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Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☐
Preliminary
Proxy Statement
☐
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒
Definitive
Proxy Statement
☐
Definitive
Additional Materials
☐
Soliciting
Material Pursuant to Section 240.14a-12
HOUR
LOOP, INC.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
☒
No
fee required.
☐
Fee
computed on the table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title
of each class of securities to which transaction applies:
(2)
Aggregate
number of securities to which transaction applies:
(3)
Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4)
Proposed
maximum aggregate value of transaction:
(5)
Total
fee paid:
☐
Fee
paid previously with preliminary materials.
☐
Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its
filing.
(1)
Amount
Previously Paid:
(2)
Form,
Schedule or Registration Statement No.:
(3)
Filing
Party:
(4)
Date
Filed:
HOUR
LOOP, INC.
8201
164th Ave. NE
Redmond,
WA 98052-7615
July
18, 2025
Dear
Stockholders:
Hour
Loop, Inc. is holding a Virtual Annual Meeting (the Annual Meeting) on Friday, August 29, 2025 at 12:00 p.m., Eastern Time.
You may attend the Annual Meeting, vote and submit a question during the Annual Meeting by visiting
www.virtualshareholdermeeting.com/HOUR2025
.
You will need to provide your 16-digit control number that is on your proxy card. The formal Notice of Annual Meeting is set forth in
the enclosed material.
The
matters expected to be acted upon at the Annual Meeting are described in the attached Notice of Annual Meeting and Proxy Statement. Holders
of record of Hour Loop, Inc.s common stock at the close of business on July 1, 2025 are entitled to vote at the Annual Meeting.
It
is important that your views be represented. Even if you plan to virtually attend the Annual Meeting, please vote on the matters to be
considered in advance of the Annual Meeting. You may vote your proxy by telephone or via the Internet or by completing and returning
the enclosed proxy card. Although we encourage you to complete and return a proxy prior to the Annual Meeting to ensure that your vote
is counted, you can cast your vote at the virtual Annual Meeting. If you vote by proxy and also participate in the virtual Annual Meeting,
there is no need to vote again at the Annual Meeting unless you wish to change your vote.
We
appreciate your investment and interest in Hour Loop, Inc. and urge you to cast your vote as soon as possible.
Sincerely,
/s/
Sam Lai
Sam
Lai
Chairman
of the Board, Chief Executive Officer and Interim Chief Financial Officer
HOUR
LOOP, INC.
8201
164th Ave. NE
Redmond,
WA 98052-7615
NOTICE
OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
Notice
is hereby given that Hour Loop, Inc., a Delaware corporation (Hour Loop), will hold a Virtual 2025 Annual Meeting of Stockholders
(the Annual Meeting) on Friday, August 29, 2025, beginning at 12:00 p.m., Eastern Time, for the following purposes, which
are described more fully in the accompanying Proxy Statement:
1.
To
elect five directors nominated by Hour Loops Board of Directors, based on the recommendation of Hour Loops independent
directors, to serve for a one-year term following approval by the stockholders at the Annual Meeting;
2.
To
ratify the appointment of HTL International, LLC as Hour Loops independent registered public accounting firm for the fiscal
year ending December 31, 2025; and
3.
To
transact such other business as may properly come before the Annual Meeting and/or any adjournment or postponement thereof.
Hour
Loops Board of Directors has fixed the close of business on July 1, 2025 (the Record Date) as the record date for
the determination of the stockholders entitled to vote at the Annual Meeting or any adjournments or postponements thereof. Only stockholders
of record at the close of business on the Record Date will be entitled to notice of, and to vote at, the Annual Meeting.
By
order of the Board of Directors,
/s/
Sam Lai
Chairman
of the Board, Chief Executive Officer and Interim Chief Financial Officer
July
18, 2025
Your
vote is very important. Even if you plan to virtually attend the Annual Meeting, we hope that you will read the Proxy Statement and vote
on the matters to be considered in advance of the Annual Meeting. You may vote your proxy by telephone or via the Internet or by completing
and returning the enclosed proxy card.
This
Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the Board) of Hour Loop, Inc.,
a Delaware corporation (the Company, Hour Loop, we, our or us),
of proxies to be voted at our 2025 Virtual Annual Meeting of Stockholders (the Annual Meeting) and at any adjournment or
postponement of the Annual Meeting. The Annual Meeting will take place on Friday, August 29, 2025, beginning at 12:00 p.m., Eastern Time,
at
www.virtualshareholdermeeting.com/HOUR2025
. You will need to provide your 16-digit control number that is on your proxy card
to gain access to the Annual Meeting. Our Board urges you to promptly execute and return your proxy in the enclosed envelope, even if
you plan to attend the Annual Meeting. This is designed to authenticate stockholders identities, to allow stockholders to give
their voting instructions and to confirm that stockholders instructions have been recorded properly.
Any
stockholder submitting a proxy may revoke such proxy at any time prior to its exercise by notifying the Secretary of the Company, in
writing, prior to the Annual Meeting. Any stockholder attending the Annual Meeting may revoke his or her proxy and vote personally by
notifying the Secretary of the Company at the Annual Meeting.
This
Proxy Statement, the Notice of Annual Meeting, and accompanying proxy are being furnished to holders of our common stock, par value $0.0001
per share, at the close of business on July 1, 2025 (the Record Date), the record date for the Annual Meeting. The Proxy
Statement and form of proxy were first mailed or made available to stockholders on or about July 18, 2025. Web links and addresses
contained in this Proxy Statement are provided for convenience only, and the content on the referenced websites does not constitute a
part of this Proxy Statement.
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Which
items will be voted on at the Annual Meeting?
Stockholders
will vote on the following items at the Annual Meeting:
1.
To
elect five directors nominated by Hour Loops Board, based on the recommendation of Hour Loops independent directors,
to serve for a one-year term following approval by the stockholders at the Annual Meeting;
2.
To
ratify the appointment of HTL International, LLC (HTL International) as Hour Loops independent registered public
accounting firm for the fiscal year ending December 31, 2025; and
3.
To
transact such other business as may properly come before the Annual Meeting and/or any adjournment or postponement thereof.
How
does the Board recommend I vote on each of the proposals presented in this Proxy Statement?
The
Board recommends a vote
FOR
the election of each of the director nominees to be members of the Board; and
FOR
Proposal 2 (ratification of the appointment of HTL International as the Companys independent registered public accounting firm
for the fiscal year ending December 31, 2025).
Who
is entitled to vote at the Annual Meeting?
Holders
of our common stock as of the Record Date are entitled to receive the Notice of Annual Meeting and to vote their shares of common stock
at the Annual Meeting. Holders of our common stock are entitled to one vote for each share of common stock held of record on the Record
Date.
3
How
many shares of common stock are outstanding?
As
of the Record Date, there were 35,160,190 shares of common stock issued and outstanding and entitled to be voted at the Annual
Meeting.
What
is the difference between holding common stock as a stockholder of record and as a beneficial owner?
If
your common stock is registered in your name with our transfer agent, Nevada Agency and Transfer Company, you are the stockholder
of record of those shares. The Notice of Annual Meeting, this Proxy Statement and any accompanying materials have been provided
directly to you by Hour Loop.
If
your shares of common stock are held through a broker, bank or other holder of record, you hold your common stock in street name
and you are considered the beneficial owner of those shares of common stock. This Notice of Annual Meeting and Proxy Statement
and any accompanying documents have been provided to you by your broker, bank or other holder of record. As the beneficial owner, you
have the right to direct your broker, bank or other holder of record how to vote your common stock by using the voting instruction card
or by following their instructions for voting by telephone or on the Internet.
If
you do not give instructions to your broker, your broker can vote your shares with respect to routine items, but not with
respect to non-routine items. On non-routine items for which you do not give your broker instructions, the shares will
be treated as broker non-votes. Our management believes that Proposal 2 (ratification of the appointment of HTL International as the
Companys independent registered public accounting firm for the fiscal year ending December 31, 2025) is a routine
matter for which brokers will have authority to vote your shares of common stock at the Annual Meeting if you do not give instruction
on how to vote your shares. Consequently, if customers do not give any direction, brokers will be permitted to vote shares of common
stock at the Annual Meeting in relation to Proposal 2. However, Proposal 1 (election of directors) is a non-routine matter for which
brokers do not have authority to vote your shares at the Annual Meeting if you do not provide instructions on how to vote your shares.
Therefore, we encourage you to submit your voting instructions to your broker to ensure your shares of common stock are voted on all
proposals at the Annual Meeting.
How
do I vote?
You
can vote your shares in one of two ways: either by proxy or in person (virtually) at the Annual Meeting. If you choose to vote by proxy,
you may do so via the Internet or by telephone, or by signing and returning the proxy card enclosed therein. Each of these procedures
is explained below. Even if you plan to attend (virtually) the Annual Meeting, the Board recommends that you vote by proxy so your shares
of common stock will be voted as directed by you if you are unable to attend the virtual Annual Meeting.
Because
many stockholders will not attend the virtual Annual Meeting personally, it is necessary that a large number of stockholders be represented
by proxy. By following the procedures for voting via the Internet or by telephone, or by signing and returning the enclosed proxy card,
your shares can be voted at the virtual Annual Meeting in the manner indicated. If you sign and return your proxy card, but do not specify
how you want your shares to be voted, they will be voted, in accordance with the Boards recommendation on Proposals 1 and 2, and
with respect to any other matter that may be presented at the Annual Meeting, in the discretion of the proxy holders named in your proxy
card.
Voting
via the Internet
You
can vote your shares via the Internet by accessing
www.virtualshareholdermeeting.com/HOUR2025
and following the instructions contained
on that website. The Internet voting procedures are designed to authenticate your identity and to allow you to vote your shares and confirm
that your voting instructions have been properly recorded. If you vote via the Internet, you do not need to mail a proxy card.
4
Voting
by Telephone
You
can vote your shares by telephone by calling the number provided on the voting website (
www.proxyvote.com
) and on the proxy card.
The telephone voting procedures are designed to authenticate your identity and to allow you to vote your shares and confirm that your
voting instructions have been properly recorded. If you vote via the telephone, you do not need to mail a proxy card.
Voting
by Mail
You
can vote by mail by filling out the enclosed proxy card and returning it per the instructions on the card.
What
can I do if I change my mind after I vote?
If
you are a stockholder of record, you can revoke your proxy before it is exercised by:
●
Giving
written notice to the Corporate Secretary of the Company;
●
Delivering
a valid, later-dated proxy in a timely manner; or
●
Voting
at the virtual Annual Meeting.
If
you are a beneficial owner of common stock, you may submit new voting instructions by contacting your broker, bank or other holder of
record. All shares of common stock for which proxies have been properly submitted and not revoked will be voted at the Annual Meeting.
Where
can I find the voting results?
We
intend to announce the preliminary voting results at the Annual Meeting and will publish the final results in a Current Report on Form
8-K, which we will file with the Securities and Exchange Commission (the SEC) no later than four business days following
the Annual Meeting. If the final voting results are unavailable in time to file a Form 8-K with the SEC within four business days after
the Annual Meeting, we intend to file a Form 8-K to disclose the preliminary results and, within four business days after the final results
are known, will file an additional Form 8-K with the SEC to disclose the final voting results.
What
is a quorum for the Annual Meeting?
The
presence of the holders of 17,580,096 shares of common stock, in person (virtually) or by proxy at the Annual Meeting, representing
a majority of the voting power of all outstanding shares of capital stock of the Company entitled to vote at the Annual Meeting is necessary
to constitute a quorum. If you have returned valid proxy instructions or attend the virtual Annual Meeting, your common stock will be
counted for the purpose of determining whether there is a quorum. Proxies that are marked abstain and proxies relating
to street name common stock that are returned to us but marked by brokers as not voted will be treated as
shares of common stock present for purposes of determining the presence of a quorum on all matters. If there is no quorum, the chairman
of the Annual Meeting may adjourn the Annual Meeting to another date. Abstentions are counted as present and entitled to vote for purposes
of determining a quorum.
