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What changed in iPower Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of iPower Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+225 added−234 removedSource: 10-K (2025-10-09) vs 10-K (2024-09-20)

Top changes in iPower Inc.'s 2025 10-K

225 paragraphs added · 234 removed · 165 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe believe that we have the following core competitive advantages over our competitors: · In addition to our in-house branded products, we distribute products from third-party brands, ensuring that whatever a customer’s particular need may be, they need look no further than iPower for their product needs. · Our knowledgeable and experienced sales team can provide guidance and insights, whether dealing with a seasoned commercial entity or a first-time purchaser looking to get their grow operations off the ground. · The convenience of our e-commerce platform allows customers to shop from the comfort of their own home and have their purchases shipped directly to them. · We believe that our prominent position as a supplier to Amazon means that our products are prominently featured on the world’s most important retailer · We view ourselves as an industry leader, offering products and new technologies from the largest and most trusted names in the business, as well as our own in-house branded products.
Biggest changeWe believe that we have the following core competitive advantages over our competitors: · In addition to our in-house branded products, we distribute products from third-party brands, ensuring that whatever a customer’s particular need may be, they need look no further than iPower for their product needs. · Our knowledgeable and experienced sales team can provide guidance and insights, whether dealing with a seasoned commercial entity or a first-time purchaser looking to get their grow operations off the ground. · The convenience of our e-commerce platform allows customers to shop from the comfort of their own home and have their purchases shipped directly to them. · We believe that our prominent position as a supplier to Amazon means that our products are prominently featured on the world’s most important retailer. · We view ourselves as an industry leader, offering products and new technologies from the largest and most trusted names in the business, as well as our own in-house branded products. 3 Moreover, we expect that as we continue to grow our business, we will achieve an economy of scale and, as such, will be able to further optimize and expand supply chains, which will enable us to continue to maintain competitive pricing options and deliver the array of items that our customers require.
In addition, on February 10, 2022 and January 14, 2022, respectively, we entered into joint venture agreements with Global Social Medial, LLC, a Nevada limited liability company formed in 2022 which provides social media platform and services to assist business in product marketing (“GSM”), and Box Harmony, LLC, a Nevada limited liability company formed in 2022 which provides logistics services primarily for foreign-based manufacturers and distributors who desire to sell their products online in the United States with such logistic services to include, without limitation, receiving, storing and transporting such products (“Box Harmony”).
In addition, on February 10, 2022 and January 14, 2022, respectively, we entered into joint venture agreements with Global Social Medial, LLC, a Nevada limited liability company formed in 2022 which provides social media platform and services to assist business in product marketing (“GSM”), and Box Harmony, LLC, a Nevada limited liability company (“Box Harmony”) formed in 2022 which provides logistics services primarily for foreign-based manufacturers and distributors who desire to sell their products online in the United States with such logistic services to include, without limitation, receiving, storing and transporting such products.
In addition, our relationship with our largest channel partner, Amazon, has also led to a strong demand environment. Working as a supplier on Amazon’s Vendor Central platform, we are confident that we have demonstrated our ability to supply products that consumers want, in sufficient volumes, enabling us to meet the stringent operating metrics required by Amazon.
In addition, our relationship with our largest channel partner, Amazon, has led to a strong demand environment. Working as a supplier on Amazon’s Vendor Central platform, we are confident that we have demonstrated our ability to supply products that consumers want, in sufficient volumes, enabling us to meet the stringent operating metrics required by Amazon.
Although the demand for our products may be negatively impacted depending on how laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions develop, we cannot reasonably predict the nature of such developments or the effect, if any, that such developments could have on our business.
Although the demand for certain of our products may be negatively impacted depending on how laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions develop, we cannot reasonably predict the nature of such developments or the effect, if any, that such developments could have on our business.
On May 18, 2021, the Company entered into equity purchase agreements with the shareholders of E Marketing and GPM, pursuant to which we acquired 100% of the equity interests of each of E Marketing and GPM for nominal consideration and E Marketing and GPM became our wholly owned subsidiaries. 4 On February 15, 2022, the Company acquired Anivia Limited (“Anivia”).
On May 18, 2021, the Company entered into equity purchase agreements with the shareholders of E Marketing and GPM, pursuant to which we acquired 100% of the equity interests of each of E Marketing and GPM for nominal consideration and E Marketing and GPM became our wholly owned subsidiaries. On February 15, 2022, the Company acquired Anivia Limited (“Anivia”).
Anivia indirectly owns Dayourenzai (Shenzhen) Technology Co., Ltd., a corporation located in the People’s Republic of China (“PRC”), which is a wholly foreign-owned enterprise of Fly Elephant Limited. Dayourenzai (Shenzhen) Technology Co., Ltd.
Anivia indirectly owns Dayourenzai (Shenzhen) Technology Co., Ltd. (“DYRZ”), a corporation located in the People’s Republic of China (“PRC”), which is a wholly foreign-owned enterprise of Fly Elephant Limited.
Google advertising, social media advertising and email list marketing, in addition to auto-ship functionality, are the primary mechanisms we employ to drive traffic to our e-commerce platforms and the other portals through which we make our products available for sale, including Amazon.com, Tiktok, Temu, eBay and Walmart. At present, more than 90% of our total sales occur through Amazon.com.
Google advertising, social media advertising and email list marketing, in addition to auto-ship functionality, are the primary mechanisms we employ to drive traffic to our e-commerce platforms and the other portals through which we make our products available for sale, including Amazon.com, Tiktok, Temu, eBay and Walmart. At present, more than 82% of our total sales occur through Amazon.com.
For example, certain countries and a total of 46 U.S. states plus the District of Columbia have adopted frameworks, in varying forms, that authorize, regulate, and tax the cultivation, processing, sale, and use of cannabis for medicinal and/or non-medicinal use, as well as hemp and CBD, while the U.S.
For example, certain countries and a total of 48 U.S. states plus the District of Columbia have adopted frameworks, in varying forms, that authorize, regulate, and tax the cultivation, processing, sale, and use of cannabis for medicinal and/or non-medicinal use, as well as hemp and CBD, while the U.S.
We believe these has allowed us to gain share from other suppliers in our various channels. 2 E-Commerce Strategy The Company continues to grow and develop its e-commerce platforms, including simpledeluxe.com and more, where we sell our in house and third party products.
We believe this has allowed us to gain market share from other suppliers in our various channels. 2 E-Commerce Strategy The Company continues to grow and develop its e-commerce platforms, including simpledeluxe.com and more, where we sell our in house and third party products.
Consumer interest in hydroponics for in home gardening as a hobby and lifestyle choice surged in interest during the Covid-19 pandemic and the current employer work-from-home policies have allowed consumers to continue to expand upon their interests in at home gardening.
Consumer interest in hydroponics for in home gardening as a hobby and lifestyle choice surged in interest during the Covid-19 pandemic and has continued as employer work-from-home policies have allowed consumers to continue to expand upon their interests in at home gardening.
For the fiscal year ended June 30, 2024, our top five product categories accounted for 68% of total sales. While we continue to focus on our top product categories, we are working to expand our product catalog to include new and adjacent categories through in-house products and our supply chain partners driven by market data analytics.
For the fiscal year ended June 30, 2025, our top five product categories accounted for 69% of total sales. While we continue to focus on our top product categories, we are working to expand our product catalog to include new and adjacent categories through in-house products and our supply chain partners driven by market data analytics.
Controls, through contractual arrangements, the business, revenues, and profits of Daheshou (Shenzhen) Information Technology Co., Ltd., a company organized under the laws of the PRC and is located in Shenzhen, China (“DHS”). DHS is principally engaged in selling a wide range of products and providing merchandizing and logistics services in the PRC.
Dayourenzai (Shenzhen) Technology Co., Ltd. which controlled, through contractual arrangements, the business, revenues, and profits of Daheshou (Shenzhen) Information Technology Co., Ltd., a company organized under the laws of the PRC and is located in Shenzhen, China (“DHS”). DHS was principally engaged in selling a wide range of products and providing merchandizing and logistics services in the PRC.
Products iPower offers essential products in the home, pet, outdoor, gardening, and consumer electronics categories. The Company has established its own in-house branded products as well as third-party brands from supply chain partners which are made available for purchase through our various sales channels.
Products iPower offers essential products in the home, pet, outdoor, gardening, and consumer electronics categories. We have established ours own in-house branded products as well as third-party brands from supply chain partners which are made available for purchase through our various sales channels.
Manufacturers We obtain both our branded proprietary products and distributed products from third party suppliers. Our products are sourced from well diversified suppliers and manufacturers, with approximately 90% sourced from China. Quality control is a critical priority for our team charged with ensuring the supply of the products from our suppliers, specifically those coming from China.
Our products are sourced from well diversified suppliers and manufacturers, with approximately 90% sourced from China. Quality control is a critical priority for our team charged with ensuring the supply of the products from our suppliers, specifically those coming from China.
We anticipate continuing to expand our reach across the United States and internationally through organic growth. iPower has developed a set of methodologies driven by proprietary data formulas to effectively bring products to market and increase sales.
We continue to expand our product categories through product development, our SuperSuite supply chain partner and future acquisitions. We anticipate continuing to expand our reach across the United States and internationally through organic growth. iPower has developed a set of methodologies driven by proprietary data formulas to effectively bring products to market and increase sales.
We have a 60% equity interest in GSM and a 40% equity interest in Box Harmony. Corporate Information The Company, a Nevada corporation, was formed on April 11, 2018 under the name BZRTH Inc. On September 4, 2020, we filed a Certificate of Amendment with the State of Nevada changing our name to iPower Inc.
The Joint Venture is managed by the Company, CCF and Yang. 5 Corporate Information The Company, a Nevada corporation, was formed on April 11, 2018 under the name BZRTH Inc. On September 4, 2020, we filed a Certificate of Amendment with the State of Nevada changing our name to iPower Inc.
Employees As of September 20, 2024, we have a total of 60 full-time and four part-time employees and consultants. None or our employees are subject to collective bargaining agreements.
Employees As of October 9, 2025, we had a total of 10 full-time and four part-time employees and consultants. None of our employees are subject to collective bargaining agreements.
Our Industry is Large and Rapidly Growing Our principal industry opportunity is in the retail sale and distribution of consumer goods. Our primary subcategories include consumer home, pet, hydroponics and gardening products, outdoor and consumer electronics.
This year, we expanded our in-house catalog to include more general home goods products, with home goods making up our largest meta category. Our Industry is Large and Rapidly Growing Our principal industry opportunity is in the retail sale and distribution of consumer goods. Our primary subcategories include consumer home, pet, hydroponics and gardening products, outdoor and consumer electronics.
With these capabilities, iPower efficiently moves a diverse catalog of SKUs from its supply chain partners to end consumers every day, providing the best value to customers in the U.S. and other countries.
With these capabilities, iPower efficiently moves a diverse catalog of SKUs from its supply chain partners to end consumers every day, providing the best value to customers in the U.S. and other countries. Our sales channels currently include Amazon Vendor, Amazon 3P, Walmart.com, Tiktok, Temu, and other marketplaces as well as our e-commerce websites such as simpledeluxe.com and more.
These products range from hydroponic-related items, fans, shelving, pet supplies, outdoor lifestyle products and consumer electronics, some of which have been designated as Amazon best seller product leaders, and for which numerous products have been designated “Amazon’s Choice” and “#1 Best Seller.” This year, we expanded our in-house catalog to include more general home goods products, with home goods making up our largest meta category.
These products range from hydroponic-related items, fans, shelving, pet supplies, outdoor lifestyle products and consumer electronics, some of which have been designated as Amazon best seller product leaders, numerous of which have been designated “Amazon’s Choice” and “#1 Best Seller” products.
We purchase our products from many different suppliers, including manufacturers and distributors in the U.S. and Southeast Asia. For the years ended June 30, 2024 and 2023, one supplier accounted for 10% and 27% of the Company's total purchases, respectively. We do not have any long-term supply agreements.
For the years ended June 30, 2025 and 2024, one supplier accounted for 14% and 10% of the Company's total purchases, respectively. We do not have any long-term supply agreements. Manufacturers We obtain both our branded proprietary products and distributed products from third party suppliers.
We do most of our development work in conjunction with our supply chain partners and our manufacturing partners, where we co-engineer designs with their development teams.
