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

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Paragraph-level year-over-year comparison of Ispire Technology 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.

+281 added−304 removedSource: 10-K (2025-09-15) vs 10-K (2024-09-27)

Top changes in Ispire Technology Inc.'s 2025 10-K

281 paragraphs added · 304 removed · 221 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

95 edited+27 added−17 removed128 unchanged
Biggest changeOur Products E-Cigarette Products We develop and sell both branded and, to a significantly lesser extent, OEM and ODM nicotine vaping systems and components (cartridges and batteries) to meet the needs of adult users worldwide, excluding the United States, the PRC and Russia. There are generally two types of vaping systems – open systems and closed systems.
Biggest changeIspire is pursuing various product launches using the IKE age-gating technology, including work on age-gated e-cigarettes with characterizing flavors in the U.S. using the IKE age-gating technology, as well as pod systems in the UK and European markets which will have age-gating functionality. 5 Our Products E-Cigarette Products We develop and sell both branded and, to a significantly lesser extent, OEM and ODM nicotine vaping systems and components (cartridges and batteries) to meet the needs of adult users worldwide, excluding the United States, the PRC and Russia.
The vast majority of sales of all classes of e-cigarettes are sold in stores, primarily grocery stores, convenience stores and tobacco stores, which generally purchase product from wholesale distributors. Our products are also available from our distributors on the internet, including both websites and services such as Amazon. These internet distribution channels are operated by our distributors.
The vast majority of sales of all classes of e-cigarettes are sold in stores, primarily grocery stores, convenience stores and tobacco stores, which generally purchase the product from wholesale distributors. Our products are also available from our distributors on the internet, including both websites and services such as Amazon. These internet distribution channels are operated by our distributors.
The cartridges of closed system vaping devices are consumable products that need to be frequently replaced. 6 Some of our products use our BDC (bottom dual coil) coil technology which uses bottom dual coils to provide expanded heating area and achieve double flavor and vapor production. This technology allows for two separate oil tanks/cartridges to be integrated into one product/design.
The cartridges of closed system vaping devices are consumable products that need to be frequently replaced. Some of our products use our BDC (bottom dual coil) coil technology which uses bottom dual coils to provide expanded heating area and achieve double flavor and vapor production. This technology allows for two separate oil tanks/cartridges to be integrated into one product/design.
In addition, Ispire ONE™ offers a more streamlined approach to cartridge filling versus conventional methods improving productivity and lowing production costs per unit. 1 A majority of our products are manufactured and supplied by Shenzhen Yi Jia, which is 95% owned by our co-chief executive officer and controlling stockholder, Tuanfang Liu.
In addition, Ispire ONE™ offers a more streamlined approach to cartridge filling versus conventional methods improving productivity and lowing production costs per unit. 1 A majority of our products are manufactured and supplied by Shenzhen Yi Jia, which is 95% owned by our co-chief executive officer, chairman and controlling stockholder, Tuanfang Liu.
Aspire North America commenced marketing cannabis vaping products in mid-2020. Aspire Science markets nicotine vaping products worldwide, except for the PRC and Russia. 2 Aspire Global is a related party. Tuanfang Liu is Aspire Global’s chief executive officer and a director of both us and Aspire Global, and his wife, Jiangyan Zhu, is also a director of both companies. Mr.
Aspire North America commenced marketing cannabis vaping products in mid-2020. Aspire Science markets nicotine vaping products worldwide, except for the PRC and Russia. Aspire Global is a related party. Tuanfang Liu is Aspire Global’s chief executive officer and a director of both us and Aspire Global, and his wife, Jiangyan Zhu, is also a director of both companies. Mr.
Liu, Aspire Global and Shenzhen Yi Jia transferred to Aspire North America all patent and other intellectual property rights, including trademarks, Know-how and Know-how Documentation, as defined in the agreement, relating to the cannabis vaping products, and to transfer to us any new intellectual property developed or acquired by Mr.
Pursuant to the Intellectual Property Transfer Agreement, Mr. Liu, Aspire Global and Shenzhen Yi Jia transferred to Aspire North America all patent and other intellectual property rights, including trademarks, Know-how and Know-how Documentation, as defined in the agreement, relating to the cannabis vaping products, and to transfer to us any new intellectual property developed or acquired by Mr.
