Hour Loop, Inc
For the period ended Jun 30, 2026. Filed Aug 11, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 11, 2026
HOUR$1.46-3.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-12.
0001493152-26-022489
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-11.
0001493152-26-037151
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 123 previous paragraphs and 131 current paragraphs.
80 unchanged; 35 reworded; 12 added; 8 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 18 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
Mr. Lai and Ms. Yu are husband and wife, and together, they beneficially own 33,363,314 shares of the Company’s common stock, representing approximately 94.8% of the voting power of the Company’s outstanding common stock, with each of Mr. Lai and Ms. Yu beneficially holding 33,363,314 shares of the Company’s common stock, as each of them is deemed to indirectly beneficially own the other’s 16,681,657 shares.
Current report
Fourth Amendment to Loan Agreement
Current report
For the six months ended June 30, 2026 compared to the six months ended June 30, 2025
Current report
Revenues, Net
Current report
Cost of Revenues
Current report
Cost of revenues for the six months ended June 30, 2026 totaled $29,888,620, as compared to $23,297,546 for the six months ended June 30, 2025. The increase was in line with the growth in revenues and also reflects the changes to Amazon’s FBA fee structure and the fuel and logistics surcharge described above.
Current report
Total Operating Expenses
Current report
Total operating expenses for the six months ended June 30, 2026 totaled $31,559,399, representing a $4,458,465, or 16.5%, increase from the $27,100,934 of total operating expenses for the six months ended June 30, 2025. This change was primarily caused by an increase in selling and marketing expenses in line with the growth in revenues.
Current report
Total Other (Expenses) Income, Net
Current report
Total other expenses, net, for the six months ended June 30, 2026 was $35,698, compared to total other expenses, net, of $23,099 for the six months ended June 30, 2025.
Current report
Total Comprehensive Income
Current report
Total comprehensive income for the six months ended June 30, 2026 was $1,861,510, as compared to $1,972,921 for the six months ended June 30, 2025. The decrease in total comprehensive income was primarily attributable to the foreign currency translation adjustments, which reflected a loss of $13,657 for the six months ended June 30, 2026, compared to a gain of $141,403 for the six months ended June 30, 2025.
Removed paragraphs (8)
Previous report
Executive Officer Cash Bonuses
Previous report
On January 28, 2026, the Company’s Audit Committee and the Board of Directors approved the payment of cash bonuses to Sam Lai, the Company’s Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer, and Maggie Yu, the Company’s Senior Vice President and a member of the Board of Directors, in the amount of $500,000 and $450,000, respectively. Mr. Lai and Ms. Yu are husband and wife, and together beneficially own approximately 94.84% of the voting power of the Company’s outstanding common stock. The Company paid such cash bonuses to Mr. Lai and Ms. Yu on March 25 and March 18, 2026, respectively.
Previous report
Bylaws Amendment
Previous report
On March 16, 2026, the Company’s Board of Directors adopted an amendment (the “Bylaws Amendment”) to the Company’s bylaws (the “Bylaws”).
Previous report
Prior to adoption of the Bylaws Amendment, the second sentence of Section 7.4 of the Bylaws provided that “[i]f any action is brought by any party against another party, relating to or arising out of [the] 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 [Delaware General Corporation Law]”, and Section 7.5 of the Bylaws provided (and continues to provide following adoption of the Bylaws Amendment) that “[a]ll powers, duties and responsibilities provided for in [the] Bylaws, whether or not explicitly so qualified, are qualified by the provisions of the [Company’s certificate of incorporation] and applicable law”.
Previous report
The Bylaws Amendment had the effect of amending and restating the second sentence of Section 7.4 of the Bylaws to read as follows: “If 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 115 of the DGCL or in connection with any other claim that a stockholder, acting in its capacity as a stockholder or in the right of the Corporation, has brought in an action, suit or proceeding.” In addition, the Bylaws Amendment added a new sentence to the end of Section 7.4 of the Bylaws, providing as follows: “Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, including, in each case, any and all claims brought either directly or derivatively.”