We do most of our development work in conjunction with our supply chain partners and our manufacturing partners, where we co-engineer designs with their development teams. We plan to increase our investments in R&D relating to the improvement of existing products and the development and addition of new product lines.
We sell to both commercial and home cultivators growing specialty crops, as well as in the home goods category. At present, sales to customers through Amazon and other third-party online platforms accounts for almost all of our annual sales. We do not manufacture any of the products we sell through our distribution channels.
At present, sales to customers through Amazon and other third-party online platforms accounts for almost all of our annual sales. We do not manufacture any of the products we sell through our distribution channels. We purchase our products from many different suppliers, including manufacturers and distributors in the U.S. and Southeast Asia.
Through supply chain and industry competency, support services, and through our relationships with suppliers, distributors, vendors, and logistics partners, we believe we can maintain and increase our growth trajectory. 3 Intellectual Property and Proprietary Rights Our intellectual property primarily consists of our brands and their related trademarks, domain names, websites, customer lists and affiliations, as well as our marketing intangibles, product know-how and technology.
Intellectual Property and Proprietary Rights Our intellectual property primarily consists of our brands and their related trademarks, domain names, websites, customer lists and affiliations, as well as our marketing intangibles, product know-how and technology.
Further, we believe our dedication to providing consumers with innovative and cutting-edge products tailored to their individual needs, combined with our industry knowledge and customer service, has positioned iPower to take advantage of the domestic and international growth anticipated for hydroponic products. Corporate Structure We have been conducting business as iPower Inc.
Further, we believe our dedication to providing consumers with innovative and cutting-edge products tailored to their individual needs, combined with our industry knowledge and customer service, has positioned iPower to take advantage of the domestic and international growth anticipated for hydroponic products. 4 Our Digital Treasury Strategy We recently announced our plans to adopt a digital treasury strategy (the “Digital Treasury Strategy”), with the plan of holding various cryptocurrency assets, starting with the plan of acquiring major digital currencies to serve as Company’s primary treasury reserve asset.
In 2023, iPower purchased approximately 90% of its products and supplies from or through DHS.
In 2023, iPower purchased approximately 90% of its products and supplies from or through DHS. During 2025, we moved the business that was being conducted under DHS into iPower and DYRZ.
We plan to increase our investments in R&D relating to the improvement of existing products and the development and addition of new product lines. 1 Customers and Suppliers We have a diverse customer base, with residential gardeners and home goods consumers constituting a significant portion of our customer base and thus the largest portion of our total sales.
Customers and Suppliers We have a diverse customer base, with residential gardeners and home goods consumers constituting a significant portion of our customer base and thus the largest portion of our total sales. We sell to both commercial and home cultivators growing specialty crops, as well as in the home goods category.
Home goods supplies currently include commercial fans, floor and wall fans, storage and shelving units, and chairs among others. The home goods industry has become a significant category we sell into.
Home goods supplies currently include commercial fans, floor and wall fans, storage and shelving units, and chairs among others. 1 Research and Development The Company has not incurred any significant research and development (“R&D”) expenses during the fiscal year ended June 30, 2025.
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Our sales channels currently include Amazon Vendor, Amazon 3P, Walmart.com, Tiktok, Temu, and other market places as well as our e-commerce websites such as simpledeluxe.com and more, We are expanding our categories through product development, our SuperSuite supply chain partner and future acquisitions.
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Through supply chain and industry competency, support services, and through our relationships with suppliers, distributors, vendors, and logistics partners, we believe we can maintain and increase our growth trajectory.
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Grandview Research estimated that the size of the home goods market in the US was $740 billion in 2020 and should reach close to $1,037 billion by 2025, with a CAGR of 6. 6 %. Research and Development The Company has not incurred any significant research and development (“R&D”) expenses during the fiscal year ended June 30, 2024.
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When and if we do establish a Digital Treasury Strategy, we may hold a variety of cryptocurrency assets, which may change from time to time. The Company has not yet launched a Digital Treasury Strategy and it is unknown when, or if, we will commence such strategy. Corporate Structure We have been conducting business as iPower Inc.
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Moreover, we expect that as we continue to grow our business, we will achieve an economy of scale and, as such, will be able to further optimize and expand supply chains, which will enable us to continue to maintain competitive pricing options and deliver the array of items that our customers require.
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After transferring all of the assets and operations out of DHS, on August 4, 2025, we entered into a contract termination agreement with DHS and its direct shareholders, Xiaoyun Liu and Jing Xie, and terminated our contractual relationship with DHS.
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We have a 60% equity interest in GSM and a 40% equity interest in Box Harmony. On June 3, 2025, the Company, Custom Cup Factory, Inc., a California corporation (“CCF”), and Yi Yang entered into the Limited Liability Company Operating Agreement (the “Operating Agreement”) of United Package NV, LLC, a Nevada limited liability corporation (the “Joint Venture”).
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The Joint Venture focuses on the domestic production of packaging materials to serve the rapidly growing demands of U.S. businesses seeking reliable, sustainable, and cost-effective supply chain solutions without reliance on offshore manufacturing.
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Pursuant to the terms of the Operating Agreement, the Company owns 2,280 Class A Voting Units (as defined in the Operating Agreement) of the Joint Venture in consideration for the Joint Venture’s use of certain of the Company’s equipment and facility. Ms. Yang owns 1,140 Class A Voting Units of the Joint Venture in consideration for Ms.
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Yang’s commitment to manage the business of the Joint Venture and CCF owns 1,710 Class A Voting Units of the Joint Venture in consideration for CCF’s contribution of its marketing expertise, existing sales channel and customer list.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeNew laws, regulations and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may, as regards our China-based subsidiaries: · Delay or impede development, · Result in negative publicity or increase our operating costs, · Require significant management time and attention, and · Subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our China-based business practices.
Biggest changeNew laws, regulations and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may, as regards our China-based Subsidiary: · Delay or impede development, · Result in negative publicity or increase our operating costs, · Require significant management time and attention, and · Subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our China-based business practices. 11 The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, could restrict or otherwise unfavorably impact the ability or manner in which we conduct the business of our China based subsidiaries and could require us to change certain aspects of their business to ensure compliance, which could delay our procurement of goods, reduce revenues, increase costs, or subject us to additional liabilities.
We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations.
We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations.
The losses incurred from a breach of data security and operational failures as well as the precautionary measures required to address this evolving risk may adversely impact our financial condition, results of operations and cash flows. 16 We collect, process, store, use, and share information collected from or about purchasers and users of our website and products.
The losses incurred from a breach of data security and operational failures as well as the precautionary measures required to address this evolving risk may adversely impact our financial condition, results of operations and cash flows. We collect, process, store, use, and share information collected from or about purchasers and users of our website and products.
Failure of third parties to meet their contractual, regulatory and other obligations may have a material adverse effect on our business, financial condition and results of operations. The sizes of the markets for our current and future products have not been established with precision and may be smaller than we estimate.
Failure of third parties to meet their contractual, regulatory and other obligations may have a material adverse effect on our business, financial condition and results of operations. 23 The sizes of the markets for our current and future products have not been established with precision and may be smaller than we estimate.
Investors in our common stock should not expect to receive dividend income on their investment, and investors will be dependent on the appreciation of our common stock to earn a return on their investment. We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all.
Investors in our common stock should not expect to receive dividend income on their investment, and investors will be dependent on the appreciation of our common stock to earn a return on their investment. 28 We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all.
Future research studies and clinical trials may reach negative conclusions regarding the viability, safety, efficacy, dosing, social acceptance or other facts and perceptions related to medical cannabis, which could materially impact the demand for our products. The public’s perception of cannabis may significantly impact the cannabis industry’s success.
Future research studies and clinical trials may reach negative conclusions regarding the viability, safety, efficacy, dosing, social acceptance or other facts and perceptions related to medical cannabis, which could materially impact the demand for our products. 25 The public’s perception of cannabis may significantly impact the cannabis industry’s success.
We cannot predict the effect, if any, that market sales of those shares of common stock or the availability of those shares of common stock for resale will have on the market price of our common stock. 24 General Risk Factors Related to our Common Stock There are risks, including stock market volatility, inherent in owning our common stock.
We cannot predict the effect, if any, that market sales of those shares of common stock or the availability of those shares of common stock for resale will have on the market price of our common stock. General Risk Factors Related to our Common Stock There are risks, including stock market volatility, inherent in owning our common stock.
A successful claim of intellectual property infringement against us, or any other successful challenge to the use of our intellectual property, could subject us to damages or prevent us from providing certain products or services, or using certain of our recognized brand names, which could have a material adverse effect on our business, financial condition, and results of operations. 17 We may not be able to develop, license or acquire new products, enhance the capabilities of our existing products to keep pace with rapidly changing technology and customer requirements, or successfully manage the transition to new product offerings, any of which could have a material adverse effect on our business, financial condition, and results of operations.
A successful claim of intellectual property infringement against us, or any other successful challenge to the use of our intellectual property, could subject us to damages or prevent us from providing certain products or services, or using certain of our recognized brand names, which could have a material adverse effect on our business, financial condition, and results of operations. 18 We may not be able to develop, license or acquire new products, enhance the capabilities of our existing products to keep pace with rapidly changing technology and customer requirements, or successfully manage the transition to new product offerings, any of which could have a material adverse effect on our business, financial condition, and results of operations.
In September 2019, the United States House of Representatives passed the SAFE Banking Act, which would permit commercial banks to offer services to cannabis companies that are in compliance with state law, but the Senate has not taken up the SAFE Banking Act or other similar legislation. 23 Risks Related to Our Common Stock If we fail to comply with the continued listing requirements of the Nasdaq Stock Market, it could result in our common stock being delisted, which could adversely affect the market price and liquidity of our securities and could have other adverse effects.
In September 2019, the United States House of Representatives passed the SAFE Banking Act, which would permit commercial banks to offer services to cannabis companies that are in compliance with state law, but the Senate has not taken up the SAFE Banking Act or other similar legislation. 26 Risks Related to Our Common Stock If we fail to comply with the continued listing requirements of the Nasdaq Stock Market, it could result in our common stock being delisted, which could adversely affect the market price and liquidity of our securities and could have other adverse effects.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for further discussion of the stockholding of our founders and principal stockholders. Future sales of our common stock in the public market could cause the market price of our common stock to decline.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for further discussion of the stockholding of our founders and principal stockholders. 27 Future sales of our common stock in the public market could cause the market price of our common stock to decline.
Any disruption in our sales or accessibility to Amazon, or any negative action taken by Amazon related to our sales, could negatively affect our business. 14 Our reliance on third-party manufacturers could harm our business. We rely on third parties to manufacture certain of our products.
Any disruption in our sales or accessibility to Amazon, or any negative action taken by Amazon related to our sales, could negatively affect our business. Our reliance on third-party manufacturers could harm our business. We rely on third parties to manufacture certain of our products.
Our management has conducted an evaluation of the effectiveness of our internal controls over financial reporting and concluded that our internal controls over financial reporting were not effective because, among other things, our controls related to the financial statements closing process were not adequately designed or appropriately implemented to identify material misstatements in our financial reporting on a timely basis. 18 Management has evaluated remediation plans for the deficiency and has implemented changes to address the material weakness identified, including hiring additional accountants and consultants and implementing controls and procedures over financial reporting process.
Our management has conducted an evaluation of the effectiveness of our internal controls over financial reporting and concluded that our internal controls over financial reporting were not effective because, among other things, our controls related to the financial statements closing process were not adequately designed or appropriately implemented to identify material misstatements in our financial reporting on a timely basis. 19 Management has evaluated remediation plans for the deficiency and has implemented changes to address the material weakness identified, including hiring additional accountants and consultants and implementing controls and procedures over financial reporting process.
Legal Proceedings” for additional information. If product liability lawsuits are brought against us, we may incur substantial liabilities. We face a potential risk of product liability resulting from the sale of our products.
Legal Proceedings” for additional information. 21 If product liability lawsuits are brought against us, we may incur substantial liabilities. We face a potential risk of product liability resulting from the sale of our products.
We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. Our stockholders will experience further dilution if we issue additional equity or equity-linked securities in the future.
We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. 30 Our stockholders will experience further dilution if we issue additional equity or equity-linked securities in the future.
