Filed 2025-09-15 · Period ending 2025-06-30 · 72,159 words · SEC EDGAR
← ISPR Profile · ISPR JSON API
# Ispire Technology Inc. (ISPR) — 10-K **Filed:** 2025-09-15 **Period ending:** 2025-06-30 **Accession:** 0001213900-25-087632 **Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1948455/000121390025087632/) **Origin leaf:** ab16dcc305becbf701e02be77ac44be66d0e7d2ac0d193215473533ca76520ef **Words:** 72,159 --- ** UNITED STATES** **SECURITIES AND EXCHANGE COMMISSION** **Washington, D.C. 20549** **** **FORM 10-K** **** ** ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** For the fiscal year ended June 30, 2025 OR **TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** For the transition period from _____________ to ___________________ Commission file number: **001-41680** **Ispire Technology Inc.** (Exact name of registrant as specified in its charter) | Delaware | | 93-1869878 | | | (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) | | | 19700 Magellan Drive, Los Angeles, CA | | 90502 | | | (Address of principal executive offices) | | (Zip Code) | | **(310) 742-9975** (Registrants telephone number, including area code) **Securities registered pursuant to Section 12(b) of the Act:** | Title of each class: | | Trading Symbol(s): | | Name of each exchange on which registered: | | | Common Stock, par value $0.0001 per share | | ISPR | | The Nasdaq Stock Market LLC | | **Securities registered pursuant to Section 12(g) of the Act:** **None** Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YesNo Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YesNo Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesNo Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YesNo Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act. | | Large accelerated filer | | Accelerated filer | | | | | Non-accelerated filer | | Smaller reporting company | | | | | | | Emerging growth company | | | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b). Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No The aggregate market value of the voting and non-voting common equity held by non-affiliates, based on the closing price of a share of the registrants common stock on December 31, 2024, which is the last business day of the registrants most recently completed second fiscal quarter, as reported by the Nasdaq Capital Market on such date, was approximately $99,098,253. As of September 15, 2025, there were 57,277,874 shares of the registrants common stock, par value $0.0001 per share (the Common Stock), outstanding. **TABLE OF CONTENTS** **** | | | Page | | | PART I | | | | | | Cautionary Note on Forward-Looking Statements | ii | | | | Summary Risk Factors | iv | | | Item 1. | Business | 1 | | | Item 1A. | Risk Factors | 19 | | | Item 1B. | Unresolved Staff Comments | 36 | | | Item 1C | Cybersecurity | 36 | | | Item 2. | Properties | 37 | | | Item 3. | Legal Proceedings | 37 | | | Item 4. | Mine Safety Disclosures | 37 | | | | | | | | PART II | | | | | Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 38 | | | Item 6. | [Reserved] | 39 | | | Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations | 39 | | | Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 46 | | | Item 8. | Financial Statements and Supplementary Data | 46 | | | Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 47 | | | Item 9A. | Controls and Procedures | 47 | | | Item 9B. | Other Information | 48 | | | Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 48 | | | | | | | | PART III | | | | | Item 10. | Directors, Executive Officers and Corporate Governance | 49 | | | Item 11. | Executive Compensation | 54 | | | Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 59 | | | Item 13. | Certain Relationships and Related Transactions, and Director Independence | 60 | | | Item 14. | Principal Accounting Fees and Services | 60 | | | | | | | | PART IV | | | | | Item 15. | Exhibits and Financial Statement Schedules | 62 | | | Item 16. | Form 10-K Summary | 64 | | i **PART I** **CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS** This Annual Report on Form 10-K (the Annual Report), and any documents we incorporate by reference, contain, or may contain, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve significant risks and uncertainties. All statements contained in this Annual Report and any documents we incorporate by reference, other than statements of historical facts, are forward-looking statements including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The words may, will, could, would, should, believes, expects, anticipates, estimates, intends, plans, potential and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about: | | our goals and growth strategies; | | | | our expectations regarding demand for and market acceptance of our brand and platforms; | | | | our future business development, results of operations and financial condition; | | | | the actual timing for and results of the PMTAs described herein, and other FDA review of the our products in development | | | | our ability to successfully operate our manufacturing facility in Malaysia; | | | | our ability to establish material relationships with suppliers other than Shenzhen Yi Jia Technology Co., Limited (Shenzhen Yi Jia); | | | | the effect of regulations relating to the marketing and sale of vaping products in the United States and other countries; | | | | our ability to maintain and improve our infrastructure necessary to operate our business; | | | | competition in the vaping industry; | | | | the expected growth of, and trends in, the markets for our products and services in the markets in which jurisdictions that we sell our products; | | | | the development of a market for cannabis vaping products outside of the United States, including the legalization of cannabis in certain European countries; | | | | the expected growth of, and trends in, the markets for our products and services in the markets in which jurisdictions that we sell our products; | | | | the effect of supply chain issues on our ability to manufacture and our ability and the ability of our distributors to distribute product; | | | | the development of a market for cannabis vaping products and our ability to market cannabis products to adult users; | | | | our ability to compete successfully in selling both tobacco and cannabis vapor products, the expected growth of, and trends in, the markets for our products and services in jurisdictions that we sell or plan to sell our products; | | | | government policies and regulations relating to our operations, including regulations relating to the sale and distribution of our vaping products and those relating to manufacturing operations; | | ii | | our ability to develop and maintain effective disclosure controls and procedures, and internal controls over financial reporting; | | | | our ability to comply with the continued listing standards of the Nasdaq Capital Market; | | | | our ability to attract and retain qualified senior management personnel and research and development staff; | | | | the volatility of our operating results and financial condition and the price of our common stock; | | | | the prospects of our joint venture with Touch Point Worldwide Inc. d/b/a Berify and Chemular Inc; | | | | general economic and business condition in China and elsewhere; | | | | assumptions underlying or related to any of the foregoing; and | | | | other risks and uncertainties, including those listed in the Risk Factors section of this Annual Report and the documents incorporated by reference herein. | | These forward-looking statements are only predictions and we may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, so you should not place undue reliance on our forward-looking statements, which speak only as of the date of this Annual Report or, in the case of documents incorporated by reference, the date of those documents.Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. These forward-looking statements involve risks and uncertainties that are subject to change based on various factors (many of which are beyond the our control). We have included important factors in the cautionary statements included in this Annual Report that could cause actual future results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. You should read this Annual Report and the documents that we incorporate by reference with the understanding that our actual future results may be materially different from what we expect. All subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events, except as may be required under applicable U.S. securities law. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Unless the context requires otherwise, references in this Annual Report to we, us, our, our company, ISPR, or similar terminology refer to Ispire Technology Inc. iii **** **SUMMARY RISK FACTORS** The following is a summary of the material risks and uncertainties that we have identified, which should be read in conjunction with the more detailed description of each risk factor found below in *ITEM 1A. Risk Factors* *Risks Related to Our Business and Industry* ** | | Existing laws, regulations and policies and the issuance of new or more stringent laws, regulations, policies and any other restrictions or limitations in relation to the nicotine vaping industry have and can materially and adversely affect our business operations. | | | | Cannabis vapor products are subject to regulations and restrictions in the United States and are prohibited in many other countries. | | | | Because Tuanfang Liu, our co-chief executive officer, who is also director, and his wife, Jiangyan Zhu, who is also a director, beneficially own a majority of our Common Stock and Mr. Liu owns 95% of the equity of our majority supplier, Mr. Liu has a conflict of interest. | | | | The recent implementation of regulations relating to e-cigarettes has resulted in our decision not to market nicotine products in the United States until we secure PMTA approvals on our ENDS devices. | | | | Recently enacted legislation and regulations in the United States may make it more difficult to sell nicotine and cannabis vaping products in the United States. | | | | We are exposed to risks relating to our relationship with a related party, and we may not be able to successfully operate manufacturing operations. | | | | If it is determined or perceived that the usage of nicotine or cannabis vaping products poses long-term health risks, the use of vaping products may decline significantly, which is likely to materially and adversely affect our business, financial condition, and results of operations. | | | | Our business, financial condition and results of operations may be adversely impacted by product defects or other quality issues. | | | | Our business may be negatively affected by global political events and foreign policy responses, including tariffs. | | | | Our business and the industry in which we operate are subject to inherent risks and uncertainties, including, among others, developments in regulatory landscape, medical discovery and market acceptance of vaping devices. | | | | Misuse or abuse of our products may lead to potential adverse health effects, subjecting us to complaints, product liability claims and negative publicity. | | | | One customer accounts for a significant portion of our sales. | | | | We may become subject to governmental regulations and other legal obligations related to privacy, information security, and data protection, and any security breaches, and our actual or perceived failure to comply with our legal obligations could harm our brand and business. | | | | Any significant cybersecurity incident or disruption of our information technology systems or those of third-party partners could materially damage user relationships and subject us to significant reputational, financial, legal and operation consequences. | | | | We may be subject to intellectual property infringement claims from third parties, which may be expensive to defend with no assurance of success and may disrupt our business and operations. | | iv | | As the patents we own or are licensed to us may expire and may not be extended, our patent applications may not be granted and our patent rights may be contested, circumvented, invalidated or limited in scope, our patent rights and license may not protect us. | | | | If we are unable to manage our growth or execute our strategies effectively, our business and prospects may be materially and adversely affected. | | | | Our success depends on our ability to retain our core management team and other keypersonnel. | | | | Our business, financial condition and results of operations may be adversely affected by an economic downturn. | | | | Although we believe that our business is not subject to PRC Laws, our business could be materially impaired if it is determined that our business is subject to PRC Laws. | | | | Our failure to collect accounts receivable from our customers may adversely affect the results of our operations. | | *Risks Related to Our Common Stock* | | Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our Common Stock. | | | | The trading price of our Common Stock may be volatile, which could result in substantial losses to investors. | | | | As an emerging growth company under the Jumpstart Our Business Startups Act, or JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. | | | | If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for our Common Stock and trading volume could decline. | | | | Our by-laws include forum selection provisions which may limit your ability to commence an action against us. | | v **ITEM 1. Business** **Overview** We are committed to delivering superior products that challenge industry norms, with the goal of delivering an unmatched customer and adult consumer experience. In achieving this, risk reduction is central to our mission, and we aim to improve the lives of our consumers through cutting-edge research and development. Our technology platforms look to reduce youth access to vaping products, which in turn will facilitate our ability to provide adult consumers with the products they desire. We are engaged in the research and development, design, commercialization, sales, marketing and distribution of branded and non-branded vaping hardware products in both the nicotine and cannabis spaces. Vaping refers to the practice of inhaling and exhaling the vapor produced by an electronic vaping device. These products are sold into the global nicotine markets in the form of e-cigarettes and global cannabis markets in the form of cartridges filled with oils by our customers. We sell our e-cigarette products globally, in markets where we are legally permitted to do so. To date, our nicotine products are marketed under the Aspire brand name and are sold primarily through our expansive distribution network. However, we are currently preparing to expand our international presence via the launch of nicotine products under the Ispire platform. These products will be launched under licensing arrangements with the owners(s) of selected partner brand(s). One such license arrangement has already launched and more are anticipated to occur in the future. We currently sell our cannabis vaping hardware in the United States, Canada, and South Africa. However, we are continuing to develop our sales network across Europe, South America, and other regions in preparation for legalization in these markets. Our cannabis products are marketed under the Ispire brand name, primarily on an original design manufacturer (ODM) basis to other cannabis vapor companies including multi and single-state operators, brand owners and co-packers. ODM generally involves the design and customization of core products to meet each brands unique image and needs. Our hardware products are sold by our customers under their own brand names. We do not touch the cannabis plant in the production and sale of our hardware products and thus are not subject to the specific cannabis-related regulatory and taxation provisions of the industry (e.g., IRS Code Section 280E). Some of our products use our BDC (bottom dual coil) coil technology which uses bottom dual coils to provide much higher temperature and an expanded heating which we believe achieves much greater flavor and vapor production than other available technologies. We believe that the use of our dual-coil technology enhances the flavor performance of e-liquid, and the hidden wick cotton with special designed wick holes can both extend the tank e-liquid capacity and improve the speed of wicking to increase the coil life. We believe that our BVC (bottom vertical coil) coil represents a significant technological breakthrough for us in coil technology utilizing a vertical heating wire surrounded by cotton. This design can enable the coil heating to provide uniform temperature from the tank, together with more efficient wicking. This technology, which was originally introduced by Aspire Global in 2014, enables the coil to last longer while still giving users what we believe is the purest and cleanest taste from e-liquids. We believe that our Cleito tank brings new and innovative technological advancement to the vaping industry. The Cleito uses a revolutionary coil design that replaces the standard chimney and, we believe, delivers maximized airflow. This design frees up even more restriction in the airflow by eliminating the need for a static chimney within the tank itself, which results in an expanded flavor profile and increased vapor production. Combined with a Clapton kanthal coil for maximum flavor, the Cleito tank delivers a rush of intense flavor and huge vapor with a broad profile. The simple top-fill design makes filling the device very easy and more convenient and enjoyable to use. Our Ispire cannabis vapor products use our patented DuCore (Dual Coil) technology for cannabis vaporizers. This technology enables users to create massive plumes of vape without burning the cannabis oil. These products incorporate our patented dual coil technology for what we believe is best-in-class airflow and taste, and our technology for eliminating the leakage of the oil from the unit, which overcomes a major disadvantage with many existing products. In June 2023, we introduced our proprietary Ispire ONE technology and products. Ispire ONE is designed to eliminate capping issues in the manufacturing/co-packing process; increase consistency and quality of the filled devices; eliminate leaking, spitting, or overheating for cartridges, disposables, and PODs; and improve consumer safety, as the devices are sealed in a sterilized factory environment to eliminate risk of contamination during filling process by Ispires customers. In addition, Ispire ONE offers a more streamlined approach to cartridge filling versus conventional methods improving productivity and lowing production costs per unit. 1 A majority of our products are manufactured and supplied by Shenzhen Yi Jia, which is 95% owned by our co-chief executive officer, chairman and controlling stockholder, Tuanfang Liu. We have taken steps toward the establishment and operation of our own manufacturing facilities. On February 5, 2024, we commenced manufacturing on two of the six lines in our approximately 31,000 square foot manufacturing facility in Malaysia. This facility is operational, with its current manufacturing operations focused on the assembly of components that we purchase from other companies. Our Malaysian facility has received several ISO certifications, including ISO9001, ISO14001, ISO13485, and a GMP certification, and in May 2025, we received an interim license from the Malaysian Government for the manufacturing of nicotine products. Because we have only recently commenced Malaysian assembly operations, we may encounter unexpected timing issues or operational and regulatory challenges which could impact our ability to be fully operational on our expected time schedule. Accordingly, we cannot assure you that we will be able to effectively and efficiently operate our facilities, or profitably or efficiently manage variations in manufacturing costs, capacity and demand planning issues, workforce and labor pricing, and local labor laws. Any one of these items could negatively impact the costs of production and thus our gross margins. We sell the Aspire brand of tobacco vaporizer technology products in more than 30 countries through our global network of more than 150 distributors. The primary markets for our e-cigarette products are Europe and the Asia Pacific region, which does not include the Peoples Republic of China (PRC). The following table sets out the breakdown of our revenue and percentage by region for the years ended June 30, 2025 and 2024 based on information provided to us by our distributors (dollars in thousands) and from the companys sales. | | | Year Ended June 30, | | | | | | 2025 | | | 2024 | | | | | | Revenue | | | % | | | Revenue | | | % | | | | Europe | | $ | 74,107 | | | | 58.1 | % | | $ | 65,260 | | | | 43.0 | % | | | North America (the U.S. and Canada) | | | 32,568 | | | | 25.5 | % | | | 63,080 | | | | 41.5 | % | | | Asia Pacific (excluding PRC) | | | 12,274 | | | | 9.6 | % | | | 17,589 | | | | 11.6 | % | | | Others | | | 8,545 | | | | 6.7 | % | | | 5,980 | | | | 3.9 | % | | | Total | | | 127,494 | | | | 100 | % | | | 151,909 | | | | 100 | % | | **Acquisition of Our Business from a Related Party** We were formed on June 13, 2022. We have two operating subsidiaries, Aspire North America LLC, a California limited liability company (Aspire North America), and Aspire Science and Technology Limited, a Hong Kong corporation (Aspire Science). On July 29, 2022, we acquired 100% of the equity interest in Aspire North America from Aspire Global Inc. (Aspire Global), and our wholly-owned subsidiary Ispire International Limited, a British Virgin Islands corporation (Ispire International), acquired 100% of the equity interest in Aspire Science from a wholly-owned subsidiary of Aspire Global in connection with a restructure by Aspire Global pursuant to which the equity in Aspire North America and Aspire Science was transferred to us, and, at the time of the transfer, we had the same stockholders as Aspire Global. Aspire North America commenced marketing cannabis vaping products in mid-2020. Aspire Science markets nicotine vaping products worldwide, except for the PRC and Russia. Aspire Global is a related party. Tuanfang Liu is Aspire Globals chief executive officer and a director of both us and Aspire Global, and his wife, Jiangyan Zhu, is also a director of both companies. Mr. Liu and Ms. Zhu beneficially own 58.1% and 4.4%, respectively, of our outstanding common stock, par value $0.0001 per share (the Common Stock) and 66.5% and 5.0% of Aspire Globals ordinary shares. Upon our formation we issued 50,000,000 shares of Common Stock to the stockholders of Aspire Global in the same proportion as their stockholdings in Aspire Global. We presently purchase the majority of our e-cigarette and cannabis vaping hardware from Shenzhen Yi Jia. Pursuant to agreements dated January 27, 2023, between Aspire North America and Shenzhen Yi Jia and between Aspire Science and Shenzhen Yi Jia, we purchase our cannabis and tobacco vaping products form Shenzhen Yi Jia at market prices, provided that the price, delivery, warranty and other terms are no less favorable to us than the price, delivery, warranty and other terms that are provided to any other customer of Shenzhen Yi Jia. 2 Our intellectual property was developed primarily by our co-chief executive officer, Tuanfang Liu. Our research and development team is headed by Mr. Liu. Our intellectual property was owned by Shenzhen Yi Jia, which had patents or patent application in the United States, the PRC, the European Union and elsewhere relating to various functional and ornamental aspects of our products. These patents cover both the cannabis and tobacco products. Pursuant to the Intellectual Property Transfer Agreement, Mr. Liu, Aspire Global and Shenzhen Yi Jia transferred to Aspire North America all patent and other intellectual property rights, including trademarks, Know-how and Know-how Documentation, as defined in the agreement, relating to the cannabis vaping products, and to transfer to us any new intellectual property developed or acquired by Mr. Liu, Aspire Global and Shenzhen Yi Jia which relates to cannabis vaping products. The patents have been transferred to Aspire North America for nil consideration. Pursuant to the Intellectual Property License Agreement (the License Agreement), Mr. Liu, Aspire Global and Shenzhen Yi Jia granted Aspire Science a perpetual, royalty-free sole license to use Licensed Technology worldwide, except for the PRC and Russia. This license is for exclusive use of the Licensed Technology, so no other parties may use or practice this intellectual property*.* The Licensed Technology includes all patents, know-how, know-how documentation and trademarks, whether now existing or hereafter developed or acquired by, or for, Mr. Liu, Aspire Global and/or Shenzhen Yi Jia that relate, directly or indirectly, to the e-cigarette market. Pursuant to the License Agreement, neither Mr. Liu, Aspire Global nor Shenzhen Yi Jia has any right to market or sell or grant distributors the right to market or sell tobacco vaping products in the world other than in the PRC and Russia. **Matters Relating to PRC Laws** Our operations are located in Hong Kong, the United States and Malaysia. We do not conduct business and we do not have any employees, assets or funds in mainland China. Although most of our cash is in Hong Kong banks, a significant portion of these funds is to be paid to related parties. See *Certain Relationships and Related Party Transactions*. Although Tuanfang Liu, our co-chief executive officer, lives in mainland China, where Shenzhen Yi Jia is located, the services that he performs for us in his capacity as our co-chief executive officer are performed primarily in Hong Kong and the United States. In addition to serving as our co-chief executive officer, Mr. Liu is chairman of Shenzhen Yi Jia, and the services he provides in mainland China are performed in his capacity as chairman of Shenzhen Yi Jia. We have 22 employees based in the United States and where our research and development activities are conducted, 46 in Malaysia, and 13 employees in Hong Kong. Our facilities are located primarily in Malaysia and the United States, where we lease more than 41,221 square feet of office, manufacturing and storage space and where our research and development activities are conducted, as compared with 1,850 square feet of office space in Hong Kong. We are also leasing approximately 162,320 square feet for our manufacturing facility in Malaysia. We do not have any variable interest entities arrangements or any similar agreements in mainland China. As of the date of this Annual Report, we do not believe we are subject to PRC Laws applicable to those Chinese companies established in mainland China, based on advice from Han Kun Law Offices. We have two operating subsidiaries established in California and Hong Kong. Hong Kong was established as a special administrative region of the PRC in accordance with Article 31 of the Constitution of the PRC. The Basic Law of the Hong Kong Special Administrative Region of the PRC (the Basic Law) was adopted and promulgated on April 4, 1990 and became effective on July 1, 1997, when the PRC resumed the exercise of sovereignty over Hong Kong. Pursuant to the Basic Law, Hong Kong is authorized by the National Peoples Congress of the PRC to exercise a high degree of autonomy and enjoy executive, legislative and independent judicial power, and the PRC laws and regulations shall not be applied to Hong Kong, other than those relating to national defense, foreign affairs, and certain other matters that are not within the scope of autonomy of Hong Kong. While the National Peoples Congress of the PRC has the power to amend the Basic Law, the Basic Law also expressly provides that no amendment to the Basic Law shall contravene the established basic policies of the PRC regarding Hong Kong. As a result, as of the date of this Annual Report, national laws of the PRC that would be applicable to us if we were a Chinese corporation do not apply to our Hong Kong subsidiary. However, there is no assurance that certain PRC laws and regulations, including existing laws and regulations and those enacted or promulgated in the future, will not be applicable to our Hong Kong subsidiary due to change in the current political arrangements between mainland China and Hong Kong or other unforeseeable reasons. The application of such laws and regulations may have a material adverse impact on us, as relevant PRC authorities may impose fines and penalties upon our Hong Kong subsidiary, delay or restrict the repatriation of the proceeds from this offering into Hong Kong, and any failure of us to fully comply with such new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our Common Stock, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Common Stock to significantly decline in value or in extreme cases, become worthless. **** **Our Corporate Organization** We are a Delaware corporation, incorporated on June 13, 2022. Aspire North America, LLC, a California limited liability company, was formed on February 22, 2020, and 100% of its ownership was transferred to Aspire Global on September 23, 2020, and was transferred by Aspire Global to Ispire Technology on July 29, 2022. Aspire Science, a Hong Kong corporation, was formed on December 9, 2016, as a subsidiary of Aspire Global, and 100% of its equity was transferred to our subsidiary, Ispire International, on July 29, 2022. Ispire International was organized on July 6, 2022. Ispire Malaysia Sdn Bhd was formed by on our behalf by Tuanfang Liu, our Chairman and Co-Chief Executive Officer, under the laws of the Federation of Malaysia on August 2, 2023, and assigned to us on September 22, 2023. Aspire North America and Aspire Science are our operating companies. 3 The following chart shows our corporate structure. * 4 **Our Strategy** We are implementing a multi-prong growth strategy directed at increasing the sales of our e-cigarette and cannabis vaporizer technology products. In addition to increasing sales to our existing customers, we plan to increase sales of our e-cigarette vaporizer technology products by increasing the number of distributors and regions where our products are sold. We plan to increase sales of our cannabis products by increasing sales to existing customers, increasing our customer base in the United States and seeking to penetrate the Canadian and European markets as they develop. We closely follow the legalization of cannabis globally and plan to enter markets when opportunities arise. Research and development is at the core of our business. We will continue to innovate via our own research and development efforts. Tuanfang Liu, our co-chief executive officer, developed the patented DuCoreTM technology, which is being assigned to us enabling our cannabis vaporizer products to heat cannabis oil, which, we believe is the first leak-proof patented design, which enables the consumer to get the full flavor experience of the cannabis. We will continue to expand our technology leadership and invest in vaporizer and similar technology research and development. Our present products are designed for adult use. Our research and development activities will be oriented to focus on both medical and recreational usages of cannabis products. We recognize that industry trends can change rapidly. We believe that our products must be at the forefront of technology if we are going to develop our business. The cannabis vaping business is in its early stages and we will seek to develop a strong and leading position in this market. Currently, this market is largely in the United States and we plan to be at the forefront as other markets develop. Through our global sales network, we have a strong understanding of all of the markets in which our products are sold. We will use online forum and community groups as a means to increase engagement and collect feedback for future improvements in product research and development. We will seek to introduce new products to meet customer needs based on our assessment of the direction of the market. We will also pursue mergers and acquisitions and strategic relationships to increase our technological human resources and technology and product portfolio. We believe that we have a strong management team adept at integrating such acquisitions and that we are an attractive platform to potential acquirees. We plan to develop further manufacturing capabilities. However, currently, and for the foreseeable near term, our manufacturing operations will primarily involve the assembly of products from components manufactured for us in accordance with our specifications. We are expanding our cannabis and e-cigarette Original Equipment Manufacturer (OEM) and Original Design Manufacturer (ODM) business. OEM generally means making and selling the products as we design them and putting customers logos on the products. For OEM products, cost is important to the customer. ODM generally involves the design and customization of the core products to meet each brands unique image and needs. For ODM products, our customers often consider technology, performance and uniqueness more important than cost, which is often a secondary consideration. Historically, for our e-cigarette products, we have focused on building and growing our own branded business, with OEM and ODM sales accounting for a minor portion of our revenue. OEM and ODM sales accounted for approximately $36.4 million and $22.1 million, or 40.2% and 25.9%, of total revenue of e-cigarette products in the years ended June 30, 2025 and 2024, respectively. As Aspire Global continued to innovate in the last decade and the Aspire brand has become recognized as a leading innovator in the vaping industry, Aspire Science has been sought after by other brands for OEM and ODM work. We believe that OEM and ODM for our e-cigarette products will represent a key growth area for us in the future. In seeking to introduce new products, we rely upon our chairman, Tuanfang Liu, who has been largely responsible for the development of the technology underlying our e-cigarette and cannabis vaping products. Sales of our cannabis products to date are largely sales to cannabis brands on an ODM basis, and, while some hardware products are sold to end users, we anticipate that our cannabis product sales will continue to be primarily ODM sales for the near future. It is the responsibility of our customers, which are cannabis brands, to manufacture the cannabis oil and load the oil into our vaping hardware product. None of our products include cannabis oil or hemp oil. We are also actively pursuing various technological innovations to prevent youth usage of e-cigarettes. Our IKE Tech LLC joint venture (described more fully within) (IKE or the Joint Venture) is a global leader in point-of-use age-gating technology for electronic nicotine delivery systems. Ispire is pursuing various product launches using the IKE age-gating technology, including work on age-gated e-cigarettes with characterizing flavors in the U.S. using the IKE age-gating technology, as well as pod systems in the UK and European markets which will have age-gating functionality. 5 **** **Our Products** * *E-Cigarette Products* We develop and sell both branded and, to a significantly lesser extent, OEM and ODM nicotine vaping systems and components (cartridges and batteries) to meet the needs of adult users worldwide, excluding the United States, the PRC and Russia. There are generally two types of vaping systems open systems and closed systems. Initially, all of our products were open system vaping devices. The term open system generally refers to vaping devices consisting of tanks, which include heating coils, and battery mods, which include the battery packs. Open system vaping devices allow end consumers to refill the tanks with their own liquid by themselves. With open systems, consumers have great flexibility in mixing different coils, mods, and e-liquid to create a more personalized experience. Our open system vaping devices are sold under our own brands, including Nautilus, and Zestquest. In 2018, we introduced our first closed system vaping device. The term closed system generally refers to vaping devices that consist of cartridges, which include a heating core (sometimes referred to as atomizers) and is filled with e-liquid, and batteries, which power the cartridges. The closed system vaping devices include rechargeable and disposable vaping devices. A cartridge for a closed-system vaping device typically can last from a few days to approximately two weeks, depending upon the frequency of use. We market a line of closed systems through our licensed brands under the brand name BRKFST. We believe that the market for closed system vaping devices is increasing rapidly and is becoming the dominant form of tobacco vaping. Our vaping components include cartridges, lithium batteries, metal parts such as coils, plastic parts that are molded, circuit boards (printed circuit board assembly) and liquid cartridges for our products. The cartridges of closed system vaping devices are consumable products that need to be frequently replaced. Some of our products use our BDC (bottom dual coil) coil technology which uses bottom dual coils to provide expanded heating area and achieve double flavor and vapor production. This technology allows for two separate oil tanks/cartridges to be integrated into one product/design. Each of the cartridges has its own heating coil that can be regulated separately to generate the desired heating temperatures independently of the other. This is beneficial to the consumers because one cartridge could be designed for terpenes (which has a very low evaporation temperature, typically 100-120 degrees Fahrenheit), and the other can be for cannabis oil (which has an evaporating temperature in the range of 400-430 degrees Fahrenheit). Conventional cartridge design would have the terpenes and cannabis oil mixed together in one cartridge and be heated to a single temperature that would typically burn the terpenes and yet under-heat the cannabis oil. With the double flavor design, we can optimize the heating temperature to evaporate both terpenes and cannabis oil without burning them. We believe that the use of our dual-coil technology enhances the flavor performance of e-liquid, and the hidden wick cotton with specially designed wick holes can both expand the tank e-liquid capacity and improve the speed of wicking to increase the coil life. Our BVC (bottom vertical coil) coil represents a major technological breakthrough for us in coil technology with a vertical heating wire surrounded by cotton. This design can enable the coil heating to provide uniform temperature to the tank, together with more efficient wicking. This technology, which Aspire Global introduced in 2014, enables the coil to last longer while still giving users what we believe is the purest and cleanest taste from e-liquids. The BVC coils are still very popular for MTL (mouth to lung) vapors today. 6 *Cannabis Products* * In December 2020, we introduced the Ispire line of cannabis vaping products. Our Ispire products use our patented Ducore (Dual Coil) technology for cannabis vaporizers. Similar to the Nautilus series, this technology enables users to create extremely large plumes of vape without burning the cannabis oil. These products incorporate our patented dual coil technology for what we believe is best-in-class airflow and taste, as well as our technology for eliminating the leakage of the oil from the unit, which overcomes a major disadvantage with many existing products. In addition to the base unit, we offer a range of cartridge, mouthpiece and color options. In our ODM services, we work with the customer to design a product that has the desired appearance. All the products are made of stainless steel and the fluid housing is Pyrex glass. We are not involved in cannabis or hemp plant or oil business, and we do not provide or procure cannabis or hemp oil. Our product, which is hardware only, is designed for our customers to fill the cartridge with their own cannabis or hemp oil. Cannabis oil, unlike nicotine oil or liquids which are generally of a uniform consistency, is not of a uniform consistency. If the oil is too viscous, the user will not have good experience with the product and our customer may reject or return the product. We do not package the oil with our product. Our ODM customers purchase the oil separately from the product they purchase from us or the end user of our product purchases the oil independently. We have no way to ensure that any consumer will use a cannabis oil that will work in a product we have manufactured for our customers. In June 2023, we introduced our proprietary Ispire ONETM technology and associated products. Ispire ONETM is designed to eliminate capping issues in the manufacturing/co-packing process, increase consistency and quality of filled devices, eliminate leaking, spitting, or overheating for cartridges, disposables, and PODs, and improve consumer safety. The devices are sealed in a sterilized factory environment to eliminate risk of contamination during the filling process by our customers. We have recently begun development and early commercialization efforts of our new patented G-Mesh technology, which will be marketed under a Silica Series trademark brand name. The G-Mesh technology uses a 1-millimeter-thick sheet of porous glass and draws e-liquid from a reservoir to an interlocking mesh coil on the opposing side of the glass core. This innovative new design allows for improved particle size for better nicotine uptake, flavor that is superior to that generated by ceramic coils, and what we believe could be less hazardous vaping by eliminating the risk of ceramic dust. 7 **** **Sales and Distribution** Most of our revenue from our e-cigarette products comes from sales to our distributors. We are looking to increase our OEM and ODM sales of e-cigarette products, which accounted for 40.2% and 25.9% of our e-cigarette revenue for the years ended June 30, 2025 and 2024, respectively. We secured a major e-cigarette OEM contract in May of 2024. Production for the customer began in fiscal year 2025 and given the ramp up in demand in June, July and August of 2025, we believe that this contract will yield significant revenue increases from the OEM and ODM business in our 2026 fiscal year. Most of our revenue from cannabis products is from ODM sales to other cannabis vaping brands, and we work with the customer to design the product, which is sold under the customers brand name. For some customers, the Ispire brand is also on the product. Prior to our acquisition, Aspire Global sold e-cigarette vaping products in the United States through its distribution network. We decided not to market in the United States as a result of changes in regulations in the United States. Aspire North America would currently only be able to sell one product line in the United States and that product line does not generate sufficient revenue to justify the marketing and regulatory expenses at this time. We are working on the submission of several new premarket tobacco product applications (each a PMTA) for a pod-based e-cigarette system with a variety of flavors, which includes the IKE point-of-use age-gating technology, in the next 6 to 12 months. We believe that we have the ability to evaluate the market need for vaping products and develop products for both the e-cigarette and cannabis markets. We believe that we have the state-of-the-art technology, which enables us to market to other cannabis vaping brands. We believe that we have implemented systems of quality control that cover the key steps of supply chain management to provide high-quality products to adult smokers in a consistent manner. We strictly uphold our extensive internal standards for various aspects of our products and conduct thorough quality assurance and control practices throughout the entire production cycle. Our cannabis vapor products are sold directly by us, with most of our sales being to other cannabis vaping brands who purchase the product from us on an ODM basis and sell the products under their brand name, although our Ispire brand may be included on the product. We work with the customer in the design and appearance of the product. We do not sell cannabis or hemp oil, either as part of a product or separately. For our e-cigarette products, we have a network of more than 150 distributors, whose territories cover more than 30 countries or regions. Our distributors have non-exclusive agreements and generally are not restricted from selling competing vapor products. Our largest distributor, whose territory was the United Kingdom and France, is Your-Buyer International Limited, which accounted for revenue of approximately $32.7 million, or 25.7% of revenue and approximately $45.6 million, or 30.0% of revenue for the years ended June 30, 2025 and 2024, respectively. No other distributor or customer accounted for 10% or more of our revenues for either the year ended June 30, 2025 or 2024. Typically, our distributors sell our products to wholesalers who in turn sell to retail distributors, although distributors may sell products directly to retail outlets. The vast majority of sales of all classes of e-cigarettes are sold in stores, primarily grocery stores, convenience stores and tobacco stores, which generally purchase the product from wholesale distributors. Our products are also available from our distributors on the internet, including both websites and services such as Amazon. These internet distribution channels are operated by our distributors. The distributors are responsible for complying with the laws of the countries in which they sell our products. We previously sold tobacco vaping products to a distributor for Russia; however, we no longer sell to that distributor. We assist our distributors in marketing our products through websites, blogs, search engine optimization (SEO), opt-in and e-mail marketing, social media marketing, influencer, marketing and digital advertising promotions. Opt-in and email marketing strategies include newsletter sign-ups to receive new product updates and promotions, giveaway promotional activities to drive conversion, coupons and discount promotion activities to increase sales to adult consumers in compliance with local laws and regulations. We may use social media to promote our products, and we market to adult consumers through our websites and Instagram. We use social media to educate on current and new products and offers as well as to provide real-time support to customers. Our social media strategies aim to convert and nurture leads, to increase brand awareness among adult consumers. 