What
are broker non-votes?
Generally,
a broker non-vote occurs when a bank, broker or other nominee that holds shares of common stock in street name for customers
is precluded from exercising voting discretion on a particular proposal because (i) the beneficial owner has not instructed the bank,
broker or other nominee how to vote, and (ii) the bank, broker or other nominee lacks discretionary voting power to vote the common stock.
A bank, broker or other nominee does not have discretionary voting power with respect to the approval of non-routine matters
absent specific voting instructions from the beneficial owners of the common stock.
On
non-routine items for which you do not give your broker instructions, the shares will be treated as broker non-votes. Proposal 1 (election
of directors) is a non-routine item. If you do not give your broker instructions with regard to this proposal, brokers will not be permitted
to vote your shares of common stock at the Annual Meeting in relation to this proposal.
Our
management believes that Proposal 2 (ratification of the appointment of HTL International as our independent registered public accounting
firm for the fiscal year ending December 31, 2025) is a routine matter for which brokers will have authority to vote your
shares of common stock at the virtual Annual Meeting if you do not give instructions on how to vote your shares. Consequently, if customers
do not give any direction, brokers will be permitted to vote shares of common stock at the Annual Meeting in relation to Proposal 2.
Nevertheless, we encourage you to submit your voting instructions to your broker to ensure your shares of common stock are voted at the
Annual Meeting.
5
How
many votes are required to approve each of the proposals presented in this Proxy Statement, and how are votes counted?
Proposal
1
With
respect to Proposal 1 (election of directors), election of each director requires the affirmative vote of the majority of the votes present
in person or represented by proxy at the Annual Meeting. Abstain votes and broker non-votes are not considered votes cast
for the foregoing purpose, and will have no effect on the election of the director nominees.
Proposal
2
With
respect to Proposal 2 (ratification of the appointment of HTL International as the Companys independent registered public accounting
firm for the fiscal year ending December 31, 2025), adoption of this proposal requires the affirmative vote of the majority of the votes
present and entitled to vote at the Annual Meeting (meaning the number of shares voted for a proposal must exceed the number
of shares voted against such proposal). With respect to Proposal 2, you may vote for, against
or abstain from voting on each such proposal. Abstentions will have the effect of a vote against Proposal
2. Because broker non-votes are not considered present for the foregoing purpose, they will have no effect on the vote for Proposal 2.
How
will my common stock be voted at the Annual Meeting?
At
the Annual Meeting, the Board (the persons named in the proxy card or, if applicable, their substitutes) will vote your shares of common
stock as you instruct. If you submit a proxy but do not indicate how you would like to vote your common stock, your shares will be voted
as the Board recommends, which is as follows:
●
FOR
Proposal 1 (election of directors); and
●
FOR
Proposal 2 (ratification of the appointment of HTL International as the Companys independent registered public accounting
firm for the fiscal year ending December 31, 2025).
What
happens if stockholders approve one or more proposals but not others?
Approval
of any one proposal is not dependent on stockholders approving any other proposal. Therefore, if stockholders approve one proposal, but
not others, the approved proposal would still take effect. Also, if Proposal 2 (ratification of the appointment of HTL International
as the Companys independent registered public accounting firm for the fiscal year ending December 31, 2025) is not approved, the
audit committee will consider whether it is appropriate to select another independent registered public accounting firm. Even if the
selection is ratified, the audit committee in its discretion may select a different independent registered public accounting firm at
any time during the fiscal year if it determines that such a change would be in the best interests of the Company and its stockholders.
Who
will pay for the cost of the Annual Meeting and this proxy solicitation?
We
will pay the costs associated with the Annual Meeting and solicitation of proxies, including the costs of transmitting the proxy materials.
In addition to these mailed proxy materials, our directors and officers may also solicit proxies in person, by telephone or by other
means of communication. Our directors and officers will not be paid any additional compensation for soliciting proxies. We may also reimburse
brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
6
MATTERS
TO COME BEFORE THE ANNUAL MEETING
PROPOSAL
1ELECTION OF DIRECTORS
Officers,
Directors and Director Nominees
Our
Board is comprised of five directors. Our Board has determined in its business judgment that three of our five directors (Hillary (Hui-Chong)
Bui, Minghui (Alan) Gao, and Michael Lenner) are independent directors of the Company within the meaning of the rules of The Nasdaq Stock
Market (Nasdaq), the Sarbanes-Oxley Act of 2002, as amended (SOX), and related SEC rules. Therefore, a majority
of the members of our Board consists of independent directors.
Based
on the recommendation of our independent directors, the Board recommends a vote FOR the following directors:
Sam
Lai
Sau
Kuen (Maggie) Yu
Hillary
(Hui-Chong) Bui
Minghui
(Alan) Gao
Michael
Lenner
If
re-elected, Messrs. Lai, Gao and Lenner, Ms. Yu and Ms. Bui will serve until the 2026 annual meeting of stockholders or until their successors
are duly elected and qualified, or their earlier death, resignation or removal. If any of these nominees is unavailable for election,
an event which the Board does not presently anticipate, the persons named in the enclosed proxy intend to vote the proxies solicited
hereby FOR the election of such other nominee or nominees as may be nominated by the Board.
Vote
Required
Election
of each director requires the affirmative vote of the majority of the votes cast at the Annual Meeting. Abstain votes and
broker non-votes are not considered votes cast for the foregoing purpose, and will have no effect on the election of the director nominees.
Recommendation
OUR
BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF MESSRS. LAI, GAO AND LENNER, MS. YU AND MS. BUI.
Below
is biographical and other information about the nominees for election as director, including information concerning the particular experience,
qualifications, attributes and/or skills that led the independent directors and the Board to determine that the nominee should serve
as a director, or each director should continue to serve as a director, as the case may be.
Sam
Lai.
Mr. Lai, age 43, has served as our Chief Executive Officer and been a member of our Board since June 2013 and our Chairman
of Board since April 2021. He has served as our Interim Chief Financial Officer since March 29, 2022. He is a seasoned software engineer
who has designed and built software and code from the ground up at Hour Loop, Inc., Amazon.com, Inc., UnifiedEdge, Inc., Kits, and Applied
Research Labs for the past 18 years. From December 2009 through June 2017, Mr. Lai served as a Software Development Engineer for Amazon.com,
Inc. From March 2009 through December 2009, he served as a Senior Java Developer at UnifiedEdge, Inc. From February 2007 through March
2009, Mr. Lai served as a Senior Java Developer at Kits. From September 2005 through February 2007, he served as a Software Development
Engineer for Amazon.com, Inc. From March 2003 through January 2004, Mr. Lai served as a Research Engineer Scientist Assistant at Applied
Research Labs. Mr. Lai graduated with a Bachelor Degree in Computer Science from University of Texas at Austin in 2003 and a Masters
Degree in Computer Science from University of California, San Diego in 2004. Mr. Lai does not hold, and has not previously held, any
directorships in any reporting companies.
7
Sau
Kuen (Maggie) Yu.
Ms. Yu, age 48, has served as our Senior Vice President and has been a member of our Board since June
2013. Since graduating from University of California, San Diego until June 2013, Ms. Yu has no employment history. Ms. Yu graduated with
a Bachelor Degree in Computer Science from University of California, San Diego in 2004. Ms. Yu does not hold, and has not previously
held, any directorships in any reporting companies.
Hillary
(
Hui-Chong)
Bui.
Ms. Bui, age 40, has been an independent member of our Board since
February 20, 2023. Since November 2022, Ms. Bui has served as the Senior Finance ManagerNorth America and US Retail FPA of
Starbucks Corporation. She joined Starbucks Corporation in 2015 and has served various positions including Finance Manager and Business
Analysis Manager of different divisions before being promoted to the current position. From 2011 to 2015, Ms. Bui served as Senior Finance
Analyst and Finance Analyst in different divisions of General Mills, Inc. From 2007 to 2011, Ms. Bui served as Senior Assurance Associate
of PricewaterhouseCoopers, LLP. Ms. Bui graduated with a bachelors degree of Accounting from the University of Minnesota in 2007.
Ms. Bui does not hold, and has not previously held, any directorships in any reporting companies.
Minghui
(Alan) Gao.
Mr. Gao, age 52, has been an independent member of our Board since October 6, 2021. Since October 2021, Mr.
Gao has served as the Chief Technology Officer of Cue Health, Inc. From January 2018 to October 2021, he served as the Chief Technology
Officer of PillPack (which was acquired by Amazon Pharmacy). From October 2016 to January 2018, Mr. Gao served as the Director of Prime
Video at Amazon.com. From September 2013 to October 2016, he served as Engineering Director of Seller Services at Amazon.com. From September
2011 to September 2013, Mr. Gao served as the Chief Technology Officer and Senior Vice President of Product and Engineering at Xiu.com,
an e-commerce company in China. From November 2008 through June 2011, he served as Engineering Director at Amazon.cn in China. From October
2007 to November 2008, Mr. Gao served as Senior Manager, Software Development at Amazon.com. From November 2006 to October 2007, he served
as a Software Development Manager at Amazon.com. From April 2001 to November 2006, Mr. Gao served as Software Design Engineer and Development
Lead. Mr. Gao graduated with a Masters Degree in Computer Science from Baylor university in 1999. Mr. Gao does not hold, and has not
previously held, any directorships in any reporting companies.
Michael
Lenner.
Mr. Lenner, age 47, has been an independent member of our Board since June 1, 2021. Since May 2018, Mr. Lenner
has served as Vice President, Software Engineering, Disney Streaming Services at The Walt Disney Company. From August 2017 through May
2018, he served as Vice President, Software Engineering at BAMTECH Media. From July 2014 through August 2017, Mr. Lenner served as Vice
President, Software Engineering and Senior Director, Software Engineering at Major League Baseball Advanced Media. From February 2011
through June 2014, he served as the Vice President, Engineering at H. Bloom. Mr. Lenner graduated with a Bachelor of Arts Degree in Physics
from Binghamton University and a Masters of Science Degree in Computer Science from Columbia University. Mr. Lenner does not hold, and
has not previously held, any directorships in any reporting companies.
Family
Relationships
Sam
Lai, our Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer, and Maggie Yu, our Senior Vice President
and member of our Board, are married.
Involvement
in Certain Legal Proceedings
No
executive officer, member of the board of directors or control person of our Company has been involved in any legal proceeding listed
in Item 401(f) of Regulation S-K in the past 10 years.
8
Corporate
Governance
Controlled
Company and Director Independence
The
controlled company exception to the Nasdaq rules provides that a company of which more than 50% of the voting power is
held by an individual, group or another company, a controlled company, need not comply with certain requirements of the
Nasdaq corporate governance rules. As stated above, Sam Lai, the Chairman of the Board, Chief Executive Officer and Interim Chief Financial
Officer of the Company, and Maggie Yu, Senior Vice President of the Company and a member of the Board, who are husband and wife, together
beneficially own 33,347,462 shares of the Companys common stock, representing approximately 94.84% of the voting
power of the Companys outstanding common stock. As a result, the Company is a controlled company under the Nasdaq
corporate governance standards. As a controlled company, we do not have to comply with certain corporate governance requirements under
the Nasdaq rules, including the following:
●
A
majority of the Companys Board to consist of independent directors as defined by the applicable Nasdaq rules
and regulations;
●
The
compensation of the Companys executive officers to be determined, or recommended to the Board for determination, by independent
directors constituting a majority of the independent directors of the Board in a vote in which only independent directors participate
or by a Compensation Committee comprised solely of independent directors; and
●
That
director nominees to be selected, or recommended to the Board for selection, by independent directors constituting a majority of
the independent directors of the Board in a vote in which only independent directors participate or by a nomination committee comprised
solely of independent directors.