Previous report
The Bylaws Amendment was intended to (i) clarify that, consistent with Section 7.5 of the Bylaws and the provisions of the Delaware General Corporation Law, including Section 109(b) thereof, the Bylaws do not contain any provision that would impose liability on a stockholder for the attorneys’ fees or expenses of the Company or any other party in connection with an internal corporate claim, or in connection with any other claim that a stockholder, acting in its capacity as a stockholder or in the right of the Company, has brought in an action, suit or proceeding; and (ii) provide that all direct and derivative claims related to the Securities Act or the Exchange Act must be brought solely in a U.S. federal court.
Previous report
Executive Officer Advance
Reworded paragraphs (35)
Previous wording
Beginning in 2026, the Company also faced additional cost pressures from Amazon’s labeling service discontinuation and changes to the commingled inventory policy. Prior to 2026, the Company contracted with Amazon to provide labeling and packaging (such as polybagging and bubble wrapping) services for the Company. Effective January 1, 2026, Amazon ceased providing these services for its sellers. Accordingly, sellers, including the Company, are now responsible for all inventory preparation prior to delivery at Amazon fulfillment centers. In response, the Company has, among other things, (i) engaged external fulfillment partners to manage labeling and preparation, resulting in an incremental increase in variable fulfillment costs per unit; and (ii) integrated FNSKU labeling and Amazon-compliant packaging directly into the manufacturing process at the source, which resulted in increases to cost of revenues and selling and marketing expenses. Labeling-related costs are expected to have an impact going forward. Although the impact is not considered material, the Company has disclosed the level of impact for transparency; however, the Company also successfully secured more advertising fund support and negotiated better vendor discounts. These measures helped offset rising costs and ensured that overall profitability remained stable for the three months ended March 31, 2026.
Current wording
Beginning in 2026, the Company also faced additional cost pressures from Amazon’s labeling service discontinuation and changes to the commingled inventory policy. Prior to 2026, the Company contracted with Amazon to provide labeling and packaging (such as polybagging and bubble wrapping) services for the Company. Effective January 1, 2026, Amazon ceased providing these services for its sellers. Accordingly, sellers, including the Company, are now responsible for all inventory preparation prior to delivery at Amazon fulfillment centers. In response, the Company has, among other things, (i) engaged external fulfillment partners to manage labeling and preparation, resulting in an incremental increase in variable fulfillment costs per unit; and (ii) integrated FNSKU labeling and Amazon-compliant packaging directly into the manufacturing process at the source, which resulted in increases to cost of revenues and selling and marketing expenses. Labeling-related costs are expected to have an impact going forward. Although the impact is not considered material, the Company has disclosed the level of impact for transparency; however, the Company also successfully secured more advertising fund support and negotiated better vendor discounts. These measures helped offset rising costs and ensured that overall profitability remained stable for the six months ended June 30, 2026.
Previous wording
Addendum No. 6 to Lai Employment Agreement
Current wording
Addendum No. 7 to Lai Employment Agreement
Previous wording
On February 24, 2026, the Company entered into Addendum No. 6 (the “Lai Addendum”) to Executive Employment Agreement, as amended, with Mr. Lai (the “Lai Agreement”). Pursuant to the terms of the Lai Addendum, Mr. Lai’s bonus targets and payments were set as follows:
Current wording
On May 15, 2026, the Company entered into Addendum No. 7 (the “Lai Addendum”) to Executive Employment Agreement, as amended, with Sam Lai (the “Lai Agreement”), the Company’s Chairman of the Board, Chief Executive Officer, interim Chief Financial Officer, and majority stockholder. Pursuant to the terms of the Lai Addendum, Mr. Lai’s 2026 bonus targets and payments were revised as follows:
Previous wording
Addendum No. 6 to Yu Employment Agreement
Current wording
Addendum No. 7 to Yu Employment Agreement
Previous wording
Also on February 24, 2026, the Company entered into Addendum No. 6 (the “Yu Addendum”) to Executive Employment Agreement, as amended, with Ms. Yu (the “Yu Agreement”). Pursuant to the terms of the Yu Addendum, Ms. Yu’s bonus targets and payments were set as follows:
Current wording
Also on May 15, 2026, the Company entered into Addendum No. 7 (the “Yu Addendum”) to Executive Employment Agreement, as amended, with Sau Kuen (Maggie) Yu (the “Yu Agreement”), the Company’s Senior Vice President, Director and majority stockholder. Pursuant to the terms of the Yu Addendum, Ms. Yu’s 2026 bonus targets and payments were revised as follows:
Previous wording
On April 6, 2026, the Company issued 1,600 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 $1.8745 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.