8 We also provide distributors with discounts and other sales incentives. From time to time, based on our sales or marketing strategy for a specific region or product, we will give distributors discounts. Although our distributors do not have sales quotas, they have sales goals and, from time to time, we may reward distributors for exceeding their sales targets. These promotions are not part of a standard plan, but developed by us from time to time based on our sales and marketing program. Our sales of Ispire cannabis products to date have been primarily through direct sales of Ispire branded atomizers to other cannabis brands as semi-finished products on an ODM basis. Pursuant to our agreements with our ODM customers, we design and sell these atomizers pursuant to purchase orders by the customers. To a lesser extent we sell heating devices directly to consumers as internet sales. **** **Source of Supply** We purchase a majority of our current e-cigarette and cannabis vaping products from Shenzhen Yi Jia. The products that we sell are the same products that Aspire Science and Aspire North America sold prior to the transfer of the equity in these subsidiaries to us. Pursuant to agreements dated January 27, 2023, between Aspire North America and Shenzhen Yi Jia and between Aspire Science and Shenzhen Yi Jia, we purchase our cannabis and e-cigarette vaping products form Shenzhen Yi Jia at market prices, provided that the price, delivery, warranty and other terms are no less favorable to us than the price, delivery, warranty and other terms that are provided to any other customer of Shenzhen Yi Jia. In addition, the agreement provides that Shenzhen Yi Jia will be responsible for any warranty expenses. In February of 2024, we began operations at our Company-owned manufacturing facility in Malaysia. We are currently operating with 6 production lines at the Malaysia factory and produce a variety of consumer electronics. We plan to continue expanding our production capabilities in Malaysia as a way to diversify our source of supply, including by adding up to 70 new lines at a second factory located nearby our first Malaysian operating facility. This expansion is expected to occur over the next 12 months. In connection with the Malaysian operations, we may purchase components from Shenzhen Yi Jias present suppliers as well as other suppliers which we may identify. Quality control will be a crucial part of our manufacturing process. We will need to include quality control checks and balances throughout our supply chain and manufacturing process. When selecting suppliers, we will have our quality control and procurement team visit potential suppliers. We will need to conduct annual inspections of the factories and we will also visit the factory if any quality issues arise. In connection with the establishment of any manufacturing facilities we will have to employ qualified manufacturing, supervisory and administrative personnel. **** **Warranties** We will pass on to our customers the warranties which Shenzhen Yi Jia provides to us as a customer. These warranties are of an assurance-type, come standard with all of products we purchase from Shenzhen Yi Jia, and cover repair or replacement should product not perform as expected. We offer these warranties for all major products, including all types of E-vapor kits, atomizers, replacement coils and mods, but no warranty for accessories such as spare parts or packaging consumables. Shenzhen Yi Jia generally offers 90-day warranty period from date of purchase for products sold to all regions, but Shenzhen Yi Jia offers six months warranty period from date of purchase for products sold in the United Kingdom and France. The warranty offers the refund or replacement of products for manufacturer defective items, dead on arrival items and items that do not appear the same as listed on our website, and exclude damaged goods caused by misuse or unauthorized repair. We generally require our customers to test our hardware with their oils to confirm the hardware performance and approve the hardware designs, in order to minimize any hardware-related discrepancy or performance issues specific to the formulation of their oils. Since we are passing on the warranties of Shenzhen Yi Jia, we do not provide for estimated expenses related to product warranties. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty costs. We estimate the actual historical warranty claims coupled with an analysis of unfulfilled claims to record a liability for specific warranty purposes. As of June 30, 2025 and 2024, products returned for repair or replacement have been immaterial. Accordingly, a warranty liability has not been deemed necessary. 9 **Research and Development** We believe that design and attention to detail are at the heart of our business. Historically, research and development relating to our existing products were conducted primarily by Shenzhen Yi Jia. We have commenced research and development activities independent of Shenzhen Yi Jia, which has related primarily to cannabis vaping products. This research and development effort, which is headed by our chairman, Tuanfang Liu, has eleven members, who are primarily based in Los Angeles. Prior to the transfer of the equity of Aspire North America and Aspire Science to us, the research and development activities were conducted by Shenzhen Yi Jia. As discussed under Business Intellectual Property* we have rights to intellectual property generated by the research and development efforts of Shenzhen Yi Jia and Mr. Liu. During the years ended June 30, 2025 and 2024, research and development efforts included the development of the Ispire cannabis vaping system, patented dual-coil technology, self-sealing technology and a closed system for e-cigarette vaping that is designed to eliminate the problem of oil leaking out of the unit. These research and development efforts were conducted by Shenzhen Yi Jia under the leadership of Tuanfang Liu, our co-chief executive officer and the chief executive officer of Aspire Global. Since the transfer of Aspire North America and Aspire Science to us in July 2022, we have established our research and development group independent of Aspire Global and Shenzhen Yi Jia, and the Shenzhen Yi Jia research and development activities relating to both cannabis and e-cigarette product have transitioned to us. We are also entitled to the benefits of Shenzhen Yi Jias research and development pursuant to the Intellectual Property Transfer Agreement and the License Agreement. **** **IKE Tech LLC Joint Venture** As reported in our Form 8-K on April 11, 2024, Aspire North America LLC entered into a capital contribution, subscription, and joint venture agreement with Chemular Inc, Touch Point Worldwide, Inc. d/b/a/ Berify, and Ike Tech LLC, a Delaware limited liability company pursuant to which the Parties agreed to participate in the Joint Venture. The business of the Joint Venture is developing, licensing, owning, and operating an industry-standard age-verification solution for vapor (e-cigarette) devices. The Joint Venture plans to submit PMTA applications seeking FDA marketing orders for cutting-edge technologies across the U.S. e-cigarette market, including, without limitation, (a) next-generation e-cigarette hardware with a user-friendly point-of-use age-verification and geo fencing capability that eliminates usability of vapor hardware in certain designated areas such as schools and sensitive areas, (b) e-cigarettes with end-to-end range of dynamic features such as authentication, direct to consumer engagements and exclusive offerings built on the foundations of blockchain technology, and (c) a real-time biometric identity platform for user access controls, designed to create added security and reliability to deter counterfeiting in connection with vapor devices. As of the date of this Annual Report, Aspire North America LLC owns 40% of the Joint Venture. In November 2024, IKEs leadership team met with the FDA on site in Maryland to discuss the viability of its age-gating solution as a product that could allow flavored e-cigarettes on the U.S. market. Subsequently, IKE submitted a PMTA application for its age-gating system as a component PMTA in April of 2025. The FDA accepted IKEs PMTA in May 2025. IKE is currently waiting for additional feedback from FDA on its application. IKE is actively pursuing age-gating mandates for all electronic nicotine products in multiple markets around the world including the United Kingdom, the United States and various countries in the Middle East. IKE has also added an agentic AI suite of services to its SaaS platform, which we believe will further enhance the value proposition to consumers, regulators and tobacco companies. 10 **** **Intellectual Property** Shenzhen Yi Jia has patents or patent applications in the United States, the PRC, the European Union and elsewhere relating to various functional and ornamental aspects of our products. Pursuant to the Intellectual Property Transfer Agreement, Aspire Global, Shenzhen Yi Jia and Mr. Liu have transferred to our subsidiary, Aspire North America, all their intellectual property, including patents, trademarks, brand names, know-how and know-how documentation that relate directly or indirectly to cannabis and hemp vaping products, and the patents and trademarks, trademarks and patent and trademark application, have been transferred to Aspire North America. Pursuant to the License Agreement, Aspire Science has the right to an exclusive (to the exclusion of Shenzhen Yi Jia and Mr. Liu) right and license to any patents, trademarks and other intellectual property that relates to tobacco vaping products in the territory, which include the world except for China and Russia. We believe that the utility patents form the core intellectual property for our e-cigarette and vaporizer products. The utility patents primarily relate to atomizer, heating coil, and battery technologies, which we believe provide enhanced functionality and an improved smoking experience to users of our products. Our atomizer technology is directed toward enhancing the atomization of e-liquid, including by enabling the user to adjust the airflow through the atomizer to provide a customized smoking experience. Our heating coil technology is directed towards heating coil designs and arrangements that deliver heat more efficiently from the heating coil to the e-liquid, thereby producing vapor more effectively. Our battery technology is directed towards battery assemblies that are replaceable and that are controllable to help facilitate a customized smoking experience in combination with the atomizer and heating coil technologies. We believe the design patents cover the visual aspects of certain of our products and serve to enhance the protection provided by our utility patents. We either own, with respect to cannabis vaping products, or license on an exclusive basis, with respect to tobacco products, designs patents for the ornamental appearance of the housing of certain of our electronic cigarettes and cannabis vaping products. Our design patents also extend to the ornamental appearance of certain e-cigarette components, including certain aspects of our atomizers and heating coils. The patents are primarily based on inventions developed by our chairman, Tuanfang Liu, who has received more than 200 patents in China, the United States, the European Union and other countries. All of these patents have been assigned, licensed, or otherwise transferred to Shenzhen Yi Jia, which, has transferred to Aspire North America, with respect to intellectual property relating to cannabis products, and licensing on a sole and exclusive basis globally other than the PRC and Russia, to Aspire Science, with respect to e-cigarette products. The earliest patents were filed in 2012 and began expiring in 2022, with the last patents set to expire in 2045, depending on priority filing date, patent type, and jurisdiction. We intend to work to improve our technology and products and to seek further patent protection as warranted in connection with any new developments. We cannot guarantee that our patent rights are sufficient to protect all aspects of our products or that we will be able to enforce those rights against third parties, as patents can be challenged, circumvented, or otherwise found to be invalid. Shenzhen Yi Jia has obtained trademark registrations for Ispire in the countries which we believe are major markets for our products, including the United States, China, the European Union, and other countries. In addition to the Ispire mark, Shenzhen Yi Jia has also been granted trademark registrations in the United States and China for certain products and components, including the marks CLEITO, PERSEUS, PLATO, PROTEUS, and ZESTQUEST. Furthermore, Shenzhen Yi Jia has submitted trademark applications for the mark Ispire in the United States, China, the European Union, and other jurisdictions we believe are important markets. To the extent any of these trademarks were held by our chairman, Tuanfang Liu or Shenzhen Yi Jia, the trademarks related to cannabis products have been assigned to Aspire North America pursuant to the Intellectual Property Transfer Agreement, and all other trademarks have been licensed on an exclusive license (to the exclusion of Aspire Global, Shenzhen Yi Jia and Mr. Liu) to Aspire Science pursuant to the License Agreement. We cannot assure you that our patent and trademark rights are sufficient to protect all aspects of our brands or that we will be to enforce those rights to prevent third parties from using the same or confusingly similar marks, as trademarks can be opposed, cancelled, or otherwise challenged, especially by parties with rights to similar marks. 11 **** **Competition** Vaping products for both e-cigarette and cannabis compete with tobacco and marijuana cigarettes and a wide range of other tobacco, nicotine and legal and illegal cannabis products. In each case, vaping products seek to provide the user with pleasure that the user derives from consuming nicotine or cannabis without the disadvantages of other mediums. The worldwide market for e-cigarette products is highly competitive, with more than 50 companies selling products which compete with our products. In terms of volume of legal products sold, by far the largest worldwide producer of tobacco vapor products is Smoore International Holdings Limited. We anticipate that the market for vaping products will evolve, with technological innovation, changing standards and changes in needs and preferences of adult vapor users. Vaping devices are more than a reduced-risk alternative to traditional cigarettes. Instead, they represent the users taste and offer them a new and fun experience, as they provide large amounts of vapor, different tastes of e-liquid and fashionable design. In light of such trend and to further differentiate their vaping devices, manufacturers are upgrading their products in terms of technology and design. Many manufacturers are now providing full-spectrum vaping devices, including closed system vaping devices, open system vaping devices and other kinds of vaping devices, so as to be more competitive in the market. In the next few years, with the technology becoming more mature, we anticipate that more differentiated vaping devices will continuously emerge to draw adult consumers attention. Our recent enhancements to our vaping products, such as the big smoke effect, have increased interest and sales of our products. We believe that our ability to remain profitable and to increase our market share is dependent upon our ability to anticipate market demand and develop and market products that address these trends. The market for cannabis vapor products is a developing market and at present is mainly limited to the United States, although there is a developing market in Canada, and we believe that a market is developing in Europe. Our ability to be successful in these markets is dependent upon our ability to develop vaping systems that attracts and retains consumer interest and the regulatory environment in the United States. Our cannabis vaping products compete with other forms of legal and illegal cannabis, marijuana cigarettes, CBD oil and other CBD products, food products and other vaping products. **** **Seasonality** Seasonality does not materially affect our business or the results of our operations. **Human Capital** We believe our people are central to the foundation and future of our success. Our culture and commitment to our employees are important factors in attracting, retaining, developing and progressing qualified employees. As of September 4, 2025, we had a total of 81 employees, of which 21 are operations personnel, 46 are general management personnel, 9 are in sales and marketing, and 5, including Tuanfang Liu, our co-chief executive officer, are in research and development relating to our products. ** *Culture and Engagement* We value and support our people through, among other initiatives, our talent management, health and safety, employment practices and total reward programs. We are committed to fostering a culture of inclusion where differences are welcomed, appreciated and celebrated to positively impact our people and business, and where our people are engaged and encouraged to support the communities in which they live and work. ** *Talent Management* We are committed to providing our people with opportunities to learn, grow and be recognized for their achievements. Through our integrated talent management strategy, we strive to attract, retain, develop and progress a workforce that embraces our culture of inclusion and reflects our diversity efforts. Our talent programs play a critical role in attracting and progressing a diverse pipeline of talent. We are also committed to investing in our people by providing learning and networking opportunities and to drive retention, progression and engagement and help them excel in their current and future roles. 12 ** *Health and Safety* We are committed to providing safe and healthy working environments and taking reasonable preventative measures to protect the health and safety of our employees and customers. We drive environmental, health and safety excellence across the Company and strive for incident-free workplaces continuously assessing and developing measures that are in place to help keep our employees, customers and communities safe. **** *Employment Practices and Total Rewards* We are committed to the fair, consistent and equitable treatment of our employees in relation to working conditions, wages, benefits, policies and procedures. To this end, our policies and programs are designed to respond to the needs of our employees in a manner that provides a safe, professional, efficient and rewarding workplace. Our total rewards programs are designed to offer competitive compensation, comprehensive benefits and other programs to support employees growth, both personally and professionally, and the diverse needs and well-being of our employees worldwide. From time to time, we hire part-time employees as needed in connection with our manufacturing. We consider our employee relations to be good. We enter into labor contracts and standard confidentiality and intellectual property agreements with our key employees. We believe that maintaining good working relationships with our employees is essential, and we have not experienced any labor disputes except for the matter set forth below. None of our employees are represented by labor unions. **** **Insurance** We consider our insurance coverage to be consistent with customary industry standards adopted by other companies in the same industry and of similar size although Aspire Science does not have product liability insurance. **** **Legal Proceedings** From time to time, we may be subject to legal or regulatory proceedings, investigations and claims incidental to the conduct of our business. We are not a party to, nor are we aware of, any legal or regulatory proceedings, investigations or claims which, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition or results of operations. **REGULATION** **** **United States** Premarket Tobacco Product Application (PMTA) filings are required for electronic nicotine delivery systems (ENDS) products, including devices, components, and/or parts that deliver aerosolized e-liquid when inhaled. For existing ENDS products that were on the U.S. market on August 8, 2016, a PMTA was required to be submitted to the FDA by September 9, 2020. We timely filed our PMTA for our Nautilus Prime open system vaping products, which are the only products we can presently sell in the United States. For new ENDS products that were not on the U.S. market on August 8, 2016, and not the subject of a pending PMTA filed by September 9, 2020, a premarket authorization is required before introducing the product to the U.S. market. Selling ENDS products without authorization can result in civil penalties, seizures, injunctions, and even criminal prosecutions. The PMTA pathway remains open for us to add further products, but now neither we, nor anyone else, can bring new tobacco products to the U.S. market without actual premarket authorizations. The PMTA process is expensive, time-consuming, and uncertain. 13 Under the Family Smoking Prevention and Tobacco Control Act of 2009 (the TCA), a PMTAs components include: | | Full reports of all information published or known to, or which should reasonably be known to, the applicant concerning investigations which have been made to show the health risks of such tobacco product and whether such tobacco product presents less risk than other tobacco products. | | | | Full statement of the components, ingredients, additives, and properties, and of the principle or principles of operation. | | | | Full description of the methods used in, and the facilities and controls used for, the manufacture, processing, and when relevant, packing and installation. | | | | An identifying reference to any tobacco product standard, if applicable. | | | | Samples of the tobacco product as required. | | | | Specimens of proposed labeling. | | In adopting the Consolidated Appropriations Act, 2021, the COVID-19 relief bill that was signed on December 27, 2020, Congress amended the PACT Act to apply to e-cigarettes and all vaping products, which includes cannabis vaping products. The legislation amends the PACT Acts definition of cigarette to include ENDS, which is defined to include any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device. The term any other substance has been interpreted in regulations to include liquids containing cannabis derivatives as well as nicotine. This amendment prohibits mailing covered products through the United States Postal Service to consumers (with exceptions for certain business-to-business mailings) and requires reporting to federal and state agencies. These restrictions make it more difficult for a seller of vaping products to sell the products in the United States. Briefly, the PACT Act requires any person who sells, transfers, or ships cigarettes, which is defined to include ENDS, which, as noted above, is very broadly defined, in interstate commerce for profit to, or who advertises or offers cigarettes or smokeless tobacco for such sale, transfer, or shipment to: | | File a statement setting forth the name, address, phone number, email address, website address, with the U.S. Attorney General and the tobacco tax administrator of the State where shipment is being made or in which an advertisement or offer is disseminated; | | | | On the 10th day of every month, file a memorandum or a copy of the invoice covering each and every shipment of cigarettes during the previous calendar month with the state tobacco tax administrator and, where there are also local taxes on cigarettes, with local/tribal official | | | | Comply with (i) certain shipping requirements if using common carriers other than the Postal Service, such as FedEx or UPS (e.g., label requirements, weight restrictions, 21+ age verification on delivery, etc.), and (ii) recordkeeping requirements (e.g., detailed invoices covering every delivery sale, organized by the state, the city or town, and zip code into which the delivery sale is made); (iii) all state, local, tribal, and other laws generally applicable to sales of cigarettes, including: excise taxes, licensing and tax-stamping requirements; restrictions on sales to minors; and other payment obligations or legal requirements relating to the sale, distribution, or delivery of cigarettes or smokeless tobacco. | | Importantly, neither the mail ban nor the other PACT Acts delivery sale provisions apply to business-to-business deliveries. Under an exception to the mail ban provision of the PACT Act, covered products may be mailed for business purposes between legally operating businesses that have all applicable State and Federal Government licenses or permits and are engaged in product manufacturing, distribution, wholesale, export, import, testing, investigation, or research or for regulatory purposes between any business described above and an agency of the federal government or a state government. A business must apply for and obtain Postal Service approval of an exception to avail itself of this exception. Except for the mail ban, the amendment to the PACT Act took effect on March 28, 2021. The mail ban took effect on October 21, 2021, pursuant to final regulations issued by the Postal Service. It applies to cannabis and hemp vaping products that aerosolize liquids only. Further, the most commonly used carriers, Federal Express and UPS, have recently announced that they would cease all deliveries of vapor products in the United States. 14 The other requirements of the PACT Act applicable to delivery sellers and delivery sales do not apply to business-to-business sales, as those terms involve delivery to consumers. The PACT Act defines consumer as any person that purchases cigarettes or smokeless tobacco and specifically excludes any person lawfully operating as a manufacturer, distributor, wholesaler, or retailer of cigarettes or smokeless tobacco. Starting on February 6, 2020, the FDA prioritized enforcement against: (i) flavored, cartridge-based ENDS products (other than tobacco- or menthol-flavored ENDS products), and (ii) any flavored ENDS products (including tobacco and menthol flavors) that are targeted at minors. Several states in the United States have imposed temporary emergency flavor bans on ENDS products, and a few of these bans have been enjoined by courts while several have become permanent. Several states and the District of Columbia have also enacted permanent prohibitions on the sale of flavored ENDS products. Flavor bans are not the same as a total ban on e-cigarettes, and none of the states in the U.S. have imposed a total ban on e-cigarettes. Our self-branded vaping systems are not affected by the flavor bans. The flavor bans are mainly aimed at ENDS products that are sold with pre-filled non-tobacco flavored or non-menthol-flavored cartridges, and our self-branded products do not contain any pre-filled cartridges. Moreover, we believe that the technology being developed by IKE may allow for the approval of ENDS products with characterizing flavors other than tobacco or menthol. This is because the point-of-use age-gating technology could prevent youth usage of vapor devices by biometrically preventing youth from powering-on the device itself. Accordingly, we plan to submit several PMTA applications for ENDS devices with characterizing flavors when we receive positive news from, or approval of, the IKE age-gating technology from the FDA. Cannabis vaping products are governed by state laws, which vary from state to state. Most states do not permit the adult recreational use of cannabis, and no states permit the sale of recreational cannabis products to minors. We cannot predict what action states will take or the nature and amount of taxes they may impose upon cannabis products. However, the shipping restrictions of the USPS under the PACT Act applied to certain cannabis products, and cannabis products cannot, with certain exceptions, be sent through the USPS. Major overnight courier services, such as Federal Express, do not ship vaping products that may not be sent using the USPS. We use a combination of advanced accounting software and PACT Act compliant carriers to remain compliant with the tax and delivery restrictions of the PACT Act. Under federal law and the laws of certain states that continue to broadly restrict production and sale of cannabis, vaping devices intended for use in consuming cannabis products may qualify as prohibited drug paraphernalia. However, the federal Controlled Substances Act includes an exemption for any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items. Several states with legal cannabis programs, including California, have enacted legislation invoking this exemption to shield state-legal businesses from federal enforcement on paraphernalia grounds. In addition, a recent court decision from the U.S. Court of International Trade applied this exemption in prohibiting U.S. Customs and Border Protection from refusing import entry of cannabis paraphernalia components that the importer could legally possess in the state of importation. In distributing cannabis vaping devices in the United States, we rely on this exemption by (i) not selling our own branded cannabis vaping products directly into states that have maintained complete or near-complete cannabis prohibition, (ii) requiring distributors to whom we sell cannabis vaping products to covenant that they will not sell our products into these states, and (iii) limiting the sale of our custom made and white label cannabis vaping products to state-licensed dispensaries and entities, such as licensed cultivators or manufacturers. To the extent that we conduct manufacturing operations in California we will be subject to federal and California state laws and regulations applicable to manufacturing operations generally, including employee health and safety and environmental laws and regulations. 15 **Europe** The European Commission issued the Tobacco Products Directive (the TPD), which entered into force on May 19, 2014, and became applicable in the EU Member States on May 20, 2016. Under the TPD, an e-cigarette is widely defined as a product that can be used for, including all types of vaping devices, HNB devices and their respective components, the consumption of nicotine-containing vapor via a mouthpiece, or any component of that product. The TPD regulates e-cigarettes on five main aspects: (i) the information to be provided by the manufacturer and/or distributor, (ii) the advertising and promotion, (iii) safety issues and warnings, (iv) product presentation, and (v) provisional measures in case of suspected risk. Member states of the European Union are required to ensure that advertisements for any tobacco related product are prohibited, unless the advertisement is specifically targeted at professionals specializing in the electronic cigarettes trading. Moreover, no promotion whatsoever shall be made as to those devices with an intention (direct or indirect) to promote electronic cigarettes. The sale of cannabis vaping products for recreational (as contrasted with medical) use is illegal in most of the European Union, although we believe that a market is developing, particularly in Germany, where the new coalition government stated clearly that it is introducing the controlled supply of recreational cannabis to adults in licensed shops. **** **United Kingdom** The Medicines and Healthcare Products Regulatory Agency (MHRA) is the authority for a regulatory scheme for e-cigarettes and refill containers in Great Britain and Northern Ireland and is responsible for implementing the majority of provisions under Part 6 of the Tobacco and related Products Regulations (TRPR) and the Tobacco Products and Nicotine Inhaling Products (Amendment) (EU Exit) Regulations 2020. The TRPR introduced rules which ensure: | | minimum standards for the safety and quality of all e-cigarettes and refill containers (otherwise known as e-liquids) | | | | that information is provided to consumers so that they can make informed choices | | | | an environment that protects children from starting to use these products. | | The requirements: | | restrict e-cigarette tanks to a capacity of no more than 2ml | | | | restrict the maximum volume of nicotine-containing e-liquid for sale in one refill container to 10ml | | | | restrict e-liquids to a nicotine strength of no more than 20mg/ml | | | | require nicotine-containing products or their packaging to be child-resistant and tamper evident | | | | ban certain ingredients including colorant, stimulants and any carcinogenic, mutanegenic or reprotoxic elements | | | | include new labelling requirements and warnings in line with the Classification, Labelling & Packaging regulations of the European Union | | | | require all e-cigarettes and e-liquids be notified to the MHRA before they can be sold. | | The Tobacco Products and Nicotine Inhaling Products (Amendment) (EU Exit) Regulations 2020 (the 2020 Regulations) explains the changes from a policy perspective: The 2020 Regulations set out the requirements for new products to be notified from January 1, 2021. This will mean that: | | Producers placing products on the Northern Ireland market will be required to notify using the EU Common Entry Gate (EU-CEG) system for the notification of tobacco and e-cigarette products. | | | | Producers placing products on the Great Britain market will be required to notify on the Great Britain domestic system. | | | | Notifiers will be required to pay one fee if they notify in relation to placing products on one of the Great Britain or Northern Ireland markets and the same one fee if they notify in relation to placing products on the two markets. | | **** A producer is anyone who manufactures or imports these products or who re-brands any product as their own. 16 Part 6of theTobacco and Related Products Regulations 2016 sets out the requirements for e-cigarettes and refill containers. Producers must submit information about their products to the MHRA through the MHRA Submission Portal and European Common Entry Gate (EU-CEG) notification portal for UK wide supply. Under the TRPR, it is the responsibility of the producer to ensure that their products comply with the TRPR requirements. We check notifications submitted for completeness and verify TRPR compliance with producers. Where this review has been completed, the compliance status of products is recorded as declared to indicate that the notification is complete, and the product has been declared compliant by the producer. Producers of new e-cigarette and refill container products must submit a notification to the MHRA six months before they intend to put their product on the market in Great Britain and/or Northern Ireland. Once the notification has been published on the MHRA website, producers can launch the product in the notified region. A product which has been substantially modified will count as a new product and must also follow this process. Further information regarding what qualifies as a substantial modification can be found in the guidance on submission type below. The TRPR does not include any requirements as to where testing of e-cigarettes and refill containers has to take place nor has any international testing standards been established. The notifier will need to be satisfied as to the standards of any testing carried out as they have to submit a declaration that they bear full responsibility for the quality and safety of the product when placed on the market and used under normal or reasonably foreseeable conditions. Disposable (closed-system) e-cigarette products were banned in the United Kingdom on April 1, 2025. Our primary sales in the UK are currently open-system, non-disposable products. In late 2024, the Tobacco and Vapes Bill (the Bill) was introduced to the House of Commons, reviving wide-ranging restrictions on vaping and tobacco products which had fallen under the previous Conservative Government. Much of the legislation mirrors the Conservative Governments prior legislation, most notably in introducing a ban on the sale of tobacco to those born after 1 January 2009, the ban of non-nicotine vape sales to under-18s, and the introduction of powers to regulate the flavoring, packaging and product requirements of vapes. However, the Labour Governments Bill goes further, introducing powers to create a register of vaping products for sale in the United Kingdom, along with new requirements for producers to share information on their products and carry out studies and testing on any health impacts. The Bill also gives the Secretary of State the ability to designate public spaces as vape and smoke-free, subject to consultation. The Bill additionally introduces a ban on the advertisement of vapes in the United Kingdom, as well as any brandsharing where vapes may be advertised by their logo on other products. The Bill has passed through the House of Commons and is currently awaiting scrutiny in the House of Lords. We expect the next stage in October, 2025, with the Bill to be completed in early 2026. The sale of cannabis products is currently illegal in the United Kingdom. **Malaysia** We are operating a manufacturing facility in Malaysia. As such, we must comply with laws and regulations relating to manufacturing operations, including regulatory approval, as applicable, including satisfying the applicable government authority that we have sufficient capital to cover all of our planned activities. We are also subject to wage and hour laws and laws relating to employee health and safety and environmental laws and regulations. We have structured our operations to comply with applicable laws and regulations in Malaysia. In May 2025, we received a temporary license to produce products containing nicotine for export from the Malaysian federal government. We are actively working to secure a permanent version of this license. 17 **** **Other requirements for e-cigarettes** Replacement e-cigarette parts that could contain nicotine only require notification if they have not already been notified as part of a device or e-cigarette kit in the United Kingdom or European Union (EU). Identical replacement parts that have already been notified as part of another notified e-cigarette product do not need to be separately re-notified if it is clear on the labelling what notified product the part is for. Any non-identical replacement part, particularly one that alters the consumer safety profile of a product (for example by changing its refill capacity), would require a separate notification. The Conformit Europenne (CE) Mark is defined as the EUs mandatory conformity marking for regulating the goods sold within the European Economic Area (EEA) since 1985. The CE marking represents a manufacturers declaration that products comply with the EUs New Approach Directives. These directives not only apply to products within the EU but also to products that are manufactured in or designed to be sold in the EEA. This makes the CE marking recognizable worldwide even to those unfamiliar with the EEA. **Regulations Relating to Privacy and Security** We are or may become subject to a variety of laws and regulations in the United States and abroad regarding privacy, data security, cybersecurity and data protection. These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws. In particular, there are numerous U.S. federal, state, and local laws and regulations and foreign laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other user data. Such laws and regulations often vary in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions. To the extent that we deal with the public and obtain private information on our computer system, we would be subject to these laws. To the extent that we conduct internet sales, we may be subject to these laws. In June 2018, California adopted the California Consumer Privacy Act (CCPA), which became effective in 2020. Under the law, any California consumer has a right to demand to see all the information a company has saved on the consumer, as well as a full list of all the third parties that data is shared with. The consumer also has the right to request that we delete the information it has on the consumer. The CCPA broadly defines protected data. The CCPA also has specific requirements for companies subject to the law. The CCPA provides for a private right of action for unauthorized access, theft or disclosure of personal information in certain situations, with possible damage awards of $100 to $750 per consumer per incident, or actual damages, whichever is greater. The CCPA also permits class action lawsuits. To the extent that we sell products to adult consumers through our website or otherwise on the Internet, we may be subject to the CCPA as well as other consumer protection laws. The European Union Parliament approved a new data protection regulation, known as the General Data Protection Regulation (GDPR), which came into effect in May 2018. The GDPR includes operational requirements for companies that receive or process personal data of residents of the European Economic Area. The GDPR imposes significant penalties for non-compliance. Although we do not currently conduct any business in the European Economic Area, in the event that residents of the European Economic Area access our website and input protected information, including information provided in ordering through our website, we may become subject to provisions of the GDPR. We are also subject to laws restricting disclosure of information relating to our employees. We strive to comply with all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy, data security, cybersecurity and data protection. However, given that the scope, interpretation, and application of these laws and regulations are often uncertain and may be conflicting, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us or our third-party service-providers to comply with our privacy or security policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other user data, may result in governmental enforcement actions, litigation, or negative publicity, and could have an adverse effect on our business and operating results. Although we maintain cybersecurity insurance, we cannot assure you that this insurance will cover or satisfy any claim made against us or adequately cover any defense costs we may incur. **** 18 **** **Environmental Laws and Regulations** As our supplier, Shenzhen Yi Jia is responsible for compliance with Chinese environmental laws and regulations. To the extent that such compliance results in increased manufacturing costs, we anticipate that our prices will be increased, although we may not know the details of the expense of such compliance. As a distributor of products made by third parties, we do not have any material costs in complying with environmental laws and regulations. As part of our current manufacturing Malaysia, we will be required to comply with applicable environmental laws and regulations. We cannot estimate the ongoing costs of such compliance. As we establish manufacturing facilities, we expect that the cost of such compliance will be included in our capital budget for any facilities we establish. **** **Available Information** As a public company, we are required to file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A and other information (including any amendments) with the Securities and Exchange Commission (the SEC). The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. You can find our SEC filings at the SECs website at www.sec.gov. Our Internet address is www.ispiretechnology.com. Information contained on our website is not part of this Annual Report. Our SEC filings (including any amendments) will be made available free of charge on www.ispiretechnology.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. **ITEM 1A. Risk Factors** ** *Investing in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this Annual Report, before deciding to invest in our securities. If any of the following risks materialize, our business, financial condition, results of operation and prospects will likely be materially and adversely affected. In that event, the market price of our Common Stock could decline, and you could lose all or part of your investment.* ** *An investment in our Common Stock involves a high degree of risks. You should carefully consider all of the information in this Annual Report, including the risks and uncertainties described below, before making an investment in our Common Stock. Any of the following risks could have a material adverse effect on our business, financial condition and results of operations. In any such case, the market price of our Common Stock could decline, and you may lose all or part of your investment.* **** **Risks Related to Our Business and Industry** **** **We sustained losses of approximately $39.2 million for the year ended June 30, 2025 and $14.8 million for the year ended June 30, 2024, and we cannot assure you that we can or will operate profitably in the future.** We sustained a loss of approximately $39.2 million, or $0.69 per share (basic and diluted) in the year ended June 30, 2025, and a loss of approximately $14.8 million, or $0.27 per share (basic and diluted) for the year ended June 30, 2024. The losses resulted primarily because of increased operating expenses for both periods. We cannot assure you that we will be able to operate profitably in the future. **** **Existing laws, regulations and policies and the issuance of new or more stringent laws, regulations, policies and any other restrictions or limitations in relation to the nicotine vaping industry have and can materially and adversely affect our business operations.** As vaping products have become more and more popular in recent years, government authorities worldwide have imposed laws, regulations and policies to regulate nicotine vaping products and the vaping industry and may impose more stringent controls either with changes in existing laws or regulations, with new laws or regulations, or with new interpretations of existing laws or regulations. Some governments have prohibited the usage of vaping products in certain areas, imposed specific taxes on vaping products or imposed restrictions, in certain areas such as product advertising, flavorings or nicotine concentration. Governments, primarily state and municipal, have imposed restrictions or prohibitions on smoking in public and on public transportation, such as on trains, airplanes and buses. Such prohibitions have been or may in the future be extended to e-cigarettes, including vaping products, and such restrictions may be imposed by local, regional or national governments. As a result of government laws and regulations affecting tobacco products, we ceased selling nicotine vaping products in the United States. 19 We cannot assure you that government authorities will not impose further restrictions on vaping nicotine products in the future, including but not limited to requirements to obtain and maintain licenses, approvals or permits for relevant business operation. Such restrictions, if any, may adversely affect supplies of raw materials, production and sales activities, taxation or other aspects of our business operation. We may not be able to comply with any or all changes in existing laws and regulations or any new laws and regulations and may incur significant compliance costs. All of the above may affect our production or market demand for vaping products and thus adversely affect our business, financial condition and results of operations. To the extent that we grow in scale and significance, we expect to face increased scrutiny, which may result in increased investment in compliance and related capabilities. The WHO and the United States Centers for Disease Control and Prevention (CDC) have been clear in their view of the harmful effects of nicotine. Although they recognize that e-cigarettes may expose users to fewer harmful chemicals than burned cigarettes, which are considered very dangerous, and that any tobacco product, including e-cigarettes, is unsafe particularly for young people and pregnant women. Countries have taken different steps to address the dangers of nicotine and to consider the difference between e-cigarettes and burned cigarettes. However, instances of death or serious illness resulting or perceived to result from the use of e-cigarettes as well as significant reported use by certain populations, including adolescents as well as nicotine-nave individuals, may spur governments at all levels to increase restrictions on vaping products. We cannot assure you that the actions taken by municipal, state or provincial and national governments will not materially and adversely affect the market for vaping products generally and our business in particular. **** **Cannabis vapor products are subject to regulations and restrictions in the United States and are prohibited in many other countries.