The
Company intends to avail itself of each of these exemptions. More specifically, a majority of the Companys Board will not consist
of independent directors and the Company will not have a compensation committee or a nominating and corporate governance committee. Therefore,
for as long as the Company remains a controlled company, the Company will not have the same protections afforded to stockholders
of companies that are subject to all of these corporate governance requirements. If at any time the Company ceases to be a controlled
company under the Nasdaq rules, the Companys Board will take all action necessary to comply with the Nasdaq corporate governance
rules, including establishing certain committees composed entirely of independent directors, subject to a permitted phase-in
period.
Notwithstanding
the Companys status as a controlled company, the Company will remain subject to the Nasdaq corporate governance standard that
requires the Company to have an audit committee with at least three independent directors as well as composed entirely of independent
directors. As a result, the Company was required, at the time of listing on Nasdaq, to have at least one independent director on our
audit committee, at least two independent directors within 90 days of listing on Nasdaq, and at least three independent directors within
one year of listing on Nasdaq, where at least one of the independent directors qualifies as an audit committee financial expert under
SEC rules and as a financially sophisticated audit committee member under the Nasdaq rules.
The
Companys Board has affirmatively determined that two of its five directors (Sam Lai and Maggie Yu) are non-independent directors
of the Company and three of its five directors (Hilary (Hui-Chong) Bui, Minghui (Alan) Gao, and Michael Lenner) are independent directors
of the Company. The Companys audit committee consists of the three independent directors: Messrs. Gao and Lenner, and Ms. Bui.
Ms. Bui is the chair of the audit committee and qualifies as an audit committee financial expert under SEC rules and as a financially
sophisticated audit committee member under the Nasdaq rules.
Our
Board of Directors and its Committees
Our
business and affairs are managed under the direction of our Board. The number of directors is fixed by our Board, subject to our articles
of incorporation and our bylaws. Currently, our Board consists of five directors.
During
the fiscal year ended December 31, 2024, the Board held four meetings. Each of our directors attended at least 75% of all the
meetings of the Board and those committees on which he or she served during the fiscal year ended December 31, 2024, either in person
or telephonically. Our Board encourages all members to attend stockholder meetings, but has not adopted a formal policy regarding attendance.
One member of our Board attended the 2024 annual meeting of stockholders.
9
Our
Board has established one standing committeethe audit committeewhich operates under a charter that has been approved by
our Board. We have appointed persons to the Board and to the audit committee of the Board as required meeting the corporate governance
requirements of the Nasdaq Listing Rules.
Audit
Committee
We
have established an audit committee which consists of our three independent directors: Messrs. Gao and Lenner, and Ms. Bui. Ms. Bui is
the chair of the audit committee. and qualifies as an audit committee financial expert. Our audit committee adopted a written
charter, a copy of which is posted on the Corporate Governance section of our website, at
www.hourloop.com
. The audit committee
did not hold any formal meetings during the fiscal year ended December 31, 2024.
Our
audit committee is authorized to:
●
approve
and retain the independent auditors to conduct the annual audit of our financial statements;
●
review
the proposed scope and results of the audit;
●
review
and pre-approve audit and non-audit fees and services;
●
review
accounting and financial controls with the independent auditors and our financial and accounting staff;
●
review
and approve transactions between us and our directors, officers and affiliates;
●
recognize
and prevent prohibited non-audit services;
●
establish
procedures for complaints received by us regarding accounting matters; and
●
oversee
internal audit functions, if any.
Compensation
Committee
Because
we are a controlled company within the meaning of the Nasdaq corporate governance standards, we are not required to have,
and do not currently have, a compensation committee.
If
and when we are no longer a controlled company within the meaning of the Nasdaq corporate governance standards, we will
be required to establish a compensation committee. We anticipate that such a compensation committee would consist of three directors
who will be independent under the rules of the SEC, subject to the permitted phase-in period pursuant to
Nasdaq rules.
This
compensation committee would:
●
review
and determine the compensation arrangements for management;
●
establish
and review general compensation policies with the objective to attract and retain superior talent, to reward individual performance
and to achieve our financial goals;
●
administer
our incentive compensation and benefit plans and purchase plans;
●
oversee
the evaluation of the Board and management; and
●
review
the independence of any compensation advisers.
Upon
formation of a compensation committee, we would expect to adopt a compensation committee charter defining the committees primary
duties in a manner consistent with the rules of the SEC and Nasdaq standards.
Nominating
and Corporate Governance Committee
Because
are a controlled company within the meaning of the Nasdaq corporate governance standards, we are not required to have,
and do not currently have, a nominating and corporate governance committee.
10
If
and when we are no longer a controlled company within the meaning of the corporate governance standards of Nasdaq, we will
be required to establish a nominating and corporate governance committee. We anticipate that such a nominating and corporate governance
committee would consist of three directors who will be independent under the rules of the SEC, subject to the permitted
phase-in period pursuant to Nasdaq rules.
The
functions of the nominating and corporate governance committee, among other things, would include:
●
identifying
individuals qualified to become Board members and recommending directors;
●
nominees
and Board members for committee membership;
●
developing
and recommending to our Board corporate governance guidelines;
●
review
and determine the compensation arrangements for directors; and
●
overseeing
the evaluation of our Board and its committees and management.
Upon
formation of a nominating and corporate governance committee, we would expect to adopt a nominating and corporate governance committee
charter defining the committees primary duties in a manner consistent with the rules of the SEC and Nasdaq standards.
Director
Nominations
Our
full Board recommends candidates for nomination for election at the annual meeting of the stockholders. We have not formally established
any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying
and evaluating nominees for director, the Board considers educational background, diversity of professional experience, knowledge of
our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders.
Procedures
for Recommending, Nominating and Evaluating Director Candidates
The
Board will consider director candidates recommended by stockholders. A stockholder who wishes to recommend a director candidate for nomination
by the Board at an annual meeting of stockholders or for vacancies of the Board that arise between annual meetings must provide the Board
with sufficient written documentation to permit a determination by the Board whether such candidate meets the required and desired director
selection criteria set forth in our bylaws. A stockholder may nominate one or more persons for election as a director at an annual meeting
of stockholders if the stockholder complies with the notice and information provisions contained in our bylaws. Such notice must be in
writing to our company not less than 90 days and not more than 120 days prior to the anniversary date of the preceding years annual
meeting of stockholders or as otherwise required by requirements of the Securities Exchange Act of 1934, as amended (the Exchange
Act). In addition, stockholders furnishing such notice must be a holder of record on both (i) the date of delivering such notice
and (ii) the record date for the determination of stockholders entitled to vote at such meeting. Such documentation and the name of the
director candidate should be sent by U.S. mail to:
Hour
Loop, Inc. Board of Directors
c/o
Hour Loop, Inc.
Attention:
Corporate Secretary
8201
164th Ave. NE #200
Redmond,
WA 98052-7615
Our
full Board recommends candidates for nomination for election at the annual meeting of the stockholders. We have not formally established
any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying
and evaluating nominees for director, the Board considers educational background, diversity of professional experience, knowledge of
our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders.
The
Board is authorized to use, as it deems appropriate or necessary, an outside consultant to identify and screen potential director candidates.
No outside consultants were used during the fiscal year ended December 31, 2023 to identify or screen potential director candidates.
The Board will reassess the qualifications of a current director, including the directors attendance and contributions at Board
and committee meetings, prior to recommending a director for reelection.
11
Code
of Ethics
We
have adopted a code of ethics meeting the requirements of SOX Section 406 that applies to all of its directors, officers (including our
principal executive officer, principal financial officer, principal accounting officer or controller, and any person performing similar
functions) and employees. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct;
provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal
reporting of violations; and provide accountability for adherence to the provisions of the code of ethics.
The
Code of Ethics and Business Conduct is available on our website at
ir.hourloop.com/corporate-governance/documents-charters
.
We
are required to disclose any amendment to, or waiver from, a provision of our code of ethics applicable to our principal executive officer,
principal financial officer, principal accounting officer, controller, or persons performing similar functions. We intend to use our
website as a method of disseminating this disclosure, as permitted by applicable SEC rules. Any such disclosure will be posted to our
website within four business days following the date of any such amendment to, or waiver from, a provision of our code of ethics.
Board
Leadership Structure and Boards Role in Risk Oversight
We
have not separated the positions of Chairman of the Board and Chief Executive Officer. Mr. Lai has served as our Chairman of the Board
since April 2021 and Chief Executive Officer since June 2013. We believe that combining the positions of Chairman and Chief Executive
Officer allows for focused leadership of our organization which benefits us in our relationships with investors, customers, suppliers,
employees and other constituencies. We believe that consolidating the leadership of the Company under Mr. Lai is the appropriate leadership
structure for our Company and that any risks inherent in that structure are balanced by the oversight of our other independent directors
on our Board. However, no single leadership model is right for all companies and at all times. The Board recognizes that depending on
the circumstances, other leadership models, such as the appointment of a lead independent director, might be appropriate. Accordingly,
the Board may periodically review its leadership structure. In addition, the Board holds executive sessions in which only independent
directors are present.
Our
Board is generally responsible for the oversight of corporate risk in its review and deliberations relating to our activities. Our principal
source of risk falls into two categories, financial and product commercialization. The audit committee oversees management of financial
risks; our Board regularly reviews information regarding our cash position, liquidity and operations, as well as the risks associated
with each. The Board regularly reviews plans, results and potential risks related to our business. The Board is also expected to oversee
risk management as it relates to our compensation plans, policies and practices for all employees including executives and directors,
particularly whether our compensation programs may create incentives for our employees to take excessive or inappropriate risks which
could have a material adverse effect on the Company.
Procedures
for Contacting the Board
The
Board has established a process for stockholders and other interested parties to send written communications to the Board, the non-management
directors, a particular committee or to individual directors, as applicable. Such communications should be sent by U.S. mail addressed
to:
Hour
Loop, Inc. Board of Directors
c/o
Hour Loop, Inc.
Attention:
Corporate Secretary
8201
164th Ave. NE #200
Redmond,
WA 98052-7615
12
The
Board has instructed the Corporate Secretary to promptly forward all communications so received to the full Board, the non-management
directors or the individual Board member(s) specifically addressed in the communication. Comments or questions regarding our accounting,
internal controls or auditing matters, our compensation and benefit programs, or the nomination of directors and other corporate governance
matters will remain with the full Board.
Depending
on the subject matter, the Companys Corporate Secretary will:
●
Forward
the communication to the director or directors to whom it is addressed;
●
Attempt
to handle the inquiry directly, for example, where it is a request for information about our Company or if it is a stock-related
matter; or
●
Not
forward the communication if it is primarily commercial in nature or if it relates to a topic that is not relevant to the Board or
a particular committee or is otherwise improper.
Compensation
Committee Interlocks and Insider Participation
Because
we are a controlled company within the meaning of Nasdaq corporate governance standards, we are not required to have, and
do not currently have, a compensation committee. None of our executive officers serves on the board of directors or compensation committee
of a company that has an executive officer that serves on our board or compensation committee. No member of our Board is an executive
officer of a company in which one of our executive officers serves as a member of the board of directors or compensation committee of
that company.
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires our executive officers and directors and persons who beneficially own more than 10% of a registered
class of our equity securities to file with the SEC initial statements of beneficial ownership, statements of changes in beneficial ownership
and annual statement of changes in beneficial ownership with respect to their ownership of the Companys securities, on Form 3,
4 and 5, respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish
our Company with copies of all Section 16(a) reports they file.
Based
solely on a review of the copies of such forms that were received by us, or written representations from certain reporting persons, we
are not aware of any failures to file reports or report transactions in a timely manner during the most recent fiscal year or prior fiscal
years that were not previously reported, except as set forth below. Each of Messrs. Lai, Branch (a former director), Lenner, and
Gao, Ms. Yu and Ms. Bui failed to timely file one Form 4, each of which related to one transaction.
