4,605,629 for
the years ended December 31, 2024 and 2023, 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, 2024 and 2023. Therefore,
the diluted earnings per share is the same as the basic earnings per share.

 Shares 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.

 F- 13

 NOTE 2 - Recent Accounting Pronouncements Not
Yet Adopted

 In December 2023, the FASB issued Accounting Standards Update ("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 ASU is
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.

 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 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 - Inventory

 Inventory was comprised of the following as of
December 31, 2024 and 2023, respectively:

 Schedule of Inventory

 Inventory

 $
 12,716,062

 $
 13,377,530

 Inventory-in-transit

 2,484,863

 1,574,911

 Allowance

 ( 560,293
)

 ( 675,886
)

 Total

 $
 14,640,632

 $
 14,276,555

 As of December 31, 2024 and 2023, $ 560,293 and
$ 675,886 were written down from the cost of purchased inventory 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 statements of operations.

 F- 14

 NOTE 4 - Prepaid Expenses and Other Current
Assets

 Prepaid expenses and other current assets were
comprised of the following as of December 31, 2024 and 2023, respectively:

of Prepaid Expenses and Other Current Assets

 December 31,2023

 Advance to suppliers

 $
 71,934

 $
 49,298

 Prepaid expenses-insurance

 2,174

 5,302

 Prepaid expenses-other

 33,501

 56,437

 Lease refundable deposit

 49,939

 81,522

 Tax receivable

 157,538

 305,253

 Other current assets

 12,808

 7,161

 Total

 $
 327,894

 $
 504,973

 As of December 31, 2024 and 2023, there was
a tax receivable of $ 157,538
and $ 305,253,
respectively, due to income taxes prepaid by the Company.

 NOTE 5 - Property and Equipment

 Property and equipment were comprised of the following
as of December 31, 2024 and 2023, respectively:

of Property and Equipment

 Property and equipment

 $
 381,067

 $
 368,729

 Accumulated depreciation and amortization

 ( 324,270
)

 ( 219,941
)

 Total property and equipment, net

 $
 56,797

 $
 148,788

 F- 15

 For the years ended December 31, 2024 and
2023, the Company purchased $ 35,996
and $ 14,823,
of fixtures and office equipment, respectively.

 For the years ended December 31, 2024 and
2023, the Company had $ 119,064
and $ 138,001,
recorded for depreciation, respectively.

 For the years ended December 31, 2024 and
2023, the Company had no
disposal or pledge on property and equipment.

 NOTE 6 - Accounts Payable and Credit Cards
Payable

of Accounts Payable and Credit Cards Payable

 Accounts payable

 $
 4,176,305

 $
 3,812,954

 Credit cards payable

 3,389,880

 4,404,445

 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, 2024 and 2023, there
were accounts payable of $ 4,176,305 and $ 3,812,954, respectively.

 The Company's credit cards payable consisted
of outstanding balances on credit cards held by the Company. As of December 31, 2024 and 2023, there were credit cards payable of $ 3,389,880
and $ 4,404,445, respectively.

 NOTE 7 - Short-Term Loan

 Line of Credit

 On August 18, 2022, Flywheel entered into a line
of credit agreement in the amount of $ 6,940,063 with Taishin of America Loa. The line of credit initially matured on August 30, 2023.
On August 11, 2023, the line of credit was extended for an additional year, revising the maturity date to August 30, 2024. On May 28,
2024, the term of the loan was revised such that maturity date was extended to November 24, 2024.

 On November 25, 2024, the term of the loan was
revised such that maturity date was extended to May 23, 2025. The line of credit bears interest at a rate of 3.33 % per annum.

 As of December 31, 2024 and 2023, the outstanding
balance under the Taishin line of credit was $ 610,967 and $ 652,422, respectively.

 F- 16

 NOTE 8 - Accrued Expenses and Other Current
Liabilities

 Accrued expenses and other current liabilities
were comprised of the following as of December 31, 2024 and 2023, respectively:

of Accrued Expenses and Other Current Liabilities

 Sales tax payable

 $
 -

 $
 288,466

 Refund liability

 766,721

 708,629

 Accrued payroll

 302,685

 297,059

 Accrued bonus

 963,800

 399,067

 Accrued expenses

 255,154

 215,485

 Accrued interest

 -

 29,712

 Other payables

 34,175

 34,094

 Total

 $
 2,322,535

 $
 1,972,512

 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, $- 0 -
and $ 78,947 are related to interest and penalties as of December 31, 2024 and 2023, respectively.