** Cannabis products are subject to federal and state regulation in the United States, and Western Europe generally prohibits the sale and use cannabis products, although some countries permit the use of approved cannabis products for medical purposes. Although an increasing number of states in the United States permit adult use of recreational marijuana, states have restrictions as to where the products can be sold and many of the states that permit recreational use of marijuana require that sales be made only at licensed stores. The U.S. federal government still prohibits non-hemp cannabis products (unless approved by the FDA) but has generally not enforced against entities and individuals operating in compliance with state laws permitting such products. Likewise, under certain circumstances, devices intended for use in consuming federally prohibited cannabis products may also technically qualify as prohibited drug paraphernalia under federal law and the laws of certain states that continue to broadly restrict production and sale of non-hemp cannabis. However, the Federal Controlled Substances Act includes an exemption for any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items. Despite the sale and use of cannabis products generally being prohibited, the Western European region has some of the most developed cannabis cultures in the world, such as in the Netherlands and Spain. On April 1, 2024, Germany legalized recreational cannabis use and is likely to accelerate the cannabis debate within the EU and promote the development of the industry at a regional level. Georgia, Luxembourg, and Malta have also legalized recreational cannabis use as of the date of this Annual Report. However, great differences persist among consumers, with older generations typically being more reluctant to allow cannabis use. Our ability to expand our marketing of cannabis products in the European market is dependent upon whether recreational cannabis will become legal in other Western European countries, and we cannot give any assurance that we will be able to sell products in Western Europe. These restrictions on the sale and use of cannabis could impair our ability to market and sell our products. The U.S. Department of Health and Human Services (HHS) recently made a recommendation to the US Drug Enforcement Agency (DEA) to reschedule cannabis as a Schedule 3 drug. The DEA is currently going through a public comment period on the potential rescheduling. If the DEA accepts HHSs recommendation and reschedules cannabis, there may be new regulatory compliance obligations placed upon cannabis operators in the U.S. Under the FD&C Act, Schedule 3 drugs must be dispensed with a prescription and the safety and efficacy of such products would be governed by FDA regulation under the FD&C Act. It is unclear how this would impact state-legal cannabis programs (both medical and adult use), if at all. If there are significant new regulatory barriers for the U.S. adult use cannabis industry, such increased regulation may negatively impact the sale of our cannabis vaporizer products in the U.S. marketplace. 20 **While we believe that our business and sales do not violate the Federal Paraphernalia Law, legal proceedings alleging violations of such law or changes in such law or interpretations thereof could adversely affect our business, financial condition or results of operations.** Under U.S. Code Title 21 Section 863 (the Federal Paraphernalia Law), the term drug paraphernalia means any equipment, product or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance. That law exempts (1) any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items and (2) any item that, in the normal lawful course of business, is imported, exported, transported, or sold through the mail or by any other means, and traditionally intended for use with tobacco products, including any pipe, paper, or accessory. Any non-exemptdrug paraphernalia offered or sold by any person in violation of the Federal Paraphernalia Law can be subject to seizure and forfeiture upon the conviction of such person for such violation, and a convicted person can be subject to fines under the Federal Paraphernalia Law and even imprisonment. Several states with legal cannabis programs, including California, have enacted legislation invoking this exemption to shield state-legal businesses from federal enforcement on paraphernalia grounds. In addition, a recent court decision from the U.S. Court of International Trade applied this exemption in prohibiting U.S. Customs and Border Protection from refusing import entry of cannabis paraphernalia components that the importer could legally possess in the state of importation. We believe our sales do not violate the Federal Paraphernalia Law. We restrict the sale of products to comply with the Federal Paraphernalia Laws exemption for sales authorized by state law. In particular, we (a) do not sell any vaping equipment or hardware into the 4 states that have maintained complete or near complete cannabis prohibition (i.e., Idaho, Indiana, Kansas, and Nebraska), and have the distributors we work with covenant that they will not sell our products into these states, and (b) in any states with laws that allow the sale of vaping equipment or hardware, but require such products to be sold to licensed cannabis businesses (such as dispensaries), we limit sales accordingly. While we believe that our business and sales are legally compliant with the Federal Paraphernalia Law in all material respects, any legal action commenced against us under such law could result in substantial costs and could have an adverse impact on our business, financial condition or results of operations. In addition, changes in cannabis laws or interpretations of such laws are difficult to predict and are subject to change, which could significantly affect our business. **** **Because Tuanfang Liu, our co-chief executive officer, who is also director, and his wife, Jiangyan Zhu, who is also a director, beneficially own 62.5% of our Common Stock as of June 30, 2025 and Mr. Liu owns 58.1% of the equity of our majority supplier, Mr. Liu has a conflict of interest.** Because our co-chief executive officer, Tuanfang Liu, and his wife own 62.5%, of our Common Stock as of June 30, 2025, they have the power to elect all of our directors and to approve any matter which is subject to stockholder approval. Mr. Liu also own 95% of the equity in Shenzhen Yi Jia, which is currently our major supplier. Mr. Liu is chairman of Shenzhen Yi Jia and his wife, Jiangyan Zhu, is its vice president of finance. The price and other terms at which Shenzhen Yi Jia sells product to us have been largely determined by Mr. Liu. In addition, as our co-chief executive officer, Mr. Liu has significant authority in the implementation of our business plan, including the expected commencement of our manufacturing operations in California and the opening of additional manufacturing operations in Malaysia. He has also historically been responsible for our product development and our present products have been the result of his research and development efforts. Mr. Lius interests may be different from our interests. Because of Mr. Lius conflict of interest, there is a risk that any actions he may take may have an adverse effect upon the success and development of our business and the price of our Common Stock. As a result of the voting power of Mr. Liu and his wife, Ms. Zhu, investors will have little, if any, power to influence our business or to approve any action submitted to stockholders for their approval. The fact that they have a controlling interest in us may, by itself, serve as a deterrent to any person seeking to obtain control of us or to enter into any business relationship which might be beneficial to the minority stockholders. Although our supply agreements with Shenzhen Yi Jia require Shenzhen Yi Jia to sell products to us at the most favorable market price that it sells similar products to third parties, because our products are designed for us and based on technology that was either developed by Mr. Liu prior to the date of the agreement or is developed by us, we cannot determine whether another supplier would be able to provide the products at the same or a better price. However, all pricing will be designed to enable us to sell the products at a price which enables us to generate a gross margin that we consider acceptable, and Mr. Liu will have significant input as to what is an acceptable gross margin. Our supply agreements also require Shenzhen Yi Jia to provide us with quality products and services in a timely manner, to provide to our customers the same warranty that we provide to our customer and to give first priority to the manufacture of our products over any other manufacturing obligations. However, as our co-chief executive officer, Mr. Liu has the ability to determine whether to pursuant any legal action to enforce our supply agreements. Thus, we will be relying on Mr. Liu taking actions that are in our best interests, and we run the risk that he may not do so. 21 **The recent implementation of regulations relating to e-cigarettes has resulted in our decision not to market nicotine products in the United States until we secure PMTA approvals on our ENDS devices.** The FDA has authority to regulate e-liquids, e-cigarettes, and other vaping products that contain (or are used to consume e-liquid containing) tobacco-derived ingredients and nicotine from any source as tobacco products under the federal Food, Drug and Cosmetic Act (the Food, Drug and Cosmetic Act), as amended by Family Smoking Prevention and Tobacco Control Act of 2009 (the Tobacco Control Act) and subsequent legislation. Through the issuance of the Deeming Regulation that became effective on August 8, 2016, the FDA began regulating e-liquids, e-cigarettes, and other vaping products that qualify as tobacco products under the Food, Drug and Cosmetic Acts requirements added by the Tobacco Control Act. The Food, Drug and Cosmetic Act requires that any Deemed Tobacco Product that was not commercially marketed as of the grandfather date of February 15, 2007, obtain premarket authorization before it can be marketed in the United States. The compliance policy generally allowed companies to market Deemed Tobacco Products that qualify as new tobacco products but that were on the U.S. market on August 8, 2016, until September 9, 2020, and the continued marketing of such products without otherwise-required authorization for up to one year during the FDAs review of a pending marketing application submitted by September 9, 2020. The compliance policy did not apply to otherwise-eligible products (i) for which the manufacturer has failed to take (or is failing to take) adequate measures to prevent minors access and (ii) that are targeted to minors or with marketing that is likely to promote use by minors. In the absence of this policy, we would have had to obtain prior authorization from the FDA to market any of our products after August 8, 2016. Accordingly, through September 9, 2020, Aspire North America marketed tobacco vaping products in the United States pursuant to the FDAs compliance policy based on evidence that they were on the U.S. market on August 8, 2016, and had not been physically modified since. FDA authorization to introduce a new tobacco product (or to continue marketing a new tobacco product covered by the current compliance policy for Deemed Tobacco Products that were on the U.S. market on August 8, 2016) could be obtained via any of the following three authorization pathways: (1) submission of a PMTA and receipt of a marketing authorization order; (2) submission of a substantial equivalence report and receipt of a substantial equivalence order; or (3) submission of a request for an exemption from substantial equivalence requirements and receipt of a substantial equivalence exemption determination. Since there were few, if any, e-liquid, e-cigarette, or other vaping products on the market as of February 15, 2007, there is no way to utilize the less onerous substantial equivalence or substantial equivalence exemption pathways that traditional tobacco companies can utilize for cigarettes, smokeless tobacco, and other traditional tobacco products. In order to obtain marketing authorizations, manufacturers of practically all e-liquid, e-cigarette, or other vaping products would have to use the PMTA pathway, which could potentially cost $1.0 million or more per application. Furthermore, the Deeming Regulation created a significant barrier to entry for any new e-liquid, e-cigarette, or other vaping product seeking to enter the market after August 8, 2016, since any such product would require an FDA marketing authorization through one of the aforementioned pathways. We filed a PMTA for the Nautilus Prime open system vaping products on September 9, 2020, and the FDA has not to date taken final action on our PMTA. For this reason, and based on public FDA statements, it appears that the FDA would not prioritize enforcement of the premarket review requirements against any covered Nautilus Prime products during the continued pendency of the PMTAs review, despite the fact that the one-year compliance period closed on September 9, 2021. We believe that, when equipped with our IKE Tech LLC Joint Venture age-gating technology, there is a path to getting an approval for ENDS products with characterizing flavors other than tobacco and menthol, as they will have strong technological barriers to prevent youth usage. The FDA has repeatedly indicated that the only way it will approve characterizing flavors in ENDS devices is if they are equipped with technology to prevent youth usage. We believe the technology we have access to will be desirable to the FDA. IKE met with the FDA on November 13, 2024, and submitted a component PMTA on this technology in April of 2025; however, there can be no guarantee that the FDA will approve our PMTA or any other PMTA we submit that contains the IKE age-gating technology. Further, although we are not marketing e-cigarette products in the United States market, and we can contractually prohibit our distributors from selling our e-cigarette vaping products in the United States market, in the event that those products are sold in the United States market, we cannot assure you that we will not be subject to regulatory or enforcement action as a result of such products being sold in the United States. Though it is highly unlikely, we may also face regulatory or enforcement action from the FDA for certain of our products that remained distributed in the United States between September 9, 2020, and April 30, 2021, and for which we did not file a PMTA by the September 9, 2020, deadline. While we have taken steps intended to ensure that no such distribution occurs, we cannot assure you that, should the FDA prioritize these violations for regulatory action, the FDA will follow its standard of approach of issuing a public warning letter and seeking voluntary corrective action rather than initiating an enforcement action under its various Food, Drug, and Cosmetic Act authorities. Such a result could materially and adversely affect our business, financial condition, and results of operations. 22 On March 17, 2021, the FDA issued letters to four companies operating in the e-cigarette industry, including Aspire North America, requesting documents related to their social media marketing practices. Specifically, the FDA requested the documents to further understand the relationship between rising youth exposure to online e-cigarette marketing and youth e-cigarette use, and the FDA asserted in each letter that each recipient had active brand pages on multiple popular social media platforms, a large number of followers, and did not use age restriction tools to prevent youth exposure. Under its Food, Drug, and Cosmetic Act authority requiring industry members to produce certain documents upon request, the FDA requested that we respond within 60 days but granted us a 30-day extension. On June 15, 2021, Aspire North America provided the required information to the FDA. To date, the FDA has not substantively responded or taken any further action in the matter. However, we cannot assure you that the FDA will consider the response adequate and will not initiate regulatory or enforcement action based on an alleged failure to comply with the request or that the FDA will not initiate regulatory or enforcement action on other grounds based on the contents of the documents produced in the response. Either result could materially and adversely affect our business, financial condition, and results of operations. In the event that similar legislation or regulations are adopted with respect to cannabis products, our business is likely to be materially impaired since all of our sales of cannabis products were in the United States. **** **Recently enacted legislation and regulations in the United States may make it more difficult to sell nicotine and cannabis vaping products in the United States.** Provisions of the 2021 Appropriations Act subjected e-cigarettes and other vaping devices (including, based on recent regulations, cannabis and hemp vaporization products that aerosolize liquids), as well as e-liquids products, to the provisions of the Prevent All Cigarette Trafficking Act of 2009 (the PACT Act), which imposes stringent rules on interstate shippers and, in particular, online sellers. Under the PACT Act, interstate shippers must register with the U.S. Attorney General and the tobacco tax administrator of each jurisdiction into which they ship products as well as submit monthly reports to such tobacco tax administrators. In addition, online retailers making delivery sales to consumers must also (i) verify the age of customers using a commercially available database, (ii) use private shipping services that collect an adult signature and verify the recipients age using government-issued identification at the point of delivery, (iii) if shipping to jurisdictions that tax vaping products, collect and remit all applicable local and state taxes and comply with all applicable licensing requirements of the recipients jurisdiction, (iv) comply with shipping-package quantity restrictions and labeling requirements, and (v) maintain records for five years of any delivery interrupted because the carrier or delivery service determines or has reason to believe that the person ordering the delivery is in violation of the PACT Act. Shippers and delivery sellers who do not comply with the PACT Act are subject to civil and criminal penalties. Accordingly, compliance with the requirements of the PACT Act may significantly increase the costs of our and our customers online businesses, increasing the prices of our products sold online and making them less attractive to consumers as compared to products sold at local retailers. In addition, failure to comply with the PACT Act could expose us to significant penalties that could materially adversely affect our business and our financial condition and results of operations. Further, as a result of the issuance of final regulations implementing the PACT Act amendments by the United States Postal Service (the USPS), the USPS generally prohibits the mailing of such products, subject to potential exceptions already applicable to combusted cigarettes and smokeless tobacco (e.g., for shipments between legally operating businesses). The USPS issued these final regulations on October 21, 2021, and the regulations took effect immediately. Further, the most commonly used carriers, Federal Express and United Parcel Service, have recently announced that they would cease all deliveries of vapor products. These restrictions on use of the USPS to ship our products and the decisions by private carriers not to deliver vapor products in the United States could materially impair our ability to sell products in the United States which would adversely affect our business, financial condition and results of operations. Further, since most of our revenue from cannabis vapor product sales is from sales to other cannabis vaping brands, if our customers are not able to deliver product in the United States, which is the largest market for cannabis vaping products, our ability to generate revenue from cannabis products would be materially impaired. We use a combination of advanced accounting software and PACT Act compliant carriers to remain compliant with the tax and delivery restrictions of the PACT Act. To the extent that the carriers that we currently use change their policies and refuse to ship or are prohibited from shipping vaping products and we are not able to find other carriers that are PACT Act compliant, our business and prospects will be materially impaired, and we may not be able to continue in the cannabis vaping business. **We are exposed to risks relating to our relationship with a related party, and we may not be able to successfully operate manufacturing operations.** The majority of our products are presently manufactured by Shenzhen Yi Jia, a related party. Due to the reliance on our business relationship with Shenzhen Yi Jia, any interruption of its operations, any failure of Shenzhen Yi Jia to accommodate our growing business demands, any termination or suspension of our cooperation terms, or any deterioration of cooperative relationships with Shenzhen Yi Jia may materially and adversely affect our operation. Failure by Shenzhen Yi Jia to provide us satisfactory products and/or services in a timely manner is likely to have a have material adverse effect on our business, financial condition and results of operations. There is a risk in relying on any third-party supplier in that we are dependent on the suppliers ability to produce a product which meets our quality standards and delivery requirements as well as being dependent upon the suppliers priorities. These risks are present when the supplier is controlled by Tuanfang Liu, our co-chief executive officer. We do not presently have any plans to engage another supplier since Shenzhen Yi Jia is familiar with our products, and we are devoting our efforts to establishing our own production facilities with no assurance that we can successfully operate our new and to-be developed manufacturing facilities. 23 **** **If it is determined or perceived that the usage of nicotine or cannabis vaping products poses long-term health risks, the use of vaping products may decline significantly, which is likely to materially and adversely affect our business, financial condition, and results of operations.** Since vaping products were only introduced to the market in the last two decades and are rapidly evolving, studies relating to the long-term health effects of nicotine and cannabis vaping product usage are still ongoing. Currently, there remain uncertainties regarding whether vaping products are sufficiently safe for their intended use, and health risks associated with the usage of vaping products have been under scrutiny. According to the WHO, there is no conclusive evidence that the use of nicotine vaping products facilitates smoking cessation. The WHO recommended governments to strengthen relevant laws and regulations on the sale of vaping products, including to, among others, prohibit marketing strategies targeting the underage and the non-smoking population. Negative publicity on the health consequences of vaping products or other similar devices may also adversely affect the usage of vaping products. For example, the FDA and the CDC issued a joint statement on August30, 2019, linking a number of cases of respiratory illnesses to nicotine vaping product use. On November8, 2019, the CDC announced that it had preliminarily linked cases of severe respiratory illness to the presence of Vitamin E acetate, which was found in certain cannabis-derived tetrahydrocannabinol-containing vaping cartridges not intended for use with nicotine-containing e-liquids that may have been obtained illegally. However, evidence is not sufficient to rule out the contribution of other chemicals of concern, including chemicals in either cannabis or non-cannabis products. In January 2020, after further research, the FDA and CDC recommended against the use of cannabis-containing vaping products, especially those from unofficial sources, and that the underage, pregnant women and adults who do not currently use tobacco products should not start using vaping products. On February25, 2020, the CDC issued a final update, stating that the number of cases of severe respiratory illnesses had declined to single digits as of February9, 2020. The CDC also reconfirmed that (i)Vitamin E acetate, which was found in some cannabis-derived vaping cartridges that were mostly obtained illegally, was strongly linked to and indicated to be the primary cause of the severe respiratory illnesses, and (ii)cannabis-derived vaping products from illicit sources were linked to most cases of severe respiratory illnesses. If vaping product usage is determined or perceived to pose long-term health risks or to be linked to illnesses, the usage of vaping products may significantly decline, which would have a material adverse effect on our business, financial condition and results of operations. Any perceived correlation between cannabis and Vitamin E acetate may adversely affect the publics perception of vaping products in general, regardless of whether such products contain cannabis and/or Vitamin E acetate and may impact sales of our cannabis vapor product. **** **Because cannabis oil, unlike nicotine oil, is not of a uniform quality, products we design may not perform as intended, which could result in a loss of business.** **** We do not include cannabis oil in our products. The cannabis oil is provided by our customer before selling the product or a cartridge with oil is inserted in the product by the customer or the end user. Unlike nicotine oil, cannabis oil is not of a uniform quality or viscosity. If the end user uses cannabis oil that is too viscous for our product and does not have the desired experience from the product, our client may reject an order, cancel an order or seek a refund of the payment made to us and/or discontinue purchasing our products. These refunds and the cost of cancellation of orders are reflected as sales return. The amount of sales return for the years ended June 30, 2025 and 2024 was $2,551,966 and $4,764,434, respectively. We cannot assure you that we will not incur significant warranty expenses and lose business as a result cannabis oil not providing the end users desired experience or that we will not lose significant business as a result of this problem. **** **The vaping market may develop more slowly or differently than we expect.** The e-cigarette vaping market worldwide has experienced rapid growth through 2019 and the cannabis market is developing, with the United States accounting for the overwhelming majority of sales. The growth rate for e-cigarette products decreased in 2021 and 2022, in part, we believe, because of the steps taken by governments worldwide to address the COVID-19 pandemic, which negatively affected our revenue and industry sales in general. The growth of cannabis vaping products is largely confined to those states in the United States where recreational cannabis is legal. The growth rate may decrease or decline due to uncertainties with respect to the acceptance of vaping technologies and products, health studies relating to vaping product use, general economic conditions, disposable income growth, and pace of development of technologies and other factors. There can be no assurance that the penetration of vaping products among adult smokers will further deepen, or that the tobacco and cannabis vaping market will grow at a pace that we expect. Additionally, vapor market development is subject to the uncertainty of overall regulatory landscape for such products, which may have a material impact on the market development of vaping products, particularly in Western Europe. There can be no assurance that the regulatory regime will be favorable to us or nicotine or cannabis vaping products in general. It is also uncertain whether our products and services will achieve and sustain high levels of market acceptance and meet users expectations. Our ability to increase the sales of our vaping products depends on several factors, some of which may be beyond our control, including users receptiveness towards and adoption of vaping technologies and products, market awareness of our brand, the market acceptance of our products and services, the word-of-mouth effects of our products and services, our ability to attract, retain and effectively train customer representatives, our ability to develop effective relationships with distributors and expand our distribution networks and the cost, performance and functionality of our products and services and meeting consumer trends. The market for nicotine products has recently seen a change in consumer preference as closed systems are overtaking open systems in market share. If we are not successful in implementing our business strategies, developing our vaping products, anticipating consumer trends or reaching adult smokers, or if these users do not accept our vaping products, the market for our products may not develop or may develop more slowly than we expect, any of which could materially and adversely affect our profitability and growth prospects. 24 **We are exposed to product liability and user complaints arising from the products we sell, which could have a material adverse impact on us.** Currently, we primarily sell our e-cigarette products to our distributors, who then supply our products to wholesale companies that in turn sell to retail outlets, and we sell our cannabis products primarily to other cannabis brands on an ODM basis, and the customers sell the products through their own distribution networks. The retail market is dominated by stores, primarily grocery stores, convenience stores and tobacco stores. Even though we generally do not sell our products directly to users, we may nevertheless be liable for defects in our products pursuant to general laws on product liability. We are exposed to potential product liability claims from users of our products in the event that the use of our products results in any personal injury, property damage or health and safety issues. There is no assurance that we can succeed in defending ourselves, and we may be required to pay significant amounts of damages for product liability claims and, to the extent that we are able to obtain product liability coverage, product liability insurance may not provide sufficient coverage against claims of injury based on the fact that they are inhaling a nicotine product. Further, product liability claims against us, whether or not successful, are costly and time-consuming to defend. These claims, whether against us or another manufacturer, may result in negative publicity that could severely damage our reputation and affect the marketability of our products, and could result in substantial costs and diversion of our resources and managements attention. Any of the above could in turn materially and adversely affect our business, financial condition and results of operations. Although we may seek indemnification or contribution from our suppliers in certain circumstances, we cannot assure you that we will be able to receive indemnification or contribution in full, or at all. We maintain limited product liability insurance for claims of personal injury and property damage caused by our products. Our insurance coverage may not be adequate to cover claims which may be made against us. Our insurance does not provide coverage for all liabilities (including liability for certain events involving pollution or other environmental claims). In addition, there can be no assurance that we will be able to maintain our product liability insurance on acceptable terms. If we cannot maintain our product liability insurance on reasonable terms or our insurance does not sufficiently compensate us for the losses we sustain in the event of a legal proceeding, our business, financial condition and results of operations would be adversely affected. At present, a majority of our products are manufactured by Shenzhen Yi Jia, a Chinese company of which Tuanfang Liu, our co-chief executive officer is a 95% owner. In the event of any claim of product liability resulting from a product manufactured by Shenzhen Yi Jia, any legal action would most likely be brought against us since the plaintiff may not be willing or able to commence an action against Shenzhen Yi Jia in China. Our co-chief executive officer has a conflict of interest in determining the extent to which Shenzhen Yi Jia would accept responsibility for any product liability claim relating to a product manufactured by Shenzhen Yi Jia or for making changes in the manufacturing process to address the substance of any claim, whether or not such claim is valid. To the extent that that we have product liability insurance, the insurer may seek to recover any amount paid from Shenzhen Yi Jia for products manufactured by Shenzhen Yi Jia. Further, although we may have legal recourse against Shenzhen Yi Jia pursuant to applicable laws, attempts to enforce our rights against Shenzhen Yi Jia may be expensive, time-consuming and may not be successful, particularly since Shenzhen Yi Jia is located in China, and we may not be able prevail in a Chinese court. The interests of the stockholders of Shenzhen Yi Jia in their capacities as such stockholders may differ from our interests. What is in the best interests of Shenzhen Yi Jia may not be in our best interests, including with respect to matters such as the warranty period and allocation of expenses with respect to the warranted repair or replacement. There can be no assurance that when conflicts of interest arise, the stockholders of Shenzhen Yi Jia, principally, our chairman as 95% owner, will act in our best interests of or that any conflicts of interest will be resolved in our favor. In addition, these related parties may breach or refuse to renew the existing cooperation arrangements with us. Since our products involve inhaling nicotine or cannabis, we may be subject to claims based on the known effects of nicotine or cannabis. Because e-vaping is a relatively recent method of ingesting nicotine and cannabis and is thought by some that, for adults, it may be less toxic than cigars and cigarettes or marijuana cigarettes, it is possible that long-term effects of inhaling nicotine or cannabis may not become generally known for many years and may prove to be not significantly less toxic than cigars, cigarettes and marijuana cigarettes, and we cannot assure you that manufacturers and distributors of vaping products may not face liability resulting from the nature of the product a device for inhaling nicotine or cannabis, which could materially impair our ability to operate profitably if at all. Furthermore, negative publicity including but not limited to negative online reviews on social media and crowd-sourced review platforms, industry findings or media reports related to the quality, functionality and health concerns of vaping products, whether or not accurate, and whether or not concerning our products, can adversely affect our business, results of operations and reputation. Such negative publicity may reduce users confidence in us, our products and our brand, which may adversely affect our business and results of operations. 25 **** **Our business, financial condition and results of operations may be adversely impacted by product defects or other quality issues.** Our products may contain defects that are not detected until after they are shipped or inspected by our users. The failure of our supplier or, when we commence manufacturing operations, our operations to maintain the consistency and quality throughout our production process could result in substandard quality or performance of our products, and product defects could cause significant damage to our market reputation and reduce our sales and market share. For example, the products we distribute may contain lithium-ion or similar types of batteries. Defects in these products could result in personal injury, property damage, pollution, release of hazardous substances or damage to equipment and facilities. As we primarily rely on one supplier, Shenzhen Yi Jia, which is a related party, to supply our products, if this supplier does not produce products that meet the industrial and our standards, we may fail to maintain our quality control over our products. Actual or alleged defects in the products we distribute may give rise to claims against us for losses and expose us to claims for damages. If we deliver any defective products, or if there is a perception that our products are of substandard quality, we may incur substantial costs associated with mass product recalls, product returns and replacements and significant warranty claims, our credibility and market reputation could be harmed and our results of operations and market share may be adversely affected. Further, defective products may result in compliance issues that could subject us to administrative proceedings and unfavorable results such as product recall and other actions. Such proceedings and unfavorable results could have a material adverse effect on our brand, reputation and results of operations. **** **Our business may be negatively affected by global political events and foreign policy responses, including tariffs.** **** Geopolitical uncertainties and events could cause damage or disruption to international commerce and the global economy and thus could have a material adverse effect on us, our suppliers, logistics providers, manufacturing vendors and customers, including our distributors and other channel partners. For example, escalating tensions between the U.S., China and other countries may result in changes in laws or regulations that will affect our ability to manufacture and sell our products. As of the date of this Annual Report, the U.S. tariff rate on all goods imported from China is 30% and the tariff rate on all goods imported from Malaysia is 19%. These tariff rates have been volatile since April 2025 and may further increase or decrease over the near term. We purchase the majority of our nicotine and cannabis vaping products from Shenzhen Yi Jia, a company located in Shenzhen, China, which constitutes a significant portion of our cost of revenue and could increase our cost of revenue should tariffs continue to rise. We are currently able to manufacture a wide range of cannabis hardware in Malaysia and import into the U.S. at a comparatively low tariff rate compared to goods imported from China. However, there is no guarantee that the current tariff on goods imported from Malaysia will not increase to the previous rate of 24% or higher. Any continuation or increase of tariffs on products imported from Malaysia or China could materially and adversely affect our business, financial condition, and results of operations. The progress and continuation of trade negotiations between the U.S. and China continues to be uncertain and a further escalation of the trade war remains a possibility. These tariffs have, and will continue to have, an adverse effect on our results of operations and profit margins. We can provide no assurance regarding the magnitude, scope or duration of the imposed tariffs or the magnitude, scope or duration from any relief in increases to such tariffs, as well as the potential for additional tariffs or trade barriers by the U.S., China or other countries, nor that any strategies we may implement to mitigate the impact of such tariffs or other trade actions will be successful. **** **Our business and the industry in which we operate are subject to inherent risks and uncertainties, including, among others, developments in regulatory landscape, medical discovery and market acceptance of vaping devices.** Our business and the industry in which we operate are subject to inherent risks and uncertainties, including, among others, developments in regulatory landscape, medical discovery and market acceptance of vaping devices. Our business and the vaping industry are subject to inherent risks, challenges and uncertainties, including but not limited to the following: | | the regulatory landscape in the jurisdictions to which we market our products are constantly evolving, and there may be further restrictions, bans or requirements with respect to e-cigarettes and vaping devices that may increase our cost of compliance or prevent us from marketing our products to certain jurisdictions; | | | | we may face unforeseen capital requirements caused by the changing industry requirements or consumer tastes and demands; demands for our vaping devices may decline significantly due to the decrease in market acceptance for our products or vaping devices generally; | | 26 | | we may not be able to establish business relationships with customers or compete with other more established competitors as, for an evolving industry, customers generally prefer to choose more established suppliers, including Juul Labs, Inc. the largest producer of nicotine vapor products, rather than us. | | | | we may not be able to adjust our procurement and/or production in time to meet the changes in market demands; and | | | | future changes in our industry may not be consistent with our prediction. Therefore, our industrial prospects, research and development focus and business plans may not be effective in helping sustain our competitive position in the vaping industry. | | If we fail to cope with the challenges and compete with other industry players in such uncertain and evolving vaping industry, our future prospects, business, financial conditions and results of operations may be materially and adversely affected. **** **We may not be able to develop and introduce new products or upgrade existing products in a timely and cost-effective manner, which may adversely affect our business, results of operations and prospects.** To optimize adult vapers experience, we must introduce new products and upgrade our existing products to meet our users evolving preferences and to incorporate the latest technological developments. It is difficult to predict the preferences of users or a specific segment of users. Changes and upgrades to our existing products may not be well received by our users, and newly introduced products may not achieve expected results. Going forward, we may introduce new products with different features. Such efforts may require substantial investments of additional human capital and financial resources. However, if we are not able to develop or obtain rights to the latest technological developments, we may not be able to market a product that meets the adult consumers changing taste. If we fail to improve our existing products or introduce new products that meet consumer taste ones in a timely or cost-effective manner, our ability to attract and retain users may be impaired, and our results of operations and prospects may be adversely affected. Although we endeavor to understand user preferences through surveys, sampling and other forms of interactions from time to time, we cannot assure you that we can anticipate, identify, develop or market products that respond to changes in users preferences and expectations. For example, our surveys may not yield accurate or useful insights on user behaviors, and feedbacks on our products may be different after such products are commercially available to a wider public. There can be no assurance that any of our new products will achieve market acceptance or generate sufficient revenues to offset the costs and expenses incurred in relation to our development and promotion efforts. There can be no assurance that each of our new products will achieve market acceptance and be successful. **Misuse or abuse of our products may lead to potential adverse health effects, subjecting us to complaints, product liability claims and negative publicity.** We are unable to control how our users choose to use our products. For example, we cannot prevent the users from misusing or abusing our products or prevent minors from obtaining access to our products. Our users may also use our products to inhale chemicals obtained from informal sources and in other potentially hazardous applications that can result in personal injury, product liability and environmental claims. Misuse or abuse of our products, including use of our products in combination with other products and components from third parties, may significantly and adversely affect the health of our users, subjecting us to user complaints and product liability litigation, even though such products were not used in the manner recommended by us. Applicable law may render us liable for damages without regard to negligence or fault. The FDA strongly advises against vaping during pregnancy on the ground that any products containing nicotine are not safe to use during pregnancy since nicotine is a health risk for pregnant women and developing babies and can damage a babys brain and lungs. We cannot assure you that we would not be subject to liability resulting from a birth defect in a baby born to a woman who used vaping products during pregnancy, notwithstanding our warnings not to use during pregnancy. Any such liability may not be covered by insurance and may materially impair our ability to operate profitably. Regardless of whether these complaints or product liability litigation have merit, they may be costly and time-consuming to defend and resolve, bring negative publicity that could damage our reputation and result in higher scrutiny by the government or stricter regulations, all of which could materially and adversely affect our business, financial condition and results of operations. **** **Failure to manage inventory at optimal levels could adversely affect our business, financial condition, and results of operations.** We are required to manage a large volume of inventory effectively for our business. We depend on our forecasts for the anticipated demand for our products to make procurement plans and manage our inventory. Our forecast for demand, however, may not accurately reflect the actual market demands, which depends on a number of factors including, without limitation, launches of new products, changes in product life cycles and pricing, product defects, changes in user spending patterns, supplier back orders and other supplier-related issues, distributors and retailers procurement plans, as well as the volatile economic environment in the markets where we sell our products. We do not have long-term contracts with some of our distributors, which makes the demands for our products from distributors unstable and unpredictable. In addition, when we launch a new product with new components or raw material, it may be difficult to establish relationships, determine appropriate raw material and product selection, and accurately forecast market demand for such product. We cannot assure you that we will be able to maintain proper inventory levels for our business at all times, and any such failure may have a material and adverse effect on our business, financial condition and results of operations. 