Limitation
on Liability and Indemnification of Officers and Directors
Our
certificate of incorporation provides that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware
law, as it now exists or may in the future be amended. In addition, our certificate of incorporation provides that our directors will
not be personally liable for monetary damages to us for breaches of their fiduciary duty as directors, except to the extent such exemption
from liability or limitation thereof is not permitted by the Delaware General Corporation Law.
Our
certificate of incorporation also permits us to maintain insurance on behalf of any officer, director or employee for any liability arising
out of his or her actions, regardless of whether Delaware law would permit such indemnification. We have purchased a policy of directors
and officers liability insurance that insures our officers and directors against the cost of defense, settlement or payment of
a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors.
These
provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions
also may have the effect of reducing the likelihood of derivative litigation against officers and directors, even though such an action,
if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholders investment may be adversely affected
to the extent we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.
We
believe that these provisions and the insurance are necessary to attract and retain talented and experienced officers and directors.
13
EXECUTIVE
COMPENSATION
2024
Summary Compensation Table
The
following summary compensation table provides information regarding the compensation earned during our fiscal years ended December 31,
2024 and 2023 to certain of our executive officers, who we collectively refer to as our named executive officers, or NEOs.
Name and Position
Year
Salary ($)
Bonus ($)
Stock
Awards
($)
Option
Awards
($)
Non-
Equity
Incentive
Plan
Compensation
($)
Non-
qualified
Deferred
Compensation
Earnings
($)
All
Other
Compensation
($)
Total
($)
Sam Lai
2024
500,000
600,000
-
-
-
-
15,546
(1)
$
1,115,546
Chief Executive Officer and Interim Chief Financial Officer
2023
500,000
100,000
-
-
-
-
24,884
(2)
624,884
Maggie Yu
2024
450,000
550,000
-
-
-
-
16,991
(3)
1,016,991
Senior Vice President
2023
450,000
550,000
-
-
-
-
25,651
(4)
1,025,651
(1)
Includes
healthcare benefits and 401(k) contribution of $8,827 and $6,719, respectively, for the fiscal
year ended December 31, 2024.
(2)
Includes
healthcare benefits and 401(k) contribution of $9,307 and $15,577, respectively, for the
fiscal year ended December 31, 2023.
(3)
Includes
healthcare benefits and 401(k) contribution of $10,332 and $6,659, respectively, for the
fiscal year ended December 31, 2024.
(4)
Includes
healthcare benefits and 401(k) contribution of $11,113 and $14,538, respectively, for the
fiscal year ended December 31, 2023
Employment
Agreements
On
May 27, 2021, the Company entered into an Executive Employment Agreement with each of Mr. Lai and Ms. Yu. Mr. Lais agreement,
as amended, provides that he will serve as the Chief Executive Officer of the Company and Ms. Yus agreement, as amended, provides
that she will serve as the Senior Vice President of the Company.
Each
of the employment agreements, as amended, has a three-year term, which automatically extends for additional terms of one year each unless
either the Company or the applicable executive provides notice to the other party of their desire to not so renew term. Each of the employment
agreements, as amended, is at will, meaning that either the executive or the Company may terminate the executives
employment at any time and for any reason, subject to certain payments and other actions as set forth below.
Mr.
Lais agreement provided for an initial annual base salary of $500,000, and Ms. Yus agreement provided for an initial annual
base salary of $450,000. Each of the base salaries may be subject to annual adjustments as determined in the discretion of the Board.
14
On
February 20, 2023, the Company entered into Addendum No. 2 to the Executive Employment Agreement, as amended, with Mr. Lai (the Lai
Addendum No. 2).
Pursuant
to the terms of the Lai Addendum No. 2, the parties agreed that for the Companys 2023 fiscal year, Mr. Lais bonus targets
and payments will be as follows:
●
If
the Company grows its net profits (excluding taxes) to at least $1,500,000 during the 2023 fiscal year with minimum annual revenue
growth rate of 20%, Mr. Lai will receive a bonus equal to 50% of his base salary.
●
If
the Company grows its net profits (excluding taxes) to at least $5,000,000 during the 2023 fiscal year with minimum annual revenue
growth rate of 20%, Mr. Lai will receive a bonus equal to 100% of his base salary.
Mr.
Lai did not meet the above conditions for the 2023 fiscal year.
On
February 20, 2023, the Company entered into Addendum No. 2 to the Executive Employment Agreement, as amended, with Ms. Yu (the Yu
Addendum No. 2).
Pursuant
to the terms of the Yu Addendum No. 2, the parties agreed that for the Companys 2023 fiscal year, Ms. Yus bonus targets
and payments will be as follows:
●
If
the Company acquires at least 100 new vendors during the 2023 fiscal year, Ms. Yu will receive a bonus equal to 50% of her base salary.
●
If
the Company acquires at least 135 new vendors during the 2023 fiscal year, Ms. Yu will receive a bonus equal to 100% of her base
salary.
The
Board determined the satisfaction of the above conditions for the 2023 fiscal year as the Company acquired more than 150 new vendors
during 2023. Ms. Yu received a bonus amount of 100% of her base salary.
On
February 26, 2024, entered into Addendum No. 3 (the Lai Addendum No. 3) to Executive Employment Agreement, as amended,
with Mr. Lai. Pursuant to the terms of the Lai Addendum No. 3, Mr. Lais bonus targets and payments were set as follows:
●
If
the Company achieves breakeven (net profits (excluding taxes) is at least $0) during the 2024 fiscal year, Mr. Lai will receive a
bonus equal to 50% of base salary.
●
If
the Company grows its net profits (excluding taxes) to at least $500,000 during the 2024 fiscal year, Mr. Lai will receive a bonus
equal to 100% of base salary.
In
addition, pursuant to the terms of the Lai Addendum No. 3, Mr. Lai was entitled to receive a guaranteed bonus of $100,000 on December
27, 2024.
Also
on February 26, 2024, the Company entered into Addendum No. 3 (the Yu Addendum No. 3) to Executive Employment Agreement,
as amended, with Ms. Yu. Pursuant to the terms of the Yu Addendum No. 3, Ms. Yus bonus targets and payments were set as follows:
●
If
the Company acquires at least 100 new vendors during the 2024 fiscal year, Ms. Yu will receive a bonus equal to 50% of base salary.
●
If
the Company acquires at least 135 new vendors during the 2024 fiscal year, Ms. Yu will receive a bonus equal to 100% of base salary.
In
addition, pursuant to the terms of the Yu Addendum No. 3, Ms. Yu was entitled to receive a guaranteed bonus of $100,000 on December 27,
2024.
15
On
March 14, 2025, the Company and Mr. Lai entered into Addendum No. 4 (the Lai Addendum No. 4) to Executive Employment Agreement,
as amended. Pursuant to the terms of the Lai Addendum No. 4, Mr. Lais bonus targets and payments were set as follows:
●
If
the Company grows its net profits (excluding taxes and executives bonuses) to at least $500,000 during the 2025 fiscal year,
Mr. Lai will receive a bonus equal to 50% of Base Salary (as defined in the Lai Agreement).
●
If
the Company grows its net profits (excluding taxes and executives bonuses) to at least $1,000,000 during the 2025 fiscal year,
Mr. Lai will receive a bonus equal to 100% of Base Salary.
The
satisfaction of the above conditions will be determined at the end of the 2025 fiscal year. For the avoidance of doubt, only one of the
above bonus amounts, if at all, will be payable.
In
addition, pursuant to the terms of the Lai Addendum, Mr. Lai is entitled to receive a guaranteed bonus of $100,000 on December 22, 2025.
Also
on March 14, 2025, the Company and Ms. Yu entered into Addendum No. 4 (the Yu Addendum No. 4) to Executive Employment Agreement,
as amended. Pursuant to the terms of the Yu Addendum No. 4, Ms. Yus bonus targets and payments were set as follows:
●
If
the Company acquires at least 100 new vendors during the 2025 fiscal year, Ms. Yu will receive a bonus equal to 50% of Base Salary.
●
If
the Company acquires at least 135 new vendors during the 2025 fiscal year, Ms. Yu will receive a bonus equal to 100% of her Base
Salary.
The
satisfaction of the above conditions will be determined at the end of the 2025 fiscal year. For the avoidance of doubt, only one of the
above bonus amounts, if at all, will be payable.
In
addition, pursuant to the terms of the Yu Addendum, Ms. Yu is entitled to receive a guaranteed bonus of $100,000 on December 22, 2025.
Each
of Mr. Lais and Ms. Yus agreements, as amended, provides that if at the Companys request the executive attends any
trade shows, events, or meetings which are independent of the executives responsibility under the applicable agreement, the Company
will pay the executive $1,000 in cash per full day for such attendance or $500 in cash for a half day.
Each
of Mr. Lais and Ms. Yus agreements, as amended, provides that at the end of each calendar quarter during the term, the
Company will issue to the applicable executive a number of shares of common stock having a fair market value of $3,000 as of such date
(with any partial quarter being pro-rated). The market value of the shares is determined as follows: (a) if the common stock is then
listed for trading on the OTC Markets or a United States national securities exchange (as applicable, the Trading Market),
the daily volume weighted average closing price of the common stock during the 20 trading day period immediately prior to the calculation
date, (b) if the common stock is not then listed or quoted for trading on a Trading Market, and if prices for the common stock are then
reported in the Pink Sheets published by OTC Markets Group, Inc., the most recent bid price per share of the common stock
so reported, or (c) in all other cases, the fair market value of a share of common stock as is determined in good faith by the Board,
without the involvement of the executive if the executive is then serving on the Board, after taking into consideration factors it deems
appropriate. A Trading Day is any day on which the Trading Market is generally open for business and on which the common
stock is then traded.
Mr.
Lais and Ms. Yus agreements, as amended, each provides that they will be entitled to fringe benefits consistent with the
practices of the Company, and to the extent the Company provides similar benefits to the Companys executive officers; that the
Company will reimburse each of them for all reasonable and necessary out-of-pocket business, entertainment and travel expenses incurred
in connection with the performance of their duties; that they are entitled to a number of vacation days as generally provided to other
executive officers of the Company from time to time; and that they are each, together with their spouses and legal dependents, entitled
to participate equally in the health, dental and other benefit plans, which are available to senior managers of the Company.
16
Mr.
Lais and Ms. Yus agreements, as amended, provide for different results and payments on termination, based on whether the
applicable agreement was terminated by the Company with or without Cause, or by the applicable executive with or without
Good Reason.
For
purposes of their agreements, Cause means any of the following:
●
a
violation of any material written rule or policy of the Company for which violation any employee may be terminated pursuant to the
written policies of the Company reasonably applicable to an executive employee;
●
misconduct
by the executive to the material detriment of the Company;
●
the
executives conviction (by a court of competent jurisdiction, not subject to further appeal) of, or pleading guilty to, a felony;
●
the
executives gross negligence in the performance of their duties and responsibilities to the Company as described in the applicable
agreement; or
●
the
executives material failure to perform their duties and responsibilities to the Company as described in the agreement (other
than any such failure resulting from the their incapacity due to physical or mental illness or any such failure subsequent to the
executive being delivered a notice of termination without Cause by the Company or delivering a notice of termination for Good Reason
to the Company), in either case after written notice from the Board (in the case of Mr. Lai) or from the Chief Executive Officer
(in the case of Ms. Yu), which specifies the nature of such material failure and the executives failure to cure such material
failure within 10 days following receipt of such notice.