Current wording
On July 1, 2026, the Company issued 1,586 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 $1.8910 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.
Previous wording
Due to changes in Amazon’s Disbursement Policy, daily remittances are now delayed by seven days. In April 2026, 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, advanced a total of $1,601,000 to the Company to provide support. At present, no formal contract has been entered into.
Current wording
On August 10, 2026, the Company entered into the Fourth Amendment (the “Fourth Amendment”) to Loan Agreement by and among the Company, 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 Sau Kuen Yu (the Company’s Senior Vice President, a member of the Company’s Board of Directors and a significant stockholder of the Company). Pursuant to the terms of the Fourth Amendment, the Company agreed to repay the loan in the principal amount of $3,410,418 to Mr. Lai and Ms. Yu through monthly settlements of $200,000, commencing August 31, 2026. As amended by the Fourth Amendment, the loan matures on December 31, 2026 and bears interest at an annual rate of 4.75%. The parties also agreed to discuss quarterly and make reasonable efforts, subject to the Company’s normal cash reserve and expansion plan, if any, to explore the possibility of early or delayed repayments.
Previous wording
For the three months ended March 31, 2026 and 2025, we generated net revenues of $29,930,342 and $25,837,090, respectively, and reported net income of $823,482 and $654,517, respectively, and cash flow used in operating activities of $2,201,403 and $23,891, respectively. As noted in our unaudited consolidated financial statements, as of March 31, 2026, we had retained earnings of $1,933,156.
Current wording
For the three months ended June 30, 2026 and 2025, we generated net revenues of $33,944,191 and $27,103,106, respectively, and reported net income of $1,051,685 and $1,177,001, respectively, and cash flow used in operating activities of $1,337,564 and $901,539, respectively.
Previous wording
The following table shows a comparison of our unaudited income statements for the three months ended March 31, 2026 and 2025.
Current wording
The following table shows a comparison of our unaudited income statements for the three and six months ended June 30, 2026 and 2025.
Previous wording
The Company generated $29,930,342 in revenues, net in the three months ended March 31, 2026, as compared to $25,837,090 in revenues, net in the same period in 2025. This represents an increase in revenues, net of $4,093,252, or 15.8%. We attribute this increase to our continued growth and maturity in our operating model, despite an overall e-commerce traffic slowdown and intense competition.
Current wording
The Company generated $33,944,191 in revenues, net in the three months ended June 30, 2026, as compared to $27,103,106 in revenues, net in the same period in 2025. This represents an increase in revenues, net of $6,841,085, or 25.2%. We attribute this increase to our continued growth and maturity in our operating model, despite an overall e-commerce traffic slowdown and intense competition.
Previous wording
Our total orders in the three months ended March 31, 2026 were approximately 1,359,094, as compared to 1,229,792 orders in the three months ended March 31, 2025, representing an increase of 10.5%. The growth in order volume was the primary driver of revenue expansion. In addition, the higher average order value contributed to revenue growth exceeding the pace of order growth. While competitive pricing strategies and promotional discounts moderated unit pricing, the combination of increased order volume and sustained customer engagement resulted in meaningful revenue gains.
Current wording
Our total orders in the three months ended June 30, 2026 were approximately 1,497,189, as compared to 1,253,975 orders in the three months ended June 30, 2025, representing an increase of 19.4%. The growth in order volume was the primary driver of revenue expansion. In addition, the higher average order value contributed to revenue growth exceeding the pace of order growth. While competitive pricing strategies and promotional discounts moderated unit pricing, the combination of increased order volume and sustained customer engagement resulted in meaningful revenue gains.