Penalties for violating federal drug, conspiracy, aiding, abetting, bank fraud and/or money laundering laws may include prison, fines, and seizure/forfeiture of property used in connection with cannabis activities, including proceeds derived from such activities. 21 In addition to sales through our own platforms, www.Zenhydro.com and www.simpledeluxe.com, we sell our products through third-party retailers and resellers.
Penalties for violating federal drug, conspiracy, aiding, abetting, bank fraud and/or money laundering laws may include prison, fines, and seizure/forfeiture of property used in connection with cannabis activities, including proceeds derived from such activities. 24 In addition to sales through our own platforms, www.Zenhydro.com and www.simpledeluxe.com, we sell our products through third-party retailers and resellers.
There can be no assurance that we will have available assets to pay to the holders of common stock, or any amounts, upon such a liquidation, dissolution or winding-up of our Company. In this event, stockholders could lose some or all of their investment. 27 ITEM 1B. Unresolved Staff Comments. None.
There can be no assurance that we will have available assets to pay to the holders of common stock, or any amounts, upon such a liquidation, dissolution or winding-up of our Company. In this event, stockholders could lose some or all of their investment. 31 ITEM 1B. Unresolved Staff Comments. None.
The PRC government has the power to exercise significant oversight and discretion over the conduct of our China-based Subsidiaries, and the regulations to which they are subject may change rapidly and with little notice to us or our shareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in the PRC are often uncertain.
The PRC government has the power to exercise significant oversight and discretion over the conduct of our China-based Subsidiary, and the regulations to which they are subject may change rapidly and with little notice to us or our shareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in the PRC are often uncertain.
Our future success depends substantially on the continued services of our executive officers, especially our Chairman, Chief Executive Officer and President, Chenlong Tan. We do not presently maintain key man life insurance on any of our executive officers or directors, although we intend to obtain such insurance in the near future.
Our future success depends substantially on the continued services of our executive officers, especially our Chairman, Chief Executive Officer, President and Interim Chief Financial Officer, Chenlong Tan. We do not presently maintain key man life insurance on any of our executive officers or directors, although we intend to obtain such insurance in the near future.
Although the demand for our products may be negatively impacted depending on how laws, regulations, administrative practices, enforcement approaches, judicial interpretations and consumer perceptions develop, we cannot reasonably predict the nature of such developments or the effect, if any, that such developments could have on our business.
Demand for our products may be negatively impacted depending on how laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions develop. We cannot predict the nature of such developments or the effect, if any, that such developments could have on our business.
We are required, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, to furnish a report by management on the effectiveness of our internal control over financial reporting for the fiscal year ending June 30, 2024.
We are required, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, to furnish a report by management on the effectiveness of our internal control over financial reporting for the fiscal year ending June 30, 2025.
To the extent the conflict between Russia and Ukraine may adversely affect our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, as well as other risks which we may not be currently aware of.
To the extent the conflict between Russia and Ukraine and the war in the Middle East may adversely affect our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, as well as other risks which we may not be currently aware of.
Our founders, officers and directors may control, and may continue to control, our company for the foreseeable future, including the outcome of matters requiring stockholder approval. Our founders, officers and directors collectively will beneficially own approximately 50% of our outstanding shares of common stock.
Our founders, officers and directors may control, and may continue to control, our company for the foreseeable future, including the outcome of matters requiring stockholder approval. Our founders, officers and directors collectively beneficially own approximately 51% of our outstanding shares of common stock.
Our China-based subsidiaries are owned by us through contractual arrangements with our Hong Kong subsidiary, Fly Elephant Limited, and its parent company, Anivia Limited, a British Virgin Islands company.
Our China-based subsidiary is owned by us through contractual arrangements with our Hong Kong subsidiary, Fly Elephant Limited, and its parent company, Anivia Limited, a British Virgin Islands company.
For the years ended June 30, 2024 and 2023, one supplier accounted for 10% and 27% of the Company's total purchases, respectively. Such reliance on a limited number of suppliers may increase our risk of experiencing disruptions in our business.
For the years ended June 30, 2025 and 2024, one supplier accounted for 14% and 10% of the Company's total purchases, respectively. Such reliance on a limited number of suppliers may increase our risk of experiencing disruptions in our business.
As a result, the Chinese government could potentially exercise significant oversight and/or discretion over the business and operations of our China-based subsidiaries and could potentially intervene in or influence the operations of those businesses at any time. We recently acquired two China-based subsidiaries, Dayourenzi (Shenzhen) Technology Co., Ltd. (the WFOE”) and Daheshou (Shenzhen) Information Technology Co., Ltd. (the “Operating Company”).
As a result, the Chinese government could potentially exercise significant oversight and/or discretion over the business and operations of our China-based subsidiary and could potentially intervene in or influence the operations of those businesses at any time. We recently acquired two China-based subsidiaries, Dayourenzi (Shenzhen) Technology Co., Ltd. (“DYRZ”) and Daheshou (Shenzhen) Information Technology Co., Ltd. (“DHS”).
The conflict between Russia and Ukraine may have the effect of heightening many of the other risks described in this “Risk Factors” section.
The conflict between Russia and Ukraine and the war in the Middle East may have the effect of heightening many of the other risks described in this “Risk Factors” section.
As such, should we experience a disruption in our sales on third party platforms, or should such third party platforms somehow come to rank us unfavorably or fail to list our products, this could negatively affect our overall sales and, thus, negatively impact our overall revenues.
As such, should we experience a disruption in our sales on third party platforms, or should such third party platforms somehow come to rank us unfavorably or fail to list our products, this could negatively affect our overall sales and, thus, negatively impact our overall revenues. Poor economic conditions could adversely affect our business.
We could be an “emerging growth company” for up to five years following the effectiveness of this registration statement, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.235 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three year period. 26 Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.
We could be an “emerging growth company” for up to five years following the effectiveness of the Company’s initial registration statement, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.235 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three year period.
However, should we be unable to continue to absorb such costs, or should we need to pass all such costs on to consumers, such increase could cut into our competitive advantage and our volume of sales activity in the United States could be materially reduced.
However, should we be unable to continue to absorb such costs, or should we need to pass all such costs on to consumers, such increase could cut into our competitive advantage and our volume of sales activity in the United States could be materially reduced. Any such reduction may materially and adversely affect our sales and our business.
In addition, several products that we offer for sale may require lengthy order lead times, and additional supplies or materials may not be available when required on terms that are acceptable to us, or at all, and our third-party manufacturers and suppliers may not be able to allocate sufficient capacity in order to meet our increased requirements, any of which could have an adverse effect on our ability to meet customer demand for our products and our business, financial condition and results of operations. 20 The failure of third parties to meet their contractual, regulatory, and other obligations could adversely affect our business.
In addition, several products that we offer for sale may require lengthy order lead times, and additional supplies or materials may not be available when required on terms that are acceptable to us, or at all, and our third-party manufacturers and suppliers may not be able to allocate sufficient capacity in order to meet our increased requirements, any of which could have an adverse effect on our ability to meet customer demand for our products and our business, financial condition and results of operations.
We are heavily reliant on manufacturers in China to produce many of the goods we sell. Approximately 90% of the products we purchased for resale during the fiscal year ended June 30, 2024 were manufactured in and imported from China. At present, we have 11 suppliers in the U.S. and more than 130 suppliers in China.
We are heavily reliant on manufacturers in China to produce many of the goods we sell. Approximately 96% of the products we purchased for resale during the fiscal year ended June 30, 2025 were manufactured in and imported from China. At present, we have 7 suppliers in the U.S. and more than 144 suppliers in China.
For the years ended June 30, 2024 and 2023, Amazon Vendor and Amazon Seller customers accounted for 90% and 91% of the Company's total revenues, respectively, and as of June 30, 2024 and 2023, accounts receivable from Amazon Vendor and Amazon Seller accounted for 91% and 95% of the Company’s total accounts receivable, respectively.
For the years ended June 30, 2025 and 2024, Amazon Vendor and Amazon Seller customers accounted for 82% and 90% of the Company's total revenues, respectively, and as of June 30, 2025 and 2024, accounts receivable from Amazon Vendor and Amazon Seller accounted for 72% and 91% of the Company’s total accounts receivable, respectively.
Distributed brand suppliers sell through us in order to access thousands of retail and commercial customers across the United States with short order lead times, no minimum order quantity on individual items, free or minimal freight expense and trade credit terms.
Our distribution and sales and marketing capabilities provide significant value to our suppliers. Distributed brand suppliers sell through us in order to access thousands of retail and commercial customers across the United States with short order lead times, no minimum order quantity on individual items, free or minimal freight expense and trade credit terms.
We engage in interest-based advertising on our e-commerce website. U.S. and foreign governments have enacted or are considering legislation related to digital advertising and we expect to see an increase in legislation and regulation related to digital advertising, the collection and use of user data and unique device identifiers, such as IP address, and other data protection and privacy regulation.
U.S. and foreign governments have enacted or are considering legislation related to digital advertising and we expect to see an increase in legislation and regulation related to digital advertising, the collection and use of user data and unique device identifiers, such as IP address, and other data protection and privacy regulation.
As we do not have any long-term supply agreements, in the event we are unable to maintain supplier arrangements and relationships, if we are unable to contract with suppliers at the quantity and quality levels needed for our business, if any of our key suppliers becomes insolvent or experience other financial distress including with respect to staffing and shipping of products, we could experience disruptions in our supply chain, which could have a material adverse effect on our financial condition, results of operations and cash flows.
As we do not have any long-term supply agreements, in the event we are unable to maintain supplier arrangements and relationships, if we are unable to contract with suppliers at the quantity and quality levels needed for our business, if any of our key suppliers becomes insolvent or experience other financial distress including with respect to staffing and shipping of products, we could experience disruptions in our supply chain, which could have a material adverse effect on our financial condition, results of operations and cash flows. 15 Although we continue to implement risk-mitigation strategies for single-source suppliers, we rely on a limited number of suppliers for certain of our products.
In addition, our China-based subsidiaries may be at risk of influence by the PRC government as they are subject to the laws, rules and regulations of the PRC, which can be complex and evolve rapidly.
In addition, our China-based subsidiary may be at risk of influence by the PRC government as it is subject to the laws, rules and regulations of the PRC, which can be complex and evolve rapidly.
In addition, the interpretation and application of privacy and data protection-related laws in some cases is uncertain, and our legal and regulatory obligations are subject to frequent changes, including the potential for various regulator or other governmental bodies to enact new or additional laws or regulations, to issue rulings that invalidate prior laws or regulations, or to increase penalties.
In addition, the interpretation and application of privacy and data protection-related laws in some cases is uncertain, and our legal and regulatory obligations are subject to frequent changes, including the potential for various regulator or other governmental bodies to enact new or additional laws or regulations, to issue rulings that invalidate prior laws or regulations, or to increase penalties. 17 We engage in interest-based advertising on our e-commerce website.
Further, an increase in the selling prices for our products resulting from a pass-through of increased freight costs could also have an adverse impact on the volume of products we sell, and as a result, our business, financial condition, and operating results may suffer.
Further, an increase in the selling prices for our products resulting from a pass-through of increased freight costs could also have an adverse impact on the volume of products we sell, and as a result, our business, financial condition, and operating results may suffer. 7 The ongoing conflict between Russia and Ukraine may adversely affect our business, financial condition, or results of operations .
If one or more of these analysts cease to cover us or fail to regularly publish reports on us, 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.
If one or more of these analysts cease to cover us or fail to regularly publish reports on us, 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. As an actively traded Nasdaq-listed company, the market price of our common stock may be volatile.
Regardless of the merits or eventual outcome, liability claims may result in: · decreased demand for products that we may offer for sale; · injury to our reputation; · costs to defend the related litigation; · a diversion of management’s time and our resources; · substantial monetary awards to trial participants or patients; · product recalls, withdrawals or labeling, marketing or promotional restrictions; and · a decline in the value of our stock. 19 Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products we develop.
Regardless of the merits or eventual outcome, liability claims may result in: · decreased demand for products that we may offer for sale; · injury to our reputation; · costs to defend the related litigation; · a diversion of management’s time and our resources; · substantial monetary awards to trial participants or patients; · product recalls, withdrawals or labeling, marketing or promotional restrictions; and · a decline in the value of our stock.
