Hour Loop Inc

Previous wording

We are an online retailer engaged in e-commerce retailing in the U.S. market. We have operated as a third-party seller onwww.amazon.comsince 2013. We have also sold merchandise on our website atwww.hourloop.com since 2013. We expanded our operations to www.walmart.com in October 2020. To date, we have generated practically all of our revenues as a third-party seller onwww.amazon.com and only a negligible amount of revenues from our operations on our website at www.hourloop.com and as a third-party seller onwww.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. In upcoming years, we plan to expand our business rapidly by increasing the number of business managers, vendors and SKUs.

Current wording

We are an online retailer engaged in e-commerce retailing in the U.S. market. We have operated as a third-party seller onwww.amazon.comsince 2013. We have also sold merchandise on our website atwww.hourloop.com since 2013. We expanded our operations to www.walmart.com in October 2020. To date, we have generated practically all of our revenues as a third-party seller onwww.amazon.com and only a negligible amount of revenues from our operations on our website at www.hourloop.com and as a third-party seller onwww.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 throughout the entirety of the last quarter (holiday season) of the calendar year. In upcoming years, we plan to expand our business rapidly by increasing the number of business managers, vendors and SKUs.

Previous wording

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 onwww.walmart.com.

Current wording

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 similar. We pay Walmart fees for allowing us to sell our merchandise on its platform. As stated above, to date, we have generated only a negligible amount of revenues as a third-party seller onwww.walmart.com.

Previous wording

The advantages of selling via a wholesale model:

Current wording

The advantages of selling via a wholesale model are as follows:

Previous wording

The challenges of selling via a wholesale model:

Current wording

The challenges of selling via a wholesale model include the following:

Previous wording

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

Current wording

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

Previous wording

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

Current wording

Among more than 2.5 million active third-party sellers on Amazon, we believe we have two main competitive advantages:

Previous wording

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.

Current wording

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 learning 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.

Previous wording

For the three months ended March 31, 2024 and 2023, we generated net revenues of $24,681,122 and $21,067,609, respectively, and reported net income (loss) of $1,065,814 and $(1,235,244), respectively, and cash flow provided by (used in) operating activities of $492,943 and $(3,289,076), respectively. As noted in our unaudited consolidated financial statements, as of March 31, 2024, we had an accumulated deficit of $186,808.

Current wording

For the three months ended June 30, 2024 and 2023, we generated net revenues of $28,070,707 and $22,417,448, respectively, and reported net income (loss) of $649,150 and $(769,368), respectively, and cash flow provided by (used in) operating activities of $456,232 and $(135,364), respectively.

Previous wording

The following table shows comparisons of our unaudited income statements for the three months ended March 31, 2024 and 2023.

Current wording

The following table shows comparisons of our unaudited income statements for the three and six months ended June 30, 2024 and 2023.

Previous wording

We generated $24,681,122 in revenues in the three months ended March 31, 2024, as compared to $21,067,609 in revenues in the same period in 2023. This represents an increase in revenues of $3,613,513, or 17.15%. 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 the three months ended March 31, 2024 were approximately 1,123,204, as compared to 912,444 orders in the three months ended March 31, 2023, representing an increase of 23.1%. 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 23.1% 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.

Current wording

We generated $28,070,707 in revenues in the three months ended June 30, 2024, as compared to $22,417,448 in revenues in the same period in 2023. This represents an increase in revenues of $5,653,259, or 25.22%. 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 the three months ended June 30, 2024 were approximately 1,268,890, as compared to 972,136 orders in the three months ended June 30, 2023, representing an increase of 30.53%. 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 30.53% 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.

Previous wording

Cost of goods sold for the three months ended March 31, 2024 totaled $10,228,916, as compared to $11,451,907 for the three months ended March 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.

Current wording

Cost of goods sold for the three months ended June 30, 2024 totaled $12,445,297, as compared to $11,059,899 for the three months ended June 30, 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.

Previous wording

Operating expenses for the three months ended March 31, 2024, totaled $12,914,034, representing a $1,686,073, or 15.02%, increase from the $11,227,961 of operating expenses for the three months ended March 31, 2023. This change was caused by an increase in platform fees and fees paid to Amazon. The Amazon fees are proportional to revenues. In 2023, Amazon made strategic adjustments to its Fulfillment by Amazon (“FBA”) fees and costs, which had a direct impact on our operating expenses. The increase in revenues in the three months ended March 31, 2024 over the same period in 2023 drove the increase in platform fees and higher Amazon fees.