Although we maintain cybersecurity insurance, we cannot assure you that this insurance will cover or satisfy any claim made against us or adequately cover any defense costs we may incur. Environmental Laws and Regulations As our supplier, Shenzhen Yi Jia is responsible for compliance with Chinese environmental laws and regulations.
Although we maintain cybersecurity insurance, we cannot assure you that this insurance will cover or satisfy any claim made against us or adequately cover any defense costs we may incur. 18 Environmental Laws and Regulations As our supplier, Shenzhen Yi Jia is responsible for compliance with Chinese environmental laws and regulations.
We use social media to educate on current and new products and offers as well as to provide real-time support to customers. Our social media strategies aim to convert and nurture leads, to increase brand awareness among adult consumers. We also provide distributors with discounts and other sales incentives.
We use social media to educate on current and new products and offers as well as to provide real-time support to customers. Our social media strategies aim to convert and nurture leads, to increase brand awareness among adult consumers. 8 We also provide distributors with discounts and other sales incentives.
Seasonality Seasonality does not materially affect our business or the results of our operations. 12 Human Capital We believe our people are central to the foundation and future of our success. Our culture and commitment to our employees are important factors in attracting, retaining, developing and progressing qualified employees.
Seasonality Seasonality does not materially affect our business or the results of our operations. Human Capital We believe our people are central to the foundation and future of our success. Our culture and commitment to our employees are important factors in attracting, retaining, developing and progressing qualified employees.
We believe that the utility patents form the core intellectual property for our cigarette-cigarette and vaporizer products. The utility patents primarily relate to atomizer, heating coil, and battery technologies, which we believe provide enhanced functionality and an improved smoking experience to users of our products.
We believe that the utility patents form the core intellectual property for our e-cigarette and vaporizer products. The utility patents primarily relate to atomizer, heating coil, and battery technologies, which we believe provide enhanced functionality and an improved smoking experience to users of our products.
A producer is anyone who manufactures or imports these products or who re-brands any product as their own. Part 6 of the Tobacco and Related Products Regulations 2016 sets out the requirements for e-cigarettes and refill containers.
A producer is anyone who manufactures or imports these products or who re-brands any product as their own. 16 Part 6 of the Tobacco and Related Products Regulations 2016 sets out the requirements for e-cigarettes and refill containers.
Our SEC filings (including any amendments) will be made available free of charge on www.ispiretechnology.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 19
Our SEC filings (including any amendments) will be made available free of charge on www.ispiretechnology.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We are committed to fostering a culture of inclusion where differences are welcomed, appreciated and celebrated to positively impact our people and business, and where our people are engaged and encouraged to support the communities in where they live and work.
We are committed to fostering a culture of inclusion where differences are welcomed, appreciated and celebrated to positively impact our people and business, and where our people are engaged and encouraged to support the communities in which they live and work.
IKE Tech LLC Joint Venture As reported in our Form 8-K on April 11, 2024, Aspire North America LLC entered into a capital contribution, subscription, and joint venture agreement with Chemular Inc, Touch Point Worldwide, Inc. d/b/a/ Berify, and Ike Tech LLC, a Delaware limited liability company (the “Joint Venture”) pursuant to which the Parties agreed to participate in the Joint Venture.
IKE Tech LLC Joint Venture As reported in our Form 8-K on April 11, 2024, Aspire North America LLC entered into a capital contribution, subscription, and joint venture agreement with Chemular Inc, Touch Point Worldwide, Inc. d/b/a/ Berify, and Ike Tech LLC, a Delaware limited liability company pursuant to which the Parties agreed to participate in the Joint Venture.
To the extent that we conduct manufacturing operations in California we will be subject to federal and California state laws and regulations applicable to manufacturing operations generally, including employee health and safety and environmental laws and regulations. 16 Europe The European Commission issued the Tobacco Products Directive (the “TPD’’), which entered into force on May 19, 2014, and became applicable in the EU Member States on May 20, 2016.
To the extent that we conduct manufacturing operations in California we will be subject to federal and California state laws and regulations applicable to manufacturing operations generally, including employee health and safety and environmental laws and regulations. 15 Europe The European Commission issued the Tobacco Products Directive (the “TPD’’), which entered into force on May 19, 2014, and became applicable in the EU Member States on May 20, 2016.