Our most price-sensitive customers may trade down to lower priced products during challenging economic times or if current economic conditions worsen, while other customers may reduce discretionary spending during periods of economic uncertainty, which could reduce sales volumes of our products in favor of our competitors’ products or result in a shift in our product mix from higher margin to lower margin products.
Our most price-sensitive customers may trade down to lower priced products during challenging economic times or if current economic conditions worsen, while other customers may reduce discretionary spending during periods of economic uncertainty, which could reduce sales volumes of our products in favor of our competitors’ products or result in a shift in our product mix from higher margin to lower margin products. 9 Heightened inflation, increased interest rates and other economic conditions including potential recession and credit market disruptions could negatively impact our business.
As a newly public company, we are unable to predict or estimate the amount of additional costs we will incur as a public company or the specific timing of such costs. 25 As a result of being a public company, we are obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our Company and, as a result, the value of our common stock.
As a result of being a public company, we are obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our Company and, as a result, the value of our common stock.
For example, the war has been accompanied by cyberattacks against the Ukrainian government and other countries in the region. It is possible that these attacks could have collateral effects on additional critical infrastructure and financial institutions globally, which could adversely affect our operations and could increase the frequency and severity of cyber-based attacks against our information technology systems.
It is possible that these attacks could have collateral effects on additional critical infrastructure and financial institutions globally, which could adversely affect our operations and could increase the frequency and severity of cyber-based attacks against our information technology systems.
Damage to our reputation can be the result of the actual or perceived occurrence of any number of events, and could include any negative publicity, whether true or not.
Our indirect involvement in the cannabis industry could affect the public’s perception of us and be detrimental to our reputation. Damage to our reputation can be the result of the actual or perceived occurrence of any number of events, and could include any negative publicity, whether true or not.
These measures, which may directly or indirectly impact our operations, include but are not limited to: · Voluntary or mandatory quarantines; · Restrictions on travel; · Limitations on gatherings in public places; · Temporary closures of non-essential businesses; · Supply chain disruptions; and · Changes in consumer behavior and spending patterns.
These measures, which may directly or indirectly impact our operations, include but are not limited to: · Voluntary or mandatory quarantines; · Restrictions on travel; · Limitations on gatherings in public places; · Temporary closures of non-essential businesses; · Supply chain disruptions; and · Changes in consumer behavior and spending patterns. 8 In the event of a future epidemic or pandemic, we cannot predict the duration of such an outbreak, the effectiveness of our response, or the full extent of the disruption to our operations.
Due to this competition, there is no assurance that we will not encounter difficulties in increasing revenues and maintaining and/or increasing market share.
Due to this competition, there is no assurance that we will not encounter difficulties in increasing revenues and maintaining and/or increasing market share. In addition, increased competition may lead to reduced prices and/or margins for products we sell.
Continued federal intervention in certain segments of the cannabis industry may have a negative impact on us. Although we expect minimal impact on the Company from any federal government crackdown on cannabis providers, a disruption to the cannabis industry could cause some potential customers to be more reluctant to invest in growing equipment, including equipment we sell.
Although we expect minimal impact on the Company from any federal government crackdown on cannabis providers, a disruption to the cannabis industry could cause some potential customers to be more reluctant to invest in growing equipment, including equipment we sell. Moreover, the federal government’s tactics may change or have unforeseen effects, which could be detrimental to our business.
Heightened inflation, increased interest rates and other economic conditions including potential recession and credit market disruptions could negatively impact our business. Customer demand for our products may be influenced by heightened inflation, increased interest rates and other weak economic conditions including recessionary conditions and credit market disruptions and volatility.
Customer demand for our products may be influenced by heightened inflation, increased interest rates and other weak economic conditions including recessionary conditions and credit market disruptions and volatility. Continued weak economic conditions may cause a decrease in demand for our products from our customers.
In addition, increased competition may lead to reduced prices and/or margins for products we sell. 11 If we need additional capital to fund the expansion of our operations, we may not be able to obtain sufficient capital on terms favorable to us and may be forced to limit the expansion of our operations.
If we need additional capital to fund the expansion of our operations, we may not be able to obtain sufficient capital on terms favorable to us and may be forced to limit the expansion of our operations.
Among other things, such a shift in public opinion could cause state jurisdictions to abandon initiatives or proposals to legalize medical or adult cannabis or adopt new laws or regulations restricting or prohibiting the medical or adult-use of cannabis where it is now legal, thereby limiting the Cannabis Industry Participants. 22 Demand for our products may be negatively impacted depending on how laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions develop.
Among other things, such a shift in public opinion could cause state jurisdictions to abandon initiatives or proposals to legalize medical or adult cannabis or adopt new laws or regulations restricting or prohibiting the medical or adult-use of cannabis where it is now legal, thereby limiting the Cannabis Industry Participants.
Further, the loss of our executive officers or our other key personnel, particularly with little or no notice, could cause delays on business developments and projects and could have an adverse impact on our customers and industry relationships, our business, operating results, or financial condition.
Further, the loss of our executive officers or our other key personnel, particularly with little or no notice, could cause delays on business developments and projects and could have an adverse impact on our customers and industry relationships, our business, operating results, or financial condition. 12 In order to increase our sales and marketing infrastructure, we will need to grow the size of our organization, and we may experience difficulties in managing this growth.
Our future financial performance and our ability to continue to grow our operation and effectively compete in the hydroponics industry will depend in part on our ability to effectively manage any future growth. 12 Certain of our products may be purchased for use in the cannabis industry and/or be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions.
Certain of our products may be purchased for use in the cannabis industry and/or be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions.
In addition, the success of our e-commerce business and the satisfaction of our customers depends on their timely receipt of our products and their ability to pick up their desired products from one of our garden centers.
Our failure to successfully respond to these risks and uncertainties might adversely affect the sales of our e-commerce business, as well as damage our reputation and brands. 14 In addition, the success of our e-commerce business and the satisfaction of our customers depends on their timely receipt of our products and their ability to pick up their desired products from one of our garden centers.
We rely on suppliers, vendors, outsourcing partners, consultants, alliance partners and other third parties to research, develop, manufacture and commercialize our products.
The failure of third parties to meet their contractual, regulatory, and other obligations could adversely affect our business. We rely on suppliers, vendors, outsourcing partners, consultants, alliance partners and other third parties to research, develop, manufacture and commercialize our products.
While we maintain our own websites, Zenhydro.com and simpledeluxe.com , as well as our offline wholesale department, which together account for approximately 1% of our sales, the bulk of our overall sales, or approximately 99%, occurred on third party platforms such as Amazon.com, Tiktok, Walmart eBay and other platforms.
While we maintain our own websites, Zenhydro.com and simpledeluxe.com , as well as our offline wholesale department, almost all of our sales occurred on third party platforms such as Amazon, Temu, Walmart and other platforms.
We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404.
We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404. 29 During the evaluation and testing process of our internal controls, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to certify that our internal control over financial reporting is effective.
Our failure to address these risks or other problems encountered in connection with our acquisitions could cause us to fail to realize the anticipated benefits of such acquisitions, investments or alliances, incur unanticipated liabilities, and harm our business generally. 13 Our acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses, or impairment of goodwill and purchased long-lived assets, and restructuring charges, any of which could harm our financial condition or results of operations and cash flows.
Our acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses, or impairment of goodwill and purchased long-lived assets, and restructuring charges, any of which could harm our financial condition or results of operations and cash flows.
Our business should be viewed in light of these risks, challenges and uncertainties. 8 An estimated 99% of our sales are carried out through third-party platforms, including Amazon.com, Tiktok, Walmart and eBay; any disruption in our selling efforts on such third party platforms could substantially disrupt our business.
Almost all of our sales are carried out through third-party platforms, including Amazon, Temu, Walmart and eBay; any disruption in our selling efforts on such third party platforms could substantially disrupt our business.
Unanticipated changes in our tax provisions, the adoption of new tax legislation or exposure to additional tax liabilities could affect our profitability and cash flows. In the event there are significant changes in federal or state tax law provisions, or in the event there is new and additional tax legislation adopted, we could be exposed to additional tax liabilities.
In the event there are significant changes in federal or state tax law provisions, or in the event there is new and additional tax legislation adopted, we could be exposed to additional tax liabilities. Such additional tax liabilities could have an effect on our net income and profit margins.
Such additional tax liabilities could have an effect on our net income and profit margins. Certain of our products sell on a seasonal basis, resulting in fluctuations in our cash flow, inventory, and accounts payable.
Certain of our products sell on a seasonal basis, resulting in fluctuations in our cash flow, inventory, and accounts payable.
Our failure to achieve and maintain the required high manufacturing standards could result in further delays or failures in product testing or delivery, cost overruns, product recalls or withdrawals, increased warranty costs or other problems that could harm our business and prospects. 15 In determining the required quantities of our products and the manufacturing schedule, we must make significant judgments and estimates based on historical experience, inventory levels, current market trends and other related factors.
Our failure to achieve and maintain the required high manufacturing standards could result in further delays or failures in product testing or delivery, cost overruns, product recalls or withdrawals, increased warranty costs or other problems that could harm our business and prospects.
(The WFOE and the Operating Company together are referred to as our “China-based Subsidiaries”). The Operating Company has historically provided the bulk of our China-based procurement and logistical needs and we believe its acquisition will serve to streamline our procurement of goods and shipping, as well as reduce costs by bringing these services in house.
The Operating Company DYRZ, in conjunction with our since disposed variable interest entity, DHS, has historically provided the bulk of our China-based procurement and logistical needs and we believe it will help streamline our procurement of goods and shipping, as well as reduce costs by bringing these services in house.
If we fail to remedy any material weakness, our financial statements may be inaccurate, our access to the capital markets may be restricted and the trading price of our common stock may suffer. General Risk Factors Related to Our Business Litigation may adversely affect our business, financial condition, and results of operations.
If we fail to remedy any material weakness, our financial statements may be inaccurate, our access to the capital markets may be restricted and the trading price of our common stock may suffer. Changes in U.S. and international trade policies, particularly with respect to China, could materially and adversely impact our business and results of operations.
Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
Accordingly, in an environment of heightened inflation, increased interest rates or other recessionary pressures, our business, financial condition and results of operation may be adversely impacted. 9 Volatile or weakened economic conditions in the U.S. and globally may adversely affect our business and operating results.
In addition, these economic conditions may adversely impact certain customers, suppliers and other vendors who are highly leveraged. Accordingly, in an environment of heightened inflation, increased interest rates or other recessionary pressures, our business, financial condition and results of operation may be adversely impacted.
If our suppliers that currently, or in the future, sell directly to the retail market in which we conduct our current or future business, enhance these efforts and cease or decrease their sales through us, our ability to sell certain products could be harmed. Our distribution and sales and marketing capabilities provide significant value to our suppliers.
For certain inputs, new sources of supply may have to be qualified under regulatory standards, which can require additional investment and delay bringing a product to market. 16 If our suppliers that currently, or in the future, sell directly to the retail market in which we conduct our current or future business, enhance these efforts and cease or decrease their sales through us, our ability to sell certain products could be harmed.
It is also not possible to obtain insurance to protect against all operational risks and liabilities. The failure to obtain and maintain adequate insurance coverage on terms favorable to us, or at all, could have a material adverse effect on our business, financial condition, and results of operations.
The failure to obtain and maintain adequate insurance coverage on terms favorable to us, or at all, could have a material adverse effect on our business, financial condition, and results of operations. 22 Unanticipated changes in our tax provisions, the adoption of new tax legislation or exposure to additional tax liabilities could affect our profitability and cash flows.
Such government efforts, along with other interest rate pressures arising from an inflationary economic environment, could lead to higher financing costs and have a material adverse effect on our business, financial condition and results of operations.
Such government efforts, along with other interest rate pressures arising from an inflationary economic environment, could lead to higher financing costs and have a material adverse effect on our business, financial condition and results of operations. 10 We rely heavily on our access to the China markets for the production of our products; should U.S. and China trade relations further deteriorate, and should the ongoing trade war continue, our supply chain, and thus our operations and revenues, could be subject to deleterious effects.
We continue to monitor the reactions of our investors, employees, customers and other stakeholders and, as of the date of this report, have neither experienced any material adverse financial impacts nor suffered from the loss of key customers or employees. 7 In addition, the risk of cybersecurity incidents has increased in connection with the ongoing war, driven by justifications such as retaliation for the sanctions imposed in conjunction with the war, or in response to certain companies’ continued operations in Russia.