For
purposes of their agreements, Good Reason means any of the following:
●
a
material diminution by the Company of compensation and benefits (taken as a whole) provided to the executive;
●
a
reduction in base salary or target or maximum bonus, other than as part of an across-the-board reduction in salaries of management
personnel;
●
the
relocation of the executives principal executive office to a location more than 50 miles further from the executives
principal executive office immediately prior to such relocation; or
●
a
material breach by the Company of any of the terms and conditions of the applicable employment agreement which the Company fails
to correct within 10 days after the Company receives written notice from the executive of such violation.
In
the event that the Company terminates the applicable agreement for Cause, or the applicable executive terminates their
agreement without Good Reason, then the Company will pay to the applicable executive any unpaid base salary and benefits
then owed or accrued, and any unreimbursed expenses, will issue to the applicable executive the shares as described above (i.e., the
$3,000 of value of shares per calendar quarter) which have accrued as of such date; and any unvested portion of any equity granted to
the applicable executive will be forfeited.
In
the event that the Company terminates the applicable agreement without Cause, or the applicable executive terminates their
agreement for Good Reason, in addition to the payments and issuances above, the Company will pay to the applicable executive,
in one lump sum, an amount equal to the base salary that they would have been paid for the remainder of the initial 3-year term (if such
termination occurs during that initial term) or the one year renewal term (if such termination occurs during a renewal term), as applicable,
and any equity grant already made to the executive shall, to the extent not already vested, be deemed automatically vested.
17
Pursuant
to their agreements, as amended, in the event of Mr. Lais or Ms. Yus death or total disability, the applicable agreement
will terminate on the date of death or total disability and the Company will shall pay to the applicable executive (or their estate)
any unpaid base salary and benefits then owed or accrued and any unreimbursed expenses for which the Company has agreed to reimburse
the applicable executive, plus a pro-rata bonus for the year of termination based on the executives target bonus for such year
and the portion of such year in which the executive was employed through the date of such termination; and any unvested portion of any
equity granted to the applicable executive will be forfeited as of the termination date.
If
it is determined that any payment or benefit provided to either Mr. Lai or Ms. Yu under their respective agreements, as amended, would
constitute an excess parachute payment within the meaning of section 280G of the Code, such that the payment would be subject
to an excise tax (the Excise Tax) under Section 4999 of the Internal Revenue Code of 1986, as amended (the Code),
the Company will pay to the applicable executive an additional amount (the Gross-Up Payment) such that the net amount of
the Gross-Up Payment retained by the applicable executive after the payment of any Excise Tax and any federal, state and local income
and employment tax on the Gross-Up Payment, will be equal to the Excise Tax due on the payment and any interest and penalties in respect
of such Excise Tax. For purposes of determining the amount of the Gross-Up Payment, the applicable executive will be deemed to pay federal
income tax and employment taxes at the highest marginal rate of federal income and employment taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality
of the applicable executives residence (or, if greater, the state and locality in which the applicable executive is required to
file a nonresident income tax return with respect to the payment) in the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in federal income taxes that may be obtained from the deduction of such state and local taxes.
As
a result of the uncertainty in the application of sections 4999 and 280G of the Code, it is possible that the Gross-Up Payments either
will have been made which should not have been made, or will not have been made which should have been made, by the Company (an Excess
Gross-Up Payment or a Gross-Up Underpayment, respectively). If it is established pursuant to (A) a final determination
of a court for which all appeals have been taken and finally resolved or the time for all appeals has expired, or (B) an Internal Revenue
Service (the IRS) proceeding which has been finally and conclusively resolved, that an Excess Gross-Up Payment has been
made, such Excess Gross-Up Payment shall be deemed for all purposes to be a loan to the executive made on the date the executive received
the Excess Gross-Up Payment and the executive shall repay the Excess Gross-Up Payment to the Company either (i) on demand, if the executive
is in possession of the Excess Gross-Up Payment or (ii) upon the refund of such Excess Gross-Up Payment to the executive from the IRS,
if the IRS is in possession of such Excess Gross-Up Payment, together with interest on the Excess Gross-Up Payment at (X) 120% of the
applicable federal rate (as defined in Section 1274(d) of the Code) compounded semi-annually for any period during which the executive
held such Excess Gross-Up Payment and (Y) the interest rate paid to the executive by the IRS in respect of any period during which the
IRS held such Excess Gross-Up Payment. If a Gross-Up Underpayment occurs as determined under one or more of the following circumstances:
(I) such determination is made by the Company (which shall include the position taken by the Company, together with its consolidated
group, on its federal income tax return) or is made by the IRS, (II) such determination is made by a court, or (III) such determination
is made upon the resolution to the executives satisfaction of the Dispute, then the Company shall pay an amount equal to the Gross-Up
Underpayment to the executive within ten calendar days of such determination or resolution, together with interest on such amount at
120% of the applicable federal rate compounded semi-annually from the date such amount should have been paid to the executive pursuant
to the terms of his or her employment agreement or otherwise, but for the operation of Section 4(c) of the employment agreements, until
the date of payment.
Each
of the two employment agreements, as amended, also contains a non-solicitation provision, wherein the executive agrees that, during the
term of their agreement and for three years thereafter, the executive will not, directly or indirectly solicit or discuss with any employee
of Company the employment of such Company employee by any other commercial enterprise other than Company, nor recruit, attempt to recruit,
hire or attempt to hire any such Company employee on behalf of any commercial enterprise other than Company, provided that this provision
will not prohibit the applicable executive from undertaking a general recruitment advertisement provided that it is not targeted towards
any person identified above, or from hiring, employing or engaging any such person who responds to that general recruitment advertisement.
18
Each
of the two employment agreements, as amended, also provides that, during the term, the applicable executive will be entitled to indemnification
and insurance coverage for officers liability, fiduciary liability and other liabilities arising out of the executives
position with the Company in any capacity, in an amount not less than the highest amount available to any other executive, and that such
coverage and protections, with respect to the various liabilities as to which the executive has been customarily indemnified prior to
termination of employment, will continue for at least six years following the end of the applicable term.
Each
of the two employment agreements, as amended, contains customary representations and warranties by the parties, a provision for resolution
of disputes by arbitration, customary confidentiality provisions, customary provisions relating to the Companys ownership of intellectual
property created by the applicable executive, and other customary miscellaneous provisions.
Director
Agreements
On
June 1, 2021, the Company entered into a Director Agreement with Mr. Lenner in connection with his services as a director of the Company.
On October 6, 2021, the Company entered into a Director Agreement with Mr. Gao in connection with his services as a director of the Company.
On February 20, 2023, the Company entered into a Director Agreement with Ms. Bui in connection with her services as a director.
Pursuant
to their respective agreements, each of Messrs. Lenner and Gao and Ms. Bui agreed to serve as a director of the Company and to be available
to perform the duties consistent with such position pursuant to the Certificate and Bylaws of the Company, and any additional codes,
guidelines or policies of the Company that may be effective now or in the future. Each of the agreements continues in effect until the
earliest of (a) such time as the applicable director resigns or is removed from office and (b) the death of the director.
Each
agreement provides that, during the term of the applicable agreement, in exchange for their services, the Company shall issue to the
applicable director a number of shares of common stock having a fair market value of $3,000 as of such date (with any partial quarter
being pro-rated). The market value of the shares is determined in the same manner as for the executives employment agreements
as discussed above.
Each
of the directors agreements provides that if at the Companys request the director attends any trade shows, events, or meetings
which are independent of the directors responsibility under the applicable agreement, the Company will pay the director $1,000
in cash per full day for such attendance or $500 in cash for a half day.
The
director agreements provide that, during the applicable term, the Company will reimburse the applicable director for all reasonable out-of-pocket
expenses incurred by them in attending any in-person meetings, provided that the director complies with the generally applicable policies,
practices and procedures of the Company for submission of expense reports, receipts or similar documentation of such expenses. Any reimbursements
for allocated expenses (as compared to out-of-pocket expenses of the director in excess of $500) must be approved in advance by the Company.
Each
of the director agreements contains customary confidentiality provisions, customary provisions relating to the Companys ownership
of intellectual property created by the applicable director, customary representations and warranties by the parties and other customary
miscellaneous provisions.
Elements
of Compensation
Mr.
Lai and Ms. Yu were provided with the following primary elements of compensation in 2024 and 2023:
19
Base
Salary.
Mr. Lai and Ms. Yu received a fixed base salary in an amount determined by the Board of Directors based on a number of
factors, including:
●
The
nature, responsibilities and duties of the officer’s position;
●
The
officer’s expertise, demonstrated leadership ability and prior performance;
●
The
officer’s salary history and total compensation, including annual cash bonuses and
long-term incentive compensation; and
●
The
competitiveness of the market for the officer’s services.
The
base salary for each of Mr. Lai and Ms. Yu for 2024 and 2023 is listed in 2024 Summary Compensation Table.
Bonuses.
For the year ended December 31, 2024, the Company paid Mr. Lai and Ms. Yu a bonus of $600,000 and $550,000, respectively. For
the year ended December 31, 2023, the Company paid Mr. Lai and Ms. Yu a bonus of $100,000 and $550,000, respectively.
The
bonuses for 2024 and 2023 were determined based on peer comparable compensation paid in the Seattle, Washington area reported by
www.salary.com
(
https://www.salary.com/tools/salary-calculator/ceo/seattle-wa?view=tabletype=bonus
). According to
www.salary.com
,
the CEO salary and bonus range in Seattle was $670,877 to $3,367,310 as updated on February 1, 2025. The $1,100,000 and $600,000 compensation
(base salary and bonus) paid to Mr. Lai for 2024 and 2023, respectively, fell within such range and we believed such compensation to
be reasonable due to the revenue growth in the Company in 2024 and 2023, respectively, due in large part to Mr. Lais leadership.
According
to
www.salary.com
(
https://www.salary.com/tools/salary-calculator/coo/seattle-wa?view=tabletype=bonus
), the salary
and bonus range for Chief Operating Officer in Seattle was $380,458 and $1,489,736, as updated February 1, 2025. The $1,100,000 and $1,000,000
compensation (base salary and bonus) paid to Ms. Yu for 2024 and 2023, respectively, fell within such range and we believed to be reasonable
due to Ms. Yu being instrumental in delivering high growth of new vendors to the Company in 2024 and 2023, respectively.
Stock
Awards.
On January 4, 2023, the Company issued 1,001 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner,
Douglas Branch, and Alan Gao, with a fair market value of $2.9985 per share, as compensation for the services as executives or directors
to the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On
April 3, 2023, the Company issued 1,365 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
and Alan Gao, and 606 shares of Company common stock to Hillary Bui, with a fair market value of $2.1985 per share, as compensation for
the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements or Director
Agreements with the Company.
On
June 30, 2023, the Company issued 1,752 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $1.7125 per share, as compensation for the services as executives or directors
of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On
October 2, 2023, the Company issued 1,948 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $1.54 per share, as compensation for the services as executives or directors of
the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On
January 2, 2024, the Company issued 2,139 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $1.4025 per share, as compensation for the services as executives or directors
of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
20
On
March 29, 2024, the Company issued 2,251 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $1.3330 per share, as compensation for the services as executives or directors
of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On
July 1, 2024, the Company issued 2,946 shares of Company common stock to each of Sam Lai and Maggie Yu (both of whom are executive officers,
directors and significant stockholders of the Company), and Michael Lenner, Douglas Branch, Alan Gao and Hillary Bui (each of whom was
a director of the Company as of such date), with a fair market value of $1.0185 per share, as compensation for the services as executives
or directors of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the
Company. Subsequently, on July 22, 2024, Mr. Branch resigned his position as a member of the Companys Board of Directors.
On
July 25, 2024, following Mr. Branchs resignation, the Company issued 6,000 shares of restricted common stock to Mr. Branch as
compensation for services rendered.
On
October 1, 2024, the Company issued 2,196 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Alan Gao and
Hillary Bui, with a fair market value of $1.3660 per share, as compensation for the services as executives or directors of the Company
pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On
April 1, 2025, the Company issued 1,750 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 $1.714 per share, as compensation for the services as executives or directors of the Company pursuant
to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
Other
Benefits.