These promotions are not part of a standard plan, but developed by us from time to time based on our sales and marketing program. 9 Our sales of Ispire cannabis products to date, which have been primarily through direct sales of Ispire branded atomizers to other cannabis brands as semi-finished products on an ODM basis.
These promotions are not part of a standard plan, but developed by us from time to time based on our sales and marketing program. Our sales of Ispire cannabis products to date have been primarily through direct sales of Ispire branded atomizers to other cannabis brands as semi-finished products on an ODM basis.
Our battery technology is directed towards battery assemblies that are replaceable and that are controllable to help facilitate a customized smoking experience in combination with the atomizer and heating coil technologies. We believe the design patents cover the visual aspects of certain of our products and serve to enhance the protection provide by our utility patents.
Our battery technology is directed towards battery assemblies that are replaceable and that are controllable to help facilitate a customized smoking experience in combination with the atomizer and heating coil technologies. We believe the design patents cover the visual aspects of certain of our products and serve to enhance the protection provided by our utility patents.
The earliest patents were filed in 2012 and began expiring in 2022, with the last patents set to expire in 2037, depending on priority filing date, patent type, and jurisdiction. We intend to work to improve our technology and products and to seek further patent protection as warranted in connection with any new developments.
The earliest patents were filed in 2012 and began expiring in 2022, with the last patents set to expire in 2045, depending on priority filing date, patent type, and jurisdiction. We intend to work to improve our technology and products and to seek further patent protection as warranted in connection with any new developments.
No other distributor or customer accounted for 10% or more of our revenues for either the year ended June 30, 2023 or 2024. Typically, our distributors sell our products to wholesalers who in turn sell to retail distributors, although distributors may sell products directly to retail outlets.
No other distributor or customer accounted for 10% or more of our revenues for either the year ended June 30, 2025 or 2024. Typically, our distributors sell our products to wholesalers who in turn sell to retail distributors, although distributors may sell products directly to retail outlets.
The following table sets out the breakdown of our revenue and percentage by region for the years ended June 30, 2023 and 2024 based on information provided to us by our distributors (dollars in thousands) and from the company’s sales.
The following table sets out the breakdown of our revenue and percentage by region for the years ended June 30, 2025 and 2024 based on information provided to us by our distributors (dollars in thousands) and from the company’s sales.
Liu and Ms. Zhu beneficially own 58.7% and 4.4%, respectively, of our outstanding common stock, par value $0.0001 per share (the “Common Stock”) and 66.5% and 5.9% of Aspire Global’s ordinary shares. Upon our formation we issued 50,000,000 shares of Common Stock to the stockholders of Aspire Global in the same proportion as their stockholdings in Aspire Global.
Liu and Ms. Zhu beneficially own 58.1% and 4.4%, respectively, of our outstanding common stock, par value $0.0001 per share (the “Common Stock”) and 66.5% and 5.0% of Aspire Global’s ordinary shares. Upon our formation we issued 50,000,000 shares of Common Stock to the stockholders of Aspire Global in the same proportion as their stockholdings in Aspire Global.
The flavor bans are mainly aimed at ENDS products that are sold with pre-filled non-tobacco flavored or non-menthol-flavored cartridges, and our self-branded products do not contain any pre-filled cartridges. Moreover, we believe that the technology being developed by our IKE Tech LLC Joint Venture may allow for the approval of ENDS products with characterizing flavors other than tobacco or menthol.
The flavor bans are mainly aimed at ENDS products that are sold with pre-filled non-tobacco flavored or non-menthol-flavored cartridges, and our self-branded products do not contain any pre-filled cartridges. Moreover, we believe that the technology being developed by IKE may allow for the approval of ENDS products with characterizing flavors other than tobacco or menthol.
Our facilities are located primarily in the United States, where we lease more than 41,221 square feet of office, manufacturing and storage space and where our research and development activities are conducted, as compared with 1,850 square feet of office space in Hong Kong. We are also leasing approximately 31,000 square feet for our manufacturing facility in Malaysia.
Our facilities are located primarily in Malaysia and the United States, where we lease more than 41,221 square feet of office, manufacturing and storage space and where our research and development activities are conducted, as compared with 1,850 square feet of office space in Hong Kong. We are also leasing approximately 162,320 square feet for our manufacturing facility in Malaysia.
