Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

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 our 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 our 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, our 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., together with Flywheel Consulting Limited, its wholly owned subsidiary ("Flywheel").

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 décor, 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

According to Marketplace Pulse (based on U.S. Census Bureau data), total U.S. retail sales increased 3.5% to approximately $7.68 trillion in 2025, from $7.42 trillion in 2024. Consumers spent $1,233.7 billion online with U.S. merchants in 2025, which represents approximately 16.4% of total U.S. retail sales for the year, compared to 16.07% in 2024.

Amazon accounted for approximately 40% of all e-commerce in the United States and that makes Amazon the biggest e-commerce 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 2025, sales grew from $0 to $142,440,236.

We were originally incorporated under the laws of the State of Washington on January 13, 2015. In 2019, we formed Flywheel, a wholly owned subsidiary, 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, 2025 and 2024, we generated net revenues of $142,440,236 and $138,252,861, respectively, and reported net income of $1,704,849 and $657,447, respectively, and cash flow provided by operating activities of $2,581,256 and $313,140, respectively. As noted in our consolidated financial statements, as of December 31, 2025, we had retained earnings of $1,109,674.

Results of Operations

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

The following table shows a comparison of our 2025 and 2024 income statements.

		Year Ended December 31,
		2025				2024
Statement of Operations Data
Total revenues		$	142,440,236			$	138,252,861
Total cost of goods sold			(67,806,565	)			(66,242,153	)
Gross profit			74,633,671				72,010,708
Total operating expenses			72,172,741				71,279,768
Income from operations			2,460,930				730,940
Total other non-operating (expense) income			(63,345	)			228,621
Income tax expense			(692,736	)			(302,114	)
Net income			1,704,849				657,447
Other comprehensive income (loss)			69,267				(25,644	)
Total comprehensive income		$	1,774,116			$	631,803

Revenue

The Company generated $142,440,236 in revenues in 2025, as compared to $138,252,861 in revenues in the same period in 2024. This represents an increase in revenues of $4,187,375, or 3.03%. 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 2025 were approximately 6,588,014, as compared to 6,337,492 orders in 2024, representing an increase of 3.95%. This growth in orders has played a pivotal role in driving the overall revenue growth. The meaningful 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 our revenues during the period. The 3.95% 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, 2025 totaled $67,806,565, as compared to $66,242,153 for the year ended December 31, 2024. 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, 2025 totaled $72,172,741, representing a $892,973, or 1.25%, increase from the $71,279,768 of operating expenses for the year ended December 31, 2024. This change was caused by an increase in operating efficiency.

Other (Expenses) Income, Net

Other (expenses) income, net for the year ended December 31, 2025 was $(63,345), as compared to $228,621 for the year ended December 31, 2024.

Total Comprehensive Income

Total comprehensive income for the year ended December 31, 2025 was $1,774,116, as compared to $631,803 for the year ended December 31, 2024. The increase in total comprehensive income was attributed to an increase in our gross revenues in 2025, compared to 2024.

Liquidity and Capital Resources

Cash Flows for the Years Ended December 31, 2025 and 2024

Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had cash of $3,792,033 and $2,119,581 as of December 31, 2025 and 2024, 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, 2025 and 2024.

		Year Ended December 31,
		2025				2024
Statement of Cash Flows
Net cash provided by operating activities		$	2,581,256			$	313,140
Net cash used in investing activities		$	(75,097	)		$	(35,996	)
Net cash used in financing activities		$	(839,000	)		$	(671,000	)
Effect of changes in foreign currency rates		$	5,293			$	29,284
Net increase (decrease) in cash		$	1,672,452			$	(364,572	)
Cash - beginning of the period		$	2,119,581			$	2,484,153
Cash - end of the period		$	3,792,033			$	2,119,581

Net Cash Provided by Operating Activities

For the fiscal year ended December 31, 2025, cash provided by operating activities amounted to $2,581,256, as compared to $313,140 for the year ended December 31, 2024. This was driven by our net income of $1,704,849 for the year ended December 31, 2025, as compared to $657,447 for the same period in 2024.

Despite the increase in revenue to $142,440,236 for the year ended December 31, 2025, as compared to $138,252,861 for the year ended December 31, 2024, the revenue increase was offset by a corresponding increase in cost of goods sold of $1,564,412 and an increase in operating expenses of $892,973.

Net Cash Used in Investing Activities

For the fiscal year ended December 31, 2025, $75,097 in cash was used in investing activities, as compared to $35,996 in cash used in investing activities for the fiscal year ended December 31, 2024. The increase primarily reflects higher purchases of property and equipment for the year ended December 31, 2025.

Net Cash Used in Financing Activities

For the fiscal year ended December 31, 2025, cash used in financing activities amounted to $1,339,000, as compared to $671,000 cash used in financing activities for the fiscal year ended December 31, 2024. The increase in cash outflows was primarily due to repayments made to related parties for the year ended December 31, 2025.

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.

Taishin International Bank

On August 18, 2022, Flywheel entered into a line of credit agreement in the amount of $6,940,063 with Taishin International Bank ("Taishin"). As amended, the line of credit matures on May 18, 2026 and bears interest at a rate of 3.42% per annum.