In fiscal years 2024 and 2023, Mr. Lai and Ms. Yu were reimbursed for healthcare expenses. The amounts paid to Mr.
Lai and Ms. Yu in 2024 and 2023 in respect of these benefits is reflected above in the All Other Compensation column of
the Summary Compensation Table.
2021
Equity Incentive Plan
Overview
The
Board of Directors and stockholders holding a majority of the Companys voting capital approved and adopted the 2021 Plan on June
27, 2021. The 2021 Plan shall be administered by the Board or one or more committees appointed by the Board or another committee (Administrator).
The Administrator, in its discretion, selects the individuals to whom awards may be granted, the time or times at which such awards are
granted, and the terms of such awards. The 2021 Plan authorizes the Company to grant stock options, stock appreciation rights, restricted
shares, restricted share unit, cash awards, other awards, and performance-based awards. Awards may be granted to the Companys
officers, employees, directors and consultants.
The
purpose of the 2021 Plan is to promote the success of the Company and to increase stockholder value by providing an additional means
through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons. The Board may, at
any time, terminate or, from time to time, amend, modify or suspend the 2021 Plan, in whole or in part. To the extent then required by
applicable law or any applicable stock exchange or required under the Code to preserve the intended tax consequences of the 2021 Plan,
or deemed necessary or advisable by the Board, the 2021 Plan and any amendment to the 2021 Plan shall be subject to stockholder approval.
Unless earlier terminated by the Board, the 2021 Plan will terminate 10 years from the date of adoption.
21
Authorized
Shares
A
total of 4,995,000 shares of the Companys common stock were originally authorized for issuance pursuant to the 2021 Plan. Pursuant
to the terms of the 2021 Plan and subject to adjustment as provided in the 2021 Plan, the maximum aggregate number of shares that may
be issued under the 2021 Plan were cumulatively increased on January 1, 2022 and will be cumulatively increased on each subsequent January
1, by a number of shares equal to the smaller of (i) 3% of the number of shares of common stock issued and outstanding on the immediately
preceding December 31, or (ii) an amount determined by the Board. As of March 27, 2025, there were 8,097,909 shares of common stock authorized
for issuance pursuant to the 2021 Plan, and 8,097,909 shares available for issuance under the 2021 Plan.
Additionally,
if any award issued pursuant to the 2021 Plan expires or becomes unexercisable without having been exercised in full, is surrendered
pursuant to an exchange program, as provided in the 2021 Plan, or, with respect to restricted stock, RSUs, performance units or performance
shares, is forfeited to or repurchased by the Company due to the failure to vest, the unpurchased shares (or for awards other than stock
options or stock appreciation rights the forfeited or repurchased shares) which were subject thereto will become available for future
grant or sale under the 2021 Plan (unless the 2021 Plan has terminated). With respect to stock appreciation rights, only shares actually
issued pursuant to a stock appreciation right will cease to be available under the 2021 Plan; all remaining shares under stock appreciation
rights will remain available for future grant or sale under the 2021 Plan (unless the 2021 Plan has terminated). Shares that have actually
been issued under the 2021 Plan under any award will not be returned to the 2021 Plan and will not become available for future distribution
under the 2021 Plan; provided, however, that if shares issued pursuant to awards of restricted stock, RSUs, performance shares or performance
units are repurchased by the Company or are forfeited to the Company due to the failure to vest, such shares will become available for
future grant under the 2021 Plan. Shares used to pay the exercise price of an award or to satisfy the tax withholdings related to an
award will become available for future grant or sale under the 2021 Plan. To the extent an award under the 2021 Plan is paid out in cash
rather than shares, such cash payment will not result in reducing the number of shares available for issuance under the 2021 Plan.
Notwithstanding
the foregoing and, subject to adjustment as provided in the 2021 Plan, the maximum number of shares that may be issued upon the exercise
of incentive stock options will equal the aggregate share number stated above, plus, to the extent allowable under Section 422 of the
Code and regulations promulgated thereunder, any shares that become available for issuance under the 2021 Plan in accordance with the
foregoing.
Plan
Administration
The
Board or one or more committees appointed by the Board will administer the 2021 Plan. In addition, if the Company determines it is desirable
to qualify transactions under the 2021 Plan as exempt under Rule 16b-3 of the Exchange Act such transactions will be structured with
the intent that they satisfy the requirements for exemption under Rule 16b-3. Subject to the provisions of the 2021 Plan, the administrator
has the power to administer the 2021 Plan and make all determinations deemed necessary or advisable for administering the 2021 Plan,
including the power to determine the fair market value of the Companys common stock, select the service providers to whom awards
may be granted, determine the number of shares covered by each award, approve forms of award agreements for use under the 2021 Plan,
determine the terms and conditions of awards (including the exercise price, the time or times at which the awards may be exercised, any
vesting acceleration or waiver or forfeiture restrictions and any restriction or limitation regarding any award or the shares relating
thereto), construe and interpret the terms of the 2021 Plan and awards granted under it, prescribe, amend and rescind rules relating
to the 2021 Plan, including creating sub-plans and modify or amend each award, including the discretionary authority to extend the post-termination
exercisability period of awards (provided that no option or stock appreciation right will be extended past its original maximum term),
and to allow a participant to defer the receipt of payment of cash or the delivery of shares that would otherwise be due to such participant
under an award. The administrator also has the authority to allow participants the opportunity to transfer outstanding awards to a financial
institution or other person or entity selected by the administrator and to institute an exchange program by which outstanding awards
may be surrendered or cancelled in exchange for awards of the same type which may have a higher or lower exercise price or different
terms, awards of a different type or cash, or by which the exercise price of an outstanding award is increased or reduced. The administrators
decisions, interpretations and other actions are final and binding on all participants.
Eligibility
Awards
under the 2021 Plan, other than incentive stock options, may be granted to employees (including officers) of the Company or a subsidiary,
members of the Companys Board, or consultants engaged to render bona fide services to the Company or a subsidiary. Incentive stock
options may be granted only to employees of the Company or a subsidiary.
22
Stock
Options
Stock
options may be granted under the 2021 Plan. The exercise price of options granted under the 2021 Plan generally must at least be equal
to the fair market value of the Companys common stock on the date of grant. The term of each option will be as stated in the applicable
award agreement; provided, however, that the term may be no more than 10 years from the date of grant. The administrator will determine
the methods of payment of the exercise price of an option, which may include cash, shares or other property acceptable to the administrator,
as well as other types of consideration permitted by applicable law. After the termination of service of an employee, director or consultant,
they may exercise their option for the period of time stated in their option agreement. In the absence of a specified time in an award
agreement, if termination is due to death or disability, the option will remain exercisable for 12 months. In all other cases, in the
absence of a specified time in an award agreement, the option will remain exercisable for three months following the termination of service.
An option may not be exercised later than the expiration of its term. Subject to the provisions of the 2021 Plan, the administrator determines
the other terms of options.
Stock
Appreciation Rights
Stock
appreciation rights may be granted under the 2021 Plan. Stock appreciation rights allow the recipient to receive the appreciation in
the fair market value of the Companys common stock between the exercise date and the date of grant. Stock appreciation rights
may not have a term exceeding 10 years. After the termination of service of an employee, director or consultant, they may exercise their
stock appreciation right for the period of time stated in their stock appreciation right agreement. In the absence of a specified time
in an award agreement, if termination is due to death or disability, the stock appreciation rights will remain exercisable for 12 months.
In all other cases, in the absence of a specified time in an award agreement, the stock appreciation rights will remain exercisable for
three months following the termination of service. However, in no event may a stock appreciation right be exercised later than the expiration
of its term. Subject to the provisions of the 2021 Plan, the administrator determines the other terms of stock appreciation rights, including
when such rights become exercisable and whether to pay any increased appreciation in cash or with shares of the Companys common
stock, or a combination thereof, except that the per share exercise price for the shares to be issued pursuant to the exercise of a stock
appreciation right will be no less than 100% of the fair market value per share on the date of grant.
Restricted
stock may be granted under the 2021 Plan. Restricted stock awards are grants of shares of the Companys common stock that vest
in accordance with terms and conditions established by the administrator. The administrator will determine the number of shares of restricted
stock granted to any employee, director or consultant and, subject to the provisions of the 2021 Plan, will determine the terms and conditions
of such awards. The administrator may impose whatever conditions to vesting it determines to be appropriate (for example, the administrator
may set restrictions based on the achievement of specific performance goals or continued service to the Company); provided, however,
that the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Recipients
of restricted stock awards generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting,
unless the administrator provides otherwise. Shares of restricted stock that do not vest are subject to the Companys right of
repurchase or forfeiture.
Restricted
Stock Units
RSUs
may be granted under the 2021 Plan. RSUs are bookkeeping entries representing an amount equal to the fair market value of one share of
the Companys common stock. Subject to the provisions of the 2021 Plan, the administrator determines the terms and conditions of
RSUs, including the vesting criteria and the form and timing of payment. The administrator may set vesting criteria based upon the achievement
of Company-wide, divisional, business unit or individual goals (including continued employment or service), applicable federal or state
securities laws or any other basis determined by the administrator in its discretion. The administrator, in its sole discretion, may
pay earned RSUs in the form of cash, in shares of the Companys common stock or in some combination thereof. Notwithstanding the
foregoing, the administrator, in its sole discretion, may accelerate the time at which any vesting requirements will be deemed satisfied.
23
Performance
Units and Performance Shares
Performance
units and performance shares may be granted under the 2021 Plan. Performance units and performance shares are awards that will result
in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. The
administrator will establish performance objectives or other vesting criteria in its discretion, which, depending on the extent to which
they are met, will determine the number or the value of performance units and performance shares to be paid out to participants. The
administrator may set performance objectives based on the achievement of Company-wide, divisional, business unit or individual goals
(including continued employment or service), applicable federal or state securities laws or any other basis determined by the administrator
in its discretion. After the grant of a performance unit or performance share, the administrator, in its sole discretion, may reduce
or waive any performance criteria or other vesting provisions for such performance units or performance shares. Performance units shall
have an initial dollar value established by the administrator on or prior to the grant date. Performance shares shall have an initial
value equal to the fair market value of the Companys common stock on the grant date. The administrator, in its sole discretion,
may pay earned performance units or performance shares in the form of cash, in shares or in some combination thereof.
Non-Employee
Directors
The
2021 Plan provides that all non-employee directors will be eligible to receive all types of awards (except for incentive stock options)
under the 2021 Plan. The 2021 Plan includes a maximum limit of $750,000 of equity awards that may be granted to a non-employee director
in any fiscal year, increased to $1,500,000 in connection with his or her initial service. For purposes of this limitation, the value
of equity awards is based on the grant date fair value (determined in accordance with accounting principles generally accepted in the
United States). Any equity awards granted to a person for their services as an employee, or for their services as a consultant (other
than as a non-employee director), will not count for purposes of the limitation. The maximum limit does not reflect the intended size
of any potential compensation or equity awards to the Companys non-employee directors.
Non-transferability
of Awards
Unless
the administrator provides otherwise, the 2021 Plan generally does not allow for the transfer of awards and only the recipient of an
award may exercise an award during their lifetime. If the administrator makes an award transferable, such award will contain such additional
terms and conditions as the administrator deems appropriate.
Certain
Adjustments
In
the event of certain changes in the Companys capitalization, to prevent diminution or enlargement of the benefits or potential
benefits available under the 2021 Plan, the administrator will adjust the number and class of shares that may be delivered under the
2021 Plan or the number, and price of shares covered by each outstanding award and the numerical share limits set forth in the 2021 Plan.