We continue to monitor the reactions of our investors, employees, customers and other stakeholders and, as of the date of this report, have neither experienced any material adverse financial impacts nor suffered from the loss of key customers or employees.
Any such reduction may materially and adversely affect our sales and our business. 10 Our China-based subsidiaries, Dayourenzi (Shenzhen) Technology Co., Ltd. and Daheshou (Shenzhen) Information Technology Co., Ltd., through which we procure the majority of our inventory and overseas logistical support, are owned through contractual agreements, as required by the laws of the PRC.
Our China-based subsidiary, Dayourenzi (Shenzhen) Technology Co., Ltd., through which we have historically procured much of our inventory and overseas logistical support, is owned through contractual agreements, as required by the laws of the PRC.
Although we continue to devote significant resources to support our brands, unfavorable economic conditions may negatively affect demand for our products.
All of these issues have posed challenges to our business and could result in declining revenues, profitability and cash flow. Although we continue to devote significant resources to support our brands, unfavorable economic conditions may negatively affect demand for our products.
There have been ongoing negative global economic trends, such as decreased consumer and business spending, higher than normal unemployment levels and declining consumer and business confidence. All of these issues have posed challenges to our business and could result in declining revenues, profitability and cash flow.
Uncertain global economic conditions, particularly in light of the COVID-19 pandemic, could adversely affect our business. During the COVID-19 pandemic, some of the effects of which are still ongoing, there have been ongoing negative global economic trends, such as decreased consumer and business spending, higher than normal unemployment levels and declining consumer and business confidence.
Acquisitions are an important element of our overall corporate development strategy and use of capital, and such transactions could be material to our financial condition and results of operations. We expect to continue to evaluate and enter into discussions regarding a wide array of potential acquisition targets and strategic transactions.
We expect to continue to evaluate and enter into discussions regarding a wide array of potential acquisition targets and strategic transactions.
Moreover, the federal government’s tactics may change or have unforeseen effects, which could be detrimental to our business. Acquisitions, other strategic alliances, and investments could result in operating difficulties, dilution, and other harmful consequences that may adversely impact our business and results of operations.
Acquisitions, other strategic alliances, and investments could result in operating difficulties, dilution, and other harmful consequences that may adversely impact our business and results of operations. Acquisitions are an important element of our overall corporate development strategy and use of capital, and such transactions could be material to our financial condition and results of operations.
Our proprietary technologies can limit our ability to locate or utilize alternative inputs for certain products. For certain inputs, new sources of supply may have to be qualified under regulatory standards, which can require additional investment and delay bringing a product to market.
Our proprietary technologies can limit our ability to locate or utilize alternative inputs for certain products.
The ongoing conflict between Russia and Ukraine may adversely affect our business, financial condition, or results of operations . On February 24, 2022, Russia initiated a military offensive in Ukraine.
On February 24, 2022, Russia initiated a military offensive in Ukraine.
We cannot predict the nature of such developments or the effect, if any, that such developments could have on our business. Our indirect involvement in the cannabis industry could affect the public’s perception of us and be detrimental to our reputation.
Although the demand for our products may be negatively impacted depending on how laws, regulations, administrative practices, enforcement approaches, judicial interpretations and consumer perceptions develop, we cannot reasonably predict the nature of such developments or the effect, if any, that such developments could have on our business. 13 Continued federal intervention in certain segments of the cannabis industry may have a negative impact on us.
Removed
Summary Risk Factors The risks described under the heading “ Risk Factors ” beginning on page 5 of this Annual Report on Form 10-K may cause us to be unable to realize the full benefits of our strengths and/or may cause us to be unable to successfully execute all or part of our strategy.
Added
In addition, the risk of cybersecurity incidents has increased in connection with the ongoing war, driven by justifications such as retaliation for the sanctions imposed in conjunction with the war, or in response to certain companies’ continued operations in Russia. For example, the war has been accompanied by cyberattacks against the Ukrainian government and other countries in the region.
Removed
Some of the more significant challenges we face include: · Our founders, officers and directors may control, and may continue to control, our company for the foreseeable future, including the outcome of matters requiring stockholder approval. · The Company faces intense competition in the hydroponics marketplace which could prohibit us from developing or increasing our customer base beyond present levels. · Our ability to ensure consistency in the quality of our products and supply chain. · Approximately 99% of our current revenues are derived from sales of our products through online third-party platforms, including Amazon.com, Tiktok, Temu, Walmart, and eBay; any disruption to these business channels could be detrimental to our business. 5 · Potential disruption of our business and supply chain that may be caused by any conflicts, trade wars or currency fluctuations or tariffs between China and the U.S. · The availability and cost of transportation for our products is vital to our success, and the loss of availability or increase in the cost of transportation or freight costs could have an unfavorable impact on our business, results of operations, financial condition, and cash flows. · The ongoing conflict between Russia and Ukraine may adversely affect our business, financial condition, results from operations, or the businesses of our suppliers, vendors and logistics partners. · The occurrence of any epidemic, including the COVID-19 pandemic or any pandemic alike, and any resurgence in related infections, whether in the U.S., China or elsewhere, along with any efforts to mitigate their impact could have an adverse effect on our business, liquidity, operations, financial condition, the business of our suppliers, vendors and logistic partners, and the price of our securities. · In the event we require additional capital resources to fund our enterprise, we may not be able to obtain sufficient capital and may be forced to limit the expansion of our operations. · Certain of our products may be purchased for use in new and emerging industries or segments, such as cannabis, and may be subject to varying, inconsistent and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations and consumer perceptions. · Our business depends significantly on the continuing efforts of our management team and our business may be impacted if we should lose their services. · Certain relationships, acquisitions, strategic alliances and investments could result in operating issues, dilutions and other harmful or unintended consequences which may adversely impact our business and the results of our operations. · Our continued investment and development in our in-house branded products are inherently risky and could disrupt our ongoing business. · If the Company is unable to maintain and continue to develop our e-commerce platform, our reputation and operating results may be materially harmed. · As the bulk of our sales are carried out through e-commerce, we are subject to certain cyber security risks, including hacking and stealing of customer and confidential data. · If we fail to comply with the continued listing requirements of the Nasdaq Stock Market, it could result in our common stock being delisted, which could adversely affect the market price and liquidity of our securities and could have other adverse effects. · There is a myriad of risks, including stock market volatility, inherent in owning our securities.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeITEM 1C. Cybersecurity. Cybersecurity risk management is an integral part of our overall enterprise risk management program. The Company manages cybersecurity and data protection through a continuously evolving program.
Biggest changeITEM 1C. Cybersecurity. Risk management program Cybersecurity risk management is an integral part of our overall enterprise risk management program. The Company manages cybersecurity and data protection through a continuously evolving program.
The board of directors has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage and mitigate those risks. The audit committee of the board of directors (the “Audit Committee”) has been designated by our board of directors to oversee cybersecurity risks.
Governance The board of directors has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage and mitigate those risks. The audit committee of the board of directors (the “Audit Committee”) has been designated by our board of directors to oversee cybersecurity risks.
Management regularly updates the Audit Committee on our cybersecurity programs, which includes cybersecurity risks and mitigation strategies, vulnerability management, and on-going cybersecurity projects. As of June 30, 2024, we did not identify any cybersecurity incidents that materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition.
Management regularly updates the Audit Committee on our cybersecurity programs, which includes cybersecurity risks and mitigation strategies, vulnerability management, and on-going cybersecurity projects. As of June 30, 2025, we did not identify any cybersecurity incidents that materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeNelson Avenue, Unit #I, Industry City, CA 91744, which we had leased at the rate of approximately $28,000 per month since September 2020. This lease expired on October 31, 2023 and we did not renew it. On February 15, 2022, upon completion of the acquisition of Anivia, the Company assumed an operating lease of offices in the PRC.
Biggest changeThe lease term expired on April 30, 2025, and the Company did not renew the lease. On February 15, 2022, upon completion of the acquisition of Anivia, the Company assumed an operating lease of offices in the PRC. In July 2023, the Company renewed the lease contract for its existing office plus additional office space.
The term of the Rancho Cucamonga lease is for 74 months. The lease commenced on February 10, 2022, with rent payments commencing after the first three months, and the expiration date is May 31, 2028. The base rental fee is $114,249 to $140,079 per month through the expiration date, May 31, 2028.
The term of the Rancho Cucamonga lease is for 74 months. The lease commenced on February 10, 2022, with rent payments commencing after the first three months, and the expiration date is May 31, 2028.
In addition, we lease a fulfilment center at 2397 Bateman Avenue, Duarte, CA 91010, which consists of approximately 49,500 square feet of space, with a base rental fee of $56,000 to $59,410 per month. The term of this lease runs from May 1, 2022 through April 30, 2025.
The base rental fee is $114,249 to $140,079 per month through the expiration date, May 31, 2028. 32 In addition, we lease a fulfilment center at 2397 Bateman Avenue, Duarte, CA 91010, which consists of approximately 49,500 square feet of space, with a base rental fee of $56,000 to $59,410 per month.
Removed
We previously leased 48,867 square feet of property at 2399 Bateman Avenue, Duarte, CA 91010, which was leased at the rate of approximately $42,000 per month. This property previously served as both our principal offices as well as our primary fulfillment center.
Added
The lease term is for three years expiring on July 14, 2026. The total base rental fee for these offices is approximately $19,406 per month. In September 2024, the Company terminated the lease contract of the office space. In September 2024, DHS entered into a sublease agreement with a third-party entity for office space in Shenzhen.
Removed
This lease expired on December 31, 2023 and we did not renew it. 28 In addition to our primary fulfillment centers in Rancho Cucamonga and Duarte, we maintained a 22,700 square foot fulfillment center located at 14750 E.
Added
The lease term was for one year from October 1, 2024 to September 30, 2025. The lease was treated as a short-term lease and the base rental fee is approximately $10,000 per month.
Removed
The office space in the PRC is located in Shenzhen and the term of this lease expires in July of 2026.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOther than the above settlement, we are not presently a party to any pending or other threatened legal proceedings or claims against us that we believe will have a material adverse effect on our business, financial condition, or operating results. Nonetheless, we may from time to time become involved in legal proceedings in the ordinary course of business.
Biggest changeITEM 3. LEGAL PROCEEDINGS We are not presently a party to any pending or other threatened legal proceedings or claims against us that we believe will have a material adverse effect on our business, financial condition, or operating results. Nonetheless, we may from time to time become involved in legal proceedings in the ordinary course of business.
Removed
ITEM 3. LEGAL PROCEEDINGS Legal Proceedings On April 3, 2024, the Company and the underwriter of our initial public offering, D.A. Davidson & Co (“D.A.
Removed
Davidson”), entered into a settlement agreement and mutual release (the “Settlement Agreement”) with Boustead Securities, LLC (“Boustead”) and its current and former employees, officers, directors, partners, agents and affiliates, pursuant to which all parties agreed to release all claims in exchange for the Company’s payment of $1.3 million (the “Settlement Amount”) to Boustead.
Removed
The Settlement Agreement was entered into for purposes of settling in full the FINRA Arbitration (FINRA Case No. 22-01133) which had been brought by Boustead against the Company and D.A. Davidson after the Company opted not to complete its initial public offering with Boustead but instead engaged and completed its initial public offering with D.A. Davidson.
Removed
In entering into the Settlement Agreement, the Company paid the Settlement Amount in four equal installments of $325,000 on each of April 3, 2024, May 3, 2024, June 3, 2024 and July 3, 2024.
Removed
As of the date of this Annual Report, the parties have formally withdrawn all of the complaints that were before FINRA, with prejudice, and the matter is settled in full. In addition, effective June 18, 2024, and pursuant to the agreement between our co-founder and chairman, Chenlong Tan and D.A. Davidson, Mr.
Removed
Tan and co-founder, Allan Huang, returned a total of 541,667 shares (the “Cancelled Shares”) to the Company, all of which were cancelled following their return. The Cancelled Shares, valued at $2.40 per share on the date of cancellation, served to cover the full value of the Settlement Amount.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePlan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders 3,663,402 $ 1.12 6,336,598 Equity compensation plans not approved by security holders – – – Total 3,663,402 $ 1.12 6,336,598 Recent Sales of Unregistered Securities Set forth below is information regarding all securities issued by us within the past three years.