Current wording

Operating expenses for the three months ended June 30, 2024 totaled $14,688,214, representing a $2,483,453, or 20.35%, increase from the $12,204,761 of operating expenses for the three months ended June 30, 2023. This change was caused by an increase in platform fees and fees paid to Amazon. The Amazon fees are proportional to revenues. In 2023, Amazon made strategic adjustments to its Fulfillment by Amazon (“FBA”) fees and costs, which had a direct impact on our operating expenses. The increase in revenues in the three months ended June 30, 2024 over the same period in 2023 drove the increase in platform fees and higher Amazon fees.

Previous wording

Other expense for the three months ended March 31, 2024, was $35,234, compared to other expense of $47,941 for the three months ended March 31, 2023.

Current wording

Other expenses, net, for the three months ended June 30, 2024 was $7,284, compared to other expense, net, of $43,138 for the three months ended June 30, 2023.

Previous wording

Total comprehensive income (loss) for the three months ended March 31, 2024, was $1,049,281, as compared with $(1,233,905) for the three months ended March 31, 2023. The decrease in total comprehensive loss was attributed to an increase in the Company’s gross revenues in the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

Current wording

Total comprehensive income (loss) for the three months ended June 30, 2024, was $641,092, as compared with $(778,560) for the three months ended June 30, 2023. The decrease in total comprehensive loss was attributed to an increase in the Company’s gross revenues in the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Previous wording

Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had cash of $2,922,080 and $1,274,791 as of March 31, 2024 and 2023, respectively.

Current wording

Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had cash of $3,346,897 and $1,118,671 as of June 30, 2024 and 2023, respectively.

Previous wording

The following table shows a summary of our cash flows for the three months ended March 31, 2024 and 2023.

Current wording

The following table shows a summary of our cash flows for the six months ended June 30, 2024 and 2023.

Previous wording

For the three months ended March 31, 2024, cash provided by operating activities amounted to $492,943, as compared to $3,289,076 of cash used in operating activities for the three months ended March 31, 2023. This was driven by our net income (loss) of $1,065,814 for the three months ended March 31, 2024, as compared to $(1,235,244) for the same period in 2023.

Current wording

For the six months ended June 30, 2024, cash provided by (used in) operating activities amounted to $949,175, as compared to $(3,424,440) of cash used in operating activities for the six months ended June 30, 2023. This was driven by our net income (loss) of $1,714,964 for the six months ended June 30, 2024, as compared to $(2,004,612) for the same period in 2023.

Previous wording

Despite the increase in revenue to $24,681,122 for the three months ended March 31, 2024, as compared to $21,067,609 for the three months ended March 31, 2023, the revenue increase was offset by a corresponding increase in operating expenses of $1,686,073.

Current wording

Despite the increase in revenue to $52,751,829 for the six months ended June 30, 2024, as compared to $43,485,057 for the six months ended June 30, 2023, the revenue increase was offset by a corresponding increase in operating expenses of $4,169,526.

Previous wording

For the three months ended March 31, 2024, $17,798 in cash was used in investing activities, compared to $3,379 in cash used in investing activities for the three months ended March 31, 2023.

Current wording

For the six months ended June 30, 2024, $34,593 in cash was used in investing activities, compared to $5,881 in cash used in investing activities for the six months ended June 30, 2023.

Previous wording

For the three months ended March 31, 2024, cash used in financing activities amounted to $-0-, as compared to cash provided by financing activities of $-0- for the three months ended March 31, 2023.

Current wording

For the six months ended June 30, 2024, cash used in financing activities amounted to $-0-, as compared to cash provided by financing activities of $-0- for the six months ended June 30, 2023.

Previous wording

On August 18, 2022, Flywheel entered into a line of credit agreement in the amount of $6,940,063 with Taishin International Bank (“Taishin”). The line of credit initially matured on August 30, 2023. On August 11, 2023, the term of the loan was extended for an additional year, revising the maturity date to August 30, 2024. The line of credit bears interest at a rate of 3.2% per annum.