Dissolution
or Liquidation
In
the event of the Companys proposed liquidation or dissolution, the administrator will notify participants as soon as practicable
and all awards will terminate immediately prior to the consummation of such proposed transaction.
24
Merger
or Change in Control
The
2021 Plan provides that in the event of the Companys merger with or into another corporation or entity or a change in control
(as defined in the 2021 Plan), each outstanding award will be treated as the administrator determines, including, without limitation,
that (i) awards will be assumed, or substantially equivalent awards will be substituted, by the acquiring or succeeding corporation (or
an affiliate thereof) with appropriate adjustments as to the number and kind of shares and prices; (ii) upon written notice to a participant,
that the participants awards will terminate upon or immediately prior to the consummation of such merger or change in control;
(iii) outstanding awards will vest and become exercisable, realizable or payable, or restrictions applicable to an award will lapse,
in whole or in part, prior to or upon consummation of such merger or change in control and, to the extent the administrator determines,
terminate upon or immediately prior to the effectiveness of such merger or change in control; (iv) (A) the termination of an award in
exchange for an amount of cash or property, if any, equal to the amount that would have been attained upon the exercise of such award
or realization of the participants rights as of the date of the occurrence of the transaction (and, for the avoidance of doubt,
if as of the date of the occurrence of the transaction the administrator determines in good faith that no amount would have been attained
upon the exercise of such award or realization of the participants rights, then such award may be terminated by the Company without
payment) or (B) the replacement of such award with other rights or property selected by the administrator in its sole discretion; or
(v) any combination of the foregoing. The administrator will not be obligated to treat all awards, all awards a participant holds, or
all awards of the same type, similarly. In the event that awards (or portion thereof) are not assumed or substituted for in the event
of a merger or change in control, the participant will fully vest in and have the right to exercise all of their outstanding options
and stock appreciation rights, including shares as to which such awards would not otherwise be vested or exercisable, all restrictions
on restricted stock and RSUs will lapse and, with respect to awards with performance-based vesting, all performance goals or other vesting
criteria will be deemed achieved at 100% of target levels and all other terms and conditions met, in all cases, unless specifically provided
otherwise under the applicable award agreement or other written agreement between the participant and the Company or any of the Companys
subsidiaries or parents, as applicable. If an option or stock appreciation right is not assumed or substituted in the event of a merger
or change in control, the administrator will notify the participant in writing or electronically that the option or stock appreciation
right will be exercisable for a period of time determined by the administrator in its sole discretion and the vested option or stock
appreciation right will terminate upon the expiration of such period.
For
awards granted to an outside director, the outside director will fully vest in and have the right to exercise all of their outstanding
options and stock appreciation rights, all restrictions on restricted stock and RSUs will lapse and, for awards with performance-based
vesting, unless specifically provided for in the award agreement, all performance goals or other vesting criteria will be deemed achieved
at 100% of target levels and all other terms and conditions met.
Clawback
Awards
will be subject to any Company clawback policy that the Company is required to adopt pursuant to the listing standards of any national
securities exchange or association on which the Companys securities are listed or as is otherwise required by the Dodd-Frank Wall
Street Reform and Consumer Protection Act or other applicable laws. The administrator also may specify in an award agreement that the
participants rights, payments or benefits with respect to an award will be subject to reduction, cancellation, forfeiture or recoupment
upon the occurrence of certain specified events. The Board may require a participant to forfeit, return or reimburse the Company all
or a portion of the award or shares issued under the award, any amounts paid under the award and any payments or proceeds paid or provided
upon disposition of the shares issued under the award in order to comply with such clawback policy or applicable laws.
Amendment
and Termination
The
administrator has the authority to amend, suspend or terminate the 2021 Plan provided such action does not impair the existing rights
of any participant. The 2021 Plan automatically will terminate on June 27, 2031, unless it is terminated sooner.
Executive
Compensation Philosophy
Our
Board of Directors determines the compensation given to our executive officers in its sole determination. Our Board of Directors reserves
the right to pay our executives or any future executives a salary, and/or issue them shares of common stock issued in consideration for
services rendered and/or to award incentive bonuses which are linked to our performance, as well as to the individual executive officers
performance. This package may also include long-term stock-based compensation to certain executives, which is intended to align the performance
of our executives with our long-term business strategies. Additionally, while our Board of Directors has not granted any performance
base stock options to date, the Board of Directors reserves the right to grant such options in the future, if the Board in its sole determination
believes such grants would be in the best interests of the Company.
25
Incentive
Bonus
The
Board of Directors may grant incentive bonuses to our executive officers and/or future executive officers in its sole discretion, if
the Board of Directors believes such bonuses are in the Companys best interest, after analyzing our current business objectives
and growth, if any, and the amount of revenue we are able to generate each month, which revenue is a direct result of the actions and
ability of such executives.
Long-Term,
Stock-Based Compensation
In
order to attract, retain and motivate executive talent necessary to support the Companys long-term business strategy, we may award
our executives and any future executives with long-term, stock-based compensation in the future, at the sole discretion of our Board.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Policies
and Procedures for Related Party Transactions
Under
Item 404 of Regulation S-K, a related person transaction is any actual or proposed transaction, arrangement or relationship or series
of similar transactions, arrangements or relationships, including those involving indebtedness not in the ordinary course of business,
to which we or our subsidiaries were or are a party, or in which we or our subsidiaries were or are a participant, in which the amount
involved exceeded or exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal
years and in which any of our directors, nominees for director, executive officers, beneficial owners of more than 5% of any class of
our voting securities (a significant stockholder), or any member of the immediate family of any of the foregoing persons,
had or will have a direct or indirect material interest.
We
recognize that transactions between us and any of our directors or executives or with a third party in which one of our officers, directors
or significant stockholders has an interest can present potential or actual conflicts of interest and create the appearance that our
decisions are based on considerations other than the best interests of our Company and stockholders.
The
Audit Committee of the Board of Directors is charged with responsibility for reviewing, approving and overseeing any transaction between
the Company and any related person (as defined in Item 404 of Regulation S-K), including the propriety and ethical implications of any
such transactions, as reported or disclosed to the Audit Committee by the independent auditors, employees, officers, members of the Board
of Directors or otherwise, and to determine whether the terms of the transaction are not less favorable to us than could be obtained
from an unaffiliated party.
From
time to time, we engage in transactions with related parties. The following is a summary of the related party transactions during the
fiscal years ended December 31, 2024 and 2023, and any proposed transactions, requiring disclosure pursuant to Item 404 of Regulation
S-K.
Affiliated
Loans
December
2020 Loan
On
December 31, 2020, Sam Lai, our Chairman of the Board, Chief Executive Officer, Interim Chief Financial Officer and a significant stockholder
of the Company, and Maggie Yu, our Senior Vice President, a member of our Board and a significant stockholder of the Company, made a
loan (December 2020 Loan) to us of $1,041,353 in a single payment ($520,676 attributable to each of Mr. Lai and Mrs. Yu).
The loan is memorialized in a Loan Agreement dated December 31, 2020. Pursuant to the terms of the Loan Agreement, the loan bore no interest
and was payable on demand.
On
September 16, 2021, Mr. Lai, Ms. Yu, and the Company amended and restated the Loan Agreement to modify the terms of the December 2020
Loan, whereby the interest rate became 2% per annum (applied retroactively) rather than non-interest bearing and maturity date became
December 31, 2021 rather than payable on demand.
On
January 18, 2022 and January 27, 2023, the Company repaid the loan principal and accrued interest in full.
26
July
2021 Loan
On
July 27, 2021, Mr. Lai and Ms. Yu made a loan (July 2021 Loan) to us of the outstanding retained earnings of approximately
$4,170,418 in a single payment ($2,085,209 attributable to each of Mr. Lai and Mrs. Yu). Pursuant to the terms of the Loan Agreement,
the loan bore interest of 2% per annum and the principal of the loan ($4,170,418) and accrued interest becomes due and payable on December
31, 2022. On December 28, 2022, the Company, Mr. Lai and Ms. Yu agreed to extend the term of the loan, with a new maturity date of December
31, 2024. On December 31, 2024, the Company, Mr. Lai and Ms. Yu agreed to extend the term of the loan, with a new maturity date of December
31, 2025. As amended, the annual interest rate of the loan is 5.5%.
As
of December 31, 2024 and March 27, 2025, the outstanding principal balance was $3,499,418 and $3,160,418, respectively, on the July 2021
Loan.
Issuances
On
January 4, 2023, the Company issued 1,001 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
and Alan Gao, with a fair market value of $2.9985 per share as compensation for the services as executives or directors to the Company
pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On
April 3, 2023, the Company issued 1,365 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch
and Alan Gao, and 606 shares of Company common stock to Hillary Bui, with a fair market value of $2.1985 per share, as compensation for
the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment Agreements or Director
Agreements with the Company.
On
June 30, 2023, the Company issued 1,752 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $1.7125 per share, as compensation for the services as executives or directors
of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On
October 2, 2023, the Company issued 1,948 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $1.54 per share, as compensation for the services as executives or directors of
the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On
January 2, 2024, the Company issued 2,139 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $1.4025 per share, as compensation for the services as executives or directors
of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On
March 29, 2024, the Company issued 2,251 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui, with a fair market value of $1.3330 per share, as compensation for the services as executives or directors
of the Company pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On
July 1, 2024, the Company issued 2,946 shares of Company common stock to each of Sam Lai and Maggie Yu, and Michael Lenner, Douglas Branch,
Alan Gao and Hillary Bui (each of whom was a director of the Company as of such date), with a fair market value of $1.0185 per share,
as compensation for the services as executives or directors of the Company pursuant to the terms of their respective Executive Employment
Agreements or Director Agreements with the Company. Subsequently, on July 22, 2024, Mr. Branch resigned his position as a member of the
Board.
On
July 25, 2024, following Mr. Branchs resignation, the Company issued 6,000 shares of restricted common stock to Mr. Branch as
compensation for services rendered.
27
On
October 1, 2024, the Company issued 2,196 shares of Company common stock to each of Sam Lai, Maggie Yu, Michael Lenner, Alan Gao and
Hillary Bui, with a fair market value of $1.3660 per share, as compensation for the services as executives or directors of the Company
pursuant to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
On
April 1, 2025, the Company issued 1,750 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 $1.714 per share, as compensation for the services as executives or directors of the Company pursuant
to the terms of their respective Executive Employment Agreements or Director Agreements with the Company.
Director
Independence
As
a Nasdaq-listed company, we are required to comply with Nasdaqs continued listing standards.
Controlled
Company and Director Independence
The
controlled company exception to the Nasdaq rules provides that a company of which more than 50% of the voting power is
held by an individual, group or another company, a controlled company, need not comply with certain requirements of the
Nasdaq corporate governance rules. As stated above, Sam Lai, the Chairman of the Board, Chief Executive Officer and Interim Chief Financial
Officer of the Company, and Maggie Yu, Senior Vice President of the Company and a member of the Board, who are husband and wife, together
beneficially own 33,347,462 shares of the Companys common stock, representing approximately 94.84% of the voting power
of the Companys outstanding common stock. As a result, the Company is a controlled company under the Nasdaq corporate
governance standards. As a controlled company, we do not have to comply with certain corporate governance requirements under the Nasdaq
rules, including the following:
●
A
majority of the Companys Board to consist of independent directors as defined by the applicable Nasdaq rules
and regulations;
●
The
compensation of the Companys executive officers to be determined, or recommended to the Board for determination, by independent
directors constituting a majority of the independent directors of the Board in a vote in which only independent directors participate
or by a Compensation Committee comprised solely of independent directors; and
●
That
director nominees to be selected, or recommended to the Board for selection, by independent directors constituting a majority of
the independent directors of the Board in a vote in which only independent directors participate or by a nomination committee comprised
solely of independent directors.