Biggest changePlan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders 4,335,629 $ 1.17 5,378,502 Equity compensation plans not approved by security holders – – – Total 4,335,629 $ 1.17 5,378,502 34 Recent Sales of Unregistered Securities None.
Grants made under the 2020 Amended Equity Incentive Plan must be approved by the Company’s board of directors. The following table provides information as of June 30, 2024 about our equity compensation plans and arrangements.
Grants made under the 2020 Amended Equity Incentive Plan must be approved by the Company’s board of directors. The following table provides information as of June 30, 2025 about our equity compensation plans and arrangements.
Prior to that time, our common stock was not traded on any exchange or quoted on any over the counter market. Holders As of September 20, 2024, we had 22 holders of record of our common stock and 31,425,290 shares of common stock outstanding. Dividends We have never paid cash dividends on our common stock.
Prior to that time, our common stock was not traded on any exchange or quoted on any over the counter market. Shareholders As of October 9, 2025, we had 23 holders of record of our common stock and 31,493,686 shares of common stock outstanding. Dividends We have never paid cash dividends on our common stock.
Removed
Also included is the consideration received by us for such securities, if any, and information relating to the section of the Securities Act, or rule of the SEC, under which exemption from registration was claimed. 30 On June 18, 2024, we closed on the Registered Direct offering of 2,083,334 Shares and a concurrent Private Placement of Warrants to purchase 2,083,334 Warrant Shares, which were sold for gross aggregate proceeds of $5,000,002.
Added
Issuer Purchases of Equity Securities None. Use of Proceeds None. ITEM 6. [Reserved]
Removed
The Shares were sold pursuant to a prospectus supplement, filed on June 18, 2024, to the Registration Statement on Form S-3, originally filed on September 25, 2023, with the SEC (File No. 333-274665), and declared effective by the SEC on September 29, 2023.
Removed
The Warrants, which were issued pursuant to an exemption from registration under Section 4(a)(2) or Regulation D of the Securities Act, have a term of five years and are immediately exercisable at $2.40 per share.
Removed
The Shares and Warrants were sold to a purchaser pursuant to a securities purchase agreement, dated June 16, 2024, between the Company and the purchaser (the "Purchase Agreement"). Roth Capital Partners, LLC acted as placement agent (the "Placement Agent"), pursuant to a placement agency agreement between the Company and the Placement Agent dated June 16, 2024 (the "Placement Agency Agreement").
Removed
The Company paid the Placement Agent as compensation a cash fee equal to 6.5% of the gross proceeds of the Offering plus reimbursement of certain expenses and legal fees.
Removed
On July 9, 2024, as required by the Purchase Agreement, we filed a resale registration statement on Form S-1 with the SEC for purposes of registering the Warrant Shares (the "Resale Form S-1"). Upon filing an amendment on July 23, 2024, the Resale Form S-1 was declared effective by the SEC on July 26, 2024.
Removed
On February 15, 2022, pursuant to the terms of a share transfer framework agreement (the “Transfer Agreement”) for acquisition of 100% of the ordinary shares of Anivia Limited (“Anivia”) and its subsidiaries and VIE, the Company issued 3,083,700 restricted shares (subject to a lock-up period of 180 days and insider trading rules) of the Company’s common stock to White Cherry Limited, a BVI company (“White Cherry”).
Removed
The shares issued under the Transfer Agreement were issued in accordance with Regulation S of the Securities Act. Please see Note 4 of the Notes to Consolidated Financial Statements for further details concerning the transaction.
Removed
On January 27, 2021, the Company completed a private placement offering pursuant to which the Company sold to two accredited investors an aggregate of $3,000,000 in convertible notes with a 6% interest per annum (the “Convertible Note”) and warrants to purchase shares of Common Stock equaling 80% of the number of shares of Class A Common Stock issuable upon conversion of the Convertible Notes.
Removed
The warrants are exercisable for a period of three years from the IPO completion date at a per share exercise price equal to the IPO.
Removed
The Convertible Notes automatically converted into the Company’s common stock upon completion of a qualified IPO (the “Mandatory Conversion”) or were repayable in cash at the option of the holders of the Convertible Notes with repayment to commence six months after January 27, 2021.
Removed
At the time of our IPO, pursuant to their terms, the Convertible Notes converted at a price equal to the lesser of (a) a price representing a 30% discount to the public offering price per share of the Common Stock in this Offering, or (b) a price representing a 30% discount to the price per share equal to dividing $200 million by the total number of (x) outstanding shares of Common Stock immediately prior to the IPO, (y) the number of Common Stock issuable upon conversion of the 34,500 shares of Series A Preferred Stock, and (z) the number of Common Stock issuable upon conversion of all outstanding Convertible Notes.
Removed
Any interest accrued on the Convertible Note will be waived upon conversion. The Convertible Notes and warrants were sold pursuant to an exemption from registration under Rule 506(b) under Regulation D of the Securities Act.
Removed
In connection with the Convertible Note offering, the Company issued placement agent warrants to purchase 7.0% of the shares of Common Stock underlying the Convertible Notes exercisable at the conversion price of the Convertible Note (the “Conversion Price”).
Removed
The placement agent warrants were exercisable for a period of five years from the issuance date and are treated as a debt issuance cost. Issuer Purchases of Equity Securities None. Use of Proceeds None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe decrease was mainly due to the combination of a decrease in selling and fulfillment expenses of $4.33 million, including vendor warranty credits for prior year purchases of $2.48 million recorded during the year ended June 30, 2024 and decreased costs related to advertising, merchant fees, delivery fees, rental expenses, storage costs and fulfillment workforce, a decrease in general and administrative expenses of $0.67 million, which included payroll expenses, stock-based compensation expense, insurance expenses, legal fees related to the Boustead case, and other operating expenses including expenses associated with being a publicly traded company, and a decrease of $3.06 million of impairment loss on goodwill triggered by a decrease in the Company’s share price of its common stock and the net loss incurred during the quarter ended September 30, 2022.
Biggest changeThe decrease was mainly due to the combination of a decrease in selling and fulfillment expenses of $4.8 million as a result of decreased costs related to advertising, merchant fees, rental expenses and delivery fees, and an increase in general and administrative expenses of $0.5 million, which included payroll expenses, stock-based compensation expense, insurance expenses, allowance for credit losses, travel expenses and other operating expenses.
If the performance condition is ultimately not met, compensation cost related to the award should not be recognized (or should be reversed) because the vesting condition in the award has not been satisfied. The Company will recognize forfeitures of such equity-based compensation as they occur. 39 Income taxes The Company accounts for income taxes under the asset and liability method.
If the performance condition is ultimately not met, compensation cost related to the award should not be recognized (or should be reversed) because the vesting condition in the award has not been satisfied. The Company will recognize forfeitures of such equity-based compensation as they occur. Income taxes The Company accounts for income taxes under the asset and liability method.
Sales return allowances are estimated based on historical amounts and are recorded upon recognizing the related sales. Shipping and handling costs are recorded as selling expenses. Accounts receivable, net During the ordinary course of business, the Company extends unsecured credit to its customers. Accounts receivable are stated at the amount the Company expects to collect from customers.
Sales return allowances are estimated based on historical amounts and are recorded upon recognizing the related sales. Shipping and handling costs are recorded as selling expenses. 41 Accounts receivable, net During the ordinary course of business, the Company extends unsecured credit to its customers. Accounts receivable are stated at the amount the Company expects to collect from customers.
On July 16, 2023, the Company borrowed $2,000,000 from White Cherry, repaid $1 million on July 31, 2023 and $1 million on January 31, 2024. For the year ended June 30, 2024, the Company recorded interest of $32,911. As of June 30, 2024, the outstanding balance of the On-demand Loan was fully paid off.
On July 16, 2023, the Company borrowed $2,000,000 from White Cherry, repaid $1 million on July 31, 2023 and $1 million on January 31, 2024. For the year ended June 30, 2024, the Company recorded interest of $32,911. As of June 30, 2025, the outstanding balance of the On-demand Loan was fully paid off.
The Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements. 41 In March 2020 and January 2021, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope, respectively (collectively, “Topic 848”).
The Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements. 46 In March 2020 and January 2021, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope, respectively (collectively, “Topic 848”).
In the event we recover amounts previously written off, we will reduce the specific allowance for credit losses. 37 Inventory, net Inventory consists of finished goods ready for sale and is stated at the lower of cost or market. The Company values its inventory using the weighted average costing method.
In the event we recover amounts previously written off, we will reduce the specific allowance for credit losses. 42 Inventory, net Inventory consists of finished goods ready for sale and is stated at the lower of cost or market. The Company values its inventory using the weighted average costing method.
The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. 40 In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative. This ASU incorporates certain U.S.
The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. 45 In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative. This ASU incorporates certain U.S.
LIQUIDITY AND CAPITAL RESOURCES Sources of Liquidity During the fiscal year ended June 30, 2024 we primarily funded our operations with cash and cash equivalents generated from operations, as well as through borrowing under our credit facility from JPMorgan Chase Bank (“JPM”).
LIQUIDITY AND CAPITAL RESOURCES Sources of Liquidity During the fiscal year ended June 30, 2025 we primarily funded our operations with cash and cash equivalents generated from operations, as well as through borrowing under our credit facility from JPMorgan Chase Bank (“JPM”).
The resale registration statement was declared effective by the SEC on July 26, 2024. As of June 30, 2024, no Warrants have been exercised. 44 Emerging Growth Company We are an “emerging growth company,” as defined in the JOBS Act.
The resale registration statement was declared effective by the SEC on July 26, 2024. As of June 30, 2024, no Warrants have been exercised. 49 Emerging Growth Company We are an “emerging growth company,” as defined in the JOBS Act.
Management reviews its accounts receivable balances each reporting period to determine if an allowance for credit loss is required. The Company evaluates the creditworthiness of all of its customers individually before accepting them and continuously monitors the recoverability of accounts receivable.
Management reviews its accounts receivable balances each reporting period to determine if an allowance for credit losses is required. The Company evaluates the creditworthiness of all of its customers individually before accepting them and continuously monitors the recoverability of accounts receivable.
The Company does not expect the adoption of this standard to have a material impact on our consolidated financial statements.
The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.
As of June 30, 2024 and 2023, the goodwill balance amounted to $3,034,110 and $3,034,110, respectively. 38 Intangible Assets, net Finite life intangible assets at June 30, 2024 include a covenant not to compete, supplier relationship and software recognized as part of the acquisition of Anivia.
As of June 30, 2025 and 2024, the goodwill balance amounted to $3,034,110 and $3,034,110, respectively. 43 Intangible Assets, net Finite life intangible assets at June 30, 2024 include a covenant not to compete, supplier relationship and software recognized as part of the acquisition of Anivia.
Through the operations of our e-commerce platforms and channel partners, our combined 121,000 square foot fulfillment centers in Rancho Cucamonga and Los Angeles, California, we believe we are one of the leading marketers, distributors and retailers in the consumer gardening and home goods categories, based on management’s estimates.
Through the operations of our e-commerce platforms and channel partners, our 99,347 square foot fulfillment centers in Rancho Cucamonga, California, we believe we are one of the leading marketers, distributors and retailers in the consumer gardening and home goods categories, based on management’s estimates.
The Company has also included in calculation of allowance for credit losses the potential impact of the COVID-19 pandemic on our customers’ businesses and their ability to pay their accounts receivable. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.
The Company has also included in calculation of allowance for credit losses the potential impact of the overall economic conditions on our customers’ industry and businesses and their ability to pay our accounts receivable. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.
In February 2024, the Company paid the fourth installment of $875,000. For the year ended June 30, 2024, the Company recorded accrued interest of $39,429 and amortization of note premium of $31,602. For the year ended June 30, 2023, the Company recorded accrued interest of $157,500 and amortization of note premium of $50,418.
In February 2024, the Company paid the fourth installment of $875,000. For the year ended June 30, 2025, the Company recorded accrued interest of $0 and amortization of note premium of $0. For the year ended June 30, 2024, the Company recorded accrued interest of $39,429 and amortization of note premium of $31,602.