27 Inventory levels in excess of distributor demand with respect to tobacco products and customer demand with respect to cannabis products may result in inventory write-downs, expiration of products or an increase in inventory holding costs and a potential negative effect on our liquidity. As we plan to continue expanding our product offerings, we expect to include more products in our inventory, which will make it more challenging for us to manage our inventory effectively and will put more pressure on our warehousing system. If we fail to manage our inventory effectively, we may be subject to a heightened risk of inventory obsolescence, a decline in inventory values, and significant inventory write-downs or write-offs. In addition, we may be required to lower sale prices in order to reduce inventory level, which may lead to lower gross margins. High inventory levels may also require us to commit substantial capital resources, preventing us from using that capital for other important purposes. Any of the above may materially and adversely affect our results of operations and financial condition. Conversely, if we underestimate distributor demand, or if our supplier fails to provide products to us in a timely manner, we may experience inventory shortages, which may, in turn, require us to purchase our products at higher costs, result in unfulfilled user orders, leading to a negative impact on our financial condition and our relationships with distributors. Additionally, the distributors largely determine the inventory levels of the retail outlets they operate or to whom they sell, based on their estimation, and such inventory levels might not correspond to actual market demands and could lead to under-stocking or over-stocking in the retail outlets. We cannot assure you that there will not be under-stocking or over-stocking in these stores which would materially impact the results of our operations and our working capital. Under-stocking can lead to missed sales opportunities, while over-stocking could result in inventory depreciation and decreased shelf space for stocks that are in higher demands. These results could adversely affect our business, financial condition and results of operations. **** **One customer accounts for a significant portion of our sales.** Although we have more than 150 distributors, our largest distributor, who is a non-exclusive distributor for the United Kingdom and France, accounted for approximately 26% and 30% of our revenue for the years ended June 30, 2025 and 2024, respectively. On January 1, 2021, we signed a distributorship agreement with this distributor in our standard form, which does not provide any special terms or prices. No other customer accounted for 10% or more of our revenue during either year. The loss of this distributor or a significant reduction in our sales to this distributor could have a material adverse effect upon our business. See Business Sales and Distribution. **** **Economic factors beyond our control, and changes in the global economic environment, including fluctuations in inflation, tariff rates, and currency exchange rates, could result in lower revenues, higher costs and decreased margins and earnings** **** A majority of our products are manufactured and sold outside of the United States which creates exposure to the volatility of global economic conditions, including fluctuations in inflation, tariff rates, and foreign currency exchange rates. Central banks deploy various strategies to combat inflation, including increasing interest rates, which impact our borrowing costs. Government shutdowns or the risk of government shutdowns, as well as the impact or expected impact of elections, both in the United States and in other countries around the world, may also increase volatility, including through changes in trade policy and tariffs. Additionally, there has been, and may continue to be, volatility in currency exchange rates that impact the U.S. Dollar value relative to other international currencies. Our international revenues and expenses generally are derived from sales and operations in foreign countries, and these revenues and expenses are affected by currency fluctuations. Currencyexchange ratefluctuations could also disrupt the business of the independent manufacturers that produce our products by making their purchases of raw materials more expensive and more difficult to finance. Foreign currency fluctuations have adversely affected and could continue to have an adverse effect on our results of operations and financial condition. **** **We face competition from companies in the vaping industry as well as other sources of nicotine and cannabis, and we may fail to compete effectively.** Vaping products for both nicotine and cannabis compete with tobacco and marijuana cigarettes and a wide range of other tobacco and legal and illegal cannabis products. The vaping industry worldwide is intensely competitive. Some of our current and potential competitors have greater financial, marketing, ordering quantities, portfolios of products and intellectual properties and other resources and some, such as JUUL Labs, Inc., which is the major seller of vaping nicotine products, and British American Tobacco Plc, another major producer of vaping nicotine products, are better known and have greater resources than we do. Certain competitors may be able to secure raw materials and products from suppliers and manufacturers on more favorable terms, devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing or inventory policies, and devote substantially more resources to product development and technology. Increased competition may adversely affect our results of operations, market share and brand recognition, or force us to incur losses. There can be no assurance that we will be able to successfully compete against current and future competitors, and competitive pressures may have a material adverse effect on our business, prospects, financial condition and results of operations. The cannabis vaping market is in the early stages and at present is mainly limited to the United States, although there is a developing market in Canada and a potential market in Europe. Our ability to be successful in this market is dependent upon our ability to develop vaping systems that attracts and retains consumer interest and the regulatory environment in the United States. Our cannabis vaping products compete with other forms of legal and illegal cannabis, marijuana cigarettes, CBD oil and other CBD products, food products and other vaping products. Since most of our revenue from cannabis is derived from sales to other brands rather than sales to distributors and consumers, we compete based on our technology and ability to work with the customers to develop a product that they can successfully market. 28 **** **Misconduct, including illegal, fraudulent or collusive activities, by our employees, distributors, retailers, suppliers and manufacturers, may harm our brand and reputation and adversely affect our business and results of operations.** Misconduct, including illegal, fraudulent or collusive activities, unauthorized business conduct and behavior, or misuse of corporate authorization by our employees, contractors, distributors, retailers, suppliers and manufacturers and other business relationships could subject us to liability and negative publicity. Our employees, distributors, retailers, suppliers and manufacturers may conduct fraudulent activities or violations of the Foreign Corrupt Practices Act, such as accepting payments from or making payments to other distribution channel participants or other third parties in order to bypass our internal system and to complete shadow transactions and/or transactions outside our official or authorized distribution channels, disclosing users information to competitors or other third parties for personal gains, or applying for fake reimbursement. They may conduct activities in violation of unfair competition law, which may expose us to unfair competition allegations and risks. We cannot assure you that such incidents will not occur in the future. It is not always possible to identify and deter such misconduct, and the precautions we take to detect and prevent these activities may not be effective. Such misconduct could damage our brand and reputation, which could adversely affect our business and results of operations. **** **We may become subject to governmental regulations and other legal obligations related to privacy, information security, and data protection, and any security breaches, and our actual or perceived failure to comply with our legal obligations could harm our brand and business.** Most of our revenue is derived from sales to distributors for our e-cigarette products and other cannabis brands for our cannabis products, and we do not sell online. As a result, in the normal course of business we do not collect, store and process personal, transactional, statistical and behavioral data, including certain personal and other sensitive data from our users. To the extent that we market to the public and collect personal data, such as credit card information, we would face risks inherent in handling large volumes of data and in securing and protecting such data. In particular, we would face a number of data-related challenges related to our business operations, including: (i) protecting the data in and hosted on our system and cloud servers, including against attacks on our system and cloud servers by external parties or fraudulent behavior by our employees; (ii) addressing concerns related to privacy and sharing, safety, security and other factors; and (iii) complying with applicable laws, rules and regulations relating to the collection, use, disclosure or security of personal information, including any requests from regulatory and government authorities relating to such data. **We may be subject to liability if private information that we receive is not secure or if we violate privacy laws and regulations.** We are or may become subject to a variety of laws and regulations in the United States and abroad regarding privacy, data security, cybersecurity and data protection. These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws. In particular, there are numerous United States federal, state, and local laws and regulations and foreign laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other user data. Such laws and regulations often vary in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions. To the extent that we deal with the public and obtain private information on our computer system including information on our system as a result of internet sales of our products, we would be subject to these laws. In June 2018, California adopted the California Consumer Privacy Act (CCPA), which became effective in 2020. Under the law, any California consumer has a right to demand to see all the information a company has saved on the consumer, as well as a full list of all the third parties that data is shared with. The consumer also has the right to request that we delete the information it has on the consumer. The CCPA broadly defines protected data. The CCPA also has specific requirements for companies subject to the law. The CCPA provides for a private right of action for unauthorized access, theft or disclosure of personal information in certain situations, with possible damage awards of $100 to $750 per consumer per incident, or actual damages, whichever is greater. The CCPA also permits class action lawsuits. To the extent that we sell products to consumers through our website or otherwise through the Internet, we may become subject to the CCPA and any other similar consumer protection laws. The European Union Parliament approved a new data protection regulation, known as the General Data Protection Regulation (GDPR), which came into effect in May 2018. The GDPR includes operational requirements for companies that receive or process personal data of residents of the European Economic Area. The GDPR imposes significant penalties for non-compliance. Although we do not conduct any business in the European Economic Area, in the event that residents of the European Economic Area access our website and input protected information, including information provided in ordering products through our website, we may become subject to provisions of the GDPR. 29 We are also subject to laws restricting disclosure of information relating to our employees. We strive to comply with all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy, data security, cybersecurity and data protection. However, given that the scope, interpretation, and application of these laws and regulations are often uncertain and may be conflicting, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us or our third-party service-providers to comply with our privacy or security policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other user data, may result in governmental enforcement actions, litigation, or negative publicity, and could have an adverse effect on our business and operating results. Although we maintain cybersecurity insurance, we cannot assure you that this insurance will cover or satisfy any claim made against us or adequately cover any defense costs we may incur. **** **Any significant cybersecurity incident or disruption of our information technology systems or those of third-party partners could materially damage user relationships and subject us to significant reputational, financial, legal and operation consequences.** We depend on our information technology systems, as well as those of third parties, to develop new products and services, host and manage our services, store data and process transactions. Any material disruption or slowdown of our systems or those of third parties upon whom we depend could cause outages or delays in our services, particularly in the form of interruption of services delivered by our website, which could harm our brand and adversely affect our operating results. Our failure to implement adequate cybersecurity protections could subject us to claims for any breach of security, particularly if it results in disclosure of information relating to our customers. If changes in technology cause our information technology systems, or those of third parties whom we depend upon, to become obsolete, or if our or their information systems are inadequate to handle our growth, we could lose users, and our business and operating results could be adversely affected. **** **Infringement of our intellectual property by any third party or loss of our intellectual property rights may materially and adversely affect our business, financial condition and results of operations.** We, through our operating subsidiaries, either own or will own or license as an exclusive licensee patent, trademark, copyright and trade secret and other intellectual property, as well as confidentiality procedures and contractual provisions, to protect our intellectual property rights. We also enter into confidentiality agreements with our employees and any third parties who may access our proprietary information, and we control access to our proprietary technology and information. Intellectual property protection may not be sufficient. Confidentiality agreements may be breached by counterparties, we may not be able to enforce these agreements and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights, and, with respect to rights licensed to us, the licensor, which is a related party, may not be willing or able to enforce its intellectual property rights against alleged infringers. Policing any unauthorized use of our intellectual property, whether owned or licensed, is difficult, time-consuming and costly, and the steps we have taken may be inadequate to prevent the misappropriation of our intellectual property. In the event that we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources. We can provide no assurance that we will prevail in such litigation, and we cannot assure you that our licensor will take steps to sufficiently protect the licensed intellectual property. Furthermore, we or our licensor may be subject to the risks of losing our intellectual property rights or the intellectual property rights licensed from other third-parties due to several reasons. Certain intellectual property rights, such as patents, are subject to a limited period of time. Upon the expiry of such period of time, others may freely use such intellectual properties without any license or charges, which may impose competitive harm to us and in turn adversely affect our business and prospects. The intellectual property rights that we currently have may also be revoked, invalidated or deprived by regulatory authorities as a result of intellectual property claims or challenges successfully raised by third parties. We may also rely on certain intellectual property rights licensed from other third parties. There can be no guarantee that we will be able to maintain such licenses at all times or renew such licenses upon expiry. Moreover, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. Any failure in maintaining, protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations. **** 30 **** **We may be subject to intellectual property infringement claims from third parties, which may be expensive to defend with no assurance of success and may disrupt our business and operations.** We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate patents, copyrights or other intellectual property rights held by third parties. Through our operating subsidiaries, we are acquiring patent, trademark and other intellectual rights from Tuanfang Liu, Aspire Global and Shenzhen Yi Jia all of their intellectual property relating to the cannabis vaping products, and we are licensing patent, trademarks and other intellectual property rights relating to the tobacco vaping products from Mr. Liu, Aspire Global and Shenzhen Yi Jia. We may, and from time to time in the future be, subject to legal proceedings and claims relating to the intellectual property rights of others. There could also be existing patents or other intellectual property of which we are not aware that we may infringe. While we do not know of any intellectual property rights on which our products or our business infringe, we cannot assure you that holders of patents or other intellectual property rights purportedly relating to some aspect of our technology or business, would not seek to enforce such patents against us or the licensor of intellectual property licensed by us, including intellectual property licensed by Shenzhen Yi Jia, or that they will not be successful in any such enforcement action. If we fail to maintain our patents or if our licensor is not able to maintain its rights, we may be subject to intellectual property infringement claims from third parties. We and Shenzhen Yi Jia have patents and patent applications in a number of jurisdictions, including the United States and the European Union. If we are found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees or damages or be forced to develop alternatives of our own. In addition, we may incur significant expenses, and may be forced to divert managements time and other resources from our business and operations to defend against these third-party infringement claims, regardless of their merits. Although the intellectual property transfer agreement (the Intellectual Property Transfer Agreement) dated September 30, 2022, among Mr. Liu, Aspire Global, Shenzhen Yi Jia, us and Aspire North America, and the exclusive license agreement (the Intellectual Property License Agreement) dated September 30, 2022, among Mr. Liu, Aspire Global, Shenzhen Yi Jia, us and Aspire Science, provide that Mr. Liu, Aspire Global and Shenzhen Yi Jia will indemnify us against any liability in the event that the transferred or licensed intellectual property infringes the intellectual property rights of a third party, we cannot assure you that we will be able to enforce such indemnification. Further, since Shenzhen Yi Jia and Mr. Liu are located in the PRC, we cannot assure you that we will be able to enforce any action or any judgment we may receive from a U.S. court in a Chinese court. **** **As the patents we own or are licensed to us may expire and may not be extended, our patent applications may not be granted and our patent rights may be contested, circumvented, invalidated or limited in scope, our patent rights and license may not protect us.** As of the date of this Annual Report, our operating subsidiaries own or license more than 200 patents relating to various aspects of our operations. The rights granted under any issued patents, however, may not provide us with proprietary protection or competitive advantages. The claims under any patents that issue may not be broad enough to prevent others from developing technologies that are similar or that achieve results similar to ours. It is also possible that the intellectual property rights of others will bar us from licensing. Numerous patents owned by others exist in the fields in which we have developed and are developing our technology. These patents and patent applications might have priority over our patent applications filed by our transferor or licensor and we or our licensor may not be able to enforce these rights. Finally, in addition to those who may claim priority, any of our existing patents may also be challenged by others on the basis that they are otherwise invalid or unenforceable.Any failure in extending our existing patents, or if our patent rights were to be contested, circumvented, invalidated or limited in scope could materially and adversely affect our business, financial condition and results of operations. **** **If we are unable to manage our growth or execute our strategies effectively, our business and prospects may be materially and adversely affected.** To accommodate our growth, we anticipate that we will need to implement a variety of new and upgraded operational and financial systems, procedures and controls, including the improvement of our accounting and other internal management systems. We will also need to continue to expand, train, manage and motivate our workforce and manage our relationships with customers and third-party suppliers. All of these endeavors involve risks and will require substantial management effort and significant additional expenditures. We may not be able to manage our growth or execute our strategies effectively, and any failure to do so may have a material adverse effect on our business and prospects. **** **Our success depends on our ability to retain our core management team and other keypersonnel.** Our performance depends on the continued service and performance of our directors and senior management as they play an important role in guiding the implementation of our business strategies and future plans. Our co-chief executive officer, Tuanfang Liu, is responsible primarily for our product development, since all of the patents we own or license are based on his inventions, and we anticipate that he will continue to be responsible for product development. Because of his knowledge of the market and the underlying technology for our products, the loss of Mr. Liu could have a material adverse effect on our business, financial condition and prospects. If any of our other members of senior management were to terminate his or her employment, there can be no assurance that we would be able to find suitable replacements in a timely manner, at acceptable cost or at all. The loss of services of key personnel or the inability to identify, hire, train and retain other qualified managerial personnel in the future may materially and adversely affect our business, financial condition, results of operations and prospects. Additionally, in addition to our co-chief executive officer, we rely on our research and development personnel for product development and technology innovation. If any of our key research and development personnel were to leave us, we cannot assure you that we can secure equally competent research and development personnel in a timely manner, or at all. **** 31 **** **Competition for highly skilled employees is intense, and we may not be able to attract and retain the highly skilled employees needed to support our business.** As we continue to operate, we believe our development depends on the efforts and talents of our employees, including management team and financial personnel. Our future development depends on our continued ability to attract, develop, motivate and retain highly qualified and skilled employees. Competition for highly skilled personnel is extremely intense. We may not be able to hire and retain these personnel at compensation levels consistent with our existing compensation and salary structure. Many of the companies with which we compete for experienced employees have greater resources than we do and may be able to offer more attractive terms of employment. In addition, we invest significant time and expense in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements, and the quality of our services and our ability to serve customers could diminish, resulting in a material adverse effect on our business. **Our business, financial condition and results of operations may be adversely affected by an economic downturn.** In recent years, the United States and other markets have experienced cyclical or episodic downturns, and worldwide economic conditions remain uncertain, including, as a result of the COVID-19 pandemic, supply chain disruptions, the Russian invasion of Ukraine, the ongoing conflict in the Middle East, instability in the U.S. and global banking systems, rising fuel prices, increasing interest rates or foreign exchange rates and increased inflation and the possibility of a recession. A significant downturn in economic conditions may affect the market for our products and our suppliers ability to provide products to us on acceptable terms. We cannot predict the timing, strength, or duration of any future economic slowdown or any subsequent recovery generally, or in any industry. If the conditions in the general economy and the markets in which we operate worsen from present levels, our business, financial condition, operating results could be adversely affected. For example, in January 2023, the outstanding national debt of the U.S. government reached its statutory limit. The U.S. Department of the Treasury has announced that, since then, it has been using extraordinary measures to prevent the U.S. governments default on its payment obligations, and to extend the time that the U.S. government has to raise its statutory debt limit or otherwise resolve its funding situation. The failure by Congress to raise the federal debt ceiling could have severe repercussions within the U.S. and to global credit and financial markets. If Congress does not raise the debt ceiling and if the U.S. government defaults on its payment obligations or experiences delays in making payments when due, such payment default or delay by the U.S. government, as well as continued uncertainty surrounding the U.S. debt ceiling or the U.S. Governments ability to pay debts, could result in a variety of adverse effects for financial markets, market participants and U.S. and global economic conditions. In addition, U.S. debt ceiling and budget deficit concerns have increased the possibility a downgrade in the credit rating of the U.S. government and could result in economic slowdowns or a recession in the United States. Although U.S. lawmakers have passed legislation to raise the federal debt ceiling on multiple occasions, ratings agencies have lowered or threatened to lower the long-term sovereign credit rating on the United States as a result of disputes over the debt ceiling. The impact of a potential downgrade to the U.S. governments sovereign credit rating or its perceived creditworthiness could adversely affect economic conditions, as well as our business, financial condition and operating results. **Although we believe that our business is not subject to PRC Laws, our business could be materially impaired if it is determined that our business is subject to PRC Laws.** Based upon the nature of our existing business operations we do not believe, based on advice from PRC counsel, that we are subject to PRC Laws. There is no assurance that certain PRC Laws, including existing laws and regulations and those enacted or promulgated in the future, will not be applicable to our Hong Kong subsidiary due to change in the current political arrangements between mainland China and Hong Kong or other unforeseeable reasons. The application of such PRC Laws may have a material adverse impact on us, as relevant PRC authorities may impose fines and penalties upon our Hong Kong subsidiary, delay or restrict the repatriation of the proceeds from this offering into Hong Kong, and any failure of us to fully comply with such new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our Common Stock, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Common Stock to significantly decline in value or in extreme cases, become worthless. **We have limited insurance coverage, which could expose us to significant costs and business disruption.** We are exposed to various risks associated with our business and operations. We have limited liability insurance coverage and product liability insurance coverage and Aspire Science does not have product liability insurance. A successful liability claim against us due to injuries or damages suffered by users of our product could materially and adversely affect our reputation, results of operations and financial conditions. Even if unsuccessful, such a claim could cause us adverse publicity, require substantial costs to defend, and divert the time and attention of our management. In addition, we do not have any business disruption insurance. Any business disruption event could result in substantial costs to us and a diversion of ourresources. 32 **The occurrence of natural disasters may adversely affect our business, financial condition and results of operations.** The occurrence of natural disasters, including hurricanes, floods, earthquakes, tornadoes, fires and other disasters disease may adversely affect our business, financial condition or results of operations. The potential impact of a natural disaster on our results of operations and financial position is speculative and would depend on numerous factors. The extent and severity of these natural disasters determines their effect on a given economy. We cannot assure you that natural disasters will not occur in the future or that our business, financial condition and results of operations will not be adversely affected. In particular, our factory in Malaysia may be at risk to certain natural disasters that could interrupt production or even cause a catastrophic loss of equipment and inventory. Further, our logistics and supply chain could be interrupted by hurricane or typhoon activity in Southeast Asia. **** **Because we are a controlled company as defined in the Nasdaq Stock Market Rules, you may not have protection of certain corporate governance requirements which otherwise are required by Nasdaqs rules.** Under Nasdaqs rules, a controlled company is a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company. We are a controlled company because Mr.Tuanfang Liu, our co-chief executive officer, holds more than 50% of our voting power. For so long as we remain a controlled company, we are not required to comply with the following permitted to elect to rely, and may rely, on certain exemptions from the obligation to comply with certain corporate governance requirements, including: | | our board of directors is not required to be comprised of a majority of independent directors. | | | | our board of directors is not subject to the compensation committee requirement; and | | | | we are not subject to the requirements that director nominees be selected either by the independent directors or a nomination committee comprised solely of independent directors. | | We have not taken advantage of these exemptions except that our co-chief executive officer and principal stockholder, Tuanfang Liu, is chairman of the nominating and corporate governance committee. As a result, to the extent that we take advantage of these exemptions, you will not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements. Although we do not currently intend to take advantage of the controlled company exemptions, except as set forth above, we cannot assure you that, in the future, we will not seek to take advantage of these exemptions. If we cease to be a controlled company in the future, we will be required to comply with the Nasdaq listing standards, which may require replacing a number of our directors and will require development of certain other governance-related policies and practices. These and any other actions necessary to achieve compliance with such rules may increase our legal and administrative costs, will make some activities more difficult, time-consuming and costly and may also place additional strain on our personnel, systems and resources. **** **You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against two of our directors, Tuanfang Liu, our co-chief executive officer and chairman, and his wife Jiangyan Zhu, who are both based in China.** Although we are a Delaware corporation, two of our directors, -- who are Tuanfang Liu, our co-chief executive officer, chairman and controlling stockholder, and his wife, Jiangyan Zhu, who is also a director live in mainland China. The PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States. As a result, it may not be possible for investors to serve process upon our co-chief executive officer, or to enforce any judgments obtained from non-PRC jurisdictions against any of them in China. As a result, it may be difficult for you to effect service of process upon those persons inside mainland China. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors who do not reside in the United States or have substantial assets located in the United States. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of written arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against our directors and officers who are residents of China if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States. **** 33 **** **Our failure to collect accounts receivable from our customers may adversely affect the results of our operations.** Our business relies on the collection of accounts receivable from our customers in a timely manner to maintain liquidity and support our ongoing operations. We recorded an allowance for credit losses of approximately $18.0 million as of June 30, 2025, and approximately $5.9 million as of June 30, 2024. Our failure or inability to collect accounts receivable when due results from a number of factors, including (i) our customers failure to pay as a result of adverse economic conditions affecting the customers; (ii) our failure to accurately assess the creditworthiness of our customers; (iii) our failure to implement effective collection efforts; and (iv) disputes over contract terms, product quality or delays in delivery. Although we may implement strategies to mitigate these risks, but there can be no assurance that such measures will be entirely effective, and we may continue to incur write-offs of accounts receivable, which may impair our ability to operate profitably. **Macroeconomic and regulatory conditions in the U.S. Cannabis industry may impact our ability to collect accounts receivable from our customers.** **** U.S. cannabis operators have run into significant economic and regulatory headwinds since 2021 which may impair their ability to function as going concerns. Most U.S. cannabis operators have significant debt which, coupled with a relatively high interest rate environment, may lead to insolvency or a takeover by creditors, as was the case recently with a major U.S. multistate cannabis operator. Further, if no major regulatory changes occur to attract new investment capital to the industry, our cannabis operator customers may slow down or cease operations, and our ability to collect on accounts receivable may be negatively impacted, which would adversely affect our business, financial condition and results of operations. **Risks Related to Our Common Stock** **** **Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our Common Stock.** If we fail to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist our Common Stock. Such a delisting would likely have a negative effect on the price of our Common Stock and would impair your ability to sell or purchase our Common Stock when you wish to do so. In the event of a delisting, we would take actions to restore our compliance with Nasdaqs listing requirements, but we can provide no assurance that any such action taken by us would allow our Common Stock to become listed again, stabilize the market price or improve the liquidity of our Common Stock, prevent our Common Stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaqs listing requirements. **** **If our shares are delisted from Nasdaq and become subject to the penny stock rules, it would become more difficult to trade our shares.** The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we do not obtain or retain a listing on Nasdaq and if the price of our Common Stock is less than $5.00, our Common Stock will be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchasers written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our Common Stock, and therefore stockholders may have difficulty selling their shares. **The trading price of our Common Stock may be volatile, which could result in substantial losses to investors.** The trading price of our Common Stock may be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors. The securities of some newly public companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial increase followed by a substantial decline in their trading prices. The trading performances of other vaping companies securities after their offerings may affect the attitudes of investors toward vaping companies listed in the United States, which consequently may impact the trading performance of our Common Stock, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or other matters of other vaping companies may also negatively affect the attitudes of investors towards us. In addition to the above factors, the price and trading volume of our Common Stock may be highly volatile due to multiple factors, including the following: | | regulatory developments affecting us, our customers, or our industry; | | | | announcements of studies and reports relating to our service offerings or those of our competitors; | | | | actual or anticipated fluctuations in our results of operations and changes or revisions of our expected results; | | 34 | | changes in financial estimates by securities research analysts; | | | | announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures or capital commitments; | | | | additions to or departures of our senior management; | | | | detrimental negative publicity about us, our management or our industry; | | | | release or expiry oflock-upor other transfer restrictions on our outstanding Common Stock; and | | | | sales or perceived potential sales of additional Common Stock. | | **As an emerging growth company under the Jumpstart Our Business Startups Act, or JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.** As an emerging growth company under the JOBS Act, we are permitted to rely and rely on exemptions from certain disclosure requirements. We are an emerging growth company until the earliest of: | | the last day of the fiscal year during which we have total annual gross revenues of $1.235 billion or more; | | | | the last day of the fiscal year following the fifth anniversary of our initial public offering, which was on April 3, 2023; | | | | the date on which we have, during the previous three-year period, issued more than $1 billion innon-convertibledebt; or | | | | the date on which we are deemed a large accelerated filer as defined under the federal securities laws. | | For so long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act for up to five fiscal years after the date of our initial public offering. We cannot predict if investors will find our Common Stock less attractive because we may rely on these exemptions. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and the trading price of our Common Stock may be more volatile. In addition, our costs of operating as a public company may increase when we cease to be an emerging growth company. **** **If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for our Common Stock and trading volume could decline.** The trading market for our Common Stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who cover us downgrade our Common Stock or publish inaccurate or unfavorable research about our business, the market price for our Common Stock would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our Common Stock to decline. **** **Our by-laws include forum selection provisions which may limit your ability to commence an action against us.** Our by-laws provide that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim for breach of a fiduciary duty owed by any of our directors, officers, employees, or agents to us or our stockholders; (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation, or our by-laws; or (iv) any action asserting a claim governed by the internal affairs doctrine; in each case, subject to said court having personal jurisdiction over the indispensable parties named as defendants therein. Our by-laws also provide that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint for the resolution of any complaint for which such courts have exclusive jurisdiction, including, but not limited to, any complaint asserting a cause of action arising under the Securities Exchange Act. Our by-laws also provide that the exclusive forum provisions do not apply to actions arising under the Securities Act. 35 There is uncertainty as to whether a court would enforce these provisions, and investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. **ITEM 1B. Unresolved Staff Comments** Not Applicable **** **ITEM 1C. Cybersecurity** Cyberattacks are a growing geopolitical risk, becoming larger, more frequent, more intricate and more relentless. These attacks represent a significant threat to individual organizations and their ability to conduct daily operations. We rely on accounting, financial, and operational management information systems to conduct our operations. Any disruption in these systems could adversely affect our ability to conduct our business. Furthermore, as part of our normal business activities, we collect and store common confidential information about customers, employees, vendors, and suppliers. This information is entitled to protection under a number of regulatory regimes. Any failure to maintain the security of the data, including the penetration of our network security and the misappropriation of confidential and personal information, could result in business disruption, damage to our reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation with potentially large costs. This scenario may also result in a deterioration of customer confidence in us and potentially other competitive disadvantages. As such, a cyberattack could have a material adverse impact on our financial condition and results of operations. While we devote resources to implement and maintain security measures to protect our systems and data, these measures cannot provide absolute security against a cyberattack. In such an event, the insurance coverage we maintain may be inadequate to cover claims, costs, and liabilities relating to cybersecurity incidents. While we have not been subject to cyberattacks and other cyber incidents, we take cybersecurity preparedness seriously. Our risk management framework considers cybersecurity risk alongside other company risks as part of our overall risk assessment process. We have plans to implement cybersecurity training for all employees upon onboarding, and then annual follow-up training courses to ensure that all employees understand the risk and implications of a cyber event. We have implemented a Cybersecurity Committee which met three times last year and is now responsible for the day-to-day management of cybersecurity risks, and the review our practices related to cyber events and risk management. The Committee is composed of the Chief Financial Officer, Chief Legal Officer, Controller, and Head of Human Resources. The Committee is responsible for developing and implementing cybersecurity risk mitigation strategies and activities, including the managing of comprehensive incident response plans, overseeing the cybersecurity risks posed by third-party vendors, keeping our policies and procedures current, assessing compliance with our cybersecurity policies and procedures, and receiving regular updates on cybersecurity-related matters. Further, the Committee will, from time to time and as needed, engage subject matter experts such as consultants and auditors to assist us in establishing processes to assess, identify, and manage potential and actual cybersecurity threats, to actively monitor our systems internally using widely accepted digital applications, processes, and controls, and to provide forensic assistance to facilitate system recovery in the case of an incident. The Audit Committee of our Board of Directors (the Audit Committee) oversees our policies and practices with respect to risk assessment and risk management, including the review, in coordination with our management, of our management of cybersecurity. The Audit Committee receives regular updates from the Cybersecurity Committee on the state of cybersecurity risks we face. This includes briefings on any significant cyber incidents and ongoing risk management efforts. These updates enable the Audit Committee to provide informed reports on cybersecurity matters to the full Board. As of the date of this Annual Report on Form 10-K, we are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect us, our business strategy, results of operations or financial condition. 36 **ITEM 2. Properties** Our headquarters are located at 19700 Magellan Dr, Los Angeles, CA 90502 and we maintain offices, manufacturing and storage facilities at the same location. We do not own any real property, and we leased an aggregate of approximately 205,391 square feet of real property. We do not expect to experience difficulties in renewing any of the leases when they expire. If we require additional space, we expect to be able to obtain additional facilities on commercially reasonable terms. The following table sets forth information as to the real property leased by us: | Location | | Square Feet | | | Current AnnualRent | | | Expiration Date | | | 1410 Abbot Kinney Blvd., PH 1, Venice, CA 90291 | | | 4,121 | | | $ | 388,000 | | | June 30, 2026 | | | 19700 Magellan Dr, Los Angeles, CA 90502 | | | 37,100 | (1) | | $ | 872,719 | | | July 31, 2027 | | | 55 King Yip Street, King Palace Plaza, Floor 31, Suite J, Kwun Tong, Hong Kong | | | 1,850 | | | $ | 81,323 | | | July 14, 2027 | | | No. 16, Jalan I-Park SAC 3, Taman Perindustrian I-Park SAC, 81400 Senai, Johor, Malaysia | | | 31,000 | | | $ | 127,076 | | | August 17, 2026 | | | Lot 210, Jalan Seelong, 81400 Senai, Johor, Malaysia | | | 131,320 | | | $ | 594,401 | | | March 16, 2030 | | | (1) | The number in the table reflects the square feet of building that we occupy. The leased property also includes land, and the total leased land and building is 79,512 square feet. | | **ITEM 3. Legal Proceedings** From time to time, we may be subject to legal proceedings, investigations and claims incidental to the conduct of our business. We are not a party to, nor are we aware of, any legal proceedings, investigations or claims which, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition or results of operations. **** **ITEM 4. Mine and Safety Disclosure** Not applicable. 