As of December 31, 2025 and 2024, the outstanding balance under the Taishin line of credit was $637,348 and $610,967, respectively.

Affiliated Loans

From time to time, we receive loans and advances from our stockholders to fund our operations. As of December 31, 2025, we had a total of $3,810,418 due to related parties, which included $2,660,418 in stockholder payables and $1,150,000 accrued for bonuses. As of December 31, 2024, we 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, we and our stockholders entered into loan agreements for loans with terms over one year.

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. As amended, the loan matures on December 31, 2026 and has an annual interest rate of 4.75%.

Leases

We have two operating leases (Flywheel has two offices lease in Taiwan). The respective lease terms are June 10, 2025 to July 9, 2027, and December 1, 2025 to November 30, 2028, respectively.

For the Year Ending December 31,		Amount
2026		$	94,036
2027			61,330
2028			26,890
2029 and thereafter			-
Total minimum lease payments			182,256
Less: effect of discounting			(6,623	)
Present value of the future minimum lease payment			175,633
Less: operating lease liabilities-current			(92,362	)
Total operating lease liabilities-non-current		$	83,271

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 - We consider 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. We perform on-going evaluations of our customers and maintains an allowance for credit losses as we deem necessary or appropriate. As of December 31, 2025 and 2024, we did not deem it necessary to have an allowance for credit loss.

Inventory and Cost of Goods Sold - Our 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. Our costs include the amounts we pay 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 our receiving dock. 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: We write 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, 2025 and 2024, $447,841 and $560,293, respectively, were written down from the cost of inventories to our 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. We elected to expense any individual property and equipment items under $2,500.

The majority of our property and equipment is computers, and the estimated useful life is three 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. We did not record any impairment charges for the years ended December 31, 2025 and 2024.

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.

We typically utilize operating leases for our office space requirements. This means that we lease office space, categorizing the lease arrangement as an operating lease. Under this arrangement, we do 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 - We account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"). We adopted ASC Topic 606 as of January 1, 2019. The standard did not affect our consolidated financial position, or cash flows. There were no changes to the timing of revenue recognition as a result of the adoption.

We recognize 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.

We 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. We can, at any time, direct Amazon, similarly, other third-party logistics providers ("Logistics Providers"), to return our inventories to any location specified by the Company. It is our responsibility to make any returns made by customers directly to Logistics Providers and we retain the back-end inventory risk. Further, we are 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.

We derive our revenue from the sale of consumer products. We sell our products directly to consumers through online retail channels. We consider 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, 2025 and 2024 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 our 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, we have 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 7.26% and 7.19% of gross sales for the years ended December 31, 2025 and 2024, respectively.

From time to time, we offer price discounts on certain selected items to stimulate the sales of those items. Revenue is measured as the amount of consideration for which we expect to be entitled in exchange for transferring goods. Consistent with this policy, we reduce 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. We treat shipping and handling as fulfillment activities, not separate performance obligations. Costs for shipping and handling were $32,050,121 and $31,480,104 for the years ended December 31, 2025 and 2024, respectively, recorded as selling and marketing expenses.

Segment Information - We only have one segment, which is online retail (e-commerce).

We use the "management approach" in determining reportable operating segments. The management approach considers the internal organization and reporting used by our chief operating decision maker for making operating decisions and assessing performance as the source for determining our reportable segments. Our 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, we have determined that it has only one operating segment.

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

We also complied with state tax codes and regulations, including with respect to California franchise taxes. Management has evaluated our tax positions and has concluded that we 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.

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

We maintain reserves for potential credit losses on customer accounts when deemed necessary. Significant customers are those which represent more than 10% of our total net revenue or gross accounts receivable balance at the balance sheet date. For the years ended December 31, 2025 and 2024, we had no customer that accounted for 10% or more of total net revenues. In addition, as of December 31, 2025 and 2024, we had no customer that accounted for 10% or more of gross accounts receivable. As of December 31, 2025 and 2024, all of our accounts receivable were held by our sales platform agent, Amazon, which collects money on our behalf from our customers. Therefore, our accounts receivable are comprised of receivables due from Amazon and the reimbursement from Amazon to the Company usually takes less than seven days.

Our business is reliant on one key vendor which currently provides us with our sales platform, logistics and fulfillment operations, including certain warehousing for our net goods, and invoicing and collection of its revenue from our end customers. During the years ended December 31, 2025 and 2024, approximately 98% and 99%, respectively, of our revenue was through or with the Amazon sales platform.

Foreign Currency Exchange Risk - We are exposed to foreign currency exchange risk through our foreign subsidiary in Taiwan. We do 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 $5,777,969 and $5,323,886 for the years ended December 31, 2025 and 2024, 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 - We account for related party transactions in accordance with FASB ASC Topic 850 (Related Party Disclosures). A party is considered to be related to us 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 our principal owners, our management, members of the immediate families of our principal owners and our management and other parties with which we 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 - We compute basic earnings per common share using the weighted-average number of shares of common stock outstanding during the period. For the period in which we report 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, 2025 and 2024. 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.