 As of December 31, 2024 and 2023, the Company
has accrued $ 766,721
 and $ 708,629, 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 $ 963,800 and $ 399,067
accrued for bonuses as of December 31, 2024 and 2023, respectively.

 NOTE 9 - Leases

 The Company had four operating leases (Flywheel's
office leases in Taiwan) as of December 31, 2024. The leased assets in Flywheel are presented as operating lease right-of-use assets.

 F- 17

 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, 2024:

of Operating Leases Cost

 Flywheel

 Flywheel

 Flywheel

 Flywheel

 February 2023

 March 2024

 June 2024

 August 2024

 Initial lease term

 to March 2025

 to June 2025

 to May 2025

 to July 2025

 Initial recognition of operating lease right-of-use assets

 $

 28,652

 $

 123,107

 $

 52,434

 $

 73,175

 Weighted-average remaining lease term at December 31, 2024

 0.17

 0.5

 0.42

 0.58

 Weighted-average discount rate at December 31, 2024

 3.20

 %

 3.20

 %

 3.33

 %

 3.33

 %

 Operating lease liabilities-current as of December
31, 2024 and 2023 were $ 114,540 and $ 82,269, respectively. Operating lease liabilities-non-current as of December 31, 2024 and 2023 were $- 0 - and $ 2,363, respectively. The operating lease right-of-use assets balance as of December 31, 2024 and 2023, were $ 111,409 and $ 83,946,
respectively.

 For the years ended December 31, 2024 and 2023,
the amortization of the operating lease right-of-use asset was $ 211,348 and $ 387,446, respectively. These amounts were recorded in general
and administrative expenses. Additionally, for the years ended December 31, 2024 and 2023, the Company made lease payments of $ 208,843
and $ 386,224, respectively, which were included in the operating cash flows statements.

 The future minimum lease payment schedule for
all operating leases as of December 31, 2024, is as disclosed below.

of Operating Lease Liabilities

 For the Year Ending December 31,

 Amount

 2025

 $

 115,652

 2026

 -

 2027

 -

 2028 and thereafter

 -

 Total minimum lease payments

 115,652

 Less: effect of discounting

 ( 1,112

)

 Present value of the future minimum lease payment

 114,540

 Less: operating lease liabilities-current

 ( 114,540

)

 Total operating lease liabilities-non-current

 $

 -

 F- 18

 NOTE 10 - 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 payable on demand. As of December 31, 2024
and 2023, the Company had $ 4,192,995 and $ 4,170,418, respectively, 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). As of December 31, 2024, this amount included $ 3,499,418 in stockholder payables and $ 693,577 accrued for bonuses. The loan is memorialized
in a Loan Agreement dated October 15, 2021. The annual interest rate was 2 % and the initial 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 for another two years, with a revised maturity date of December 31, 2024. On December 31,
2024, the Company, Mr. Lai and Ms. Yu agreed to extend the term of the loan for another one year, with a revised maturity date of December
31, 2025. The annual interest rate is 5.5%.

 For the years ended December 31, 2024 and 2023,
the Company made repayments to related parties of $ 671,000 and $- 0 -, respectively.

 NOTE 11 – Disaggregation of Revenue

 Revenue was comprised of the following for the
years ended December 31, 2024 and 2023, respectively:

 Schedule of Revenue

 2024

 2023

 Revenue-America

 $
 144,760,995

 $
 138,079,203

 Revenue-International

 4,947,516

 4,379,801

 Revenue-Other

 1,148,935

 930,191

 Revenue

 1,148,935

 930,191

 Sales returns

 ( 10,840,277
)

 ( 9,248,586
)

 Discounts

 ( 1,764,308
)

 ( 2,016,407
)

 Total

 $
 138,252,861

 $
 132,124,202

 F- 19

 NOTE 12 - Income Tax

 The components of income taxes benefit are as
follows:

of Effective Income Tax Rate Reconciliation

 December
 31, 2024

 December
 31, 2023

 Federal rate

 21.00
 %

 21.00
 %

 Blended state tax rate

 4.12
 %

 4.11
 %

 Effective tax rate

 25.12
 %

 25.11
 %

 Schedule of Effective Tax Rate Reconciliation

 Effective Tax Rate Reconciliation for the Year Ended December 31, 2024

 %

 $

 Pretax Book Income

 959,561

 21.00

 %

 201,508

 Permanent Differences

 84,240

 1.84

 %

 17,690

 PY Federal Perm True-up

 117,653

 2.57

 %

 24,707

 State income tax

 68,981

 6.79

 %

 65,198

 Other Deferred adjustment

 -

 - 0.73

 %

 ( 6,989

)