Previous wording
Cost of revenues for the three months ended March 31, 2026 totaled $13,912,567, as compared to $11,691,792 for the three months ended March 31, 2025. Cost of revenues includes the cost of the merchandise sold and shipping costs, as well as estimated losses due to damage to goods. In 2026, Amazon implemented changes to its Fulfillment by Amazon (FBA) fee structure. Beginning January 15, 2026, fulfillment fees for certain product categories were adjusted, with increases for higher-priced standard-size items and reductions for select bulky items. In addition, effective April 17, 2026, Amazon introduced a 3.5% fuel and logistics surcharge applicable to FBA in the United States and Canada, as well as cross-border Remote Fulfillment programs. These changes, together with revised inventory and return handling policies, are expected to increase operating costs for sellers. The Company has assessed that the impact is not material; however, the level of impact has been disclosed for transparency.
Current wording
Cost of revenues for the three months ended June 30, 2026 totaled $15,976,053, as compared to $11,605,754 for the three months ended June 30, 2025. In the same period last year, the Company intentionally maintained a higher gross margin in response to tariff concerns by preserving lower-cost inventory and gradually adjusting retail prices to help customers adapt to higher price levels. Cost of revenues includes the cost of the merchandise sold and shipping costs, as well as estimated losses due to damage to goods. In 2026, Amazon implemented changes to its Fulfillment by Amazon (FBA) fee structure. Beginning January 15, 2026, fulfillment fees for certain product categories were adjusted, with increases for higher-priced standard-size items and reductions for select bulky items. In addition, effective April 17, 2026, Amazon introduced a 3.5% fuel and logistics surcharge applicable to FBA in the United States and Canada, as well as cross-border Remote Fulfillment programs. These changes, together with revised inventory and return handling policies, are expected to increase operating costs for sellers. The Company has assessed that the impact is not material; however, the level of impact has been disclosed for transparency.
Previous wording
Total operating expenses for the three months ended March 31, 2026 totaled $14,875,647, representing a $1,651,214, or 12.5%, increase from the $13,224,433 of total operating expenses for the three months ended March 31, 2025. This change was caused by an increase in operating efficiency.
Current wording
Total operating expenses for the three months ended June 30, 2026 totaled $16,683,752, representing a $2,807,251, or 20.2%, increase from the $13,876,501 of total operating expenses for the three months ended June 30, 2025. This change was primarily caused by an increase in selling and marketing expenses in line with the growth in revenues.
Previous wording
Total other expenses, net, for the three months ended March 31, 2026 was $8,988, compared to total other income, net, of $15,071 for the three months ended March 31, 2025, representing a $24,059, or 159.6%, decrease in total other income, net. This decrease wasdue to the Company received a subsidy from the High-Value Industrial Promotion Fund in 2025.
Current wording
Total other expenses, net, for the three months ended June 30, 2026 was $26,710, compared to total other expenses, net, of $38,170 for the three months ended June 30, 2025.
Previous wording
Total comprehensive income for the three months ended March 31, 2026 was $805,866, as compared to $640,981 for the three months ended March 31, 2025. The increase in total comprehensive income was attributed to the reasons mentioned above.
Current wording
Total comprehensive income for the three months ended June 30, 2026 was $1,055,644, as compared to $1,331,940 for the three months ended June 30, 2025. The decrease in total comprehensive income was primarily attributable to lower income from operations for the three months ended June 30, 2026.
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 $992,886 and $3,792,033 as of March 31, 2026 and December 31, 2025, 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 $985,404 and $3,792,033 as of June 30, 2026 and December 31, 2025, respectively.
Previous wording
The following table shows a summary of our cash flows for the three months ended March 31, 2026 and 2025.
Current wording
The following table shows a summary of our cash flows for the six months ended June 30, 2026 and 2025.