37 **PART II** **ITEM 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities** **Market Information** Our Common Stock trades on the Nasdaq Stock Market under the symbol ISPR. **Holders of Record** As of September 15, 2025, we had approximately 16 holders of record of our Common Stock. Because most of our shares of Common Stock held by persons other than our original stockholders are held by brokers and other institutions on behalf of stockholders, this number is not indicative of the total number of stockholders who beneficially own our stock. **** **Dividend Policy** We have never declared or paid any cash dividends on our capital stock. We do not anticipate paying cash dividends on our Common Stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business. Any future determination related to our dividend policy will be made at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects, the requirements of current or then-existing debt instruments and other factors our board of directors may deem relevant. One of our subsidiaries declared a dividend payable to its then sole stockholder, Tuanfang Liu, our co-chief executive officer. See Item 13. Certain Relationships and Related Transactions, and Director Independence. **** **Securities Authorized for Issuance under Equity Compensation Plan** The following table sets forth information concerning securities authorized under equity compensation plans as of June 30, 2025. | Plan Category | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) (1) | | | | Weighted-average exercise price of outstanding options, warrants and rights (b) (1) | | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | | | Equity compensation plans approved by security holders | | | 1,438,125 | | | $ | 8.15 | | | | 11,616,039 | | | | Equity compensation plans not approved by security holders | | | - | | | $ | - | | | | - | | | | Total | | | 1,438,125 | | | | 8.15 | | | | 11,616,039 | | | | (1) | Excludes 1,582,865 shares of Common Stock reserved under our Amended and Restated 2022 Equity Incentive Plan, subject to the issuance of restricted stock units (RSUs) and performance stock units (PSUs). | | **Recent Sales of Unregistered Securities** During the three months ended June 30, 2025, the Company did not conduct any unregistered sales of equity securities. 38 **Purchases of Equity Securities by the Issuer and Affiliated Purchasers** Pursuant to the share repurchase program approved by the Companys board of directors on January 20, 2025, for a period of 24 months, the Company may repurchase up to $10 million of the currently outstanding shares of the Companys common stock. Under the approved repurchase program, the Company may purchase shares of the Companys common stock (i) in the open market, (ii) in privately negotiated transactions, (iii) block purchases, or (iv) otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Exchange Act. During the three month period ended June 30, 2025, the Company did not repurchase any shares of its common stock. **** | ISSUER PURCHASES OF EQUITY SECURITIES(1) | | | | Period | | Total Number of Shares (or Units) Purchased | | | Average Price Paid per Share (or Unit) | | | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | | | Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | | | | April (April 1, 2025 April 30, 2025) | | | - | | | | - | | | | - | | | $ | 9,939,556 | | | | May (May 1, 2025 May 31, 2025) | | | - | | | | - | | | | - | | | $ | 9,939,556 | | | | June (June 1, 2025 June 30, 2025) | | | - | | | $ | - | | | | - | | | $ | 9,939,556 | | | | Total | | | - | | | $ | - | | | | - | | | $ | 9,939,556 | | | | (1) | On January 20, 2025, the Companys board of directors authorized the Companys entry into a program to repurchase up to $10 million of shares of the Companys Common Stock, as previously announced in the Companys Current Report on Form 8-K filed with the SEC on January 22, 2025. The board of directors authorization to conduct such a repurchase program expires on January 20, 2027. | | **ITEM 6. [Reserved]** **ITEM 7. Managements Discussion and Analysis of Financial Condition and Results of Operations** ** *The following discussion should be read in conjunction with our consolidated financial statements and the related notes contained elsewhere in this Annual Report on Form 10-K and in our other Securities and Exchange Commission filings. The following discussion may contain predictions, estimates, and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under Risk Factors and elsewhere in this Annual Report on Form 10-K. These risks could cause our actual results to differ materially from any future performance suggested below.* **** **Overview** As stated in our corporate mission, we are committed to delivering superior products that challenge industry norms, with the goal of delivering an unmatched customer and adult consumer experience. In achieving this, risk reduction is central to our mission, and we aim to improve the lives of our consumers through cutting-edge research and development. Our technology platforms look to reduce youth access to vaping products, which in turn, will facilitate our ability to provide adult consumers with the products they desire. We are engaged in the research and development, design, commercialization, sales, marketing and distribution of branded and non-branded vaping hardware products in both the nicotine and cannabis spaces. Vaping refers to the practice of inhaling and exhaling the vapor produced by an electronic vaping device. These products are sold into the global nicotine and cannabis markets in the form of e-cigarettes or cartridges filled with oils by our customers, respectively. 39 We sell our e-cigarette (or nicotine) products globally, in markets where we are legally permitted to do so. To date, our nicotine products are marketed under the Aspire brand name and are sold primarily through our expansive distribution network. However, we are expanding our international presence via the launch of nicotine products under the Ispire platform. These products have started to be launched under licensing arrangements with the owners of selected partner brands. We currently sell our cannabis vaping hardware in the United States, Canada, and South Africa. However, we are continuing to develop our sales network across Europe, South America, and other regions in preparation for legalization in these markets. Our cannabis products are sold under the Ispire brand name, primarily on an ODM basis to other cannabis vapor companies including multi and single-state operators, brand owners and co-packers. ODM generally involves the design and customization of the core products to meet each brands unique image and needs. Our hardware products are sold by our customers under their own brand names. We do not touch the cannabis plant in the production and sale of our hardware products and thus are not subject to the specific cannabis-related regulatory and taxation provisions of the industry (e.g., IRS Code Section 280E). Since our initial public offering in April 2023, we have completed three fundraising rounds. The first was executed as part of our initial public offering, from which we raised approximately $18.3 million after underwriting and other offering expenses. In June 2023, we raised net proceeds of approximately $7.4 million, after placement agent and offering expenses, from the private placement of our Common Stock to three investors. In March 2024, we raised net proceeds of approximately $10.6 million, after placement agent fees and offering expenses, through a public offering of our Common Stock priced at $6.00 per share. We used the net proceeds from this offering in connection with the establishment and operation of our manufacturing facility in Malaysia, the funding of our joint venture with Touch Point Worldwide Inc. d/b/a/ Berify and Chemular Inc. and for working capital and general corporate purposes, including research and development. **Regulatory Risks** The sale of nicotine and cannabis products is subject to regulations worldwide. Many countries prohibit the sale of any cannabis products, and many countries have regulations relating to nicotine products, with a particular emphasis on underage sales. We work closely with our various global distribution partners to help ensure our nicotine products comply with local regulations (e.g., packaging, ingredient disclosure, health warnings, etc.). Changes in the regulatory environment can be enacted swiftly and may lead to our products becoming non-compliant in one or more international markets. This regulatory scenario may severely disrupt our business in these markets while we resolve the deficiencies (if possible) with the current product offering. **** **E-cigarette regulation** Regulation regarding e-cigarettes varies across countries, from limited regulation to a total ban. The legal status of e-cigarettes is currently pending in many countries. As e-cigarettes have become more and more popular recently, many countries are considering imposing more stringent law and regulations to regulate this market. Changes in existing law and regulations and the imposition of new laws or regulations in countries and regions that our major customers are in may adversely affect our business. Please see the sections titled Item 1. Business Regulation and Item 1A. Risk Factors above for our robust discussion of this topic. **Accounts Receivable** Our business relies on the collection of accounts receivable from our customers in a timely manner to maintain liquidity and support our ongoing operations. The balance of the allowance for credit losses was $18.0 million and $5.9 million at June 30, 2025 and 2024, respectively. Our failure or inability to collect accounts receivable when due results from a number of factors, including (i) our customers failure to pay as a result of adverse economic conditions affecting the customers cash flow; (ii) our failure to implement effective collection efforts; and (iii) disputes over contract terms, product quality or delays in delivery. Due to federal status of cannabis and the uncertainty of adverse economic conditions in cannabis industry, the company has focused more on nicotine business in the past year. Although we may implement strategies to mitigate these risks, there can be no assurance that such measures will be entirely effective, and we may continue to incur write-offs of accounts receivable, which may impair our ability to operate profitably. 40 **Key Factors that Affect Our Results of Operations** We believe the following key factors may affect our financial condition and results of operations: | | The effect of legislation and regulations affecting non-combustable nicotine products and cannabis vaping products. | | | | If we elect to market nicotine vaping products in the United States, our ability to obtain regulatory approval to market additional nicotine vaping products in the United States and the significant cost of seeking such approval. | | | | Our ability to develop and market nicotine and cannabis vaping products to meet the changing tastes of adult consumers. | | | | The effects of competition. | | | | The development of an international market for cannabis vaping products, which is presently primarily limited to certain states in the United States. | | **Results of Operations** The following table sets forth a summary of our consolidated statements of operations and comprehensive income for the years ended June 30, 2025 and 2024 (dollars in thousands except per share amounts). | | | Years Ended June 30, | | | | | | 2025 | | | 2024 | | | | | | | | | % of Revenue | | | | | | % of Revenue | | | | Revenue | | $ | 127,494 | | | | 100.0 | % | | $ | 151,909 | | | | 100.0 | % | | | Cost of revenue | | | (104,845 | ) | | | (82.2 | )% | | | (122,126 | ) | | | (80.4 | )% | | | Gross profit | | | 22,649 | | | | 17.8 | % | | | 29,783 | | | | 19.6 | % | | | Operating expenses | | | (60,499 | ) | | | (47.5 | )% | | | (43,677 | ) | | | (28.8 | )% | | | Loss from operations | | | (37,850 | ) | | | (29.7 | )% | | | (13,894 | ) | | | (9.1 | )% | | | Other(loss) income, net | | | (187 | ) | | | (0.1 | )% | | | 409 | | | | 0.3 | % | | | Loss before income taxes | | | (38,037 | ) | | | (29.8 | )% | | | (13,486 | ) | | | (8.9 | )% | | | Income taxes | | | (1,204 | ) | | | (0.9 | )% | | | (1,282 | ) | | | (0.8 | )% | | | Net loss | | | (39,241 | ) | | | (30.8 | )% | | | (14,768 | ) | | | (9.7 | )% | | | Other comprehensive (loss) income | | | (167 | ) | | | (0.1 | )% | | | 221 | | | | 0.1 | % | | | Comprehensive loss | | | (39,408 | ) | | | (30.9 | )% | | | (14,546 | ) | | | (9.6 | )% | | | Net loss per ordinary share (basic and diluted) | | $ | (0.69 | ) | | | | | | $ | (0.27 | ) | | | | | | | Weighted ordinary shares outstanding | | | 56,853,552 | | | | | | | | 54,812,900 | | | | | | | 41 **Revenue** **** The following table sets out the breakdown of our revenue percentage by region based on information provided to us by our distributors. | | | For the yearended June 30, | | | | | | 2025 | | | 2024 | | | | Europe | | | 58.1 | % | | | 43.0 | % | | | North America (the U.S. and Canada) | | | 25.5 | % | | | 41.5 | % | | | Asia Pacific (excluding PRC) | | | 9.6 | % | | | 11.6 | % | | | Others | | | 6.8 | % | | | 3.9 | % | | | Total | | | 100.0 | % | | | 100.0 | % | | Our revenue decreased by $24,414,387, or 16.1%, from $151,908,691 for the year ended June 30, 2024, to $127,494,304 for the year ended June 30, 2025. The decrease in revenue is the combined effect of (i) decreases in product sales in the United States of $30.5 million from $63.1 million for the year ended June 30, 2024, to $32.6 million for the year ended June 30, 2025, (ii) decreases in product sales in the Asia Pacific (excluding PRC) of $5.3 million from $17.6 million for the year ended June 30, 2024, to $12.3 million for the year ended June 30, 2025, (iii) increases in sales of vaping products in Europe of $8.8 million from $65.3 million for the year ended June 30, 2024 to approximately $74.1 million for the year ended June 30, 2025, and (iv) increases in sales of vaping products in Africa and South America of $2.5 million from $6.0 million for the year ended June 30, 2024 to approximately $8.5 million for the year ended June 30, 2025. **** **Cost of Revenue** Cost of revenue mainly consists of cost of purchases of vaping products, that are mostly purchased from Shenzhen Yi Jia. Cost of revenue decreased by $17,281,612, or 14.2%, from $122,126,245 for the year ended June 30, 2024, to $104,844,633 for the year ended June 30, 2025. The decrease in cost of revenue is in line with decrease in sales. **** **Gross Profit** The following tables show the revenue, cost of revenue and gross profit of our products (dollars in thousands). | Year Ended June 30, 2025 | | | | Revenue | | | Cost of revenue | | | Gross profit | | | Gross profit % | | | | $ | 127,494 | | | $ | 104,845 | | | $ | 22,649 | | | | 17.8 | % | | | Year Ended June 30, 2024 | | | | Revenue | | | Cost of revenue | | | Gross profit | | | Gross profit % | | | | $ | 151,909 | | | $ | 122,126 | | | $ | 29,782 | | | | 19.6 | % | | Gross profit decreased by $7,132,775, or 23.9%, from $29,782,446 for the year ended June 30, 2024, to $22,649,671 for the year ended June 30, 2025, while our gross margin decreased from 19.6% to 17.8%. The decrease in gross margin was primarily due to changes in product mix with less higher margin products being sold during the year ended June 30, 2025. **** 42 **** **Operating Expenses** Operating expenses increased by $16,822,945 or 38.5%, from $43,676,585 for the year ended June 30, 2024, to $60,499,530 for the year ended June 30, 2025. Our sales and marketing expenses mainly consist of employee salaries and benefits, marketing expenses, travel expenses, and other miscellaneous expenses. Sales and marketing expenses increased by $1,830,660, or 27.7%, from $6,608,724 for the year ended June 30, 2024, to $8,439,384 for the year ended June 30, 2025. The increase in sales and marketing expenses was primarily due to an increase in payroll from marketing personnel of $0.9 million, increase in brand advertising activities of $0.4 million and increase in marketing related professional service fee of $0.3 million. Credit loss expenses increased by $16,019,060, or 266.3%, from $6,015,752 for the year ended June 30, 2024, to $22,034,812 for the year ended June 30, 2025. The increase is due to longer time in collection of customer payments than expected and more allowance for credit losses were provided. Our general and administrative expenses (excluding the credit loss expenses) mainly consist of employees salaries and benefits, rental expense, professional fees, stock-based compensation expenses and other administrative expenses. General and administrative expenses decreased by $1,026,775, or 3.3%, from $31,052,109 for the year ended June 30, 2024, to $30,025,334 for the year ended June 30, 2025. The decrease was primarily due to (i) a decrease of $0.5 million of stock-based compensation expense due to cutting headcount in streamline operations by North America, and (ii) decrease in research and development expenses of $0.4 million by North America. **** **Other (expense) income, net** Other (expense) income, net includes interest income, interest expense, exchange loss, net and other income (expense). Interest income decreased by $278,255, from $365,251 for the year ended June 30, 2024, to $86,996 for the year ended June 30, 2025. The decrease in interest income is mainly due to decrease in interest rate and less interest income from bank deposits. Other (expense) income mainly consists of interest expense, loss on equity method investment, credits from company credit card, rental income and other miscellaneous expenses. Other (expense) income decreased by $300,494, or 265.0%, from net income of $113,405 for the year ended June 30, 2024 to net expense of $187,089 for the year ended June 30, 2025. The decrease was mainly due to increase in interest expense of $0.2 million. Exchange loss, net increased by $16,277, or 23.2%, from net exchange loss of $70,293 for the year ended June 30, 2024 to net exchange loss of $86,570 for the year ended June 30, 2025. As a result of these factors, total other (expense) income, net decreased by $595,026, from other income, net of $408,363 for the year ended June 30, 2024 to other expense, net of $186,663 for the year ended June 30, 2025. **** **Income Taxes** We account for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provisions of ASC 740-10 prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. For the years ended June 30, 2025 and 2024, we did not incur any interest or penalties related to an uncertain tax position. We do not believe that there were any uncertain tax positions as of June 30, 2025 and 2024. Income taxes decreased by $78,342 or 6.1%, from $1,282,046 for the year ended June 30, 2024 to $1,203,704 for the year ended June 30, 2025. We had a consolidated net loss for both year ended June 30, 2025 and 2024, which was the combined effect of a profit by Aspire Science, a loss by Aspire North America and Ispire Malaysia. The profit from Aspire Science resulted in a current tax expense. The increase in valuation allowance reflects our view that the taxable income in the future will not be sufficient to utilize the carryforward loss. **** 43 **** **Net Loss** As a result of the foregoing, net loss increased by $24,472,404, from net loss of $14,767,822, or loss of $0.27 per share (basic and diluted), for the year ended June 30, 2024 to a net loss of $39,240,226, or loss of $0.69 per share (basic and diluted), for the year ended June 30, 2025. **** **Liquidity and Capital Resources** The following table summarizes our changes in working capital from June 30, 2024 to June 30, 2025 (dollars in thousands). | | | June 30, 2025 | | | June 30, 2024 | | | Change | | | % Change | | | | Current Assets | | $ | 72,908 | | | $ | 102,572 | | | $ | (29,664 | ) | | | (28.9 | )% | | | Current Liabilities | | | 72,540 | | | | 85,991 | | | | (13,451 | ) | | | (15.6 | )% | | | Working Capital | | | 368 | | | | 16,581 | | | | (16,213 | ) | | | (97.8 | )% | | The following table sets forth information as to consolidated cash flow information for the years ended June 30, 2025 and 2024 (dollars in thousands). | | | Year Ended June 30, | | | Increase | | | | Consolidated cash flow data: | | 2025 | | | 2024 | | | (Decrease) | | | | Net cash used in operating activities | | $ | (7,374 | ) | | $ | (18,302 | ) | | $ | 10,928 | | | | Net cash (used in) provided by investing activities | | | (5,199 | ) | | | 2,990 | | | | (8,189 | ) | | | Net cash provided by financing activities | | | 1,853 | | | | 10,083 | | | | (8,230 | ) | | | Net decrease in cash | | $ | (10,720 | ) | | $ | (5,229 | ) | | $ | (5,491 | ) | | Net cash flow used in operating activities for the year ended June 30, 2025, of $7.4 million, reflected our net loss of $39.2 million, adjusted primarily as follows: add back of impairment of account receivable of $22.0 million, add back of share-based compensation expense of $5.6 million, add back of right-of-use assets amortization of $1.5 million, an increase in accounts payable of $10.8 million, an increase in contract liabilities of $2.6 million, offset by increase in accounts receivable of $9.3 million, and increase in payment made for operating lease liabilities of $1.4 million. Net cash flow used in operating activities for the year ended June 30, 2024 of $18.3 million, reflected our net loss of $14.8 million, adjusted primarily as follows: add back of impairment of account receivable of $6.0 million, add back of shared based payment expenses of $6.4 million, add back of depreciation and amortization of $0.5 million, an increase in accounts payable of $17.9 million, an increase in accrued liabilities and other payables of $2.5 million, a decrease in inventory of $0.9 million, a decrease in prepaid expenses and other current assets of $2.4 million, an increase in contract liabilities of $1.2 million offset by an increase in accounts receivable of $41.3 million. Net cash flow used in investing activities for the year ended June 30, 2025, of $5.2 million reflected primarily the repayment of acquisition payable of $3.2 million, purchase of property, plant and equipment of $1.1 million and acquisition of intangible assets of $0.9 million. Net cash flow generated from investing activities for the year ended June 30, 2024, of $3.0 million reflected primarily maturity of short term investment of $9.1 million offset by purchase of cost other investment of $2.0 million, purchase of property, plant and equipment of $2.0 million, acquisition of intangible assets of $1.2 million and purchase of equity method investment of $1.0 million. Net cash flow generated from financing activities for the year ended June 30, 2025, of $1.9 million reflected primarily proceeds from borrowing of $2.1 million, offset by repayment of borrowing of $0.2 million. Net cash flow generated by financing activities for the year ended June 30, 2024, of $10.1 million reflected primarily proceeds from our equity offering of $12.3 million, offset by payment of equity offering costs of $1.5 million. 44 To date, we have financed our operations primarily through cash flow from operations and working capital loans from our major stockholders, who are our co-chief executive officer and his wife, when necessary. We plan to support our future operations primarily from cash generated from our operations and cash on hand. As of the date of this Annual Report, we believe that our current cash and cash flows provided by operating activities, and the net proceeds from our equity offerings and borrowing will be sufficient to meet our working capital needs in the next 12 months. If we experience an adverse operating environment or incur unanticipated capital expenditure requirements, or if we decide to accelerate our growth, then additional financing may be required. We cannot give any assurance that additional financing will not be required or, if required, would be available on favorable terms if at all. Such financing may include the use of additional debt or the sale of additional equity securities. Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in dilution to our stockholders which may be substantial. The cash held at a bank by our Hong Kong operating subsidiary can be freely transferred within our corporate structure without restriction. If our Hong Kong operating subsidiary were to incur additional debt on its own behalf in the future, the instruments governing the debt may restrict the ability of our operating subsidiaries to transfer cash to our U.S. investors. **** **Contractual Obligations** **** As of June 30, 2025 and 2024, we had contract liabilities of $4,861,250 and $2,218,166, respectively. These liabilities are advance deposits received from customers after an order has been placed. We expect all of the contract liabilities to be settled in less than one year. We have operating lease arrangements for office and factory premises for Hong Kong, California and Malaysia, which are treated as right-of-use assets. These leases typically have terms of two to five years. Leases with an initial term of 12 months or less are not presented as right-of-use assets and are expensed over the lease term. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. **** The balances for the right-of-use assets and lease liabilities where we are the lessee are presented as follow: | | | As of | | | As of | | | | | | June30, 2025 | | | June30, 2024 | | | | Operating lease right-of-use assets | | $ | 5,181,521 | | | $ | 3,579,140 | | | | Impairment | | | (151,516 | ) | | | - | | | | Total | | $ | 5,030,005 | | | $ | 3,579,140 | | | | | | | | | | | | | | | Operating lease liabilities current | | $ | 1,838,815 | | | $ | 1,207,832 | | | | Operating lease liabilities non-current | | | 3,267,522 | | | | 2,194,094 | | | | Total | | $ | 5,106,337 | | | $ | 3,401,926 | | | As of June 30, 2025, the maturities of our lease liabilities (excluding short-term leases) are as follows: | | | As of June30, 2025 | | | | July 1, 2025 to June 30, 2026 | | $ | 2,110,799 | | | | July 1, 2026 to June 30, 2027 | | | 1,583,109 | | | | July 1, 2027 to June 30, 2028 | | | 777,402 | | | | July 1, 2028 to June 30, 2029 | | | 696,727 | | | | July 1, 2029 to June 30, 2030 | | | 464,484 | | | | Total future lease payments | | | 5,632,521 | | | | Less: imputed interest | | | (526,184 | ) | | | Total lease liabilities | | $ | 5,106,337 | | | As of June 30, 2025, we have a borrowing balance of $1,952,127 outstanding. The maturities of our borrowing are as follows: | | | As of June30, 2025 | | | | July 1, 2025 to June 30, 2026 | | | 1,146,766 | | | | July 1, 2026 to June 30, 2027 | | | 805,361 | | | | Total borrowing | | | 1,952,127 | | | As of June 30, 2025, we recorded an unpaid $5.8 million consideration in accrued liabilities and other payables on the consolidated balance sheet for a committed investment of $9 million into a joint venture investment named IKE Tech LLC. 45 **Trend Information** Other than as disclosed elsewhere in this Form 10-K, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition. **Seasonality** Seasonality does not materially affect our business or the results of our operations. **** **Off-Balance Sheet Arrangements** We do not have off-balance sheet arrangements. **** **Critical Accounting Estimates** ** *Revenue recognition* We sell our vaping products to customers and recognize revenue in accordance with the guidance of ASC 606,Revenue from Contracts withCustomers. In certain sales contracts, a right of return is offered. With a right of return, a customer is given the right to return the products if they are not satisfied with the product, and a credit would be given. The return rate historically is low, and we recognize a sales return reserve based on historical return rate and apply the rate on sales for the latest three months, as it is unlikely to have sales return after the three-month period. Should there be a change in our estimate of the return rate, or a change in the periods in which we expect return, the return reserves would be affected, and our revenue would be affected as well. *Allowance for credit losses* We adopted Accounting Standards Update 2016-13 Financial Instruments Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments on July 1, 2023, under the modified retrospective method of adoption. In establishing the required allowance for credit losses, we consider historical collection experience, aging of the receivables, economic environment, and the credit history and financial conditions of the customers. We review its receivables on a regular basis to determine if the allowance is adequate and adjusts the allowance when necessary. Delinquent account balances are written off against allowance for credit losses after management has determined that the likelihood of collection is not probable. *Recent Accounting Pronouncements* The discussion of the recent accounting pronouncements contained in our consolidated financial statements, Summary of Significant Accounting Policies, is incorporated herein by reference. **** **Emerging Growth Company** As a company with less than $1.235 billion in revenue for our last fiscal year, we qualify as an emerging growth company pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth companys internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. We have elected to take advantage of such exemptions. We could lose Emerging Growth Company status if we become a Large Accelerated Filer. This would occur if we had a public float of $700 million or more, as of the last business day of our most recently completed second fiscal quarter.**** **** **ITEM 7A. Quantitative and Qualitative Disclosure About Market Risk** As a smaller reporting company we are not required to provide information required by this Item. **ITEM 8. Financial Statements and Supplementary Data** The financial statements begin on page F-1 and are incorporated in their entirety into this Item 8. 46 **** **ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure** None. **ITEM 9A. Controls and Procedures** **** **Evaluation of Disclosure Controls and Procedures** Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act). Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective due to the material weaknesses in internal controls over financial reporting noted below. **** **Managements Responsibility for Internal Controls over Financial Reporting** Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined inRules 13a -15(f) under theExchange Act. Our internal control was designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that: | (1) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company, | | | (2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and | | | (3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements. | | **Inherent Limitations of Internal Control over Financial Reporting** Because of its inherent limitations, internal control over financial reporting may not prevent or detect all errors or misstatements in our financial statements. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. **Managements Report of Internal Control over Financial Reporting** Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined inRules 13a-15(f) and15d-15(f) under theExchange Act. Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2025 under the supervision and participation of our management, including our Chief Executive Officer and Chief Financial Officer. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control Integrated Framework (2013). Based on that assessment, management concluded that, the Companys internal control over financial reporting was not effective as of June 30, 2025, due to the material weaknesses described below. 47 **Material Weaknesses** We identified the following material weaknesses in our internal control over financial reporting as of June 30, 2025. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the issuing companys annual or interim financial statements will not be prevented or detected on a timely basis. | | 1). | The lack of controls needed to enable us to evaluate significant estimates, including (i) the sufficiency of inventory reserve for slow-moving inventories and (ii) the credit loss history and use of it to evaluate the sufficiency of credit loss reserve for accounts receivable under the Topic 326; | | | | 2). | The lack of sufficient personnel with appropriate levels of accounting knowledge and experience to address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP, which resulted in restatements of certain unaudited/audited financial statements prior to the fiscal year ended June 30, 2025; | | | | 3). | The lack of IT general controls regarding cyber security governance, logical access security and service organization management. | | Therefore, management determined that we did not maintain effective internal control over financial reporting as of June 30, 2025. **Remediation Plan for the Material Weaknesses**: We are committed to continually improving our internal controls over financial reporting. Subsequent to June 30, 2024, we appointed a new chief financial officer and a vice president of finance, as part of our program to develop and implement effective internal controls over financial reporting. Additionally, management is currently working on the plan to address the material weaknesses noted above including, but not limited to the following: | | 1). | Perform scoping and risk assessment of material financial statement line items and identify key processes and systems including documentation of key processes and internal controls. | | | | 2). | Recruit additional full-time employees and external consultants with extensive knowledge of U.S. GAAP within our finance and accounting department, and assess the design and operational effectiveness of the internal controls over financial reporting, including the remedial actions implemented. | | | | 3). | Strengthen our IT control environment and procedures by engaging third party expertise in introducing and implementing the required changes to the overall IT environment and required upgrades to our systems. | | The material weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period and management has concluded, through testing, that these controls are operating effectively. As we continue to evaluate and work to improve our internal control over financial reporting, we may decide that additional measures are necessary to address these identified control deficiencies. **Changes in Internal Control over Financial Reporting** During the year ended June 30, 2025, we developed and commenced the implementation of improvements to internal controls over financial reporting, and we are continuing to develop and implement internal controls over financial reporting particularly in view of the material weakness described above. **** **Item 9B. Other Information** No director or Section 16 officer adopted or terminated a trading arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025. **** **Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections** Not Applicable. 48 **** **PART III** **ITEM 10. Directors, Executive Officers and Corporate Governance** Listed below are the names of our directors and executive officers, their ages as of the date of this Annual Report, their positions held and the year they commenced service with us. | Name | | Age | | Position/Title | | | Tuanfang Liu3 | | 53 | | Co-Chief Executive Officer and Chairman | | | Michael Wang | | 62 | | Co-Chief Executive Officer and President of Aspire North America | | | Jie Yu | | 41 | | Chief Financial Officer | | | Steven Przybyla | | 40 | | Chief Legal Officer and Secretary | | | Jiangyan Zhu | | 50 | | Director | | | Christopher Robert Burch1,2,3 | | 58 | | Independent Director | | | Brent Cox1,2 | | 43 | | Independent Director | | | John Fargis1,2,3 | | 59 | | Independent Director | | | 1 | Member of the Audit Committee | | | 2 | Member of the Compensation Committee | | | 3 | Member Nominating and Corporate Governance Committee. | | **Tuanfang Liu**has been serving as our chairman of the board of directors and chief executive officer since our organization and co-chief executive officer since August 7, 2023. Mr. Liu has also served as chairman of the board and chief executive officer of Aspire Global, a position he has held since its organization. Mr. Liu also serves as chairman of Shenzhen Yi Jia since he founded the company in June 2010. He is responsible for our daily operations and research and development of the e-cigarette and cannabis vaporizer technology products. Mr. Liu has served as the vice-chairman of the European Union E-cigarette Association since 2019, vice-chairman and founding member of the Canada E-cigarettes Association since 2019, vice chairman of the China Electronics Chamber of Commerce since 2017, and executive vice-chairman and founder of the Shenzhen E-Vapor Industry Association since October 2017. He received Shenzhen High-level Professionals award in 2019. Mr. Liu holds doctorate degrees in business management from Victoria University School of Management in Switzerland and EuroPort Business School in the Netherlands, respectively. He has more than 14 years of experience in research and development of the e-cigarette products and quality control management. Mr. Liu is the spouse of Jiangyan Zhu. **** **Michael Wang**has been serving as co-chief executive officer since August 7, 2023, having served as our chief financial officer from our organization until August 7, 2023, and he has served as president of Aspire North America since its organization in 2020. Mr. Wang served chief financial officer of Aspire Global from August 2020 until his resignation in September 2022. Mr. Wang is an experienced chief executive officer, chief operating officer and president of various companies with leadership skills in profit and loss management, finance, human resources, products, technology, sales and operations. Mr. Wang has approximately 12 years of internet technology and e-commerce experience. From September 2018 through August 2020, he was the president, chief operating officer and co-chief executive officer of The Pharm/Sunday Goods (located in California and Arizona), a vertically integrated leader in the cannabis cultivation, processing, manufacturing, distribution, wholesale, and retail industry. Mr. Wang managed and transformed the cultivation, manufacturing and wholesale divisions. Mr. Wang was with Onestop Commerce, a leading e-commerce technology and service company, as president and chief operating officer from February 2013 to July 2015 and as chief executive officer from July 2015 to June 2018. Onestop Commerce managed omni-channel-commerce for major lifestyle brands and retailers. From May 2005 through June 2010, he was the chief operating and fulfillment officer of Zazzle, a leader in online customization and personalization service. He started his career in 1992 at Honeywell and also worked at Technicolor, ESS Technology and Vitec Group. Mr. Wang received bachelor of science and master of science degrees in aerospace engineering in 1983 and 1985 respectively, from the Beijing University of Aeronautics & Astronautics also known as Beihang University. In 1987, he received a master of science degree in systems engineering from Oakland University in Rochester, Michigan. In 1992, Mr. Wang received an MBA in Finance and General Management from the University of Chicagos Booth School of Business. **Jie (Jay) Yu**was appointed our Chief Financial Officer on May 13, 2025. Prior to his appointment, Mr. Yu served as the Companys Vice President of Finance since June 2023 and is a seasoned accounting professional with extensive experience in public accounting and audit roles. Mr. Yu began his career at KPMG in 2008 as an auditor, before holding public accounting roles at Crowe Horwath from 2009 to 2012 and Dahua Moore Certified Public Accountants from 2012 to 2015. Mr. Yu also served as Chief Financial Officer of MTI Environmental Group from 2016 to 2018 and Luokung Technology Corp. (OTCMKTS: LKCOF) from 2018 to 2023. He holds a Bachelor of Commerce in finance and accounting, as well as a postgraduate degree, from the University of Auckland. 49 **Steven P. Przybyla** has served as our chief legal officer and secretary since September 1, 2023. Mr. Przybyla has over 10 years of regulated cannabis industry experience and a nearly a decade of experience in nicotine/tobacco product regulation. Mr. Przybyla currently serves as the Companys appointed board member for its IKE Joint Venture and has served in this capacity since April 2024. From July 2020 to April 2023, Mr. Przybyla was General Counsel and Corporate Secretary, and then President of Hemp/Cannabis, at 22nd Century Group. Inc., a plant biotechnology company. While at 22nd Century, Mr. Przybyla helped to secure the only Modified Risk Tobacco Product approval for a combustible cigarette authorized by the U.S. Food and Drug Administration to date. Prior to that, he was President of the Medical Division at Jushi, Inc., a multi-state cannabis operator, from 2018 to 2020, General Counsel at Dent Neurologic Group LLP from 2016 to 2018 and General Counsel at Seneca Development Corporation from 2015 to 2016. Early in his career, he worked as an associate at Phillips Lytle LLP. Mr. Przybyla received his undergraduate degree in Economics from Washington & Lee University and his Juris Doctor from Columbia Law School. **Jiangyan Zhu** has been serving as our director since inception. Ms. Zhu is one of the founders of Aspire Global and is a director of Aspire Global, and, since 2013, she has served as vice president of finance of Shenzhen Yi Jia, where she is responsible for financial management, assisting in human resources management and establishing and improving the automated office system. Ms. Zhu holds a bachelors degree in business management from Jiangxi University of Technology. She also holds a Business Management certificate from the College of Continuing Education Graduate School of Shenzhen Tsinghua University. Ms. Zhu is the spouse of Mr. Tuanfang Liu. **** **Christopher Robert Burch** has been serving as a director since July 2023. He has worked in the finance and venture capital industries for more than 15 years. Currently, Mr. Burch is consulting for Bioglobal Inc., a biopesticides company. From September 2020 to May 2022, Mr. Burch served as Chief Financial Officer at Braun Bio-Technology (Shan Dong) Co. Ltd. in China where he was responsible for fundraising and corporate strategies. Prior to that, from January 2020 to September 2020, Mr. Burch served as Chief Financial Officer at Waton Corporation Limited (NASDAQ: WTF) where he was responsible for fundraising, financial planning, cash flow management, investor relations, banking relations, securities licensing, and strategy direction. From July 2019 to November 2019, Mr. Burch worked at Zhejiang Panshi Information Technology Co. Ltd. as a Vice President responsible for corporate strategic investment. From March 2017 to July 2019, Mr. Burch served as a Managing Director at Feiyang Group Co. Ltd. in Hong Kong and China where he was responsible for fundraising and providing advisory services to the sector. Prior to joining us, from October 2008 to October 2014 Mr. Burch served on the board of directors of KeenHigh Technologies Limited, listed on Taiwans Emerging Stock Market (TW:3651). In 2006, Mr. Burch received a Master of Business Administration with a focus on technology management from Tsinghua University. In 1993, Mr. Burch received a bachelors degree in business administration with concentration in decision sciences from Georgia State University. In 1991, Mr. Burch received a bachelors degree in business administration with concentration in finance from University of Georgia. We believe that Mr. Burch is well qualified to serve as a member of our board of directors because of his experience in finance, operations of public companies and corporate fundraising and strategy. **** **Brent Cox** has been serving as a director since April 2023. He also serves as the co-founder and managing partner of The Inception Companies, a private investment firm, a position he has held since 2016. From September 2008 to April 2016, he served as a principal investor of the Yucaipa Companies, a Los Angeles, California based private equity firm where he was responsible for sourcing, analyzing and executing investment opportunities, structuring financing for investments and monitoring the performance and strategic initiatives of its portfolio companies. From 2006 to 2008, Mr. Cox served as an investment banking analyst in the Leveraged Finance Group of Jefferies & Co. a multinational independent investment bank and financial services company. Mr. Cox received a bachelor of science degree from the University of Southern California. Mr. Cox previously served on the boards of Medmen Enterprises Inc. (OTC: MMNFF), The Pharm, LLC, Pacific Dutch Group, LLC, and has also served as a board observer for Soho House & Co Inc. (NYSE: SHCO), Americold Realty Trust (NYSE: COLD), Versacold International Corp, Stephen Webster Limited, Garrard & Co. Limited, and Eimskipaflag slands hf. (IC: EIM). We believe Mr. Cox is well-qualified to serve as a member of our board of directors due to his experience in investment banking and prior corporate governance experience having served on corporate boards of directors. **** **John Fargis** has been serving as a director since April 2023. He is the co-founder and principal of BYG Advantage since June 2014, a Beijing-based platform that outsources business development, sales acceleration bridging best in class technology into the Asia Pacific region. Clients include Hashicorp, Trustonic, Tomorrow.io, and EF. Its services include market analysis, market entry, market acceleration, government relations and special vehicle creation across the region. Mr. Fargis founded and runs Dustybrine LLC, a market entry consulting firm in New York State. Mr. Fargis has been serving as the professor of management, strategy, and emerging markets at Hult International Business School since February 2014, where he teaches courses including strategy, management, emerging markets, leadership, operations and big data. Mr. Fargis has been also serving as the Adjunct Professor of Strategy and China History since January 2014 in Shanghai, China. Mr. Fargis has been serving as the principal Asia-Pacific of Hortonworks since 2014. From March 2010 to December 2013, Mr. Fargis served as the executive vice president and general manager at Kaseya where he incorporated, staffed and ran offices for Kaseya in Beijing, Seoul, Tokyo and Hong Kong. The company was purchased by Insight Venture Partners in June 2013. From 2007 to April 2010, Mr. Fargis served as the vice president sales and general manager of Asia of On2 Technologies which was purchased by Google in February 2010. From August 2005 to October 2007, Mr. Fargis served as the general manager Asia Pacific of Global IP Solutions (GIPS), where he oversaw sales and business development strategy for Global IP Sound (GIPS) in Asia. GIPS provides premiere quality speech processing technology for Voice Over IP (VOIP) networks, and its software enables numerous clients including application providers such as Skype, Google, AOL, Tencent, etc. From January 2004 to July 2005, Mr. Fargis served as the chief executive officer of SiMa Systems, where he oversaw funding and alliance strategy and general management for this digital clipboard solutions company. In 1998, Mr. Fargis received his master of arts in law and diplomacy degree in international consulting at The Fletcher School of Law and Diplomacy. In 1992, Mr. Fargis received his masters degree in special education at Hunter College. In 1988, Mr. Fargis received his bachelors degree in medieval studies at Wesleyan University. We believe Mr. Fargis is well-qualified to serve as a member of our board of directors due to his experience in business strategy, emerging markets, and his contacts and relationships. 