Current wording

On August 18, 2022, Flywheel entered into a line of credit agreement in the amount of $6,940,063 with Taishin International Bank (“Taishin”). The line of credit 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.

Previous wording

As of March 31, 2024, the outstanding balance under the Taishin line of credit was $625,978. The Company has accrued interest expense of $1,646 as of March 31, 2024.

Current wording

As of June 30, 2024, the outstanding balance under the Taishin line of credit was $617,284.

Previous wording

Accounts Receivable and Allowance for Doubtful Accounts - Accounts receivable are stated at historical cost less allowance for doubtful accounts. On a periodic basis, management evaluates its accounts receivable and determines whether to provide an allowance for credit losses in accordance with 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 March 31, 2024 and December 31, 2023, the Company did not deem it necessary to have an allowance for bad debt or doubtful accounts.

Current wording

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 June 30, 2024 and December 31, 2023, the Company did not deem it necessary to have an allowance for credit loss.

Previous wording

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 March 31, 2024 and December 31, 2023, $637,058 and $675,886, respectively, was 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.

Current wording

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 June 30, 2024 and December 31, 2023, $645,379 and $675,886, respectively, was 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.

Previous wording

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 three months ended March 31, 2024 and 2023.

Current wording

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 three and six months ended June 30, 2024 and 2023.

Previous wording

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 As of March 31, 2024 and December 31, 2023, the Company held cash equivalents in a money market fund, Dreyfus Government Cash Management. The value of the money market fund was $1,677,426 and $101,510 as of March 31, 2024 and December 31, 2023, respectively. These funds were classified as Level 1 assets within the fair value hierarchy and accounted for at fair value.

Current wording

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 As of June 30, 2024 and December 31, 2023, the Company held cash equivalents in a money market fund, Dreyfus Government Cash Management. The value of the money market fund was $92,183 and $101,510 as of June 30, 2024 and December 31, 2023, respectively. These funds were classified as Level 1 assets within the fair value hierarchy and accounted for at fair value.

Previous wording

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 three months ended March 31, 2024 and twelve months ended December 31, 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.

Current wording

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 three and six months ended June 30, 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.

Previous wording

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 5.53% and 7.25% of gross sales for the three months ended March 31, 2024 and 2023, respectively.

Current wording

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 5.94% and 6.77% of gross sales for six months ended June 30, 2024 and 2023, respectively.

Previous wording

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 $5,705,385 and $5,037,251 for the three months ended March 31, 2024 and 2023, respectively, recorded as selling and marketing expenses.

Current wording

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 $11,886,764 and $10,312,496 for the six months ended June 30, 2024 and 2023, respectively, recorded as selling and marketing expenses.

Previous wording

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 three months ended March 31, 2024 and 2023, the Company had no customer that accounted for 10% or more of total net revenues. In addition, as of March 31, 2024 and December 31, 2023, the Company had no customer that accounted for 10% or more of gross accounts receivable. As of March 31, 2024 and December 31, 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.

Current wording

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 three and six months ended June 30, 2024 and 2023, the Company had no customer that accounted for 10% or more of total net revenues. In addition, as of June 30, 2024 and December 31, 2023, the Company had no customer that accounted for 10% or more of gross accounts receivable. As of June 30, 2024 and December 31, 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.

Previous wording

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 three months ended March 31, 2024 and 2023, approximately 99% and 100%, respectively, of the Company’s revenue was through or with the Amazon sales platform.

Current wording

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 three and six months ended June 30, 2024 and 2023, approximately 99% and 100%, respectively, of the Company’s revenue was through or with the Amazon sales platform.

Previous wording

Advertising and Promotion Expenses – Our policy is to recognize advertising costs as they are incurred. Advertising and promotion expenses were $884,000 and $784,266 for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Advertising and Promotion Expenses – Our policy is to recognize advertising costs as they are incurred. Advertising and promotion expenses were $1,953,155 and $1,567,126 for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

**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 three months ended March 31, 2024 and 2023. Therefore, the diluted earnings per share is the same as the basic earnings per share.

Current wording

**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 three and six months ended June 30, 2024 and 2023. Therefore, the diluted earnings per share is the same as the basic earnings per share.