In particular, there are numerous United States federal, state, and local laws and regulations and foreign laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other user data. Such laws and regulations often vary in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions.
In particular, there are numerous U.S. federal, state, and local laws and regulations and foreign laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other user data. Such laws and regulations often vary in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions.
Under the Family Smoking Prevention and Tobacco Control Act of 2009 (the “TCA”), a PMTA’s components include: ● Full reports of all information published or known to, or which should reasonably be known to, the applicant concerning investigations which have been made to show the health risks of such tobacco product and whether such tobacco product presents less risk than other tobacco products. ● Full statement of the components, ingredients, additives, and properties, and of the principle or principles of operation. ● Full description of the methods used in, and the facilities and controls used for, the manufacture, processing, and when relevant, packing and installation. ● An identifying reference to any tobacco product standard, if applicable. ● Samples of the tobacco product as required. ● Specimens of proposed labeling.
The PMTA process is expensive, time-consuming, and uncertain. 13 Under the Family Smoking Prevention and Tobacco Control Act of 2009 (the “TCA”), a PMTA’s components include: ● Full reports of all information published or known to, or which should reasonably be known to, the applicant concerning investigations which have been made to show the health risks of such tobacco product and whether such tobacco product presents less risk than other tobacco products. ● Full statement of the components, ingredients, additives, and properties, and of the principle or principles of operation. ● Full description of the methods used in, and the facilities and controls used for, the manufacture, processing, and when relevant, packing and installation. ● An identifying reference to any tobacco product standard, if applicable. ● Samples of the tobacco product as required. ● Specimens of proposed labeling.
Liu. 10 During the years ended June 30, 2023 and 2024, research and development efforts included the development of the Ispire cannabis vaping system, patented dual-coil technology, self-sealing technology and a closed system for e-cigarette vaping that is designed to eliminate the problem of oil leaking out of the unit.
During the years ended June 30, 2025 and 2024, research and development efforts included the development of the Ispire cannabis vaping system, patented dual-coil technology, self-sealing technology and a closed system for e-cigarette vaping that is designed to eliminate the problem of oil leaking out of the unit.
Our distributors have non-exclusive agreements and generally are not restricted from selling competing vapor products. Our largest distributor, whose territory was the United Kingdom and France, is Your-Buyer International Limited, which accounted for revenue of approximately $37.4 million, or 32.4% of revenue and approximately $45.6 million, or 30.0% of revenue for the years ended June 30, 2023 and 2024, respectively.
Our distributors have non-exclusive agreements and generally are not restricted from selling competing vapor products. Our largest distributor, whose territory was the United Kingdom and France, is Your-Buyer International Limited, which accounted for revenue of approximately $32.7 million, or 25.7% of revenue and approximately $45.6 million, or 30.0% of revenue for the years ended June 30, 2025 and 2024, respectively.
Attorney General and the tobacco tax administrator of the State where shipment is being made or in which an advertisement or offer is disseminated; ● On the 10th day of every month, file a memorandum or a copy of the invoice covering each and every shipment of “cigarettes” during the previous calendar month with the state tobacco tax administrator and, where there are also local taxes on cigarettes, with local/tribal official ● Comply with (i) certain shipping requirements if using common carriers other than the Postal Service, such as FedEx or UPS (e.g., label requirements, weight restrictions, 21+ age verification on delivery, etc.), and (ii) recordkeeping requirements (e.g., detailed invoices covering every delivery sale, organized by the state, the city or town, and zip code into which the delivery sale is made); (iii) all state, local, tribal, and other laws generally applicable to sales of cigarettes, including: excise taxes, licensing and tax-stamping requirements; restrictions on sales to minors; and other payment obligations or legal requirements relating to the sale, distribution, or delivery of cigarettes or smokeless tobacco. 15 Importantly, neither the mail ban nor the other PACT Act’s “delivery sale” provisions apply to business-to-business deliveries.