Previous wording
For the three months ended March 31, 2026, net cash used in operating activities amounted to $2,201,403, as compared to $23,891 of net cash used in operating activities for the three months ended March 31, 2025. The increase in net cash used in operating activities was primarily driven by higher inventory purchases during 2026. As part of our strategy to ensure product availability and mitigate supply chain risks under evolving trade policies and in light of discontinuation of Amazon’s labeling service, we invested more heavily in inventory.
Current wording
For the six months ended June 30, 2026, net cash used in operating activities amounted to $3,556,564, as compared to $925,430 of net cash used in operating activities for the six months ended June 30, 2025. The increase in net cash used in operating activities was primarily driven by higher inventory purchases during 2026 and an increase in accounts receivable resulting from changes in Amazon’s Disbursement Policy, under which daily remittances are now delayed by seven days. As part of our strategy to ensure product availability and mitigate supply chain risks under evolving trade policies and in light of discontinuation of Amazon’s labeling service, we invested more heavily in inventory.
Previous wording
Despite the increase in revenues to $29,930,342 for the three months ended March 31, 2026, as compared to $25,837,090 for the three months ended March 31, 2025, the increase in revenues was offset by a corresponding increase in cost of revenues of $2,220,775 and an increase in operating expenses of $1,651,214.
Current wording
Despite the increase in revenues to $63,874,533 for the six months ended June 30, 2026, as compared to $52,940,196 for the six months ended June 30, 2025, the increase in revenues was offset by a corresponding increase in cost of revenues of $6,591,074 and an increase in operating expenses of $4,458,465.
Previous wording
For the three months ended March 31, 2026, $5,662 in net cash was used in investing activities, compared to $720 in net cash used in investing activities for the three months ended March 31, 2025. The increase primarily reflects higher purchases of property and equipment for the three months ended March 31, 2026.
Current wording
For the six months ended June 30, 2026, $5,705 in net cash was used in investing activities, compared to $801 in net cash used in investing activities for the six months ended June 30, 2025. The increase primarily reflects higher purchases of property and equipment for the six months ended June 30, 2026.
Previous wording
Net Cash Used in Financing Activities
Current wording
Net Cash Provided by (Used in) Financing Activities
Previous wording
For the three months ended March 31, 2026, net cash used in financing activities amounted to $600,000, as compared to net cash used in financing activities of $839,000 for the three months ended March 31, 2025. The cash outflow was primarily due to repayments made to related parties for the three months ended March 31, 2026 and 2025.
Current wording
For the six months ended June 30, 2026, net cash provided by financing activities amounted to $750,000, as compared to net cash used in financing activities of $839,000 for the six months ended June 30, 2025. The net cash inflow for the six months ended June 30, 2026 was primarily due to advances of $1,634,000 received from related parties, partially offset by repayments of $884,000 made to related parties. The cash outflow for the six months ended June 30, 2025 was primarily due to repayments made to related parties.
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”). As amended, the line of credit matures on May 18, 2026 and bears interest at a rate of 3.42% per annum. As of March 31, 2026 and December 31, 2025, the outstanding balance under the Taishin line of credit was $626,076 and $637,348, respectively.
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”). As amended, the line of credit matures on November 13, 2026 and bears interest at a rate of 3.42% per annum. As of June 30, 2026 and December 31, 2025, the outstanding balance under the Taishin line of credit was $628,931 and $637,348, respectively.
Previous wording
From time to time, we receive loans and advances from our stockholders to fund our operations. As of March 31, 2026, we had a total of $2,060,418 due to related parties, which included $2,060,418 in stockholder payables and $0 accrued for bonuses. 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. While stockholder payables are generally non-interest bearing and payable on demand, we and our stockholders have entered into loan agreements for loans with terms over one year.
Current wording
From time to time, we receive loans and advances from our stockholders to fund our operations. As of June 30, 2026, we had a total of $3,410,418 due to related parties, which included $3,410,418 in stockholder payables and $0 accrued for bonuses. 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. While stockholder payables are generally non-interest bearing and payable on demand, we and our stockholders have entered into loan agreements for loans with terms over one year.
Previous wording
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.
Current wording
Significant estimates include, but are 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.
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, 2026 and December 31, 2025, $409,455 and $447,841, 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.