The decrease was due to the reasons discussed above, along with other comprehensive loss of $148,272 as a result of foreign currency translation adjustments resulting from the translation of RMB, the functional currency of our VIE in the PRC, to USD, the reporting currency of the Company.
The increase was due to the reasons discussed above, along with other comprehensive income of $250,513 as a result of foreign currency translation adjustments resulting from the translation of RMB, the functional currency of our VIE in the PRC, to USD, the reporting currency of the Company.
Under the terms of the Waiver Letter, JPM agreed to waive the right to enforce an event of default based on the aforementioned Existing Defaults. As of June 30, 2024 and 2023, the Company was in compliance with the ABL covenants.
Under the terms of the Waiver Letter, JPM agreed to waive the right to enforce an event of default based on the aforementioned Existing Defaults. As of June 30, 2024, the Company was in compliance with the ABL covenants. However, as of June 30, 2025, the Company was in default as a result of covenant violations under the ABL facility.
June 2024 Registered Direct Offering On June 18, 2024, the Company, closed on a Registered Direct Offering of 2,083,334 Shares and a concurrent Private Placement of Warrants to purchase 2,083,334 Warrant Shares, which were sold for gross aggregate proceeds of $5,000,002.
As of June 30, 2025 and 2024, the outstanding balance of the RP Loan was $0 and $350,000. June 2024 Registered Direct Offering On June 18, 2024, the Company, closed on a Registered Direct Offering of 2,083,334 Shares and a concurrent Private Placement of Warrants to purchase 2,083,334 Warrant Shares, which were sold for gross aggregate proceeds of $5,000,002.
We actively evaluate potential acquisition opportunities of companies and product brand names that can complement our product catalog and improve on existing products and supply chain efficiencies.
Trends and Expectations Product and Brand Development We plan to increase investments in product and brand development. We actively evaluate potential acquisition opportunities of companies and product brand names that can complement our product catalog and improve on existing products and supply chain efficiencies.
In addition, we plan to increase the size of our in-house product catalog, which will have a net beneficial impact to our margin profile and ability to generate cash. Currently, we have approximately $18.0 million in unused credit under the revolving line with JPM, which will be expired and we are in negotiations on a renewal in November 2024.
In addition, we plan to increase the size of our in-house product catalog, which will have a net beneficial impact to our margin profile and ability to generate cash. Currently, we have approximately $1.8 million in unused credit under the revolving line with JPM.
The Company also considers external factors to the specific customer, including current conditions and forecasts of economic conditions, including the potential impact of the COVID-19 pandemic.
The Company also considers external factors to the specific customer, including current conditions and forecasts of economic conditions, including the potential impact of the recent tariff policy.
Given our current working capital position and available funding from our revolving credit line and proceeds from our June Registered Direct offering, we believe we will be able to manage through the current challenges by managing payment terms with customers and vendors.
Given our current working capital position and available funding from our revolving credit line and proceeds from our June Registered Direct offering, we believe we will be able to manage through the current challenges by managing payment terms with customers and vendors. 39 Working Capital As of June 30, 2025 and 2024, our working capital was $4.9 million and $11.2 million, respectively.
The decrease in other expenses was mainly due to decrease in other non-operating loss of $71,761, and in interest, including amortization of debt discount, on the revolving loan of $277,855 during the year ended June 30, 2024 resulted from the decreasing loan balance. Net Loss Attributable to iPower Inc.
The decrease in other expenses was mainly due to decrease in other non-operating loss of $120,258, and in interest, including amortization of debt discount, on the revolving loan of $352,224 during the year ended June 30, 2024 as a result of the decreasing balance on the revolving loan. 38 Net Loss Attributable to iPower Inc.
The financing fees are recorded as debt discount and to be amortized over three years as financing expenses, the term of the ABL. 42 Below is a summary of the interest expense recorded for the years ended June 30, 2024 and 2023: 2024 2023 Accrued interest $ 402,675 $ 670,924 Credit utilization fees 71,332 43,931 Amortization of debt discount 265,219 265,218 Total $ 739,226 $ 980,073 As of June 30, 2024 and 2023, the outstanding amount of the JPM revolving loan payable, net of debt discount and including interest, was $5,500,739 and $9,791,191, respectively.
The financing fees are recorded as debt discount and are to be amortized over three years as financing expenses, the term of the ABL. 47 Below is a summary of the interest expense recorded for the years ended June 30, 2025 and 2024: 2025 2024 Accrued interest $ 244,078 $ 402,675 Credit utilization fees 57,052 71,332 Amortization of debt discount 125,906 265,219 Total $ 427,036 $ 739,226 As of June 30, 2025 and 2024, the outstanding amount of the JPM revolving loan payable, net of debt discount and including interest, was $3,737,602 and $5,500,739, respectively.
In addition, supply chain disruptions may make it harder for us to find favorable pricing and reliable sources for the materials we need, putting upward pressure on our costs and increasing the risk that we may be unable to acquire the materials and services we need to continue to make certain products. 32 Regulatory Environment We sell hydroponic gardening products to end users that may use such products in new and emerging industries or segments, including the growing of cannabis.
In addition, supply chain disruptions may make it harder for us to find favorable pricing and reliable sources for the materials we need, putting upward pressure on our costs and increasing the risk that we may be unable to acquire the materials and services we need to continue to make certain products.
Net loss attributable to iPower Inc. for the year ended June 30, 2024 was $1,528,159 as compared to $11,965,390 for the year ended June 30, 2023, representing a decrease of net loss of $10,437,231. The decrease was primarily due to the increase in gross profit and decrease in operating expenses as discussed above. 34 Comprehensive loss Attributable to iPower Inc.
Net loss attributable to iPower Inc. for the year ended June 30, 2025 was $4,968,288 as compared to $1,528,159 for the year ended June 30, 2024, representing an increase of net loss of $3,440,129. The increase was primarily due to the decrease in gross profit and operating expenses as discussed above. Comprehensive loss Attributable to iPower Inc.
Return allowances, which reduce product revenue by the Company’s best estimate of expected product returns, are estimated using historical experience. 36 The Company evaluates the criteria of ASC 606 - Revenue Recognition Principal Agent Considerations in determining whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions.
The Company evaluates the criteria of ASC 606 - Revenue Recognition Principal Agent Considerations in determining whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions.
OFF-BALANCE SHEET ARRANGEMENTS We do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
OFF-BALANCE SHEET ARRANGEMENTS We do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. 40 CRITICAL ACCOUNTING POLICIES AND ESTIMATES We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States, or GAAP and pursuant to the rules and regulations of the SEC.
As of June 30, 2023, including $236,250 of accrued interest and $31,602 of unamortized premium, the total outstanding balance of the Purchase Note was $2,017,852, which is presented on the consolidated balance sheet as a current portion of $2,017,852 and a non-current portion of $0. 43 Short-term loans payable On July 8, 2023, the Company entered into an agreement with White Cherry Limited (“White Cherry”), a BVI company owned by the former owner of DHS, for an on-demand, unsecured and subordinated loan (“On-demand Loan”).
As of June 30, 2025 and 2024, the total outstanding balance of the Purchase Note was $0. 48 Short-term loans payable On July 8, 2023, the Company entered into an agreement with White Cherry Limited (“White Cherry”), a BVI company owned by the former owner of DHS, for an on-demand, unsecured and subordinated loan (“On-demand Loan”).
RESULTS OF OPERATIONS For the fiscal years ended June, 2024 and 2023 The following table presents certain consolidated statement of operations information and presentation of that data as a percentage of change from period to period.
The Company will provide additional updates to shareholders when and if we do effectuate such strategy. 36 RESULTS OF OPERATIONS For the fiscal years ended June 30, 2025 and 2024 The following table presents certain consolidated statement of operations information and presentation of that data as a percentage of change from period to period.
Our core strategy continues to focus on expanding our geographic reach across the United States and internationally through organic growth, both in terms of expanding customer base as well as brand and product development. iPower has developed a set of methodologies driven by proprietary data formulas to effectively bring products to market and sales.
Our core strategy continues to focus on expanding our geographic reach across the United States and internationally through organic growth, both in terms of expanding customer base as well as brand and product development. iPower has developed a set of methodologies driven by proprietary data formulas to effectively bring products to market and sales. 35 We are actively developing our in-house branded products and through supply chain partners, which to date include the iPower and Simple Deluxe brands and more, some of which have been designated as Amazon best seller product leaders and Amazon Choice products, among others.
The decrease in cash provided by operating activities mainly resulted from a decrease in cash received from customers and an increase in cash paid for cost of revenues and operating expenses. Investing Activities For the years ended June 30, 2024 and 2023, net cash used in investing activities was $0 and $140,813, respectively.
The decrease in cash provided by operating activities mainly resulted from a combination of an increase in net loss , a decrease in cash received from customers and an increase in cash paid for cost of revenues and operating expenses.
The decrease was due to combination of the decrease in operating expenses and the increase in gross profit as discussed above. Other Expenses Other expenses consist of interest expense and other non-operating income (expenses). Other expenses for the year ended June 30, 2024 were $829,921 as compared to $1,184,030 for the year ended June 30, 2023.
Loss from Operations Loss from operations was $5,865,762 for the year ended June 30, 2025 as compared to $962,892 for the year ended June 30, 2024. The decrease was due to the decrease in operating expenses and in gross profit as discussed above. Other Expenses Other expenses consist of interest expense and other non-operating income (expenses).
The gross profit ratio increased to 45.61% for the year ended June 30, 2024 from 39.14% for the year ended June 30, 2023. The increase in gross profit ratio was mainly driven by the decrease in costs of goods sold during the year ended June 30, 2024, as discussed above.
The decrease in the gross profit ratio was mainly driven by the combination of the increase in the logistics service costs and decrease in costs of goods sold during the year ended June 30, 2025, as discussed above.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows. Recent Financings Asset-based revolving loan On November 12, 2021, the Company entered into a Credit Agreement with JPMorgan Chase Bank, N.A.
The Company does not expect the adoption of this standard to have a material impact on the Company's consolidated financial statements. The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.
Comprehensive loss attributable to iPower Inc. for the year ended June 30, 2024 was $1,676,431 as compared to $12,033,202 for the year ended June 30, 2023, representing a decrease of comprehensive loss of $10,356,771.
Comprehensive loss attributable to iPower Inc. for the year ended June 30, 2025 was $4,717,775 as compared to $1,676,431 for the year ended June 30, 2024, representing an increase of comprehensive loss of $3,041,344.
As of June 30, 2024, the outstanding balance of the On-demand Loan 2, including accrued interest of $7,615, was $491,214. On April 1, 2024, the Company borrowed $350,000 short-term loan (“RP Loan”) from an entity owned by Mr. Allan Huang, one of the majority shareholders of the Company.
On April 1, 2024, the Company borrowed $350,000 short-term loan (“RP Loan”) from an entity owned by Mr. Allan Huang, one of the majority shareholders of the Company. The RP Loan bears no interest and is due upon receipt of request of repayment.
We anticipate that past historical trends to remain in place through the balance of the fiscal year with working capital remaining near this level for the foreseeable future. 35 Cash Flows Operating Activities Our largest source of cash provided by operations is from sales of products.
The historical seasonality in our business during the year can cause cash and cash equivalents, inventory and accounts payable to fluctuate, resulting in changes in our working capital. We anticipate that past historical trends to remain in place through the balance of the fiscal year with working capital remaining near this level for the foreseeable future.
The Company transfers the risk of loss or damage upon shipment or completion of service, therefore, revenue from product sales is recognized when it is shipped to the customer and the revenue from services is recognized upon completion of services. For the years ended June 30, 2024 and 2023, the revenues from services were immaterial.
The Company transfers the risk of loss or damage upon shipment or completion of service, therefore, revenue from product sales is recognized when it is shipped to the customer and the revenue from services is recognized upon completion of services. Return allowances, which reduce product revenue by the Company’s best estimate of expected product returns, are estimated using historical experience.
Our primary uses of cash from operating activities include payments to suppliers for products, to employees for compensation, and other general expenses. Net cash provided by operating activities for the years ended June 30, 2024 and 2023 was $6,164,076 and $9,211,269, respectively.
Cash Flows Operating Activities Our largest source of cash provided by operations is from sales of products. Our primary uses of cash from operating activities include payments to suppliers for products, to employees for compensation, and other general expenses.