 Total Tax Expenses

 31.47

 %

 302,114

 F- 20

 Effective Tax Rate Reconciliation for the Year Ended 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

)

 Schedule of Tax Expense Summary

 Current

 Deferred

 Total

 Tax Expense Summary, for the Year Ended December 31, 2024

 Expense

 Expense

 Expense

 Federal

 39,989

 193,145

 233,134

 State

 18,013

 50,967

 68,980

 Total Tax Expense

 58,002

 244,112

 302,114

 Current

 Deferred

 Total

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

 Benefit

 Benefit

 Benefit

 Federal

 $
 ( 637,242
)

 $
 -

 $
 ( 637,242
)

 State

 ( 117,654
)

 24,136

 ( 93,518
)

 Total tax expense (benefit)

 $
 ( 754,896
)

 $
 24,136

 $
 ( 730,760
)

 F- 21

 The tax effects of temporary differences that
give rise to significant portions of the deferred tax assets at December 31, 2024 and 2023 were as follows:

of Deferred Tax Assets and Liabilities

 Deferred Tax Assets

 Deferred Tax Assets

 Deferred Tax Assets summary

 Federal

 $
 908,691

 $
 1,101,836

 State

 151,413

 202,379

 Total

 $
 1,060,104

 $
 1,304,215

 Deferred Tax Assets

 Deferred Tax Assets

 Deferred Tax Assets summary

 Operating lease right of use lease assets

 $

 $

 Inventories allowance

 140,743

 169,725

 Net loss carry forward

 918,574

 1,134,318

 Total

 $
 1,060,104

 $
 1,304,215

 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, 2024 and 2023.

 For the years ended December 31, 2024 and 2023,
the Company reported net operating income (loss) of $ 657,447
 and $ ( 2,429,694), 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.

 F- 22

 NOTE 13 - Stockholders' Equity

 Preferred Stock

 As of December 31, 2024 and 2023, 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, 2024 and 2023. The holders of the preferred stock are entitled to receive dividends, if and when declared
by the Board of Directors.

 Common Stock

 As of December 31, 2024 and 2023, the Company
had 300,000,000 shares of common stock, $ 0.0001 par value per share, authorized. As of December 31, 2024 and 2023, there were 35,143,460
and 35,082,464 shares of common stock issued and outstanding, respectively.

 Share Issuances for Stock Compensation

 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

 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

 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

 F- 23

 On March 29, 2024, the Company issued 2,251 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 $ 1.3330 per share as compensation for the services as executives or directors of the Company pursuant to the terms of their respective

 On July 1, 2024, the Company issued 2,946 shares
of Company common stock to each of Sam Lai and Maggie Yu (both of whom are executive officers, directors and significant stockholders
of the Company), and Michael Lenner, Douglas Branch, Alan Gao and Hillary Bui (each of whom was a director of the Company as of such date),
with a fair market value of $ 1.0185 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. Subsequently, on July 22, 2024, Mr.
Branch resigned his position as a member of the Company's Board of Directors.

 On July 25, 2024, following Mr. Branch's
resignation, the Company issued 6,000 shares of restricted common stock to Mr. Branch as compensation for services rendered.

 On October 1, 2024, the Company issued 2,196 shares
of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Alan Gao and Hillary Bui, with a fair market value of $ 1.3660 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.

 NOTE 14 - Commitments and Contingencies

 As of December 31, 2024 and 2023, 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, 2024 and 2023, 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 15 - Subsequent Events

 On January 2, 2025, the Company issued 1,596 shares
of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Alan Gao and Hillary Bui, with a fair market value of $ 1.8799 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 27, 2025, 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- 24

 SIGNATURES

 Pursuant 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.

 Dated: March 27, 2025

 By:

 /s/ 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.

 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.

 Signature

 Title

 Date

 /s/ Sam Lai

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

 principal financial officer and principal accounting officer)

 /s/ Sau Kuen (Maggie) Yu

 Director

 Sau Kuen (Maggie) Yu

 /s/ Michael Lenner

 Director

 Michael Lenner

 /s/ Minghui (Alan) Gao

 Director

 Minghui (Alan) Gao

 / s/ Hilary (Hui-Chong) Bui

 Director

 Hilary (Hui-Chong) Bui