Attorney General and the tobacco tax administrator of the State where shipment is being made or in which an advertisement or offer is disseminated; ● On the 10th day of every month, file a memorandum or a copy of the invoice covering each and every shipment of “cigarettes” during the previous calendar month with the state tobacco tax administrator and, where there are also local taxes on cigarettes, with local/tribal official ● Comply with (i) certain shipping requirements if using common carriers other than the Postal Service, such as FedEx or UPS (e.g., label requirements, weight restrictions, 21+ age verification on delivery, etc.), and (ii) recordkeeping requirements (e.g., detailed invoices covering every delivery sale, organized by the state, the city or town, and zip code into which the delivery sale is made); (iii) all state, local, tribal, and other laws generally applicable to sales of cigarettes, including: excise taxes, licensing and tax-stamping requirements; restrictions on sales to minors; and other payment obligations or legal requirements relating to the sale, distribution, or delivery of cigarettes or smokeless tobacco.
In seeking to introduce new products, we will, at least initially, rely upon our chairman, Tuanfang Liu, who has been largely responsible for the development of the technology underlying our e-cigarette and cannabis vaping products.
In seeking to introduce new products, we rely upon our chairman, Tuanfang Liu, who has been largely responsible for the development of the technology underlying our e-cigarette and cannabis vaping products.
We sell the Aspire brand of tobacco vaporizer technology products in more than 30 countries through our global network of more than 150 distributors. The primary markets for our e-cigarette products are Europe and the Asia Pacific region, which does not include the PRC.
We sell the Aspire brand of tobacco vaporizer technology products in more than 30 countries through our global network of more than 150 distributors. The primary markets for our e-cigarette products are Europe and the Asia Pacific region, which does not include the People’s Republic of China (“PRC”).
In addition, the agreement provides that Shenzhen Yi Jia will be responsible for any warranty expenses. In February of 2024, we began operations at our Company-owned manufacturing facility in Malaysia. We are currently operating with 6 production lines at the Malaysia factory.
In addition, the agreement provides that Shenzhen Yi Jia will be responsible for any warranty expenses. In February of 2024, we began operations at our Company-owned manufacturing facility in Malaysia. We are currently operating with 6 production lines at the Malaysia factory and produce a variety of consumer electronics.
Liu, Aspire Global nor Shenzhen Yi Jia has any right to market or sell or grant distributors the right to market or sell tobacco vaping products in the world other than in the PRC and Russia. 3 Matters Relating to PRC Laws The majority of our operations are in United States.
Liu, Aspire Global nor Shenzhen Yi Jia has any right to market or sell or grant distributors the right to market or sell tobacco vaping products in the world other than in the PRC and Russia. Matters Relating to PRC Laws Our operations are located in Hong Kong, the United States and Malaysia.
We estimate the actual historical warranty claims coupled with an analysis of unfulfilled claims to record a liability for specific warranty purposes. As of June 30, 2023 and 2024, products returned for repair or replacement have been immaterial. Accordingly, a warranty liability has not been deemed necessary.
We estimate the actual historical warranty claims coupled with an analysis of unfulfilled claims to record a liability for specific warranty purposes. As of June 30, 2025 and 2024, products returned for repair or replacement have been immaterial.
Ispire ONE TM is designed to eliminate capping issues in the manufacturing/co-packing process, increase consistency and quality of filled devices, eliminate leaking, spitting, or overheating for cartridges, disposables, and PODs, and improve consumer safety., The devices are sealed in a sterilized factory environment to eliminate risk of contamination during the filling process by our customers. 8 Sales and Distribution Most of our revenue from our e-cigarette products comes from sales to our distributors.
Ispire ONE TM is designed to eliminate capping issues in the manufacturing/co-packing process, increase consistency and quality of filled devices, eliminate leaking, spitting, or overheating for cartridges, disposables, and PODs, and improve consumer safety. The devices are sealed in a sterilized factory environment to eliminate risk of contamination during the filling process by our customers.
The PMTA pathway remains open for us to add further products, but now neither we, nor anyone else, can bring new tobacco products to the U.S. market without actual premarket authorizations. The PMTA process is expensive, time-consuming, and uncertain.
The PMTA pathway remains open for us to add further products, but now neither we, nor anyone else, can bring new tobacco products to the U.S. market without actual premarket authorizations.
Although we do not conduct any business in the European Economic Area, in the event that residents of the European Economic Area access our website and input protected information, including information provided in ordering through our website, we may become subject to provisions of the GDPR. We are also subject to laws restricting disclosure of information relating to our employees.