The Company has adopted the provisions of ASC 740 since its inception on April 11, 2018, and has subsequently analyzed filing positions in each of the federal and state jurisdictions where the Company is required to file income tax returns, as well as open tax years in such jurisdictions.
Valuation allowances are recorded, when necessary, to reduce deferred tax assets to the amount expected to be realized. 44 The Company has analyzed filing positions in each of the federal and state jurisdictions where the Company is required to file income tax returns, as well as open tax years in such jurisdictions.
While pricing remained stable, the decreased revenue mainly resulted from a slight decrease in sales volume. Costs of Goods Sold Costs of goods sold for the year ended June 30, 2024 decreased 13.47% to $46,818,232 as compared to $54,104,587 for the year ended June 30, 2023.
While pricing remained stable, the decreased revenue mainly resulted from a decrease in sales volume during the year ended June 30, 2025 as the Company offered less promotions due to lower inventory level as compared to the year ended June 30, 2024.
We had cash and cash equivalents of $7,377,837 as of June 30, 2024, representing a $3,642,195 increase from $3,735,642 in cash as of June 30, 2023. The cash increase was primarily the result of the cash we received in the Registered Direct in June 2024.
We had cash and cash equivalents of $2,007,890 as of June 30, 2025, representing a $5,369,947 decrease from $7,377,837 in cash as of June 30, 2024.
The decrease was mainly due to the decrease in sales, freight costs, and lowered product costs resulted from management’s efforts on supply chain management. Gross Profit Gross profit was $ 39,253,253 for the year ended June 30, 2024 as compared to $34,797,461 for the year ended June 30, 2023.
The decrease was primarily due to a combination of the costs related to the logistics service income and the decrease in product sales, freight costs, and lowered product costs resulted from management’s efforts on supply chain management.
(1,528,159 ) (11,965,390 ) (86.61% ) Other comprehensive loss (148,272 ) (67,812 ) 118.65% Comprehensive loss attributable to iPower Inc. $ (1,676,431 ) $ (12,033,202 ) (86.07% ) Gross profit % of revenues 45.61% 39.14% 16.51% Operating loss % of revenues (1.12% ) (15.17% ) (92.62% ) Net loss attributable to iPower Inc. % of revenues (1.78% ) (13.46% ) (86.81% ) 33 Revenues Revenues for the year ended June 30, 2024 decreased 3.18% to $86,071,485 as compared to $88,902,048 for the year ended June 30, 2023.
(4,968,288 ) (1,528,159 ) 222.12% Other comprehensive loss 250,513 (148,272 ) (268.96% ) Comprehensive loss attributable to iPower Inc. $ (4,717,775 ) $ (1,676,431 ) 181.42% Gross profit % of revenues 43.84% 45.61% (1.03% ) Operating loss % of revenues (8.87% ) (1.12% ) 692.73% Net loss attributable to iPower Inc. % of revenues (7.51% ) (1.78% ) 323.07% 37 Revenues Revenues for the year ended June 30, 2025 decreased 23.15% to $66,142,779 as compared to $86,071,485 for the year ended June 30, 2024.
Operating Expenses Operating expenses for the year ended June 30, 2024 decreased 16.70% to $40,216,145 as compared to $48,281,004 for the year ended June 30, 2023.
Operating Expenses Operating expenses for the year ended June 30, 2025 decreased 10.81% to $34,859,456 as compared to $39,084,260 for the year ended June 30, 2024.
Year Ended June 30, 2024 Year Ended June 30, 2023 Variance Revenues $ 86,071,485 $ 88,902,048 (3.18% ) Cost of goods sold 46,818,232 54,104,587 (13.47% ) Gross profit 39,253,253 34,797,461 12.80% Operating expenses 40,216,145 48,281,004 (16.70% ) Loss from operations (962,892 ) (13,483,543 ) (92.86% ) Other expenses (829,921 ) (1,184,030 ) (29.91% ) Loss before income taxes (1,792,813 ) (14,667,573 ) (87.78% ) Income tax benefit (251,365 ) (2,690,500 ) (90.66% ) Net loss (1,541,448 ) (11,977,073 ) (87.13% ) Non-controlling interest (13,289 ) (11,683 ) 13.75% Net loss attributable to iPower Inc.
Year Ended June 30, 2025 Year Ended June 30, 2024 Variance Revenues $ 66,142,779 $ 86,071,485 (23.15% ) Cost of goods sold 37,149,085 47,950,117 (22.53% ) Gross profit 28,993,694 38,121,368 (23.94% ) Operating expenses 34,859,456 39,084,260 (10.81% ) Loss from operations (5,865,762 ) (962,892 ) 509.18% Other expenses (366,273 ) (829,921 ) (55.87% ) Loss before income taxes (6,232,035 ) (1,792,813 ) 247.61% Income tax benefit (1,254,489 ) (251,365 ) 399.07% Net loss (4,934,424 ) (1,541,448 ) 220.12% Non-controlling interest (9,258 ) (13,289 ) (30.33% ) Net loss attributable to iPower Inc.
Demand for our products could be impacted by changes in the regulatory environment with respect to such industries and segments. Recent Developments On June 18, 2024, we closed on the Registered Direct offering of 2,083,334 Shares and a concurrent Private Placement of Warrants to purchase 2,083,334 Warrant Shares, which were sold for gross aggregate proceeds of $5,000,002.
Demand for our products could be impacted by changes in the regulatory environment with respect to such industries and segments. Recent Developments Adoption of Digital Treasury Strategy On June 17, 2025, the Company adopted a digital asset reserve, allocation and development strategy (the “Digital Treasury Strategy”) with the plan of creating a Digital Treasury Strategy business.
The decrease in cash used in investing activities was because the Company did not purchase any additional equipment during the year ended June 30, 2024, whereas such equipment had been purchased in the same period during 2023. Financing Activities Net cash used in financing activities was $2,397,801 and $7,153,620, respectively, for the years ended June 30, 2024 and 2023.
The increase was mainly due to the prepayments made for software developments and investment in joint venture during the year ended June 30, 2025 Financing Activities Net cash used in financing activities was $2,999,362 and $2,397,801 for the years ended June 30, 2025 and 2024, respectively.
The decrease in net cash used in financing activities was primarily due to a combination of increase in proceeds from our registered offering and loans and our payment of approximately $16.8 million for: (1) $3.8 million to pay off the notes payable to White Cherry; (2) $12 million to pay down the outstanding balance of the asset-based revolving loan facility with JPM; and (3) $1.0 million of offering cost settlement payment to Boustead.
The cash decrease was primarily due to the result of cash used in operating activities, investing activities and financing activities resulting from our payments to offering cost settlement, pay down the short-term loans - related party and part of the JPM revolving line of credit.
Removed
We are actively developing our in-house branded products and through supply chain partners, which to date include the iPower and Simple Deluxe brands and more, some of which have been designated as Amazon best seller product leaders and Amazon Choice products, among others. Trends and Expectations Product and Brand Development We plan to increase investments in product and brand development.
Added
Regulatory Environment We sell hydroponic gardening products to end users that may use such products in new and emerging industries or segments, including the growing of cannabis.
Removed
The Warrants, which were issued pursuant to an exemption from registration under Section 4(a)(2) or Regulation D of the Securities Act, have a term of five years and are immediately exercisable at $2.40 per share. The Shares and Warrants were sold to a Purchase Agreement to a securities purchase agreement, dated June 16, 2024, between the Company and the purchaser.
Added
To date, we have not effectuated the Digital Treasury Strategy business and do not know if it will be effectuated. As this Digital Treasury Strategy is a new planned addition to our business model, we cannot predict its success or know whether we will continue with this strategy for the long term.
Removed
Roth Capital Partners, LLC acted as Placement Agent, pursuant to a Placement Agency Agreement. The Company paid the Placement Agent as compensation a cash fee equal to 6.5% of the gross proceeds of the Offering plus reimbursement of certain expenses and legal fees.
Added
In addition, the Company also experienced significant decrease in amazon orders due to uncertainty over tariffs during the second half of the fiscal year ended June 30, 2025. Costs of Goods Sold Costs of goods sold for the year ended June 30, 2025 decreased 22.53% to $37,149,085 as compared to $47,950,117 for the year ended June 30, 2024.
Removed
On July 9, 2024, as required by the Purchase Agreement, we filed a resale registration statement on Form S-1 with the SEC (the "Resale Form S-1"). Upon filing an amendment on July 23, 2024, the Resale Form S-1 was declared effective by the SEC on July 26, 2024.
Added
Gross Profit Gross profit was $28,993,694 for the year ended June 30, 2025 as compared to $38,121,368 for the year ended June 30, 2024. The gross profit ratio decreased to 43.84% for the year ended June 30, 2025 from 44.29% for the year ended June 30, 2024.
Removed
We have seen decreased operating expenses during the year ended June 30, 2024; however, we can provide no assurance that this trend will continue. Loss from Operations Loss from operations was 962,892 for the year ended June 30, 2024 as compared to $13,483,543 for the year ended June 30, 2023.
Added
The increase in general and administrative expenses was mainly due to the expansion of our vendor network and development of the SuperSuite platform and an increased allowance for credit losses and inventory reserves of $1.2 million.
Removed
Working Capital As of June 30, 2024 and 2023, our working capital was $11.2 million and $17.9 million, respectively. The historical seasonality in our business during the year can cause cash and cash equivalents, inventory and accounts payable to fluctuate, resulting in changes in our working capital.
Added
Other expenses for the year ended June 30, 2025 were $366,273 as compared to $829,921 for the year ended June 30, 2024.
Removed
CRITICAL ACCOUNTING POLICIES AND ESTIMATES We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States, or GAAP and pursuant to the rules and regulations of the SEC.
Added
Net cash (used in) provided by operating activities for the years ended June 30, 2025 and 2024 was $(579,187) and $6,164,076, respectively.
Removed
As of June 30, 2024, there were no indicators of impairment.
Added
Investing Activities For the years ended June 30, 2025 and 2024, net cash used in investing activities was $2,042,250 and $0, respectively.
Removed
Valuation allowances are recorded, when necessary, to reduce deferred tax assets to the amount expected to be realized.
Added
The increase in net cash outflows was primarily attributable to lower financing inflows in fiscal 2025 as compared to fiscal 2024. Financing activities during fiscal 2024 included significant sources of cash that did not recur in fiscal 2025, including $4.5 million in net proceeds from the issuance of common stock and $2.4 million in proceeds from related party borrowings.
Removed
As a result of the implementation of certain provisions of ASC 740, Income Taxes (“ASC 740”), which clarifies the accounting and disclosure for uncertainty in tax position, as defined, ASC 740 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes.
Added
These inflows were partially offset in fiscal 2024 by net repayments of $5.1 million on revolving loans and $3.75 million on short-term borrowings.
Removed
The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.
Added
The Company did not record any impairment charge for the years ended June 30, 2025 and 2024.
Removed
This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) as if the entity had originated the contracts. The guidance is effective for fiscal years beginning after December 15, 2023, with early application permitted.
Added
Recent Financings Asset-based revolving loan On November 12, 2021, the Company entered into a Credit Agreement with JPMorgan Chase Bank, N.A.
Removed
The Company does not expect the adoption of this standard to have a material impact on the Company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which eliminates step two from the goodwill impairment test.
Added
On November 8, 2024, the Company entered into a third amendment (the “Third Amendment”) to that certain credit agreement, initially entered into by and among the Company and its subsidiaries and JPMorgan Chase Bank, N.A., as administrative agent for the Lender and a lender (the “Administrative Agent” or “Lender”), on November 12, 2021 (the “Credit Agreement”).
Removed
Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit.
Added
The Third Amendment to the Credit Agreement amended, among other things, (i) the defined term “Aggregate Revolving Commitment” to mean $15,000,000, and (ii) extended the maturity date to “November 8, 2027 or any earlier date on which the Revolving Commitments are reduced to zero or otherwise terminated pursuant to the terms hereof.” The borrowing rate is SOFR plus 2.25% to 2.50% depending on utilization of the borrowing availability.
Removed
ASU 2017-04 became effective for accelerated filing companies for annual periods or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. All other entities, including not-for-profit entities, that are adopting the amendments in this Update should do so for their annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2022.
Added
In February 2024, the note premium was fully amortized, and the outstanding balance of the principal and accrued interest of $275,679 was fully paid off.

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