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, 2026 and December 31, 2025, $370,981 and $447,841, 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.
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, 2026 and 2025.
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, 2026 and 2025.
Previous wording
The Company recognizes revenues in accordance with ASC Topic 606, which provided a five-step model for recognizing revenues from contracts with customers as follows:
Current wording
The Company recognizes revenues in accordance with ASC Topic 606, which provided a five-step model for recognizing revenue from contracts with customers as follows:
Previous wording
The Company derives its revenues 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, 2026 and 2025 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, revenues are 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 revenues 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, 2026 and 2025 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, revenues are 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 products within 30 days after the products are delivered and estimated sales returns are calculated based on the expected returns. The rates of sales returns were 6.73% and 6.35% of gross sales for the three months ended March 31, 2026 and 2025, respectively.
Current wording
The customer can return products within 30 days after the products are delivered and estimated sales returns are calculated based on the expected returns. The rates of sales returns were 6.90% and 6.92% of gross sales for the six months ended June 30, 2026 and 2025, 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 $6,407,406 and $5,748,972 for the three months ended March 31, 2026 and 2025, 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 $13,887,211 and $11,659,356 for the six months ended June 30, 2026 and 2025, 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 revenues or gross accounts receivable balance at the balance sheet date. During the three months ended March 31, 2026 and 2025, the Company had no customer that accounted for 10% or more of total net revenues. In addition, as of March 31, 2026 and December 31, 2025, the Company had no customer that accounted for 10% or more of gross accounts receivable. As of March 31, 2026 and December 31, 2025, 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 approximately 14 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 revenues or gross accounts receivable balance at the balance sheet date. During the three and six months ended June 30, 2026 and 2025, the Company had no customer that accounted for 10% or more of total net revenues. In addition, as of June 30, 2026 and December 31, 2025, the Company had no customer that accounted for 10% or more of gross accounts receivable. As of June 30, 2026 and December 31, 2025, 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 disbursement from Amazon to the Company usually takes approximately 14 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 revenues from the Company’s end customers. During the three months ended March 31, 2026 and 2025, approximately 98% and 99%, respectively, of the Company’s revenues 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 revenues from the Company’s end customers. During the six months ended June 30, 2026 and 2025, approximately 97% and 99%, respectively, of the Company’s revenues were through or with the Amazon sales platform.
Previous wording
Advertising and Promotion Expenses – The Company’s policy is to recognize advertising costs as they are incurred. Advertising and promotion expenses were $1,262,089 and $1,004,083 for the three months ended March 31, 2026 and 2025, respectively.
Current wording
Advertising and Promotion Expenses – The Company’s policy is to recognize advertising costs as they are incurred. Advertising and promotion expenses were $2,823,018 and $964,824 for the six months ended June 30, 2026 and 2025, 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, 2026 and 2025. 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, 2026 and 2025. Therefore, the diluted earnings per share is the same as the basic earnings per share.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
For the six months ended June 30, 2026 and 2025, we generated net revenues of $63,874,533 and $52,940,196, respectively, and reported net income of $1,875,167 and $1,831,518, respectively, and cash flow used in operating activities of $3,556,564 and $925,430, respectively.
Current report — wording carried from elsewhere
As noted in our unaudited consolidated financial statements, as of June 30, 2026, we had retained earnings of $2,984,841.
Current report — wording carried from elsewhere
The Company generated $63,874,533 in revenues, net in the six months ended June 30, 2026, as compared to $52,940,196 in revenues, net in the same period in 2025. This represents an increase in revenues, net of $10,934,337, or 20.7%. We attribute this increase to our continued growth and maturity in our operating model, despite an overall e-commerce traffic slowdown and intense competition.
Current report — wording carried from elsewhere
Our total orders in the six months ended June 30, 2026 were approximately 2,856,283, as compared to 2,483,767 orders in the six months ended June 30, 2025, representing an increase of 15.0%. The growth in order volume was the primary driver of revenue expansion. In addition, the higher average order value contributed to revenue growth exceeding the pace of order growth.