50 **Family Relationships** Tuanfang Liu, our chairman and chief executive officer, and Jiangyan Zhu, one of our directors, are married. Other than this relationship, there are no other direct family relationships among any of our directors or executive officers. **** **Section 16(a) Beneficial Ownership Reporting Compliance** Section 16(a) of the Exchange Act requires our directors, executive officers and ten percent stockholders to file initial reports of ownership and reports of changes in ownership of our Common Stock with the Commission. Directors, executive officers and ten percent stockholders are also required to furnish us with copies of all Section 16(a) forms that they file. All of our officers, directors and 10% stockholders have filed the required ownership reports. **Director Independence** The Nasdaq Marketplace Rules require a majority of a listed companys board of directors to be comprised of independent directors within one year of listing. In addition, the Nasdaq Marketplace Rules require that, subject to specified exceptions, each member of a listed companys audit, compensation and nominating and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act. Under Rule 5605(a)(2) of the Nasdaq Marketplace Rules, a director will only qualify as an independent director if, in the opinion of our board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3 of the Exchange Act, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. Our board of directors has reviewed the composition of our board of directors and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our board of directors has determined that each of Brent Cox, John Fargis and Christopher Robert Burch is an independent director as defined under Rule 5605(a)(2) of the Nasdaq Marketplace Rules. Because we are a controlled corporation, we have included our chief executive officer, who is not an independent director, as a member and chair of the nominating and corporate governance committee. **** **Board Committees** Our board of directors has established three standing committees-audit, compensation, and nominating and corporate governance-each of which operates under a charter that has been approved by our board of directors. Copies of each committees charter are posted on the Investors section of our website, which is located at https://ispiretechnology.com/pages/investors#corporate-governance. Information contained on our website is not part of this Annual Report. Each committee has the composition and responsibilities described below. Our board of directors may from time to time establish other committees. *Audit Committee* Our Audit Committee consists of Brent Cox, John Fargis and Christopher Robert Burch, with Mr. Cox as chair. We have determined that each of these three directors satisfies the independence requirements of the Nasdaq Listing Rules and meet the independence standards under Rule 10A-3 under the Exchange Act. We have determined that Brent Cox and Christopher Robert Burch qualify as an audit committee financial expert. The Audit Committee oversees our accounting and financial reporting processes and the audits of our financial statements. The Audit Committee is responsible for, among other things: | | selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by the independent registered public accounting firm; | | | | reviewing with the independent registered public accounting firm any audit problems or difficulties and managements response; | | 51 | | reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; | | | | discussing the annual audited financial statements with management and the independent registered public accounting firm; | | | | reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures; | | | | annually reviewing and reassessing the adequacy of our Audit Committee charter; | | | | meeting separately and periodically with management and the independent registered public accounting firm; | | | | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and | | | | reporting regularly to the board. | | Our Audit Committee reviews all proposed related party transactions on an ongoing basis and any such transactions must be approved by the Audit Committee. The Audit Committee also approves certain pricing matters pursuant to our supply agreements with Shenzhen Yi Jia. In determining whether to approve a related party transaction, the Audit Committee considers, among other factors, the following factors to the extent relevant to the related party transaction: | | whether the terms of the related party transaction are fair to the Company and on the same basis as would apply if the transaction did not involve a related party; | | | | whether there are business reasons for us to enter into the related party transaction; | | | | whether the related party transaction would impair the independence of an outside director; | | | | whether the related party transaction or the approval of the related party transaction would present an improper conflict of interest for any director or executive officer, taking into account the size of the transaction, the overall financial position of the director, executive officer or the related party, the direct or indirect nature of the directors, executive officers or the related partys interest in the transaction and the ongoing nature of any proposed relationship, and any other factors the Audit Committee deems relevant; and | | | | any pre-existing contractual obligations. | | *Compensation Committee* Our Compensation Committee consists of Christopher Robert Burch, Brent Cox and John Fargis, with Brent Cox as chair. We have determined that each of these directors satisfies the independence requirements of the Nasdaq Listing Rules. The Compensation Committee assists the board in reviewing and approving the compensation structure, including all forms of compensation relating to our directors and executive officers. Tuanfang Liu, our co-chief executive officer may not be present at any committee meeting during which his compensation is deliberated upon. The Compensation Committee is responsible for, among other things: | | reviewing and approving, or recommending to the board for its approval, the compensation for our co-chief executive officers and other executive officers; | | | | reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; | | | | reviewing periodically and approving any incentive compensation or equity plans, programs or other similar arrangements; and | | | | selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that persons independence from management. | | 52 *Nominating and Corporate Governance Committee* Our Nominating and Corporate Governance Committee consists of Tuanfang Liu, Brent Cox and John Fargis, with Tuanfang Liu as chair. We have determined that Mr. Cox and Mr. Fargis satisfy the independence requirements of the Nasdaq Listing Rules. Because we are a controlled corporation, we have included Tuanfang Liu, our co-chief executive officer, who is not an independent director, as a member and chair of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee assists the board in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The Nominating and Corporate Governance Committee is responsible for, among other things: | | recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board; | | | | reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience, expertise, diversity and availability of service to us; | | | | selecting and recommending to the board the names of directors to serve as members of the Audit Committee and the compensation committee, as well as of the nominating and corporate governance committee itself; | | | | developing and reviewing the corporate governance principles adopted by the board and advising the board with respect to significant developments in the law and practice of corporate governance and our compliance with such laws and practices; and | | | | evaluating the performance and effectiveness of the board as a whole. | | **Meetings of the Board and Committees** Our independent directors were appointed, and the committees were formed, at the time of our initial public offering in April 2023. During the period from June 30, 2024 until June 30, 2025, our board of directors met telephonically ten times and also acted by unanimous written consent. During this period, the Audit Committee met five times, the nominating and corporate governance committee did not meet, and the compensation committee met three times. **** **Code of Conduct** Our board of directors has adopted a written code of conduct that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of the code and all disclosures that are required by law or Nasdaq Marketplace Rules concerning any amendments to, or waivers from, any provision of the code are available on our website at https://ispiretechnology.com/pages/investors#corporate-governance. Information contained on our website is not part of this Annual Report. **Insider Trading Policy** Our board of directors adopted our amended and restated Insider Trading Policy on August 27, 2024. A copy of our Insider Trading Policy is filed herewith as Exhibit 19.1 and is incorporated herein by reference. **** **Board Leadership Structure** Our board of directors has the ability to select the chairman of the board of directors and a chief executive officer in a manner that it considers to be in the best interests of our company at the time of selection. Currently, Tuanfang Liu and Michael Wang serve as our Co-Chief Executive Officers and Mr. Liu serves as chairman of the board of directors. We currently believe that this leadership structure is in our best interests. Additionally, three of our five members of our board of directors have been deemed to be independent by the board of directors, which we believe provides sufficient independent oversight of our management. Our board of directors, as a whole and also at the committee level, plays an active role overseeing the overall management of our risks. Our Audit Committee reviews risks related to financial and operational items with our management and our independent registered public accounting firm. Our board of directors is in regular contact with our co-chief executive officers, who report directly to our board of directors and who supervises day-to-day risk management. **Role of Board in Risk Oversight Process** Our board of directors believes that risk management is an important part of establishing, updating and executing on our business strategy. Our board of directors has oversight responsibility relating to risks that could affect the corporate strategy, business objectives, compliance, operations, and the financial condition and performance of our company. Our board of directors focuses its oversight on the most significant risks facing us and on our processes to identify, prioritize, assess, manage and mitigate those risks. Our board of directors receives regular reports from members of our senior management on areas of material risk to us, including strategic, operational, financial, legal and regulatory risks. While our board of directors has an oversight role, management is principally tasked with direct responsibility for management and assessment of risks and the implementation of processes and controls to mitigate their effects on us. 53 **Delinquent Section 16(a) Reports** Section 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock and other equity securities. These executive officers, directors, and greater than 10% beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a) forms filed by such reporting persons. Based solely on our review of such forms furnished to us and written representations from certain reporting persons, we believe that during the fiscal year ended June 30, 2025, all reports applicable to our executive officers, directors and greater than 10% beneficial owners were filed in a timely manner in accordance with Section 16(a) of the Exchange Act, except as set forth below: | | Jie Yu, our Chief Financial Officer, filed a late Form 3. | | **Amended and Restated Bylaws** On September 24, 2024, our Board by unanimous written consent voted to amend our bylaws and to restate our bylaws in their entirety with immediate effect. The amendment to our bylaws amends Section 2.03(a) to vest the power to call a special meeting of stockholders solely with our Board, in line with Section 7.01 of our certificate of incorporation. The full text of our amended and restated bylaws is filed as Exhibit 3.2 to this Annual Report and incorporated herein by reference. **ITEM 11. Executive Compensation** **Summary Compensation Table** The following table shows information regarding the compensation of the named executive officers during the fiscal years ended June 30, 2025 and 2024. | Name and Principal | | Fiscal Year Ending, | | | Salary | | | Bonus | | | Stock Awards | | | Option Awards | | | Non-Equity Incentive Plan Compensation | | | Non-Qualified Deferred Compensation Earnings | | | All Other Compensation | | | Totals | | | | Position | | June 30 | | | ($) | | | ($) | | | ($)(4) | | | ($)(4) | | | ($) | | | ($) | | | ($)(5) | | | ($) | | | | Tuanfang Liu, Co-CEO(1)(2) | | | 2025 | | | | 246,476 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 246,476 | | | | | | | 2024 | | | | 245,568 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 245,568 | | | | Michael Wang, co-CEO(2) | | | 2025 | | | | 597,159 | | | | 400,000 | | | | 1,356,936 | | | | (5,537,903 | ) | | | | | | | | | | | | | | | (3,183,808 | ) | | | | | | 2024 | | | | 350,000 | | | | | | | | 2,760,001 | | | | 5,537,903 | | | | | | | | | | | | | | | | 8,647,904 | | | | Tirdad Rouhani, President(3) | | | 2025 | | | | 277,778 | | | | 100,000 | | | | 542,773 | | | | | | | | | | | | | | | | 68,333 | | | | 988,884 | | | | | | | 2024 | | | | 297,500 | | | | 300,000 | | | | 1,134,509 | | | | 1,661,371 | | | | | | | | | | | | | | | | 3,393,380 | | | | Steven Przybyla, Chief Legal Officer and Secretary | | | 2025 | | | | 398,637 | | | | 250,000 | | | | 2,650,547 | | | | | | | | | | | | | | | | | | | | 3,299,184 | | | | | | | 2024 | | | | 216,039 | | | | 40,000 | | | | | | | | 553,790 | | | | | | | | | | | | | | | | 809,829 | | | | Daniel Machock (CFO)(6) | | | 2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 125,000 | | | | 125,000 | | | | | | | 2024 | | | | 234,936 | | | | 20,000 | | | | | | | | | | | | | | | | | | | | | | | | 254,936 | | | | James McCormick (CFO) (7) | | | 2025 | | | | 339,508 | | | | 24,000 | | | | | | | | | | | | | | | | | | | | 96,000 | | | | 459,508 | | | | | | | 2024 | | | | 32,500 | | | | | | | | | | | | 819,029 | | | | | | | | | | | | | | | | 851,529 | | | | Jie Yu (CFO)(8) | | | 2025 | | | | 201,289 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 201,289 | | | | | | | 2024 | | | | 167,123 | | | | | | | | | | | | 547,272 | | | | | | | | | | | | | | | | 714,395 | | | | (1) | Mr. Liu and Mr. Yus compensation are paid in Hong Kong dollars, which are converted into U.S. dollars at the average exchange rates during the period, which was 7.8186 Hong Kong dollars to $1.00 for the year ended June 30, 2024 and 7.7898 Hong Kong dollars to $1.00 for the year ended June 30, 2025. | | | (2) | Mr. Liu and Mr. Wang are currently co-chief executive officers. | | | (3) | Mr. Rouhanis employment with the Company ended on February 27, 2025. | | | (4) | Amounts reflect the full grant-date fair value of RSUs and stock options granted during our most recently completed fiscal year computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. | | | (5) | Amounts refer to severance payments. | | | (6) | Mr. Machock employment with the Company ended onMay 15, 2024. | | | (7) | Mr. McCormick was appointed our Chief Financial Officer on May 17, 2024, and subsequently separated from the Company onMay 13, 2025. | | | (8) | Mr. Yu was appointed our Chief Financial Officer on May 13, 2025. From June 2023 to May 13, 2025, Mr. Yu served as our Vice President of Finance. | | 54 **Employment Agreements** ** *Tuanfang Liu* On January 31, 2023, we entered into an employment agreement with Mr. Liu, our co-chief executive officer. The employment agreement with Mr. Liu has a term of five years and continues on year-to-year basis unless terminated by either us or Mr. Liu on notice given not later than 60 days prior to the expiration of the initial five-year term or any one-year extension. Mr. Liu receives compensation from us at the annual rate of 1,920,000 Hong Kong dollars. Any increase in his annual compensation and any bonus compensation are subject to the discretion of the Compensation Committee and Mr. Liu is also eligible for such options or other equity-based compensation, if any, as may be determined by the Compensation Committee. Mr. Liu will perform his services at such location as he may determine, and we anticipate that he will perform his services in the PRC. The agreement acknowledges that Mr. Liu is also chairman, chief executive officer and a director of Aspire Global and the chief executive officer and 95% owner of Shenzhen Yi Jia. The agreement has customary non-competition and non-solicitation provisions. Mr. Liu has agreed that we have title to all rights to any intellectual property rights which may be developed by Mr. Liu that relate to cannabis or cannabis related vaping or other products during the term of the employment agreement and he will execute such documents as may be necessary to effect our ownership of such intellectual property, including, but not limited to assignment of patents and trademarks. With respect to any intellectual property relating to tobacco vaping and other nicotine products, we shall have an exclusive license in the territory, which is worldwide except for the PRC and Russia, with respect to such intellectual property. We acknowledge the Mr. Liu is also employed as chief executive officer of Aspire Global and Shenzhen Yi Jia. Both Aspire Global and Shenzhen Yi Jia agreed to the provisions of Mr. Lius employment agreement relating to intellectual property developed by Mr. Liu. Although Mr. Liu does not receive any compensation from Aspire Global or Shenzhen Yi Jia, for his services as its chief executive officer of Aspire Global, as the 95% owner of Shenzhen Yi Jia, he receives dividends from Shenzhen Yi Jia. ** *Michael Wang* On January 31, 2023, we entered into an employment agreement with Mr. Wang, our co-chief executive officer who formerly was our chief financial officer. The employment agreement with Mr. Wang has a term of three years and continues on a quarter-to-quarter basis unless terminated by either us or Mr. Wang on notice given not later than 30 days prior to the expiration of the initial three-year term or any quarterly extension. Mr. Wang receives annual compensation at the rate of $393,447. Any increase in his annual compensation and any bonus compensation are subject to the discretion of the Compensation Committee and Mr. Wang is also eligible for such options or other equity-based compensation, if any, as may be determined by the Compensation Committee. The agreement has customary assignment of invention provisions. In connection with our organization, we issued to Peak Group LLC, a limited liability company owned by Mr. Wang a 2% interest in Aspire Global for services rendered which, when our Common Stock was issued to the holders of the Aspire Global capital stock, resulted in the issuance to Mr. Wang of 1,000,000 shares of Common Stock, which were valued at $473,235. The issuance of these shares is treated as compensation for services rendered by Mr. Wang to Aspire Global, the then parent of Aspire North America and Aspire Science, as its chief financial officer. *Jie Yu* ** In connection with his appointment as Chief Financial Officer on May 13, 2025, we agreed to compensate Mr. Yu with an annual base salary of $200,000 and an annual performance bonus to be awarded at the sole discretion of our Compensation Committee. *Steven Przybyla* On June 25, 2024, we entered into an executive employment agreement with Mr. Przybyla, our Chief Legal Officer and Secretary (the Przybyla Agreement). Mr. Przybylas employment with us is at will and may be terminated by either Mr. Przybyla or us at any time, for any reason, or no reason. Mr. Przybyla will receive an annual base salary of $400,000, which may be increased from time to time, but not decreased, during the term of his employment. Mr. Przybyla is eligible for an annual discretionary bonus with a bonus target of 50% of his annual base salary, subject to the discretion of the compensation committee of our board. Mr. Przybyla is eligible for any fringe benefits offered by us on the same terms and conditions as other executives, including group health benefits and a 401k retirement plan. We have agreed to bear the costs associated with Mr. Pzybylas maintenance of his professional licenses. In the event Mr. Przybyla is terminated without cause or resigns for good reason, Mr. Przybyla is entitled to severance in the amount of twelve months then-applicable base salary and immediate accelerated vesting of 50% of any unvested equity grants (as that term is defined in the Plan) that Mr. Przybyla has received under the Plan, regardless of the terms of the Plan or any award agreement. The Przybyla Agreement contains customary assignment of invention, indemnification and confidentiality provisions. **Employee Benefit Plans** ** *2022 Equity Incentive Plan* ** In October 2022, our directors and stockholders approved the 2022 Equity Incentive Plan. On August 9, 2024, Mr. Liu, as majority shareholder, and the Board, approved an amended and restated 2022 Equity Incentive Plan which was sent to all shareholders of record as of August 9, 2024 and was filed on Schedule14C with the SEC on August 29, 2024 (the Plan). Under the Plan, up to 15,000,000 shares of Common Stock may be issued pursuant to a variety of equity award types. The Plan is administered by the Compensation Committee of the Board. Awards under the Plan may be granted to officers, directors, employees and those consultants who qualify as a consultant or advisor under the instructions to Form S-8. The Compensation Committee has broad discretion in making awards; provided that any options shall be exercisable at the fair market value on the date of grant. 55 ** *Outstanding Equity Awards* ** The following table summarizes information about all outstanding unvested equity awards held by our named executives as of June 30, 2025 ** **Outstanding Awards at June 30, 2025** ** | | | | | RSUs | | | Non-qualified stock options | | | | Name | | Grant Date | | Number of Unvested Sharesor Units (#) | | | Market Value of Shares that Have Not Vested ($) | | | Number of Unvested Sharesor Units (#) | | | Market Valueof Unvested Shares or Units ($) | | | | Tuanfang Liu | | - | | | - | | | $ | - | | | | - | | | $ | - | | | | Michael Wang | | - | | | - | | | $ | - | | | | - | | | $ | - | | | | Tirdad Rouhani | | - | | | - | | | $ | - | | | | - | | | $ | - | | | | Steven Pryzbyla | | 09/04/2023 | | | - | | | $ | - | | | | 56,250 | | | $ | 301,723 | | | | Steven Pryzbyla | | 10/01/2024 | | | 336,705 | | | $ | 862,080 | | | | - | | | $ | - | | | | James McCormick | | - | | | - | | | $ | - | | | | - | | | $ | - | | | | Jie Yu | | - | | | - | | | $ | - | | | | - | | | $ | - | | | ** | | | | | Option Awards | | Stock Awards | | | | Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable (2) | | | Number of Securities Underlying Unexercised Options (#) Unexercsiable | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | Number of Shares or Units of Stock that Have Not Vested (#) | | | Market Value of Shares or Units of Stock that Have Not Vested ($)(1) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | | | Equity Incentive Plan Awards: Marketor Payout Valueof Unearned Shares, Unitsor Other Rights that HaveNot Vested ($)(1) | | | | Tuanfang Liu | | - | | | - | | | | - | | | | - | | | | - | | | - | | | - | | | | - | | | | - | | | | - | | | | Michael Wang | | - | | | - | | | | - | | | | - | | | | - | | | - | | | - | | | | - | | | | - | | | | - | | | | Tirdad Rouhani | | - | | | - | | | | - | | | | - | | | | - | | | - | | | - | | | | - | | | | - | | | | - | | | | Steven Pryzbyla (3) | | 9/4/2023 | | | 43,750 | | | | 56,250 | | | | - | | | | 9.76 | | | 09/04/2033 | | | - | | | | - | | | | - | | | | - | | | | Steven Pryzbyla (4) | | 10/01/2024 | | | - | | | | - | | | | - | | | | - | | | - | | | 336,750 | | | | 862,080 | | | | - | | | | - | | | James McCormick | | | | | - | | | | - | | | | - | | | | - | | | - | | | - | | | | - | | | | - | | | | - | | | | Jie Yu (5) | | 11/03/2023 | | | 37,500 | | | | - | | | | - | | | | 8.28 | | | 11/03/2027 | | | - | | | | - | | | | - | | | | - | | | | Jie Yu (5) | | 12/13/2023 | | | 37,500 | | | | - | | | | - | | | | 8.45 | | | 12/13/2027 | | | - | | | | - | | | | - | | | | - | | | | Jie Yu (5) | | 03/13/2024 | | | 37,500 | | | | - | | | | - | | | | 9.36 | | | 03/13/2028 | | | - | | | | - | | | | - | | | | - | | | | Jie Yu (5) | | 06/13/2024 | | | 37,500 | | | | - | | | | - | | | | 7.09 | | | 06/13/2028 | | | - | | | | - | | | | - | | | | - | | | ** | 1. | Amounts are calculated based on multiplying the number of shares shown in the table by the per share closing price of our Common Stock on the Nasdaq Capital Market on June 30, 2025, the last trading day of our last completed fiscal year, which was $2.56. | | ** | 2. | The options shown in this column were fully vested as of the end of the most recently completed fiscal year. | | | 3. | The stock options vest over a four-year period with twenty-five percent (25%) vesting on September 4, 2024, and the remainder vesting in 36 equal installments on the first day of each calendar month, subject to the executives continued service. | | | 4. | Grants represent a one-time grant in recognition of the executives efforts from 2020 through our initial public offering and is not necessarily reflective of our compensation program going forward. | | | | | | | 5. | The options granted are exercisable for up to four years from the date of grant, subject to standard termination provisions should Mr. Yu cease to be employed by the Company or its subsidiaries. The options have an exercise price equal to the closing price per share of the Companys common stock on the date of grant. | | 56 **** **Compensation Recovery Policy** On November 27, 2023, our Board of Directors adopted a policy (commonly known as a clawback policy) which provides for the recovery of erroneously awarded incentive compensation to certain of our officers in the event that we are required to prepare an accounting restatement due to material noncompliance by us with any financial reporting requirements under the federal securities laws. This policy is designed to comply with Section 10D of the Securities Exchange Act of 1934, as amended, related rules and the listing standards of Nasdaq Stock Market or any other securities exchange on which our shares are listed in the future. The policy is administered by our Board of Directors or, if so designated by the Board of Directors, the Compensation Committee. Any determinations made by the Board shall be final and binding on all affected individuals. **Limitation of Liability and Indemnification Matters** Our certificate of incorporation limits the liability of our directors for monetary damages for breach of their fiduciary duties, except for liability that cannot be eliminated under the Delaware General Corporation Law (the DGCL). Consequently, our directors will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except liability for any of the following: | | any breach of their duty of loyalty to us or our stockholders; | | | | acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; | | | | unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or | | | | any transaction from which the director derived an improper personal benefit. | | Our certificate of incorporation and bylaws also provide that we will indemnify our directors and executive officers and may indemnify our other officers and employees and other agents to the fullest extent permitted by law. Our bylaws also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in this capacity, regardless of whether our bylaws would permit indemnification. We have obtained directors and officers liability insurance. The above description of the Indemnification provisions of our bylaws and is qualified in its entirety by reference to these documents, each of which is filed as an exhibit to this Annual Report. The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholders investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. Insofar as indemnification for liabilities under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and may be unenforceable. There is no pending litigation or proceeding naming any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer. **Director Compensation** The following table shows the compensation paid to our directors who are not Named Executive Officers during the year ended June 30, 2025. | Name | | Fees Earned or Paid inCash ($) | | | Stock Awards ($) (2) | | | Option Awards ($) | | | Nonequity incentive plan compensation ($) | | | Nonqualified deferred compensation earnings ($) | | | All other compensation ($) | | | Total ($) | | | | Jiangyan Zhu(1) | | $ | 161,750 | | | | - | | | | - | | | | - | | | | - | | | | - | | | $ | 161,750 | | | | Christopher Robert Burch | | | 62,500 | | | | 59,770 | | | | - | | | | - | | | | - | | | | - | | | | 122,270 | | | | Brent Cox | | | 55,500 | | | | 88,098 | | | | - | | | | - | | | | - | | | | - | | | | 143,598 | | | | John Fargis | | | 49,500 | | | | 88,025 | | | | - | | | | - | | | | - | | | | - | | | | 137,525 | | | | (1) | Ms. Zhus compensation is paid in Hong Kong dollars, which are converted into U.S. dollars at the average exchange rates during the period, which was 7.7898 Hong Kong dollars to $1.00 for the year ended June 30, 2025. | | 57 | (2) | As of June 30, 2025: | | | | | Mr. Burch has received 14,480 shares of stock awards | | | | | | | | | | Mr. Cox has received 20,998 shares of stock awards | | | | | | | | | | Mr. Fargis has received 19,421 shares of stock awards | | | | | | | | | | Ms. Zhu has received 0 shares of stock awards | | We have an agreement with Ms. Zhu pursuant to which we increased her annual compensation to 1,440,000 Hong Kong dollars starting from October 2024. Before October 2024, her annual compensation was 720,000 Hong Kong dollars. Ms. Zhu is also a director of Aspire Global, and she does not receive compensation from Aspire Global. On August 3, 2023, our board of directors adopted the non-employee director compensation policy. Pursuant to the non-employee director compensation policy: | | | Each outside director (a director who is not also serving as an employee of us or any of our subsidiaries) shall receive an annual cash retainer of $48,000 for his or her service on the Board, and each outside director who serves as chair of the Audit Committee will be paid an additional annual cash retainer of $12,000. The payment is made in four equal quarterly installments. The retainer is pro rated if the outside director is not an outside director for the entire quarter. | | | | | Each outside director automatically will be granted fully vested shares of the Common Stock equal in value to such outside directors retainer for the calendar quarter. The number of shares granted shall be equal to: (A) the retainer earned by the outside director for such calendar quarter, divided by (B) the volume-weighted average price, generally known as VWAP, of our common stock on the principal trading market on which our Common Stock trades during each trading day of the preceding calendar quarter, rounded down to the nearest whole share. To be eligible for a quarterly share grant an outside director must be serving as an outside director on the last day of the calendar quarter. The shares shall be granted pursuant to our 2022 Equity Incentive Plan or any successor plan. The compensation policy is effective commencing with the quarter beginning July 1, 2023. | | On December 2, 2024, our board of directors adopted an updated non-employee director compensation policy. Pursuant to the non-employee director compensation policy: | | | Each outside director (a director who is not also serving as an employee of us or any of our subsidiaries) shall receive an annual cash retainer of $50,000 for his or her service on the Board, and each outside director who serves as chair of the Audit Committee will be paid an additional annual cash retainer of $12,000. The payment is made in four equal quarterly installments. The retainer is prorated if the outside director is not an outside director for the entire quarter. | | | | | Each outside director automatically will be granted fully vested shares of the Common Stock equal to $165,000 per year for their board service, plus an additional committee retainer fee of $10,000 for service on the Audit Committee, $7,500 for service on the Compensation Committee and $5,000 for service on the Nominating and Governance Committee. The number of shares granted shall be equal to: (A) the retainer earned by the outside director for such calendar quarter, divided by (B) the volume-weighted average price, generally known as VWAP, of our common stock on the principal trading market on which our Common Stock trades during each trading day of the preceding calendar quarter, rounded down to the nearest whole share. To be eligible for a quarterly share grant an outside director must be serving as an outside director on the last day of the calendar quarter. The shares shall be granted pursuant to our Amended and Restated 2022 Equity Incentive Plan or any successor plan. The compensation policy became effective commencing with the quarter beginning October 1, 2024. For the fiscal years ended June 30, 2025 and 2024, we issued, pursuant to the Plan, 40,215 and 16,285 shares of common stock, respectively. | | **Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information** **** The Company generally grants equity awards to our employees in the first fiscal quarter each year, except in the case of equity awards for (i) new hires which are granted within 30 days of an employees start date with the Company, and (ii) directors, which receive quarterly equity grants for their service on the Board. We do not have a written policy regarding the timing of equity awards, but we do not grant equity awards in anticipation of the release of material nonpublic information, nor do we time the release of material nonpublic information based on equity award grant dates. 58 **ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters** As of September 15, 2025, we had 57,277,874 shares of Common Stock issued and outstanding. Holders of Common Stock are entitled to one vote per share. The following table sets forth information with respect to the beneficial ownership of our Common Stock as of September 15, 2025: | | each person, or group of affiliated persons, who is the beneficial owner of more than 5% of the outstanding Common Stock of the Company; | | | | each executive officer and director of the Company; and | | | | all of the Companys executive officers and directors as a group. | | Beneficial ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power of that security, including securities that are exercisable or convertible, as the case may be, within 60 days of September 15, 2025. Shares of Common Stock issuable pursuant to such securities are deemed outstanding for computing the percentage of the person holding such securities and the percentage of any group of which the person is a member but are not deemed outstanding for computing the percentage of any other person. Except as indicated by the footnotes below, the combined Company believes, based on the information furnished to it, that the persons named in the table below have sole voting and investment power with respect to all shares of Common Stock shown that they beneficially own, subject to community property laws where applicable. The information does not necessarily indicate beneficial ownership for any other purpose, including for purposes of Section 13(d) and 13(g) of the Securities Act. | | | Beneficial Ownership63 | | | | Name of Beneficial Owner(1) | | Shares | | | % | | | | Greater than 5% Stockholders:(2)(3)(4) | | | | | | | | | Tuanfang Liu and Jiangyan Zhu(2)(3)(4) | | | 35,750,000 | | | | 62.4 | % | | | Pride Worldwide Investment Limited(2)(3) | | | 33,250,000 | | | | 58.1 | % | | | | | | | | | | | | | | Current Executive Officers and Directors: | | | | | | | | | | | Michael Wang | | | 1,453,882 | | | | 2.5 | % | | | Jie Yu | | | 0 | | | * | | | | Steven Przybyla | | | 416,710 | | | | * | | | | Christopher Robert Burch | | | 41,658 | | | | * | | | | Brent Cox | | | 50,782 | | | | * | | | | John Fargis | | | 46,599 | | | | * | | | | All current executive officers and directors as a group (ten individuals) | | | 37,759,631 | | | | 65.9 | % | | | * | Represents beneficial ownership of less than 1%. | | | (1) | The percentage of ownership is based on 57,277,874 shares of Common Stock outstanding on September 15, 2025. Unless otherwise noted below, the address of the persons listed on the table is c/o Ispire Technology Inc., 19700 Magellan Dr., Los Angeles, CA 90502. | | | (2) | The business address of Pride Worldwide Investment Limited is 14 Jianan Road, Tangwei Fuyong Town, Baoan District, Shenzhen, Guangdong Province, China. | | | (3) | The shares beneficially owned by Tuanfang Liu, our co-chief executive officer, are held by Pride Worldwide Investment Limited. Mr. Liu is the sole stockholder and holds the voting and dispositive power over the Common Stock held by such entity. Mr. Liu disclaims beneficial interest in shares beneficially owned by his wife, Jiangyan Zhu. | | | (4) | The shares beneficially owned Jiangyan Zhu, our director and spouse of Tuanfang Liu, are held by Honor Epic International Limited. Ms. Zhu is the sole stockholder and holds the voting and dispositive power over the Common Stock held by such entity. Ms. Zhu disclaims beneficial interest in shares beneficially owned by her husband. | | | (5) | The shares beneficially owned by Michael Wang are held by Peak Group LLC. Mr. Wang has sole voting and dispositive powers over the shares of Common Stock owned by Peak Group LLC. | | 59 **ITEM 13. Certain Relationships and Related Transactions, and Director Independence** The following are transactions from July 1, 2023 through June 30, 2025 between us, and enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, (a) us, (b) our directors; (c) individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over us, and close members of any such individuals family; (d) key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling our activities, including senior management of companies and close members of such individuals families; and (e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence. The following are forth the major related parties and their relationships with us: | Name of related parties and Relationship with the Company | | | - Tuanfang Liu is the Co-Chief Executive Officer and Chairman of the Company. | | | - Jiangyan Zhu is the wife of Tuanfang Liu and a director of the Company. | | | - Eigate (Hong Kong) Technology Co., Limited (Eigate) is a wholly-owned and controlled by the Companys Chairman. | | | - Aspire Global is a company controlled by the Chairman of the Company. | | | - Aspire International Hong Kong Limited is a wholly-owned subsidiary of Aspire Global. | | | - Shenzhen Yi Jia, a Chinese company that is 95% owned by the Companys Chairman and 5% by the Chairmans cousin. | | | - IKE Tech LLC, a joint venture that the Company has 40% membership interests. | | Tuanfang Liu is also Aspire Globals chief executive officer and a director of both the Company and Aspire Global, and his wife, Jiangyan Zhu, is also a director of both companies. As of June 30, 2025, Mr. Liu and Ms. Zhu beneficially own 66.5% and 5.0%, respectively, of the outstanding shares of Aspire Global. As of June 30, 2025, Mr. Liu and Ms. Zhu beneficially own 58.1% and 4.4%, respectively, of the outstanding shares of the Company. For both years ended June 30, 2025 and 2024, the majority of the Companys tobacco and cannabis vaping products were purchased from Shenzhen Yi Jia. As of June 30, 2025 and 2024, the accounts payable related party was $52,420,256 and $67,046,472, respectively, which was payable to Shenzhen Yi Jia. There are no fixed payment terms regarding these balances and they are classified as current liabilities. For the years ended June 30, 2025 and 2024, the purchases from Shenzhen Yi Jia were $94,657,848 and $91,324,614, respectively. The balances due to a related party at June 30, 2025 and 2024 represent amounts due to Shenzhen Yi Jia of $25,000,000 and $0, respectively. The balance of $25,000,000 as of June 30, 2025 was reclassified from accounts payable related party as Shenzhen Yijia agreed not to seek repayment of this balance for twelve months starting from September 30, 2025. The balances are non-interest bearing and unsecured. As of June 30, 2025 and 2024, the Company had total accounts receivable of $75,147and$17,280due from IKE. For the years ended June 30, 2025 and 2024,the Company recorded$109,349 and$0in other income from IKE from charging administrative fees. **ITEM 14. Principal Accounting Fees and Services** The following table sets forth (i) the fees billed by our previous independent accountants, MSPC Certified Public Accountants and Advisors, A Professional Corporation (MSPC) for the fiscal year ended June 30, 2024, (ii) the fees billed by our previous independent accountants, Marcum LLP (Marcum) for the fiscal years ended June 30, 2024 and 2025, (iii) the fees billed by our previous independent accountants, CBIZ CPAs P.C. (CBIZ) for the fiscal year ended June 30, 2025, and (iv) the fees billed by our current independent registered public accounting firm Marcum Asia CPAs LLP (Marcum Asia), for the fiscal year ended June 30, 2025. MSPC resigned as our independent registered public accounting firm, effective December 11, 2023. On January 25, 2024, the Audit Committee engaged Marcum as our independent registered public accounting firm for the fiscal year ended June 30, 2024. On November 1, 2024, CBIZ purchased substantially all of the attest business assets of Marcum, the Companys then independent registered public accounting firm. Substantially all of the partners and staff that provided attestation services with Marcum joined CBIZ. Marcum resigned as auditors of the Company effective December 16, 2024, and with the approval of the Audit Committee, on December 17, 2024, CBIZ CPAs P.C. was engaged as the Companys independent registered public accounting firm for the fiscal year ended June 30, 2025, with immediate effect. On February 18, 2025, the Audit Committee approved the dismissal of CBIZ, the Companys then independent registered public accounting firm, effective immediately, and approved the appointment of Marcum Asia as the Companys independent registered public account firm for the fiscal year ended June 30, 2025, with immediate effect. | | | Year Ended June 30, | | | | | | 2024 | | | 2025 | | | | Audit fees for MSPC | | $ | - | | | $ | - | | | | Audit fees for Marcum | | $ | 851,600 | | | $ | 170,465 | | | | Audit fees for CBIZ | | $ | - | | | $ | 87,550 | | | | Audit fees for Marcum Asia | | $ | - | | | $ | 504,238 | | | | Audit-related fees for MSPC | | $ | 60,010 | | | $ | 37,250 | | | | Audit-related fees for Marcum | | $ | - | | | $ | - | | | | Audit-related fees for CBIZ | | $ | - | | | $ | - | | | | Audit-related fees for Marcum Asia | | $ | - | | | $ | - | | | | Tax fees | | $ | - | | | $ | - | | | | All other fees | | $ | - | | | $ | - | | | 60 **Audit Fees** Audit fees consist of fees for professional services rendered for the audit of our year-end financial statements and services that are normally provided by our independent accountants in connection with regulatory filings. The aggregate fees of Marcum Asia for professional services rendered for the audit of our annual financial statements, review of the financial information include in our required filings with the SEC for the years ended June 30, 2025 and 2024 totaled approximately $504,238 and $0, respectively. The aggregate fees of Marcum for professional services rendered for the audit of our annual financial statements, review of the financial information include in our required filings with the SEC for the years ended June 30 2025 and 2024 totaled approximately $170,465 and $851,600, respectively. The aggregate fees of CBIZ for professional services rendered for the audit of our annual financial statements, review of the financial information include in our required filings with the SEC for the years ended June 30, 2025 and 2024 totaled approximately $87,550 and $0, respectively. The above amounts include interim procedures and audit fees, as well as attendance at Audit Committee meetings. We did not pay any audit fees to MSPC for the fiscal years ended June 30, 2025 and 2024. **** **Audit-Related Fees** Audit-related fees 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. The aggregate fees of MSPC for professional services rendered for Audit-Related fees was $37,250 and $60,010 for the year ended June 30, 2025 and 2024. We did not pay any audit-related fees to Marcum Asia, Marcum, or CBIZ for the fiscal year ended June 30, 2025 or 2024. **** **Tax Fees** We did not pay MSPC, Marcum, CBIZ, or Marcum Asia for tax services, planning or advice for the years ended June 30, 2025 or 2024. **** **All Other Fees** We did not pay MSPC, Marcum, CBIZ, or Marcum Asia for any other services for the years ended June 30, 2025 or 2024. **** **Procedures For Board of Directors Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditor** Our Audit Committee is ultimately responsible for reviewing and approving, in advance, any audit and any permissible non-audit engagement or relationship between us and our independent registered public accounting firm. Our engagement of MSPC, Marcum, CBIZ, and Marcum Asia to conduct all audit and permissible non-audit related activities incurred during fiscal years 2025 and 2024, respectively were approved by our Audit Committee in accordance with these procedures. 61 **** **PART IV** **ITEM 15. Exhibits and Financial Statements Schedules** 1. Consolidated Financial Statements Our financial statements and the notes thereto, together with the report of our independent registered public accounting firm on those financial statements, are hereby filed as part of this Annual Report beginning on page F-1. 2. Financial Statement Schedules All financial statement schedules have been omitted since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto. 3. Exhibits The following is a complete list of exhibits filed as part of this Form 10-K. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K. | Exhibit Number | | Description | | | 3.1 | | Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Companys Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on January 31, 2023). | | | 3.2 | | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Companys Annual Report on Form 10-K, filed with the SEC on September 27, 2024). | | | 4.1 | | Description of Capital Stock (incorporated by reference to Exhibit 4.1 of the Companys Annual Report on Form 10-K, filed with the SEC on September 27, 2024). | | | 4.2 | | Representatives Warrant (incorporated by reference to Exhibit 4.1 of the Companys Current Report on Form 8-K filed with the SEC on April 6, 2023). | | | 4.3 | | Form of Warrant (incorporated by reference to the Companys Quarterly Report on Form 10-Q filed with the SEC on May 14, 2024). | | | 4.4 | | Form of Indenture (incorporated by reference to Exhibit 4.5 of the Companys Registration Statement on Form S-3 (File No. 333-280856) filed with the SEC on July 17, 2024). | | | 10.1 | | Intellectual Property Transfer Agreement dated September 30, 2022, by and among Aspire Global Inc., Shenzhen Yi Jia, Tuanfang Liu, Aspire North America LLC and Ispire Technology Inc. (incorporated by reference to Exhibit 10.1 of the Companys Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on January 31, 2023). | | | 10.2 | | Intellectual Property License Agreement dated September 30, 2022, by and among Aspire Global Inc., Shenzhen Yi Jia, Tuanfang Liu, Aspire Science and Technology Limited and Ispire Technology Inc. (incorporated by reference to Exhibit 10.2 of the Companys Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on January 31, 2023). | | | 10.3 | | Employment agreement dated January 31, 2023, by and between the Company and Tuanfang Liu (incorporated by reference to Exhibit 10.3 of the Companys Amendment No. 1 to its Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on February 16, 2023). | | | 10.4 | | Employment agreement dated January 31, 2023, by and between the Company and Michael Wang (incorporated by reference to Exhibit 10.4 of the Companys Amendment No. 1 to its Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on February 16, 2023). | | | 10.6 | | Employment agreement dated June 25, 2024, by and between the Company and Tirdad Rouhani (incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed with the SEC on June 28, 2024). | | | 10.7 | | Employment agreement dated June 25, 2024, by and between the Company and Steven Przybyla (incorporated by reference to Exhibit 10.2 of the Companys Current Report on Form 8-K filed with the SEC on June 28, 2024). | | 62 | 10.8 | | Form of Subscription Agreement dated June 26, 2023, by and between the Company and the Purchasers in a Private Placement (incorporated by reference to Exhibit 10.1 of the Companys Form 8-K filed with the SEC on June 27, 2023). | | | 10.9 | | Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.13 of the Companys Post Effective Amendment No. 1 to its Registration Statement on Form S-1 (File No. 333-276804) filed with the SEC on March 25, 2024). | | | 10.10 | | Form of Placement Agency Agreement (incorporated by reference to Exhibit 1.1 of the Companys Amendment No. 1 to its Registration Statement on Form S-1 (File No. 333-276804) filed with the SEC on March 18, 2024). | | | 10.11 | | Amended and Restated 2022 Equity Incentive Plan (incorporated by reference to Appendix A of the Companys Definitive Schedule 14C filed with the SEC on August 29, 2024). | | | 10.12 | | Form of independent director agreement with Brent Cox (incorporated by reference to Exhibit 10.7 of the Companys Amendment No. 2 to its Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on February 28, 2023). | | | 10.13 | | Form of independent director agreement with John Fargis (incorporated by reference to Exhibit 10.8 of the Companys Amendment No. 2 to its Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on February 28, 2023). | | | 10.14 | | Form of independent director agreement with Chirstopher Robert Burch (incorporated by reference to Exhibit 10.12 of the Companys Amendment No. 1 to its Registration Statement on Form S-1 (File No. 333-273904) filed with the SEC on October 11, 2023). | | | 10.15 | | Distributorship Agreement dated January 1, 2021, between Aspire Science and Technology Limited and Your-Buyer International Limited (incorporated by reference to Exhibit 10.10 of the Companys Registration Statement on Form S-1(File No. 333-269470) filed with the SEC on January 31, 2023). | | | 10.16 | | Supply agreement dated January 27, 2023 by and between Aspire North America LLC and Shenzhen Yi Jia.(incorporated by reference to Exhibit 10.11 of the Companys Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on January 31, 2023). | | | 10.17 | | Supply agreement dated January 27, 2023 by and between Aspire Science and Technology Limited and Shenzhen Yi Jia (incorporated by reference to Exhibit 10.12 of the Companys Registration Statement on Form S-1 (File No. 333-269470) filed on January 31, 2023). | | | 10.18 | | Capital Contribution, Subscription, and Joint Venture Agreement by and between Aspire North America LLC, Ispire Technology Inc., Chemular Inc., Touch Point Worldwide, Inc. d/b/a Berify, and Ike Tech LLC, dated as of April 5, 2024 (incorporated by reference to Exhibit 10.3 of the Companys Quarterly Report on Form 10-Q filed with the SEC on May 14, 2024). | | | 10.19^ | | Master Loan and Security Agreement dated February 10, 2025, by and between Ispire Technology Inc. and Avon River Ventures LLC (incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q filed with the SEC on May 9, 2025). | | | 10.20 | | Promissory Note dated February 10, 2025, by and among Ispire Technology Inc. and Avon River Ventures LLC (incorporated by reference to Exhibit 10.2 of the Companys Quarterly Report on Form 10-Q filed with the SEC on May 9, 2025). | | | 10.22+ | | Master Consulting Agreement dated February 10, 2025, by and among Ispire Technology Inc. and Avon River Ventures LLC (incorporated by reference to Exhibit 10.3 of the Companys Quarterly Report on Form 10-Q filed with the SEC on May 9, 2025). | | | 16.1 | | Letter from MSPC Certified Public Accountants and Advisors, P.C., dated December 13, 2023 (incorporated by reference to Exhibit 16.1 of the Companys Current Report on Form 8-K filed with the SEC on December 15, 2023). | | | 16.2 | | Letter from Marcum LLP, dated December 19, 2024 (incorporated by reference to Exhibit 16.1 of the Companys Current Report on Form 8-K filed on December 20, 2024) | | | 16.3 | | Letter from CBIZ CPAs P.C. dated February 21, 2025 (incorporated by reference to Exhibit 16.1 of the Companys Current Report Form 8-K filed on February 18, 2025) | | | 19.1 | | Insider Trading Policy (incorporated by reference to Exhibit 19.1 of the Companys Annual Report on Form 10-K, filed with the SEC on September 27, 2024). | | | 21.1* | | Subsidiaries of the Company. | | | 23.1* | | Consent of Marcum Asia CPAs LLP. | | | 23.2* | | Consent of Marcum LLP | | | 31.1* | | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act. | | 63 | 31.2* | | Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Sarbanes-Oxley Act. | | | 32.1** | | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act. | | | 97.1 | | Policy Relating to Recovery of Erroneously Awarded Compensation (incorporated by reference to Exhibit 97.1 of the Companys Annual Report on Form 10-K, filed with the SEC on September 27, 2024). | | | 101.INS* | | Inline XBRL Instance Document | | | 101.SCH* | | Inline XBRL Taxonomy Extension Schema Document | | | 101.CAL* | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | 101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | | 101.LAB* | | Inline XBRL Taxonomy Extension Label Linkbase Document | | | 101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | | 104* | | Cover Page Interactive Data File | | | * | Filed herewith. | | | ** | Furnished and not filed herewith. | | | | Indicates a management contract or compensatory plan, contract or arrangement. | | | ^ | Certain annexes, schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted attachment to the SEC on a confidential basis upon request. | | | + | Certain portions of this exhibit (indicated by [*]) have been omitted pursuant to Item 601(a)(6) of Regulation S-K. | | **ITEM 16. Form 10-K Summary** Not applicable **** 64 **SIGNATURES** Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 15th day of September, 2025. | | ISPIRE TECHNOLOGY INC. | | | | | | | | | By: | /s/ Michael Wang | | | | | Michael Wang | | | | | Co-Chief Executive Officer | | | | | (Principal Executive Officer) | | | | | | | | | By: | /s/ Jie Yu | | | | | Jie Yu | | | | | Chief Financial Officer | | | | | (Principal Financial and Accounting Officer) | | Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed by the following persons in the capacities and on the date indicated: | Signature | | Title | | Date | | | | | | | | | | /s/ Tuanfang Liu | | Co-Chief Executive Officer and Chairman | | September 15, 2025 | | | Tuanfang Liu | | (principal executive officer) | | | | | | | | | | | | /s/ Michael Wang | | Co-Chief Executive Officer | | September 15, 2025 | | | Michael Wang | | (principal executive officer) | | | | | | | | | | | | /s/ Jie Yu | | Chief Financial Officer | | September 15, 2025 | | | Jie Yu | | (principal financial and accounting officer) | | | | | /s/ Jiangyan Zhu | | Director | | September 15, 2025 | | | Jiangyan Zhu | | | | | | | | | | | | | | /s/ Christopher Robert Burch | | Director | | September 15, 2025 | | | Christopher Robert Burch | | | | | | | | | | | | | | /s/ Brent Cox | | Director | | September 15, 2025 | | | Brent Cox | | | | | | | | | | | | | | /s/ John Fargis | | Director | | September 15, 2025 | | | John Fargis | | | | | | 65 **ISPIRE TECHNOLOGY INC.** **Index to Consolidated Financial Statements** | | | Page | | | Report of Independent Registered Public Accounting Firm Marcum Asia CPAs LLP(PCAOB ID:5395) | | F-2 | | | Report of Independent Registered Public Accounting Firm Marcum LLP (PCAOB ID:688) | | F-3 | | | Consolidated Balance Sheets as of June 30, 2025 and 2024 | | F-4 | | | Consolidated Statements of Operations and Comprehensive Loss for the Years Ended June 30, 2025 and 2024 | | F-5 | | | Consolidated Statements of Changes in Stockholders Equity for the Years Ended June 30, 2025 and 2024 | | F-6 | | | Consolidated Statements of Cash Flows for the Years Ended June 30, 2025 and 2024 | | F-7 | | | Notes to Consolidated Financial Statements | | F-8 | | F-1 **Report of Independent Registered Public Accounting Firm** **** To the Shareholders and Board of Directors of **Ispire Technology Inc.** **** **Opinion on the Financial Statements** **** We have audited the accompanying consolidated balance sheet of Ispire Technology Inc. (the Company) as of June 30, 2025, the related consolidated statements of operations and comprehensive loss, changes in stockholders equity and cash flows for the year ended June 30, 2025, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025, and the results of its operations and its cash flows for the year ended June 30, 2025, in conformity with accounting principles generally accepted in the United States of America. **Basis for Opinion** These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Marcum Asia CPAs LLP Marcum Asia CPAs LLP We have served as the Companys auditor since 2025. New York, New York September 15, 2025 F-2 **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** **** To the Stockholders and Board of Directors of Ispire Technology Inc. **Opinion on the Financial Statements** **** We have audited the accompanying consolidated balance sheet of Ispire Technology Inc. (the Company) as of June 30, 2024, the related consolidated statements of operations and comprehensive loss, changes in stockholders equity and cash flows for the year ended June 30, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024, and the results of its operations and its cash flows for the year ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America. **Basis for Opinion** These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Marcum llp Marcum llp We served as the Companys auditor from 2024 to 2025. **** New York, NY September 26, 2024 F-3 **ISPIRE TECHNOLOGY INC.** **CONSOLIDATED BALANCE SHEETS** *(In $USD, except share and per share data)* ** | | | June30, | | | | | | 2025 | | | 2024 | | | | Assets | | | | | | | | | Current assets: | | | | | | | | | Cash | | $ | 24,351,765 | | | $ | 35,071,294 | | | | Accounts receivable, net | | | 39,664,145 | | | | 59,734,765 | | | | Inventories, net | | | 6,647,970 | | | | 6,365,394 | | | | Prepaid expenses and other current assets | | | 2,244,505 | | | | 1,400,152 | | | | Total current assets | | | 72,908,385 | | | | 102,571,605 | | | | Other assets: | | | | | | | | | | | Accounts receivable non current | | | 7,367,158 | | | | - | | | | Property, plant and equipment, net | | | 2,952,800 | | | | 2,582,457 | | | | Intangible assets, net | | | 2,232,620 | | | | 1,375,666 | | | | Right-of-use assets operating leases | | | 5,030,005 | | | | 3,579,140 | | | | Other investment | | | 2,000,000 | | | | 2,000,000 | | | | Equity method investment | | | 9,515,546 | | | | 10,248,048 | | | | Other non-current assets | | | 210,617 | | | | 284,050 | | | | Total other assets | | | 29,308,746 | | | | 20,069,361 | | | | Total assets | | $ | 102,217,131 | | | $ | 122,640,966 | | | | Liabilities and stockholders equity | | | | | | | | | | | Current liabilities | | | | | | | | | | | Accounts payable | | $ | 4,172,476 | | | $ | 3,779,723 | | | | Accounts payable related party | | | 52,420,256 | | | | 67,046,472 | | | | Contract liabilities | | | 4,861,250 | | | | 2,218,166 | | | | Accrued liabilities and other payables | | | 8,099,991 | | | | 11,738,339 | | | | Borrowing current portion | | | 1,146,766 | | | | - | | | | Operating lease liabilities current portion | | | 1,838,815 | | | | 1,207,832 | | | | Total current liabilities | | | 72,539,554 | | | | 85,990,532 | | | | | | | | | | | | | | | Other liabilities: | | | | | | | | | | | Amount due to a related party | | | 25,000,000 | | | | - | | | | Borrowing net of current portion | | | 805,361 | | | | - | | | | Operating lease liabilities net of current portion | | | 3,267,522 | | | | 2,194,094 | | | | Total liabilities | | | 101,612,437 | | | | 88,184,626 | | | | | | | | | | | | | | | Commitments and contingencies | | | | | | | | | | | | | | | | | | | | | | Stockholders equity: | | | | | | | | | | | Common stock, par value $0.0001 per share; 140,000,000 shares authorized; 57,193,734 and 56,470,636 sharesissued and outstanding as of June30, 2025 and June30, 2024 | | | 5,719 | | | | 5,647 | | | | Treasury stock, at cost | | | (60,488 | ) | | | - | | | | Additional paid-in capital | | | 48,833,601 | | | | 43,217,391 | | | | Accumulated deficit | | | (48,065,267 | ) | | | (8,825,041 | ) | | | Accumulated other comprehensive (loss)/income | | | (108,871 | ) | | | 58,343 | | | | Total stockholders equity | | | 604,694 | | | | 34,456,340 | | | | Total liabilities and stockholders equity | | $ | 102,217,131 | | | $ | 122,640,966 | | | ** See notes to consolidated financial statements. F-4 **ISPIRE TECHNOLOGY INC.** **CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS** *(In $USD, except share and per share data)* ** | | | Years ended June30, | | | | | | 2025 | | | 2024 | | | | | | | | | | | | | Revenue | | $ | 127,494,304 | | | $ | 151,908,691 | | | | Cost of revenue | | | 104,844,633 | | | | 122,126,245 | | | | Gross profit | | | 22,649,671 | | | | 29,782,446 | | | | Operating expenses: | | | | | | | | | | | Sales and marketing expenses | | | 8,439,384 | | | | 6,608,724 | | | | Credit loss expenses | | | 22,034,812 | | | | 6,015,752 | | | | General and administrative expenses | | | 30,025,334 | | | | 31,052,109 | | | | Total operating expenses | | | 60,499,530 | | | | 43,676,585 | | | | Loss from operations | | | (37,849,859 | ) | | | (13,894,139 | ) | | | Other income (expense): | | | | | | | | | | | Interest income, net | | | 86,996 | | | | 365,251 | | | | Exchange loss, net | | | (86,570 | ) | | | (70,293 | ) | | | Other (expense) income, net | | | (187,089 | ) | | | 113,405 | | | | Total other (expense) income, net | | | (186,663 | ) | | | 408,363 | | | | Loss before income taxes | | | (38,036,522 | ) | | | (13,485,776 | ) | | | Income taxes current | | | (1,203,704 | ) | | | (1,282,046 | ) | | | Net loss | | $ | (39,240,226 | ) | | $ | (14,767,822 | ) | | | Other comprehensive (loss) income | | | | | | | | | | | Foreign currency translation adjustments | | | (167,214 | ) | | | 222,111 | | | | Comprehensive loss | | | (39,407,440 | ) | | | (14,545,711 | ) | | | Net loss per share | | | | | | | | | | | Basic and diluted | | $ | (0.69 | ) | | $ | (0.27 | ) | | | Weighted average shares outstanding: | | | | | | | | | | | Basic and diluted | | | 56,853,552 | | | | 54,812,900 | | | ** See notes to consolidated financial statements. F-5 **ISPIRE TECHNOLOGY INC.** **CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY** *(In $USD, except share and per share data)* ** | | | Common Stock | | | | | | | | | Retained | | | Accumulated | | | Total | | | | | | Numberof | | | | | | Treasury | | | Additional | | | Earnings (Accumulated | | | Other Comprehensive | | | Stockholders | | | | | | Shares | | | Amount | | | Stock | | | Capital | | | Deficit) | | | (Loss)/Income | | | Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance,July1, 2023 | | | 54,222,420 | | | $ | 5,422 | | | $ | - | | | $ | 25,685,475 | | | $ | 5,942,781 | | | $ | (163,768 | ) | | $ | 31,469,910 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | - | | | | - | | | | - | | | | - | | | | (14,767,822 | ) | | | - | | | | (14,767,822 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issuance of common stock for a secondary offering, net of insurance cost | | | 2,050,000 | | | | 205 | | | | - | | | | 10,785,701 | | | | - | | | | - | | | | 10,785,906 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issuance of common stock for equity incentives | | | 198,216 | | | | 20 | | | | - | | | | 1,183,976 | | | | - | | | | - | | | | 1,183,996 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock based compensation expenses | | | - | | | | - | | | | - | | | | 5,196,286 | | | | - | | | | - | | | | 5,196,286 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issuance of warrants | | | - | | | | - | | | | - | | | | 365,953 | | | | - | | | | - | | | | 365,953 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Foreign currency translation adjustment | | | - | | | | - | | | | - | | | | - | | | | - | | | | 222,111 | | | | 222,111 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance,June30, 2024 | | | 56,470,636 | | | $ | 5,647 | | | $ | - | | | $ | 43,217,391 | | | $ | (8,825,041 | ) | | $ | 58,343 | | | $ | 34,456,340 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | - | | | | - | | | | - | | | | - | | | | (39,240,226 | ) | | | - | | | | (39,240,226 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issuance of common stock for equity incentives | | | 723,098 | | | | 72 | | | | - | | | | 1,251,256 | | | | - | | | | - | | | | 1,251,328 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock based compensation expenses | | | - | | | | - | | | | - | | | | 4,364,954 | | | | - | | | | - | | | | 4,364,954 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Common stock repurchase | | | - | | | | - | | | | (60,488 | ) | | | - | | | | - | | | | - | | | | (60,488 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Foreign currency translation adjustment | | | - | | | | - | | | | - | | | | - | | | | - | | | | (167,214 | ) | | | (167,214 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance,June30, 2025 | | | 57,193,734 | | | $ | 5,719 | | | $ | (60,488 | ) | | $ | 48,833,601 | | | $ | (48,065,267 | ) | | $ | (108,871 | ) | | $ | 604,694 | | | See notes to consolidated financial statements. F-6 **ISPIRE TECHNOLOGY INC.** **CONSOLIDATED STATEMENTS OF CASH FLOWS** *(In $USD, except share and per share data)* ** | | | Years ended June30, | | | | | | 2025 | | | 2024 | | | | | | | | | | | | | Net loss | | $ | (39,240,226 | ) | | $ | (14,767,822 | ) | | | Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | Depreciation and amortization | | | 812,483 | | | | 505,653 | | | | Credit loss expenses | | | 22,034,812 | | | | 6,015,752 | | | | Right-of-use assets amortization | | | 1,460,104 | | | | 1,211,899 | | | | Stock-based compensation expenses | | | 5,616,282 | | | | 6,380,282 | | | | Inventory impairment | | | 754,976 | | | | 205,594 | | | | Loss from equity method investment | | | 732,502 | | | | 117,905 | | | | Right-of-use assets impairment | | | 151,516 | | | | - | | | | Debt issuance cost amortization | | | 38,478 | | | | - | | | | Changes in operating assets and liabilities: | | | | | | | | | | | Accounts receivable | | | (9,331,350 | ) | | | (41,299,642 | ) | | | Inventories | | | (1,037,552 | ) | | | 901,120 | | | | Prepaid expenses and other current assets | | | (547,085 | ) | | | 1,937,029 | | | | Accounts payable and accounts payable related party | | | 10,766,537 | | | | 17,891,667 | | | | Contract liabilities | | | 2,643,084 | | | | 1,248,687 | | | | Accrued liabilities and other payables | | | (555,383 | ) | | | 2,456,979 | | | | Operating lease liabilities | | | (1,358,074 | ) | | | (1,043,556 | ) | | | Prepaid income tax/income tax payable | | | (315,189 | ) | | | (63,853 | ) | | | Net cash used in operating activities | | | (7,374,085 | ) | | | (18,302,306 | ) | | | | | | | | | | | | | | Cash flows from investing activities: | | | | | | | | | | | Purchase of property, plant and equipment | | | (1,100,704 | ) | | | (1,969,961 | ) | | | Acquisition of intangible assets | | | (939,075 | ) | | | (1,173,302 | ) | | | Maturity of short term investment | | | - | | | | 9,133,707 | | | | Acquisition of other investment | | | - | | | | (2,000,000 | ) | | | Acquisition of equity method investment | | | - | | | | (1,000,000 | ) | | | Repayment of acquisition payable | | | (3,158,826 | ) | | | - | | | | Net cash (used in) provided by investing activities | | | (5,198,605 | ) | | | 2,990,444 | | | | | | | | | | | | | | | Cash flows from financing activities: | | | | | | | | | | | Common stock repurchased | | | (60,488 | ) | | | - | | | | Proceeds from equity offerings | | | - | | | | 12,300,000 | | | | Issuance costs of equity offerings | | | - | | | | (1,514,094 | ) | | | Proceeds from borrowing | | | 2,080,863 | | | | - | | | | Repayment of borrowing | | | (167,214 | ) | | | - | | | | Repayments of advances from a related party | | | - | | | | (703,323 | ) | | | Net cash provided by financing activities | | | 1,853,161 | | | | 10,082,583 | | | | | | | | | | | | | | | Net decrease in cash | | | (10,719,529 | ) | | | (5,229,279 | ) | | | Cash beginning of year | | | 35,071,294 | | | | 40,300,573 | | | | Cash end of year | | $ | 24,351,765 | | | $ | 35,071,294 | | | | Supplemental non-cash investing and financing activities | | | | | | | | | | | Leased assets obtained in exchange for operating lease liabilities | | $ | 3,062,902 | | | $ | 537,307 | | | | Reclassification of accounts receivable to accounts receivable non current | | $ | 7,367,158 | | | $ | - | | | | Reclassification of accounts payable related party to amount due to a related party | | $ | 25,000,000 | | | $ | - | | | | Unpaid equity method investment in accrued liabilities and other payables | | $ | - | | | $ | 9,000,000 | | | | Warrants issued in connection with equity method investment | | $ | - | | | $ | 365,953 | | | | Unpaid intangible assets in accrued liabilities and other payables | | $ | - | | | $ | 232,382 | | | | Supplemental disclosures | | | | | | | | | | | Cash paid for income taxes | | $ | 1,531,924 | | | $ | 1,355,110 | | | | Cash paid for interest | | $ | 150,285 | | | $ | 15,229 | | | ** See notes to consolidated financial statements. F-7 **ISPIRE TECHNOLOGY INC.** **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** **NOTE 1. ORGANIZATION AND PRINCIPAL ACTIVITIES** Ispire Technology Inc. (the Company or Ispire) was incorporated under the laws of the State of Delaware on June13, 2022. Through its subsidiaries, the Company is engaged in the research and development, design, commercialization, sales, marketing and distribution of branded e-cigarettes and cannabis vaping products. Ispire owns a 100% equity interest in Ispire International Limited, a business company incorporated under the laws of the British Virgin Islands (BVI) (Ispire International) on July6, 2022. Prior to July 29, 2022, all of the equity of Aspire North America LLC, a California limited liability company (Aspire North America), was owned by Aspire Global Inc. (Aspire Global), and all of the equity of Aspire Science and Technology Limited, a Hong Kong corporation (Aspire Science), was owned by Aspire Global Holdings Limited (Aspire Holdings), a wholly-owned subsidiary of Aspire Global. Aspire Global and the Company are related parties since the same individual is the chief executive officer of both companies. As of June 30, 2025, the chief executive officer and his wife, being directors of both companies, owned 66.5% and 5.0% of the equity of Aspire Global, respectively. As of June 30, 2025, they owned 58.1% and 4.4% of the equity of the Company, respectively. On July 29, 2022, Aspire Global transferred 100% of the equity interest in Aspire North America to the Company. On the same day, Aspire Holdings transferred 100% of the equity of Aspire Science to Ispire International. At the time of transfer of the equity in Aspire North America and Aspire Science, the Company had the same stockholders as Aspire Global, and the Companys stockholders held the same percentage interest in the Company as they had in Aspire Global. Because the transfer of the equity in Aspire North America and Aspire Science is a transfer between related parties, the historical financial information of the subsidiaries is carried forward as the historical financial information of the Company and the 50,000,000 shares that were issued at or about the time of the Companys organization are treated as being outstanding on July 1, 2020. In September 2023, the Company established a wholly-owned subsidiary, Ispire Malaysia Sdn Bhd (Ispire Malaysia) under the laws of the Federation of Malaysia, in order to establish manufacturing operations in Southeast Asia. Ispire Malaysia was formed by Tuanfang Liu, the Companys Chairman and Co-Chief Executive Officer on August 2, 2023, and assigned to the Company on September 22, 2023, at a consideration of 100 Malaysian ringgits, equivalent to USD 21. In July 2024, the Company established a wholly-owned subsidiary, Aspire AME Electronic Cigarettes Trading LLC (Ispire UAE) under the laws of the United Arab Emirates (UAE), in order to establish sales and marketing in the UAE. In October 2024, the Company established a wholly-owned subsidiary, Magellan Trading LLC (Magellan Trading) incorporated under the laws of the State of California to assist in operations and logistics for the Company. In January 2025, the Company established a wholly-owned subsidiary, Ispire Products UK LTD (Ispire UK) incorporated under the laws of England and Wales to assist in sales and marketing for the Company. The following table sets forth information concerning the Company and its subsidiaries as of June 30, 2025: | Name of Entity | | Date of Organization | | Place of Organization | | % of Ownership | | Principal Activities | | | Ispire Technology Inc. | | June13, 2022 | | Delaware | | ParentCompany | | Holding Company | | | Ispire International | | July6, 2022 | | BVI | | 100% | | Holding Company | | | Aspire North America | | February22,2020 | | California | | 100% | | Research and Development, Sales and Marketing | | | Aspire Science | | December9, 2016 | | Hong Kong | | 100% | | Sales and Marketing | | | Ispire Malaysia | | August2, 2023 | | Malaysia | | 100% | | Manufacturing, Sales and Marketing | | | Ispire Global Products LLC | | January 19, 2024 | | Delaware | | 100% | | Sales and Marketing | | | Aspire AME Electronic Cigarettes Trading LLC | | July 19, 2024 | | UAE | | 100% | | Sales and Marketing | | | Magellan Trading LLC | | October 1, 2024 | | California | | 100% | | Operations and Logistics | | | Ispire Products UK LTD | | January 9, 2025 | | England and Wales | | 100% | | Sales and Marketing | | F-8 **NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** **Basis of presentation** The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and the applicable rules and regulations of the Securities and Exchange Commission (SEC). Credit loss expenses for June 30, 2024 have been broken out from general and administrative expenses in order to conform to the June 30, 2025 presentation. **Emerging growth company** The Company is an emerging growth company, as defined in Section2(a)of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the JOBS Act), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section102(b)(1)of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Companys financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. **Basis of consolidation** The consolidated financial statements include the financial statements of the Company and its subsidiaries. All inter-company transactions and balances have been eliminated upon consolidation. **Use of estimates** The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include allowance for credit losses and revenue recognition. Actual results could differ from those estimates. F-9 **Cash** Cash includes currency on hand, deposits held by banks and other financial institutions that can be added or withdrawn without limitation and highly liquid investments with maturities of three months or less when purchased. **Fair value measurement** The Company applies ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value, and expands financial statement disclosure requirements for fair value measurements. ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. ASC Topic 820 specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows: | | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | | | | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. | | | | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. Unobservable inputs are valuation technique inputs that reflect the Companys own assumptions about the assumptions that market participants would use in pricing an asset or liability. | | The carrying value of certain of the Companys financial instruments, including cash, accounts receivable, prepaid expenses and other receivables, accounts payable, accounts payable related party, contract liabilities, accrued liabilities and other payables and due to related parties, approximates their fair value because of their short-term maturity. **Accounts receivable, net** Accounts receivable are recognized and carried at the historical carrying amount net of allowance for expected credit loss. The Company have different payment terms for different businesses. For tobacco vaping business, the Company requires a deposit of 30% of sales amount upon placing order, and the payment of remaining 70% to be made before shipment. For cannabis vaping business, tailored payment term are designed for each customer, based on business relationship, order size and other considerations. **Allowance for credit losses** The Company adopted Accounting Standards Update 2016-13 Financial Instruments Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments on July 1, 2023, under the modified retrospective method of adoption. The Company uses roll rate method or evaluates the aggregation of risk characteristics of a receivable pool to develop credit losses estimate. In establishing the required allowance for doubtful accounts, management considers historical collection experience, aging of the receivables, economic environment, and the credit history and financial conditions of the customers. Management reviews its receivables on a regular basis to determine if the allowance is adequate and adjusts the allowance when necessary. Delinquent account balances are written off against allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. F-10 **Inventories, net** Inventories mainly consist of finished goods purchased from suppliers. Inventories are stated at the lower of cost or net realizable value. The cost of an inventory item is determined using the weighted average method. When management determines that certain inventories may not be saleable, or there is an indicator that certain inventory costs may exceed expected market value, the Company will record the difference between the cost and the net realizable value as a write down of inventories. The net realizable value is determined based on the estimated selling price, in the ordinary course of business, less estimated costs necessary to make the sale. The Company records an allowance for slow moving and potentially obsolete inventory based upon recent sales history, the quantity of inventory on-hand, and an estimate of expected sellable life of the inventory. The Company periodically reviews inventory to identify slow moving inventories and compares the forecast sales with the quantities and expected sellable life of inventory. Any inventories identified during this process are reserved for at rates based upon managements judgment and historical rates. The quantity thresholds and reserve rates are based on managements judgment and knowledge of current and projected demand. The reserve estimates may, therefore, be revised if there are changes in the overall market for the Companys products or market changes that in managements judgment, impact its ability to sell potentially obsolete inventory. As of June 30, 2025 and 2024, the Company recorded inventory reserves of $960,570 and $205,594, respectively. **Property, plant and equipment, net** Property, plant and equipment are stated at cost less accumulated depreciation and depreciated on a straight-line basis over the estimated useful lives of the assets from the time the assets are placed in service. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income/loss in the year of disposition. Estimated useful lives are as follows: | | | Estimated Useful Life | | | Office and other equipment | | 3 - 5 years | | | Furniture and fixtures | | 7 years | | | Leasehold improvements | | Shorter of the term of the lease or the estimated useful life of the assets | | **** **Other investment** **** Other investments consist of equity investments in a privately held company that the Company does not have control or significant influence over it. These equity investments do not have readily determinable fair values and are primarily accounted for under the measurement alternative. Under the measurement alternative, the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The Company also makes qualitative assessment at each reporting period and if the assessment indicates that the fair value of the investment is less than the carrying value, the investment in equity securities will be written down to its fair value, with the difference between the fair value and carrying amount of the investment as an impairment loss recorded in the consolidated statements of operations and comprehensive loss. F-11 **Equity method investment** **** The Company applies the equity method to account for equity investment in common stock or in-substance common stock, according to ASC 323, Investments Equity Method and Joint Ventures, over which it has significant influence but does not own a controlling financial interest, unless the fair value option is elected for an investment. As further discussed in Note 8, the Company invested in an entity with two unrelated parties, whereby a new legal entity was formed for the purpose of licensing, owning, operating and developing an industry-standard age-verification solution for vapor (e-cigarette) devices in the U.S. market. Under the equity method, the Companys share of the post-investment profits or losses of the equity method investee is recognized in the consolidated statement of operations. When the Companys share of losses of the equity method investee equals or exceeds its interest in the equity method investee, the Company does not recognize further losses, unless the Company has incurred obligations or made payments or guarantees on behalf of the equity method investee. The Company continually reviews its investments in equity method investees to determine whether a decline in fair value below the carrying value is other-than-temporary. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the investment in the equity method investee is written down to its fair value. **Intangible assets, net** **** Intangible assets refer to capitalized external costs, such as filing fees and associated attorney fees, incurred to obtain issued patents and patent license rights. The Company expenses costs associated with maintaining patents subsequent to their issuance in the period incurred. Capitalized patent costs are amortized on a straight-line basis over estimated useful lives of 15 20 years, which are based on the length of the license agreements as the Company expects to receive economic benefits over that time. The Company assesses the potential impairment to capitalized patent costs when events or changes in circumstances indicate that the carrying amount of our patent portfolio may not be recoverable. $939,075 and $1,405,684 of patent fees were capitalized during the years ended June 30, 2025 and 2024. The amortization of the intangible assets was $82,121 and $30,018 for the years ended June 30, 2025 and 2024 respectively. The amortization expenses were included in the general and administrative expenses. **Accounts payable** Accounts payable represents payables to suppliers and other non-trade vendors. The Companys major supplier is a related party to the Company. See Note 12. **Contract liabilities** Contract liabilities represent advanced deposits received from customers after an order has been placed but before a product has been shipped. The Companys policy is to require a minimum customer deposit in the range of 10% to 30% of the purchase price upon placement of a sales order. Contract liabilities are realized as revenue when the conditions to revenue recognition are met, primarily when control of goods has transferred to customers. **Leases** The Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Companys use by the lessor. The Companys assessment of the lease term reflects any rent-free periods. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated statements of operations over the lease term. For leases with a term exceeding 12months, an operating lease liability is recorded on the Companys consolidated balance sheet at lease commencement reflecting the present value of its remaining fixed minimum payment obligations over the lease term. A corresponding operating lease right-of-use asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Companys incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease. F-12 For the Companys operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term. For leases with a term of 12months or less, any fixed lease payments are recognized on a straight-line basis over the lease term and are not recognized on the Companys consolidated balance sheet as an accounting policy election. Leases qualifying for the short-term lease exception were insignificant. **Impairment of long-lived assets** In accordance with ASC Topic 360-10, Impairment and Disposal of Long-Lived Assets, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the assets estimated fair value and its book value. For the years ended June 30, 2025 and 2024, the impairment of long-lived assets were $151,516 and $0, respectively. **Revenue recognition** The Company sells its vaping products to customers and recognizes revenue in accordance with the guidance of ASC 606,Revenue from Contracts withCustomers. Many customers are distributors that resell the Companys products in various geographic regions. The performance obligations are for the Company to transfer the title and control of the goods to a customer for a determined price. Each order is considered a separate contract with a single performance obligation. Revenue is recognized when control of goods has transferred to customers. For the majority of the Companys customer arrangements, control transfers to customers at a point-in-time when goods have been delivered to the pickup location specified by the customer or a forwarder appointed by the customer, as that is generally when legal title, physical possession and risks and rewards of goods transfer to the customer. Revenue is recognized at the transaction price based on the purchase order as adjusted for the anticipated rebates, discounts and other sales incentives. When determining the transaction price, management estimates variable consideration applying the portfolio approach practical expedient under ASC 606. The main sources of variable consideration for the Company are sales returns. These sales incentives are recorded as a reduction of revenue at the time of the initial sale using the most-likely amount estimation method. The most-likely amount method is based on the single most likely outcome from a range of possible consideration outcomes. The Company offers different payment terms to different customers. For nicotine vaping products, the general payment term is a deposit of 30% of sales amount upon placing order, and the payment of the remaining 70% to be made before shipment. For cannabis vaping products, a tailored payment term is designed for each customer, based on the business relationship, order size and other considerations. All contract liabilities at the beginning of the period were recognized as revenues in the reporting period. The Company offers a thirty-day warranty. The warranty is an assurance-type warranty, and it offers replacement of products in case the products sold do not function as expected. In certain sales contracts, a right of return is offered. With a right of return, a customer is given the right to return the products if they are not satisfied with the product, and a credit would be given. The Company has a very low rate of return in history and a return reserve is accruedbased on historical return rate and the managements judgement. The Company has minimal incremental costs of obtaining a contract and are expensed when incurred. Sales taxes, which are sales and use or other similar taxes collected from the customer and remitted to the applicable taxing authority by the Company in accordance with applicable law,are excluded from revenue. *Disaggregated Revenue* The Company has taken into consideration the nature, amount, timing, and uncertainty of revenue and cash flows, and has determined to disaggregate its net sales by region. The net sales disaggregated by region for the years ended June 30, 2025 and 2024, were as follows: | | | For the yearended June 30, | | | | | | 2025 | | | 2024 | | | | Europe | | $ | 74,107,249 | | | $ | 65,260,478 | | | | North America (the U.S. and Canada) | | | 32,567,795 | | | | 63,079,961 | | | | Asia Pacific (excluding PRC) | | | 12,274,022 | | | | 17,588,597 | | | | Others | | | 8,545,238 | | | | 5,979,655 | | | | Total | | | 127,494,304 | | | | 151,908,691 | | | F-13 **Cost of revenue** Cost of revenue for the years ended June 30, 2025 and 2024 consisted primarily of the cost of purchasing vaping products, freight-in cost and inventory impairment, which were mostly purchased from a related party. See Note 12. **Research and development expenses** Research and development expenses represent staff costs for development personnels, and expenses incurred for the testing of new products. For the years ended June 30, 2025 and 2024, the research and development expenses were $363,301 and $779,174, respectively. They are included in the general and administrative expenses. **Stock-based compensation** **** The Company measures and recognizes compensation expenses for stock-based payment awards, including stock options, restricted stock granted to directors and advisors, and restricted stock units (RSUs) granted to employees, based on the grant date fair value of the awards. The Company engages a third-party valuer to assist in determining the fair value of stock options using the binomial option pricing model, with significant assumption of exercise multiple, expected volatility, risk-free interest rate and expected dividend yield. The fair value of RSUs is measured on the grant date based on the closing market price of the Companys common stock. The stock-based payment awards typically include time-based vesting conditions, however, certain of the Companys stock-based payment awards may include performance-based vesting conditions. For stock-based payment awards with time-based vesting conditions, the resulting cost is recognized over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period, which is generally four years for stock options and three years for RSUs. Stock-based compensation expense is recognized on a straight-line basis over the period during which services are provided in exchange for the award. For stock-based payment awards with performance-based vesting conditions, the Company will estimate the probability that the performance condition will be met at each reporting date. Stock-based compensation expense is only recognized for stock-based payment awards that are probable of vesting. Ultimately, the cumulative stock-based compensation expense recognized by the Company is the grant date fair value of the awards where the performance conditions have been met and the awards have vested. Stock-based compensation expense is recorded in the sales and marketing expense and general and administrative expense in the consolidated statements of operations. The Company recognizes forfeitures of stock-based payment awards uponoccurrence. **Interest income** ** For the years ended June30, 2025 and 2024, interest income related to interest on bank deposits. **Income taxes** The Company accounts for income taxes under ASC 740, Income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. F-14 The provisions of ASC 740-10 prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company classifies the interest and penalties, if any, as a component of income tax expense. For the years ended June 30, 2025 and 2024, the Company did not incur any interest or penalties related to an uncertain tax position. The Company does not believe that there were any uncertain tax positions as of June30, 2025 and 2024. **Earnings per share** The Company computes earnings per share (EPS) in accordance with ASC 260, Earnings per Share. ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net loss divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (for example, convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potentially dilutive shares could dilute basic EPS in the future that were not included in the computation of diluted EPS because to do so would have been antidilutive for the years ended June 30, 2025 and 2024. Potentially dilutive shares were as follows: | | | As of June30, | | | As of June30, | | | | Dilutive securities: | | 2025 | | | 2024 | | | | Share options | | | 1,438,125 | | | | 3,255,000 | | | | Unvested restricted stock units | | | 404,970 | | | | 483,606 | | | | Warrants | | | 173,211 | | | | 173,211 | | | | Total | | | 2,016,306 | | | | 3,911,817 | | | **** **Comprehensive loss** Comprehensive loss consists of two components, net loss and other comprehensive (loss) income. The foreign currency translation gain or loss resulting from translation of the financial statements expressed in USD is reported in other comprehensive (loss) income in the consolidated statements of operations and comprehensive loss. **Commitments and contingencies** In the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. If the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Companys financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, is disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. **** **Segment reporting** ** Based on the criteria established by ASC 280, and ASU 2023-07 that Company adopted during the year ended June 30, 2025, the Companys chief operating decision maker (CODM) has been identified as its Chief Executive Officer, who reviews the consolidated results when making decisions about allocating resources and assessing performance of the Company as a whole and hence, the Company has onlyonereportable segment. The Company does not distinguish between markets or segments for the purpose of internal reporting. Therefore, no geographical segments are presented. For the years ended June 30, 2025 and 2024, the reportable segment revenue, segment profit or loss and significant segment expenses are the same as consolidated comprehensive loss statement. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the CODM, or decision-making group, in deciding how to allocate resources and in assessing performance. The Companys CODM is Mr. Tuanfang Liu, the Co-Chief Executive Officer and Chairman, and Mr. Michael Wang, the Co-Chief Executive Officer. F-15 The Companys organizational structure is based on a number of factors that the CODM uses to evaluate, view and run its business operations which include, but not limited to, customer base, homogeneity of products and technology. The Companys operating segment is based on such organizational structure and information reviewed by the Companys CODM to evaluate the operating segment results. The Company has internal reporting of revenue, cost and expenses by nature as a whole. Hence, the Company has onlyoneoperating segment. The accounting policies of the single segment are the same as described in the significant accounting policies. The CODM assesses performance for the single segment and decides how to allocate resources based on net loss that also is reported on the consolidated statements of comprehensive loss as consolidated net loss. The measure of the single segment assets is reported on the consolidated balance sheets as total consolidated assets. The CODM reviews revenues and expenses at the consolidated level as disclosed in the Companys consolidated statements of comprehensive loss and uses net loss to evaluate return on assets and to monitor budget versus actual results and in competitive analysis by benchmarking to the Companys competitors. The competitive analysis and the monitoring of budgeted versus actual results are used in assessing the segments performance and in establishing managements compensation. **Related parties** Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, immediate family members of principal owners of the Company and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all significant related party transactions in Note 12. **Recent accounting pronouncements** As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company intends to take advantage of the benefits of this extended transition period for all accounting standards described below, if applicable. In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements. The amendments in this update modify the disclosure or presentation requirements of a variety of topics in the codification. Certain of the amendments represent clarifications to or technical corrections of the current requirements. The adoption of the amendment will occur on a prospective basis. The amendments in this ASU will be effective for public business entities on the effective date of the SECs removal of the related disclosures from Regulation S-X or Regulation S-K. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, the amendments will not become effective for any entity. The Company is currently evaluating the impacts of the provisions of ASU 2023-06. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. ASU 2023-09 requires disaggregated information about a reporting entitys effective tax rate reconciliation as well as additional information on income taxes paid. The guidance is effective for public business entities for annual periods beginning after December 15, 2024, and for private entities for annual periods beginning after December 15, 2025, on a prospective basis. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement: Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), to improve the disclosures about an entitys expenses. In January 2025, the FASB issued ASU 2025-01 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. Upon adoption, the Company will be required to disclose in the notes to the financial statements a disaggregation of certain expense categories included within the expense captions on the face of the income statement. The standard can be applied either prospectively or retrospectively. The Company is currently assessing adoption timing and the effect that the updated standard will have on our financial statement disclosures. F-16 In July 2025, the FASB issued ASU 2025-05, Financial InstrumentsCredit Losses (Topic 326), to address challenges encountered when applying the guidance in Topic 326, Financial InstrumentsCredit Losses. The amendment provides (1) all entities with a practical expedient and (2) entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. The standard is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The standard can be applied prospectively. The Company is currently assessing adoption timing and the effect that the updated standard will have on our financial statement disclosures. **Concentration and risks** *Risks and Uncertainties* The Companys business, financial condition and results of operations may be negatively impacted by risks related to government regulations, natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Companys operations. *E-cigarette regulation* Regulation regarding e-cigarettes varies across countries, from no regulation to a total ban. The legal status of e-cigarettes is currently pending in many countries. But as e-cigarettes have become more and more popular recently, many countries are considering imposing more stringent law and regulations to regulate this market. Changes in existing law and regulations and the imposition of new laws and regulations in countries and regions that our major customers are located in may adversely affect the Companys business. The Federal Food, Drug, and Cosmetic Act requires all Electronic Nicotine Delivery Systems (ENDS) product manufacturers that market products in the United States to submit Premarket Tobacco Product Applications (PMTAs) to the Food and Drug Administration (FDA). For ENDS products that were on the U.S. market on or before August8, 2016, a PMTA was required to be submitted to the FDA before September9, 2020; for ENDS products that were not on the U.S. market prior to August8, 2016, and for which a PMTA was not filed before September 9, 2020, a PMTA premarket authorization issued by FDA is required before the subject product may enter the U.S. market. The Company has submitted a PMTA filing for one ENDS product, and, under apparent FDA policies, FDA will not enforce the premarket review requirements for that product pending review of its PMTA. However, even with submission of the PMTA application, the FDA may reject the Companys application and may prevent the Companys ENDS products from being sold in U.S., which will adversely affect the Companys business. Amendments to the Prevent All Cigarette Trafficking (PACT) Act, which became law in 2021, extend the PACT Act to include e-cigarette and all vaping products, and place significant burdens on sellers of vaping products in the United States which may make it difficult to operate profitably in the United States. Because of tighter government regulations, the Company has stopped marketing tobacco vaping products in the United States, as the volume of sales from the one tobacco vaping product which the Company may sell in the United States does not justify the marketing and regulatory costs involved. **** In the United States, cannabis vaping products are governed by state laws, which vary from state to state. Most states do not permit the adult recreational use of cannabis, and no states permit the sale of recreational cannabis products to minors. The Company cannot predict what action states will take or the nature and amount of taxes they may impose. However, to the extent the PACT Act applies to cannabis products that aerosolize liquids, it may be more difficult to sell our products in states that permit the sale of cannabis. However, cannabis and its derivatives containing more than 0.3% delta-9 tetrahydrocannabinol on a dry weight basis remain Schedule I controlled substances under U.S. federal law, meaning that federal law generally prohibits their manufacture and distribution. United States federal law also deems it unlawful to sell, offer for sale, transport in interstate commerce, import, or export drug paraphernalia, which includes any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance the possession of which federal law prohibits, including Schedule I marijuana. Limited exemptions exist, most notably when state or local law authorizes these items manufacture, possession, or distribution. F-17 The European Commission issued the Tobacco Products Directive (the TPD), which became effective on May19, 2014, and became applicable in the European Union member states on May20, 2016. The TPD regulates e-cigarettes on the packaging, labelling and ingredients of the products on the European Union market, the creation of smoke-free environments, tax measures and activities against illegal trade and anti-smoke campaigns. Member states of the European Union are required to ensure that advertisements for any tobacco related product are prohibited, and no promotion shall be made as to those devices with an intention to promote e-cigarettes. For the e-cigarettes released after May20, 2016, TPD requires e-cigarette manufacturers to submit product sales applications to the regulatory market six months in advance, and ensure their products can meet the TPD requirements before they can be released. The Company has complied with TPD requirement for products sold in Europe. The sale of cannabis vaping products is illegal in the European Union and the United Kingdom.**** *Customer and Supplier Concentration* **** (a) Customers **** For the years ended June30, 2025 and 2024, the Companys major customers, who accounted for more than 10% of the Companys consolidated revenue, were as follows: | | | Year Ended June30, | | | | | | 2025 | | | 2024 | | | | Major Customers | | | | | | | | | A | | | 26 | % | | | 30 | % | | (b)Suppliers For the years ended June 30, 2025 and 2024, the Companys suppliers, who accounted for more than 10% of the Companys total purchases, were as follows: | | | Year Ended June30, | | | | | | 2025 | | | 2024 | | | | Major Suppliers | | | | | | | | | B(1) | | | 91 | % | | | 78 | % | | | (1) | Major supplier B is Shenzhen Yi Jia, a Chinese company that is 95% owned by the Companys co-chief executive officer and principal stockholder. See Note 12. | | *Credit Risk ***** Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and accounts receivable. The Company maintains its cash in financial institutions. Accounts at United States financial institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. Accounts at Malaysian financial institutions are insured by the Perbadanan Insurans Deposit Malaysia (PIDM) up to RM 250,000. The Hong Kong Deposit Protection Board pays compensation up to a limit of Hong Kong Dollar (HKD) 800,000. The Company may carry cash balances at financial institutions in excess of the insured limits. The amount in excess of the deposit insurance as of June 30, 2025 and 2024 was $23,939,618 and $34,698,647. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant. As of June 30, 2025 and 2024, the Companys customers, whose accounts receivable balances accounted for more than 10% of the Companys total accounts receivable, net, were as follows: | | | As of June30, | | | As of June30, | | | | Customers | | 2025 | | | 2024 | | | | C | | | 16 | % | | | 16 | % | | | D | | | 17 | % | | | * | | | | * | Represents the percentage was below 10%. | | F-18 **NOTE 3. CASH** Below is a breakdown of the Companys cash balances in banks as of June30, 2025 and 2024, both by geography and by currencies (translated into U.S. dollars): | | | As of June30, | | | As of June30, | | | | By Geography: | | 2025 | | | 2024 | | | | Cash in HK | | $ | 23,336,668 | | | $ | 32,667,486 | | | | Cash in U.S. | | | 824,852 | | | | 2,240,874 | | | | Cash in Malaysia | | | 190,245 | | | | 162,934 | | | | Total | | $ | 24,351,765 | | | $ | 35,071,294 | | | | | | | | | | | | | | | By Currency: | | | | | | | | | | | USD | | $ | 14,675,591 | | | $ | 25,399,331 | | | | RM | | | 101,743 | | | | 88,598 | | | | HKD | | | 139,691 | | | | 121,628 | | | | EUR | | | 11,097 | | | | 13,056 | | | | GBP | | | 24,091 | | | | 22,233 | | | | RMB | | | 9,399,552 | | | | 9,426,448 | | | | Total | | $ | 24,351,765 | | | $ | 35,071,294 | | | HKD refers to Hong Kong dollars, GBP refers to British pounds, EUR refers to Euros, RM refers to Malaysia ringgit, and RMB refers to Renminbi. **NOTE 4. ACCOUNTS RECEIVABLE, NET** As of June30, 2025 and 2024, accounts receivable consisted of the following: | | | As of June30, | | | As of June30, | | | | | | 2025 | | | 2024 | | | | Accounts receivable gross | | $ | 65,002,773 | | | $ | 65,620,003 | | | | Allowance for credit losses | | | (17,971,470 | ) | | | (5,885,238 | ) | | | Accounts receivable, net | | $ | 47,031,303 | | | $ | 59,734,765 | | | | | | | | | | | | | | | Accounts receivable, net current portion | | | 39,664,145 | | | | 59,734,765 | | | | Accounts receivable, net non current portion | | | 7,367,158 | | | | - | | | | Accounts receivable, net | | $ | 47,031,303 | | | $ | 59,734,765 | | | TheCompany recorded $22,034,812 and $6,015,752 credit loss expenses for the years ended June30, 2025 and 2024, respectively. The rise in credit loss expenses was due to higher aged receivables and an increase in estimated lifetime expected losses under the Companys model, and a higher volume of past-due customer balances. For the years ended June30, 2025 and 2024, the Company wrote off accounts receivable against allowance for credit losses of $9,948,580 and $1,629,320,respectively. As of June 30, 2025, there were $7,367,158 accounts receivable reclassified to accounts receivable non current due to payment term extension arrangements with customers. Activity in the allowance for credit losses is below: | | | For the yearended June 30, | | | | | | 2025 | | | 2024 | | | | Balance at July 1 | | $ | 5,885,238 | | | $ | 1,498,806 | | | | Provision for expected losses | | | 22,034,812 | | | | 6,015,752 | | | | Write-offs charged against the allowance | | | (9,948,580 | ) | | | (1,629,320 | ) | | | Balance at June 30 | | | 17,971,470 | | | | 5,885,238 | | | F-19 **NOTE 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS** As of June30, 2025 and 2024, prepaid expenses and other current assets consisted of the following: | | | As of June30, | | | As of June30, | | | | | | 2025 | | | 2024 | | | | Prepayment for inventory purchases | | $ | 1,133,083 | | | $ | 206,480 | | | | Prepayments | | | 270,545 | | | | 696,960 | | | | Other receivable | | | 517,080 | | | | 488,104 | | | | Prepaid provisional tax | | | 323,797 | | | | 8,608 | | | | Total | | $ | 2,244,505 | | | $ | 1,400,152 | | | **NOTE 6. PROPERTY, PLANT AND EQUIPMENT, NET** As of June30, 2025 and 2024, property, plant and equipment consisted of the following: | | | As of June30, | | | As of June 30, | | | | | | 2025 | | | 2024 | | | | Leasehold improvements | | $ | 817,327 | | | $ | 817,329 | | | | Office and other equipment | | | 1,648,733 | | | | 1,466,840 | | | | Furniture and fixtures | | | 877,685 | | | | 817,308 | | | | Construction-in-progress | | | 894,919 | | | | 36,483 | | | | | | | 4,238,664 | | | | 3,137,960 | | | | Less: accumulated depreciation | | | (1,285,864 | ) | | | (555,503 | ) | | | Total | | $ | 2,952,800 | | | $ | 2,582,457 | | | For the years ended June30, 2025 and 2024, depreciation expense amounted to $730,362 and $479,066, respectively. Construction-in-progress refers to the office and production plant that are under construction in Malaysia, which are expected to be put into use in year 2026. **NOTE 7. OTHER INVESTMENT** **** On February 20, 2024, the Company acquired shares of preferred equityinvestmentin Touch Point Worldwide, Inc. d/b/a/ Berify, a Delaware corporation (Berify). The Company purchased 908,464 shares of Berify SeriesSeedPreferred equity for $1 million, yielding a 2.3% ownership in Berify. On April 5, 2024, the Company invested an additional of $1 million into Berifys preferred equity for 908,464 shares, giving the Company a total of 1,816,928 shares equal to a 4.5% interest in Berify. As of June 30, 2025, the investment in Berify amounted to $2,000,000. The Series Seed Preferred Shares are convertible at any time into Berify common stock on a one-to-one basis, subject to certain specified adjustment provisions, and are mandatorily convertible upon an initial public offering or upon the election of the holders of a majority of the outstanding shares of Berify preferred stock. The Series Seed Preferred Shares will be paid in preference to the holders of common stock upon any voluntary or involuntary liquidation, dissolution or winding up of the entity, or upon a deemed liquidation event (consisting of (a) a merger or consolidation, or (b) the sale, lease, transfer of all or substantially all of the entitys assets), based on the original issue price plus declared but unpaid dividends. The Series Seed Preferred Shares do not provide the Company with the ability to require repurchase of the shares at any specified time or upon any specified event. The Series Seed Preferred equity comes with a variety of protective rights for Series Seed Preferred shareholders, including the ability to approve the creation of new classes of capital stock, redemptions of capital stock, declare dividends on capital stock and effecting a deemed liquidation event or liquidation, dissolution or winding up of the entity. The holders of Berify Series Seed Preferred Shares vote with holders of common stock on an as-converted basis. F-20 The Company accounts for the investment in Berify Series Seed Preferred Shares as equity securities under ASC 321. The Company initially recognized the investment based on its transaction price, reflective of the fair value of the investment. As the investment does not have a readily determinable fair value, the Company applies the measurement alternative, and measures at cost less any impairment on a subsequent measurement basis, until there are any observable price changes that can be applied to the measurement of the investment. **NOTE 8. EQUITY METHOD INVESTMENT** **** On April 5, 2024, Aspire North America entered into a capital contribution, subscription, and joint venture agreement with several other parties. Pursuant to joint venture agreement, the parties created a legal entity, IKE Tech LLC (IKE), whose business is licensing, owning, operating and developing an industry-standard age-verification solution for vapor (e-cigarette) devices in the U.S. market as the related planned submission of PMTA applications that seek FDA marketing orders for cutting-edge technologies across the U.S. e-cigarette market. Ispire contributed $1 million to IKE in cash for funding its operating activities and entered into a binding commitment to make an additional capital contribution to IKE in the aggregate amount of up to $9 million. In exchange for Ispires total investment of $10 million, IKE issued to Ispire membership interests in an aggregate amount initially equal to forty percent (40%) of the membership interests in IKE. As of June30, 2025 and 2024, the investment in joint venture accounted for under the equity method amounted to $9,515,546 and $10,248,048. As of June 30, 2025, the Company noticed no indicator of impairment regarding the investment. For the years ended June 30, 2025 and 2024, the Companys share of the joint ventures net loss was $732,502 and $117,905. The loss was included in other (expense) income, net in the consolidated statements of operations and comprehensive loss. The tables below presentthe summarized financial information, as provided to the Company by the investee, for the unconsolidated company: | | | As of June30, | | | As of June30, | | | | | | 2025 | | | 2024 | | | | Current assets | | $ | 20,583,827 | | | $ | 24,249,101 | | | | Noncurrent assets | | | 2,568,283 | | | | 576,789 | | | | Current liabilities | | | 278,128 | | | | 120,654 | | | | Equity | | | 22,873,982 | | | | 24,705,236 | | | **** | | | For the yearended June 30, | | | | | | 2025 | | | 2024 | | | | Net revenue | | $ | - | | | $ | - | | | | Gross profit (loss) | | | - | | | | - | | | | Loss from operations | | | 1,831,254 | | | | 294,763 | | | | Net loss | | | 1,831,254 | | | | 294,763 | | | **NOTE 9. CONTRACT LIABILITIES** As of June 30, 2025 and 2024, the Company had total contract liabilities of $4,861,250 and $2,218,166, respectively. These liabilities are advance deposits received from customers after an order has been placed. The increase in the balance at June 30, 2025 was due to more orders on hand on that date. The amount of revenue recognized in the year ended June 30, 2025, that was included in the opening contract liability balance was $1,957,808. Changes in the contract liabilities is below: | | | Year ended June30, 2025 | | | | Balance at July 1, 2024 | | $ | 2,218,166 | | | | Contract liabilities recognized related to advanced deposits | | | 41,129,592 | | | | Revenue recognized in current period | | | (38,486,508 | ) | | | Balance at June 30, 2025 | | $ | 4,861,250 | | | F-21 **NOTE 10. LEASES** The Company has operating lease arrangements for office premises in Hong Kong, California and Malaysia. These leases typically have terms of two to five years. Leases with an initial term of 12 months or less are not presented as right-of-use assets on the consolidated balance sheet and are expensed over the lease term. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. The balances for the right-of-use assets and lease liabilities where the Company is the lessee are presented as follow: | | | As of | | | As of | | | | | | June30, 2025 | | | June30, 2024 | | | | Operating lease right-of-use assets | | $ | 5,181,521 | | | $ | 3,579,140 | | | | Impairment | | | (151,516 | ) | | | - | | | | Total | | $ | 5,030,005 | | | $ | 3,579,140 | | | | | | | | | | | | | | | Operating lease liabilities current | | $ | 1,838,815 | | | $ | 1,207,832 | | | | Operating lease liabilities non-current | | | 3,267,522 | | | | 2,194,094 | | | | Total | | $ | 5,106,337 | | | $ | 3,401,926 | | | As of June 30, 2025, the maturities of our lease liabilities (excluding short-term leases) are as follows: | | | As of June30, 2025 | | | | July 1, 2025 to June 30, 2026 | | $ | 2,110,799 | | | | July 1, 2026 to June 30, 2027 | | | 1,583,109 | | | | July 1, 2027 to June 30, 2028 | | | 777,402 | | | | July 1, 2028 to June 30, 2029 | | | 696,727 | | | | July 1, 2029 to June 30, 2030 | | | 464,484 | | | | Total future lease payments | | | 5,632,521 | | | | Less: imputed interest | | | (526,184 | ) | | | Total lease liabilities | | $ | 5,106,337 | | | The Company incurred lease costs, which include the payment of short-term leases, of $1,757,022 and $1,522,974 on the Companys consolidated statements of operations and comprehensive loss for the years ended June 30, 2025 and 2024, respectively. The Company made payments of $1,654,992 and $1,342,709 under the lease agreements during the years ended June 30, 2025 and 2024, respectively. The weighted-average remaining lease term related to the Companys lease liabilities as of June 30, 2025 and 2024 was 3.4 years and 2.7 years, respectively. The discount rate related to the Companys lease liabilities as of June 30, 2025 and 2024 was 6.4% and 7.9%. The discount rates are generally based on estimates of the Companys incremental borrowing rate, as the discount rates implicit in the Companys leases cannot be readily determined. F-22 **NOTE 11. ACCRUED LIABILITIES AND OTHER PAYABLES** As of June30, 2025 and 2024, accrued liabilities and other payables consisted of the following: | | | As of June30, | | | As of June30, | | | | | | 2025 | | | 2024 | | | | Joint venture investment payable | | $ | 5,841,174 | | | $ | 9,000,000 | | | | Other payables | | | 502,669 | | | | 575,115 | | | | Accrued salaries and related benefits | | | 372,294 | | | | 432,863 | | | | Accrued expenses | | | 1,180,982 | | | | 1,012,353 | | | | Reserve for product returns | | | 201,922 | | | | 717,058 | | | | Other tax payable | | | 950 | | | | 950 | | | | Total | | $ | 8,099,991 | | | $ | 11,738,339 | | | Joint venture investment payable refers to payable to IKE, which is a related party, please see Note 8 and Note 12 for details. **** **NOTE 12. RELATED PARTY TRANSACTIONS** | a) | The table below sets forth the major related parties and their relationships with the Company: | | | Name of related parties and Relationship with the Company | | | - Tuanfang Liu is the Co-Chief Executive Officer and Chairman of the Company. | | | - Jiangyan Zhu is the wife of Tuanfang Liu and a director of the Company. | | | - Eigate (Hong Kong) Technology Co., Limited (Eigate) is a wholly-owned and controlled by the Companys Chairman. | | | - Aspire Global is a company controlled by the Chairman of the Company. | | | - Aspire International Hong Kong Limited is a wholly-owned subsidiary of Aspire Global. | | | - Shenzhen Yi Jia, a Chinese company that is 95% owned by the Companys Chairman and 5% by the Chairmans cousin. | | | - IKE Tech LLC, a joint venture that the Company has 40% membership interests. | | | b) | Tuanfang Liu is also Aspire Globals chief executive officer and a director of both the Company and Aspire Global, and his wife, Jiangyan Zhu, is also a director of both companies. As of June 30, 2025, Mr. Liu and Ms. Zhu beneficially own 66.5% and 5.0%, respectively, of the outstanding shares of Aspire Global. As of June 30, 2025, Mr. Liu and Ms. Zhu beneficially own 58.1% and 4.4%, respectively, of the outstanding shares of the Company. | | | c) | For both years ended June 30, 2025 and 2024, the majority of the Companys tobacco and cannabis vaping products were purchased from Shenzhen Yi Jia. As of June 30, 2025 and 2024, the accounts payable related party was $52,420,256 and $67,046,472, respectively, which was payable to Shenzhen Yi Jia. There are no fixed payment terms regarding these balances and they are classified as current liabilities. For the years ended June 30, 2025 and 2024, the purchases from Shenzhen Yi Jia were $94,657,848 and $91,324,614, respectively. | | | d) | The balances due to a related party at June 30, 2025 and 2024 represent amounts due to Shenzhen Yi Jia of $25,000,000 and $0, respectively. The balance of $25,000,000 as of June 30, 2025 was reclassified from accounts payable related party as Shenzhen Yijia agreed not to seek repayment of this balance for twelve months starting from September 30, 2025. The balances are non-interest bearing and unsecured. | | | e) | As of June 30, 2025 and 2024, the Company had total accounts receivable of $75,147and$17,280due from IKE. For the years ended June 30, 2025 and 2024,the Company recorded$109,349 and$0in other income from IKE from charging administrative fees. | | **** **NOTE 13. INCOME TAXES** British Virgin Islands (BVI) Under the current laws of the BVI, the Companys BVI subsidiary, Ispire International, is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholding tax in the BVI. Hong Kong Under the two-tiered profits tax rates regime for Hong Kong, the first 2 million HKD of profits of the qualifying entity will be taxed at 8.25%, and profits above HKD 2 million will be taxed at 16.5%. United States The Company and Aspire North America LLC are each subject to the federal income tax rate of 21% if in a taxable position. F-23 Malaysia Ispire Malaysia Sdn Bhd are subject to the standard corporate tax rate of 24% if in a taxable position. However, resident companies that qualify as small and medium-sized enterprises may benefit from a reduced tax rate of 15% on the first RM 150,000 of chargeable income and 17% on the next RM 450,000. For the years ended June30, 2025 and 2024 income (loss) before income taxes by major taxing jurisdiction consists of: | | | Years ended June30, | | | | | | 2025 | | | 2024 | | | | HK | | $ | 7,447,310 | | | $ | 8,150,770 | | | | U.S. | | | (44,039,142 | ) | | | (20,623,262 | ) | | | Malaysia | | | (1,444,690 | ) | | | (1,013,284 | ) | | | Total | | $ | (38,036,522 | ) | | $ | (13,485,776 | ) | | The provision for income taxes consisted of the following: | | | Years ended June30, | | | | | | 2025 | | | 2024 | | | | Current provision: | | | | | | | | | | | United States Federal | | $ | - | | | | - | | | | United States - State | | | - | | | | - | | | | Foreign | | | 1,203,704 | | | | 1,282,046 | | | | Total current provision | | | 1,203,704 | | | | 1,282,046 | | | | | | | | | | | | | | | Deferred provision: | | | | | | | | | | | United States Federal | | | - | | | | - | | | | United States - State | | | - | | | | - | | | | Foreign | | | - | | | | - | | | | Total deferred provision: | | | - | | | | - | | | | | | | | | | | | | | | Total provision for income tax | | $ | 1,203,704 | | | $ | 1,282,046 | | | The reconciliation of the actual income taxes to the amount of tax computed by applying the aforementioned statutory tax rate to pre-tax income is as follows: | | | Years ended June30, | | | | | | 2025 | | | 2024 | | | | Federal statutory income tax rate | | $ | (7,987,670 | ) | | $ | (2,832,013 | ) | | | State income taxes, net of federal benefit | | | (3,054,267 | ) | | | (2,922,897 | ) | | | Global Intangible Low-Taxes Income | | | 1,007,772 | | | | - | | | | Permanent Differences | | | 56,843 | | | | 77,429 | | | | Foreign Rate Differential | | | (373,481 | ) | | | (460,014 | ) | | | Effect of entity tax reclassification | | | 4,832,943 | | | | - | | | | Other | | | (16,880 | ) | | | 69,469 | | | | Hong Kong Preferential Rate | | | (11,908 | ) | | | - | | | | Change in valuation allowance | | | 6,750,352 | | | | 7,350,072 | | | | Income tax expense | | $ | 1,203,704 | | | $ | 1,282,046 | | | The Companys effective tax rate for the years ended June 30, 2025 and 2024, was different from the United States statutory income tax rate due primarily to the U.S. and Malaysia subsidiaries being in a loss position and the Hong Kong subsidiary being in an income position. No tax benefit has been recognized for these current losses and the related carryforward losses of these subsidiaries, as a full valuation allowance has been established against the deferred tax asset arising from these losses. As of June 30, 2025, the Company had unrecognized deferred tax assets totaling $20,210,191. Of this amount, $10,839,605 relates to federal, state, and foreign net operating loss carryforwards, which may provide future income tax benefits. These deferred tax assets are attributable to gross net operating loss carryforwards of $34,335,732 for federal, $45,842,049 for state and $1,754,463 for foreign jurisdictions. In accordance with the Tax Cuts and Jobs Act enacted in December 2017, federal NOL carryforwards arising from tax years beginning after January 1, 2018 can be carried forward indefinitely, subject to a taxable income limitation. State net operating loss carryforwards will begin to expire in 2043, and foreign net operating loss carryforwards will begin to expire in 2034. F-24 The amount of the valuation allowance as of June 30, 2025 was $18,617,103, resulting from an addition of $6,766,587 to the valuation allowance. Valuation allowances provided against the deferred tax assets are related to all net operating loss carryforwards, as the Companys management does not believe that sufficient positive evidence exists to conclude that the benefits of such deferred tax assets are more likely than not to be realized in full. Deferred tax assets and liabilities represent the future effects on income taxes that result from temporary differences and carryforwards that exist at the balance sheet date, and are measured using enacted rates and provisions of the tax law. Deferred tax assets are recognized for deductible temporary differences as well as tax attributes. The Company generated Global Intangible Low-Taxes Income during the year. However, no corresponding U.S. federal income tax expense was recognized due to the utilization of net operating loss carryforwards. The Company will continue to monitor the impact of Global Intangible Low-Taxes Income on its future tax positions. Significant components of the Companys deferred tax liabilities and assets as of June 30, 2025 and 2024 are as follows: | | | Years ended June30, | | | | | | 2025 | | | 2024 | | | | Deferred tax assets: | | | | | | | | | Net operating loss carryforward | | $ | 10,839,605 | | | $ | 7,006,420 | | | | Foreign payables | | | - | | | | 1,310,900 | | | | Accounts receivable impairment | | | 5,456,177 | | | | 1,541,584 | | | | Share based compensation | | | 1,868,307 | | | | 1,529,346 | | | | Lease liabilities | | | 1,270,401 | | | | 939,195 | | | | Others | | | 775,701 | | | | 702,425 | | | | Total deferred tax assets | | | 20,210,191 | | | | 13,029,870 | | | | Less: Valuation allowance | | | (18,617,103 | ) | | | (11,850,516 | ) | | | Net deferred assets | | | 1,593,088 | | | | 1,179,354 | | | | | | | | | | | | | | | Deferred tax liabilities: | | | | | | | | | | | Property, plant and equipment | | | (353,363 | ) | | | (347,779 | ) | | | Intangible Assets | | | (8,405 | ) | | | - | | | | Right of use assets | | | (1,231,320 | ) | | | (831,575 | ) | | | Net deferred tax liabilities | | | (1,593,088 | ) | | | (1,179,354 | ) | | | | | | | | | | | | | | Net deferred tax asset | | $ | - | | | $ | - | | | Movement of valuation allowance: | | | Years ended June30, | | | | | | 2025 | | | 2024 | | | | At the beginning of the year | | $ | 11,850,516 | | | $ | 4,500,444 | | | | Current year addition | | | 6,766,587 | | | | 7,350,072 | | | | At the end of the year | | $ | 18,617,103 | | | $ | 11,850,516 | | | The Company is subject to income taxes in the U.S. federal, state, and various foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. All of the Companys tax years will remain open for examination by the US federal and state tax authorities from the date the returns are filed or are due, whichever is later. The Company does not have any tax audits or other issues pending. F-25 **NOTE 14. WARRANTS** The following table summarizes information with respect to outstanding warrants to purchase common stock during the years ended June 30, 2025 and 2024: | Name | | Warrants Outstanding | | | Warrants Exercisable | | | Weighted average exercise price | | | Weighted average remaining life in months | | | Aggregate intrinsic value | | | | Outstanding at June 30, 2023 | | | 62,100 | | | | 62,100 | | | | 8.75 | | | | 46 | | | | - | | | | Granted | | | 111,111 | | | | 111,111 | | | | 9.00 | | | | 119 | | | | - | | | | Exercised | | | - | | | | - | | | | - | | | | - | | | | - | | | | Expired | | | - | | | | - | | | | - | | | | - | | | | - | | | | Outstanding at June 30, 2024 | | | 173,211 | | | | 173,211 | | | | 8.91 | | | | 93 | | | | - | | | | Name | | Warrants Outstanding | | | Warrants Exercisable | | | Weighted average exercise price | | | Weighted average remaining life in months | | | Aggregate intrinsic value | | | | Outstanding at June 30, 2024 | | | 173,211 | | | | 173,211 | | | | 8.91 | | | | 93 | | | | - | | | | Granted | | | - | | | | - | | | | - | | | | - | | | | - | | | | Exercised | | | - | | | | - | | | | - | | | | - | | | | - | | | | Expired | | | - | | | | - | | | | - | | | | - | | | | - | | | | Outstanding at June 30, 2025 | | | 173,211 | | | | 173,211 | | | | 8.91 | | | | 81 | | | | - | | | On April 3, 2023, the Company issued the representative of the underwriters in the Companys initial public offering 62,100 warrants. Each warrant entitles the holder to purchase one share of common stock at an exercise price of $8.75, during the period commencing April 3, 2023, and expiring on April 3, 2028. None of the warrants have been exercised yet. On April 5, 2024, the Company issued a warrant to purchase 111,111 shares of its Common Stock to Berify in a private placement concurrent with the closing of investment in Ike Tech LLC, the joint venture. See Note 8. The Warrant has an exercise price of $9.00 per share, is exercisable immediately, and will expire ten years from the date of issuance, or April 5, 2034. The warrants are equity-classified and recorded at fair value. A third party valuation specialist was engaged to assist management with the fair value estimation and the Black-Scholes option pricing model was adopted to estimate the fair value of the warrants. Key assumptions used in determining fair value were as below: | | | Year ended June30, 2024 | | | | Time to expiry | | | 10 years | | | | Expected volatility | | | 50 | % | | | Risk-free interest rate | | | 4.40 | % | | | Expected dividend yield | | | 0 | % | | **** F-26 **** **NOTE 15. STOCK-BASED COMPENSATION** In October 2022, the board of directors and stockholders of the Company approved the 2022 Equity Incentive Plan (as amended, the Plan) pursuant to which up to 15,000,000 shares of common stock may be issued pursuant to options, restricted stock or RSUs grants. The Plan is administered by the Compensation Committee of the Board of Directors. Awards under the Plan may be granted to officers, directors, employees and those consultants who qualify as a consultant or advisor under the instructions to the Companys Form S-8 (File No. 333-273458) initially filed with U.S. Securities and Exchange Commission on July 26, 2023, and amended on November 15, 2024. The Compensation Committee has broad discretion in making awards, provided that any options shall be exercisable at the fair market value on the date of grant. *Restricted stock* During the years ended June 30, 2025 and 2024, 206,271 and 148,216 shares of common stock were issued to the Companys board of directors and service providers in settlement of restricted stock granted under the Plan, respectively. Restricted stock granted to directors vests over three months and was fully vested as of June 30, 2025. The Company recognized stock-based compensation expense totaling $1,251,328 and $826,996 during the year ended June 30, 2025 and 2024, which were related to the restricted stock issued to the Companys board of directors and a service provider, based on the grant date fair value of the awards. There are $15,909 unrecognized compensation expenses related to the restricted stock awards granted to one service provider as of June 30, 2025. In June 2024, the Company entered into consulting agreements with two consultants which provide for the issuance of up to 150,000 shares of common stock to each consultant (a total of 300,000 shares of common stock). Under the terms of the consulting agreements, (a) 25,000 shares of common stock vested upon execution of the consulting agreements (a total of 50,000 shares of common stock), (b) 100,000 shares of common stock will vest upon the attainment of five separate sales-based targets, in 20,000 share increments (a total of 200,000 shares of common stock), and (c) 25,000 shares of common stock will vest on October 1, 2027, if the consulting agreements have not been terminated (a total of 50,000 shares of common stock). The Company estimated the grant date fair value of the restricted stock to be $7.14 per share. Upon execution of the consulting agreements, the Company issued a total of 50,000 shares of common stock and recognized stock-based compensation expense totaling $357,000. In July 2024, the Company entered into consulting agreements with two consultants, which provide for the issuance of up to 140,000 shares of common stock to each consultant (a total of 280,000 shares of common stock). Under the terms of the consulting agreements, these 140,000 shares of common stock will vest upon the attainment of six separate sales-based targets, in 20,000 share increments, if the consulting agreements have not been terminated. In July 2024, the Company entered into consulting agreements with two consultants, which provide for the issuance of up to 400,000 shares of common stock to each consultant (a total of 800,000 shares of common stock). Under the terms of the consulting agreements, (a) 75,000 shares of common stock vested upon execution of the consulting agreements (a total of 150,000 shares of common stock issued during the three months ended September 30, 2024), (b) 300,000 shares of common stock will vest upon the attainment of three separate sales-based targets, in 100,000 share increments (a total of 300,000 shares of common stock), and (c) 25,000 shares of common stock will vest upon the attainment of one separate sales-based target, if the consulting agreements have not been terminated. These consultant agreements were cancelled during the year ended June 30, 2025. Upon cancellation, 150,000 shares from the consultant agreements had been vested and issued, and there were 650,000 unissued and unvested shares being cancelled. The shares of common stock that vest upon the attainment of the sales-based targets include performance-based vesting conditions, which the Company has determined were not probable of being achieved at June 30, 2025. As such, the Company has not recognized any compensation expense as of June 30, 2025, related to the restricted common stock with performance-based vesting conditions. The shares of common stock that vest on October 1, 2027, include time-based vesting criteria. For these shares, the Company recognizes stock-based compensation expense based on the grant date fair value on a straight-line basis over the required service period. For the year ended June 30, 2025, the stock-based compensation expense related to the restricted common stock with time-based vesting conditions was zero. F-27 *Stock Options* ** The following is a summary of stock option activity transactions as of and for the years ended June 30, 2025 and 2024: | | | Number Ofoptions | | | Weighted average exercise price | | | Weighted average fair value per option | | | Weighted average remaining contractual life in years | | | | Outstanding at June 30, 2023 | | | - | | | $ | - | | | $ | - | | | | - | | | | Granted | | | 3,750,000 | | | $ | 9.19 | | | $ | 5.19 | | | | 9.1 | | | | Exercised | | | - | | | $ | - | | | $ | - | | | | - | | | | Expired | | | - | | | $ | - | | | $ | - | | | | - | | | | Forfeiture | | | (495,000 | ) | | $ | 9.81 | | | $ | 5.58 | | | | 9.2 | | | | Outstanding at June 30, 2024 | | | 3,255,000 | | | $ | 9.10 | | | $ | 5.13 | | | | 9.1 | | | | Granted | | | 465,000 | | | $ | 6.06 | | | $ | 3.69 | | | | 9.3 | | | | Exercised | | | - | | | $ | - | | | $ | - | | | | - | | | | Expired | | | (224,376 | ) | | $ | 9.76 | | | $ | 5.50 | | | | 8.2 | | | | Forfeiture | | | (2,057,499 | ) | | $ | 9.00 | | | $ | 5.12 | | | | 8.4 | | | | Outstanding at June 30, 2025 | | | 1,438,125 | | | $ | 8.15 | | | $ | 4.61 | | | | 8.0 | | | | Exercisable at June 30, 2025 | | | 531,771 | | | $ | 8.68 | | | $ | 4.66 | | | | 6.8 | | | The aggregate intrinsic value of options outstanding with an exercise price less than the closing price of the Companys common stock as of June30, 2025 was $0. Aggregate intrinsic value represents the value of the Companys closing stock price on the last trading day of the period in excess of the weighted-average exercise price multiplied by the number of options outstanding or exercisable. Total expense of options vested for the years ended June 30, 2025 and 2024, was $513,553 and $3,607,816, respectively. The options granted during year ended June 30, 2025 were valued using the binomial option pricing model based on the following range of assumptions: | | | Years ended June 30, | | | | | | 2025 | | | 2024 | | | | Exercise multiple | | | 2.8 | | | | 2.8 | | | | Expected volatility | | | 50% - 55 | % | | | 50% - 55 | % | | | Risk-free interest rate | | | 4.062% -4.812 | % | | | 4.049% -4.812 | % | | | Expected dividend yield | | | 0 | % | | | 0 | % | | F-28 *RSUs* RSUs granted to employees vest cumulatively as to one-third of the restricted stock units on each of the first three anniversaries of the date of grant based on continues service. Each vested RSU entitles holder to receive one share of common stock upon exercise. RSUs are accounted for as equity using the fair value method, which requires measurement and recognition of compensation expense for all awards granted to employees, directors and consultants based upon the grant-date fair value. | | | Shares | | | Weighted average grant date fair value | | | | Unvested, June 30, 2023 | | | - | | | $ | - | | | | Granted | | | 637,235 | | | | 9.46 | | | | Vested | | | (70,000 | ) | | | 7.02 | | | | Canceled and forfeited | | | (83,629 | ) | | | 9.76 | | | | Unvested, June 30, 2024 | | | 483,606 | | | $ | 9.76 | | | | | | Shares | | | Weighted average grant date fair value | | | | Unvested, June 30, 2024 | | | 483,606 | | | $ | 9.76 | | | | Granted | | | 1,223,830 | | | | 6.10 | | | | Vested | | | (606,379 | ) | | | 7.15 | | | | Canceled and forfeited | | | (696,087 | ) | | | 7.68 | | | | Unvested, June 30, 2025 | | | 404,970 | | | $ | 6.35 | | | Total expense for the RSUs during the years ended June 30, 2025 and 2024 was $3,851,401 and $1,588,470, respectively. During the years ended June 30, 2025 and 2024, there were 516,827 and 0 shares issued as a result of employees exercising vested RSUs granted to them. The following table summarizes the allocation of stock-based compensation in the accompanying consolidated statements of operations and comprehensive loss: | | | Years ended June30, | | | | | | 2025 | | | 2024 | | | | General and administrative expenses | | $ | 5,453,313 | | | $ | 5,885,192 | | | | Sales and marketing expenses | | | 162,969 | | | | 495,090 | | | | Total | | $ | 5,616,282 | | | $ | 6,380,282 | | | As of June 30, 2025, the Company had approximately $5,562,026 in unrecognized compensation expenses related to all non-vested options and RSUs that will be recognized over the weighted-average period of 2.3 years. F-29 **NOTE 16. STOCKHOLDERS EQUITY** **** The Company has authorized the issuance of 140,000,000 shares of common stock, with a par value of $0.0001 per share. **** On March 22, 2024, pursuant to a securities purchase agreement with certain purchasers, the Company sold, in a secondary offering, an aggregate of 2,050,000 shares of common stock, with par value $0.0001 per share, at a public offering price of $6.00 per share. This offering generated proceeds of $12,300,000, offset by offering cost of $1,514,094, which contributed an increase of share capital of $205 and additional paid in capital of $10,785,701. The Company has authorized the issuance of 10,000,000 shares of preferred stock, with a par value of $0.0001 per share. As of and for the years ended June 30, 2025 and 2024, there were no shares of preferred stock issued or outstanding. **NOTE 17. LOSS PER SHARE** The following table presents a reconciliation of basic net loss per share: | | | Years ended June30, | | | | | | 2025 | | | 2024 | | | | Net loss | | $ | (39,240,226 | ) | | $ | (14,767,822 | ) | | | Weighted average basic and diluted ordinary shares outstanding | | | 56,853,552 | | | | 54,812,900 | | | | Net loss per basic and diluted share of common stock | | $ | (0.69 | ) | | $ | (0.27 | ) | | **NOTE 18. COMMITMENTS AND CONTINGENCIES** From time to time, the Company may be subject to legal or regulatory proceedings, investigations and claims incidental to the conduct of its business. The Company is not a party to, nor is the Company aware of, any legal or regulatory proceedings, investigations or claims which, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition or results of operations. Concurrently with the JV Agreement (see Note 8), Ispire entered into an exclusive supply agreement with Berify, whereby Ispire is obligated to purchase all Bluetooth enabled integrated circuits to be used on vape type devices to control the activation of the device that are to be sold to IKE at cost plus a20% mark-up. In addition, IKE entered into an exclusive supply agreement with Ispire, whereby IKE is obligated to purchase at cost plus a5% mark-up all products to be sold by IKE in the nicotine field. F-30