The
Company intends to avail itself of each of these exemptions. More specifically, a majority of the Companys Board will not consist
of independent directors and the Company will not have a compensation committee or a nominating and corporate governance committee. Therefore,
for as long as the Company remains a controlled company, the Company will not have the same protections afforded to stockholders
of companies that are subject to all of these corporate governance requirements. If at any time the Company ceases to be a controlled
company under the Nasdaq rules, the Companys Board will take all action necessary to comply with the Nasdaq corporate governance
rules, including establishing certain committees composed entirely of independent directors, subject to a permitted phase-in
period.
Notwithstanding
the Companys status as a controlled company, the Company will remain subject to the Nasdaq corporate governance standard that
requires the Company to have an audit committee with at least three independent directors as well as composed entirely of independent
directors. As a result, the Company was required, at the time of listing on Nasdaq, to have at least one independent director on our
audit committee, at least two independent directors within 90 days of listing on Nasdaq, and at least three independent directors within
one year of listing on Nasdaq, where at least one of the independent directors qualifies as an audit committee financial expert under
SEC rules and as a financially sophisticated audit committee member under the Nasdaq rules.
The
Companys Board has affirmatively determined that two of its five directors (Sam Lai and Maggie Yu) are non-independent directors
of the Company and three of its five directors (Michael Lenner, Minghui (Alan) Gao, and Hilary (Hui-Chong) Bui) are independent directors
of the Company. The Companys audit committee consists of the three independent directors: Messrs. Lenner and Gao and Ms. Bui.
Ms. Bui is the chair of the audit committee. and qualifies as an audit committee financial expert under SEC rules and as a financially
sophisticated audit committee member under the Nasdaq rules.
28
PROPOSAL
2RATIFICATION OF THE APPOINTMENT OF
THE
COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
HTL
International has served as our independent registered public accounting firm since September 13, 2023. Our Board is asking stockholders
to ratify the appointment of HTL International as our independent registered public accounting firm for the fiscal year ending December
31, 2025. Although the Company is not required to submit this appointment to a vote of the stockholders, the audit committee believes
that it is appropriate as a matter of policy to request that stockholders ratify the appointment of HTL International as independent
registered public accounting firm. If the stockholders do not ratify the appointment, the audit committee will investigate the reasons
for stockholder rejection and consider whether to retain HTL International or will appoint another independent registered public accounting
firm. Even if the appointment is ratified, the audit committee in its discretion may direct the appointment of a different independent
registered public accounting firm at any time during the year if it determines that such a change would d be in the best interests of
the Company and its stockholders.
A
representative of HTL International is not expected to be present virtually at the Annual Meeting.
The
following table shows the fees that were billed for the audit and other services provided by HTL International for the fiscal years ended
December 31, 2024 and 2023.
Year Ended December 31,
2024
2023
Audit Fees
$
168,750
$
150,000
Audit-Related Fees
$
-
$
-
Tax Fees
$
-
$
-
All Other Fees
$
-
$
-
Total
$
168,750
$
150,000
Audit
Fees
. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and
services that are normally provided by our independent registered public accounting firm in connection with regulatory filings. The above
amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.
Audit-Related
Fees.
Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance
of the audit or review of our financial statements and are not reported under Audit Fees. These services include attest
services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards.
Tax
Fees
. Tax fees consist of fees billed for tax planning services and tax advice. The Board must specifically approve all other tax
services.
All
Other Fees
. Other services are services provided by the independent registered public accounting firm that do not fall within the
established audit, audit-related, and tax services categories. The Board preapproves specified other services that do not fall within
any of the specified prohibited categories of services.
Pre-Approval
Policy
All
of the foregoing services were pre-approved by our audit committee. Our audit committee pre-approves all auditing services and permitted
non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions
for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
29
REPORT
OF THE AUDIT COMMITTEE
The
primary function of the audit committee is to assist the Board in its oversight of the Companys financial reporting processes.
Management is responsible for the Companys financial statements and overall reporting process, including the system of internal
controls. The independent auditors are responsible for conducting annual audits and quarterly reviews of the Companys financial
statements and expressing an opinion as to the conformity of the annual financial statements with generally accepted accounting principles.
The
audit committee submits the following report pursuant to the SEC rules:
●
The
audit committee has reviewed and discussed with management and with HTL International, the Companys independent registered
public accounting firm, the audited consolidated financial statements of the Company for the fiscal year ended December 31, 2024
(the 2024 Financial Statements).
●
HTL
International has advised the management of the Company and the audit committee that it has discussed with them all the matters required
to be discussed by applicable requirements of the Public Company Accounting Oversight Board (PCAOB) and the SEC.
●
The
audit committee has received from HTL International the written disclosures and the letter required by applicable requirements of
the PCAOB regarding HTL Internationals communications with the audit committee concerning independence and has discussed HTL
Internationals independence with them, and based on this evaluation and discussion, recommended that HTL International be
selected as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2025.
●
Based
upon the aforementioned review, discussions and representations of HTL International, the audit committee recommended to the Board
that the 2024 Financial Statements be included in the Companys Annual Report on Form 10-K for the fiscal year ended December
31, 2024.
Submitted
by the Audit Committee of the Board of Directors:
Hillary
(Hui-Chong) Bui, Chair
Minghui
(Alan) Gao
Michael
Lenner
Vote
Required
The
affirmative vote of the shares present and entitled to vote at the Annual Meeting is required to ratify the appointment of HTL International
as our independent registered public accounting firm for the fiscal year ending December 31, 2025. You may vote for, against
or abstain from voting on Proposal 2. Abstentions will have the effect as a vote against Proposal 2. Because
broker non-votes are not considered present for the foregoing purpose, they will have no effect on the vote on Proposal 2.
Recommendation
THE
BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION OF HTL INTERNATIONAL AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM.
30
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information regarding the beneficial ownership of our common stock as of the Record Date by:
●
each
person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
●
each
of our current named executive officers and directors that beneficially own shares of our common stock; and
●
all
our executive officers and directors as a group.
All
such information provided by the stockholders who are not executive officers or directors reflects their beneficial ownership as of the
Record Date. Unless otherwise indicated, the owners have sole voting and investment power with respect to their respective shares. Unless
otherwise noted below, the address for each beneficial owner listed on the table is c/o Hour Loop, Inc., 8201 164th Ave. NE #200, Redmond,
WA 98052-7615.
Name and Address of Beneficial Owner
Number and
Nature of
Shares
Beneficially
Owned
Percentage of
Outstanding
Common Stock
(1)
Directors and Executive Officers:
Sam Lai
33,347,462
(2)
94.84
%
Maggie Yu
33,347,462
(2)
94.84
%
Hillary (Hui-Chong) Bui
17,184
*
Minghui (Alan) Gao
22,668
*
Michael Lenner
23,709
*
All executive officers and directors as a group (5 persons)
33,411,023
95.03
%
*
less
than 1%.
(1)
The
percentages in the table have been calculated based on 35,160,190 shares of our common stock outstanding on the Record Date.
To calculate a stockholders percentage of beneficial ownership, we include in the numerator and denominator the common stock
outstanding and all shares of our common stock issuable to that person in the event of the exercise of outstanding options and other
derivative securities owned by that person which are exercisable within 60 days of the Record Date. Common stock options and derivative
securities held by other stockholders are disregarded in this calculation. Therefore, the denominator used in calculating beneficial
ownership among our stockholders may differ. Unless we have indicated otherwise, each person named in the table has sole voting power
and sole investment power for the shares listed opposite such persons name.
(2)
Sam
Lai and Maggie Yu are husband and wife, and together they beneficially own 33,347,462 shares of the Companys common stock,
representing 94.84% of the voting power of the Companys outstanding common stock. Each of Mr. Lai and Ms. Yu individually
holds 16,673,731 shares of common stock, and each of them is deemed to indirectly beneficially own the others 16,673,731 shares
of common stock.
OTHER
MATTERS
Management
does not know of any other business that may be considered at the Annual Meeting. However, if any matters other than those referred to
above should properly come before the Annual Meeting, it is the intention of the persons named in the accompanying form of proxy to vote
the proxies held by them in accordance with their best judgment.
Stockholders are urged to vote on the matters to be considered
in advance of the Annual Meeting. You may vote your proxy by telephone or via the Internet or by completing and returning the enclosed
proxy card.
The
Company will bear the costs of its solicitation of proxies. In addition to the use of the mail, proxies may be solicited by electronic
mail, personal interview, telephone, telegram and telefax by the directors, officers and employees of the Company. Arrangements will
also be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of stock held of record by such persons, and the Company may reimburse such custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred by them in connection therewith.
31
ANNUAL
REPORT
A
copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, including the financial statements filed as part
of the Annual Report (the 2024 Form 10-K), accompanies this Proxy Statement. We will provide stockholders with additional
copies of the 2024 Form 10-K, without charge, upon written request to Hour Loop, Inc., Attention: Corporate Secretary, 8201 164th Ave.
NE #200, Redmond, WA 98052-7615. The 2023 Form 10-K and the exhibits thereto also are available, free of charge, from the SECs
website (
http://www.sec.gov
).
HOUSEHOLDING
OF PROXY MATERIALS
The
SEC has adopted rules that permit companies and intermediaries (e.g. brokers) to satisfy the delivery requirements for proxy statements
and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual
report addressed to those stockholders. This process, which is commonly referred to as householding, potentially means
extra convenience for stockholders and cost savings for companies.
A
number of brokers with accountholders who are stockholders will be householding our proxy materials. As indicated in the notice previously
provided by these brokers to stockholders, a single proxy statement and annual report will be delivered to multiple stockholders sharing
an address unless contrary instructions have been received from an affected stockholder. Once you have received notice from your broker
or us that they will be householding communications to your address, householding will continue until you are notified otherwise.
Stockholders
who currently receive multiple copies of the proxy materials at their address and would like to request householding of their communications
should contact their broker or, if a stockholder is a direct holder of shares of our common stock, they should submit a written request
to our transfer agent, Nevada Agency and Transfer Company, 50 West Liberty Street, Suite 880, Reno, Nevada 89501.
To
delist yourself from householding in the future you may write us at Hour Loop, Inc., Attention: Corporate Secretary, 8201 164th Ave.
NE #200, Redmond, WA 98052-7615, or call (206) 385-0488, ext. 100. Upon written or oral request directed to the Company at the address
or phone number listed above, we will deliver promptly a separate copy of the proxy materials.
STOCKHOLDER
PROPOSALS FOR 2026 ANNUAL MEETING OF STOCKHOLDERS
Stockholder
proposals submitted for inclusion in the proxy statement and form of proxy for the 2026 Annual Meeting of Stockholders must be received
at the corporate offices of the Company, addressed to the attention of Corporate Secretary, Hour Loop, Inc., 8201 164th Ave. NE #200,
Redmond, WA 98052-7615, no later than March 18, 2026. The proposals must comply with the rules of the SEC relating to stockholder proposals.
Our
bylaws provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election
as directors at our annual meeting of stockholders must provide timely notice of their intent in writing. To be timely, a stockholders
notice must be delivered to the Companys Corporate Secretary at our principal executive offices not less than 90 days nor more
than 120 days prior to the first anniversary of the preceding years annual meeting; provided, however, that in the event
that the date of the annual meeting is advanced by more than 30 days, or delayed by more than 90 days, from such anniversary date, or
if no annual meeting was held in the preceding year, notice by a stockholder to be timely must be so delivered not earlier than the 120th
day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting and
the 10th day following the day on which the public announcement of the date of such meeting is first made by the Company. Our bylaws
also specify certain requirements as to the form and content of a stockholders notice for an annual meeting. A copy of the full
text of these bylaw provisions may be obtained by writing to our Secretary at the address indicated above.
By
Order of the Board of Directors,
/s/
Sam Lai
Chairman
of the Board, Chief Executive Officer and Interim Chief Financial Officer
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