Although we do not currently conduct any business in the European Economic Area, in the event that residents of the European Economic Area access our website and input protected information, including information provided in ordering through our website, we may become subject to provisions of the GDPR.
The CE marking represents a manufacturer’s declaration that products comply with the EU’s New Approach Directives. These directives not only apply to products within the EU but also for products that are manufactured in or designed to be sold in the EEA.
The CE marking represents a manufacturer’s declaration that products comply with the EU’s New Approach Directives. These directives not only apply to products within the EU but also to products that are manufactured in or designed to be sold in the EEA. This makes the CE marking recognizable worldwide even to those unfamiliar with the EEA.
A cartridge for a closed-system vaping device typically can last from a few days to approximately two weeks, depending upon the frequency of use. We market a line of closed systems through our licensed brands under the brand names BRKFST and Hidden Hills Club.
The closed system vaping devices include rechargeable and disposable vaping devices. A cartridge for a closed-system vaping device typically can last from a few days to approximately two weeks, depending upon the frequency of use. We market a line of closed systems through our licensed brands under the brand name BRKFST.
The requirements: ● restrict e-cigarette tanks to a capacity of no more than 2ml ● restrict the maximum volume of nicotine-containing e-liquid for sale in one refill container to 10ml ● restrict e-liquids to a nicotine strength of no more than 20mg/ml ● require nicotine-containing products or their packaging to be child-resistant and tamper evident ● ban certain ingredients including colorant, stimulants and any carcinogenic, mutanegenic or reprotoxic elements ● include new labelling requirements and warnings in line with the Classification, Labelling & Packaging regulations of the European Union ● require all e-cigarettes and e-liquids be notified to the MHRA before they can be sold. 17 The Tobacco Products and Nicotine Inhaling Products (Amendment) (EU Exit) Regulations 2020 (the “2020 Regulations”) explains the changes from a policy perspective: The 2020 Regulations set out the requirements for new products to be notified from January 1, 2021.
The requirements: ● restrict e-cigarette tanks to a capacity of no more than 2ml ● restrict the maximum volume of nicotine-containing e-liquid for sale in one refill container to 10ml ● restrict e-liquids to a nicotine strength of no more than 20mg/ml ● require nicotine-containing products or their packaging to be child-resistant and tamper evident ● ban certain ingredients including colorant, stimulants and any carcinogenic, mutanegenic or reprotoxic elements ● include new labelling requirements and warnings in line with the Classification, Labelling & Packaging regulations of the European Union ● require all e-cigarettes and e-liquids be notified to the MHRA before they can be sold.
OEM and ODM sales accounted for approximately $4.5 million and $22.1 million, or 6.0% and 25.9%, of total revenue of e-cigarette products in the years ended June 30, 2023 and 2024, respectively.
OEM and ODM sales accounted for approximately $36.4 million and $22.1 million, or 40.2% and 25.9%, of total revenue of e-cigarette products in the years ended June 30, 2025 and 2024, respectively.
Pursuant to agreements dated January 27, 2023, between Aspire North America and Shenzhen Yi Jia and between Aspire Science and Shenzhen Yi Jia, we purchase our cannabis and tobacco vaping products form Shenzhen Yi Jia at market prices, provided that the price, delivery, warranty and other terms are no less favorable to us than the price, delivery, warranty and other terms that are provided to any other customer of Shenzhen Yi Jia.
Pursuant to agreements dated January 27, 2023, between Aspire North America and Shenzhen Yi Jia and between Aspire Science and Shenzhen Yi Jia, we purchase our cannabis and tobacco vaping products form Shenzhen Yi Jia at market prices, provided that the price, delivery, warranty and other terms are no less favorable to us than the price, delivery, warranty and other terms that are provided to any other customer of Shenzhen Yi Jia. 2 Our intellectual property was developed primarily by our co-chief executive officer, Tuanfang Liu.
ODM generally involves the design and customization of core products to meet each brand’s unique image and needs, and our products are sold by our customers under their own brand names although they may also include our brand name on the products.
ODM generally involves the design and customization of core products to meet each brand’s unique image and needs. Our hardware products are sold by our customers under their own brand names.
Although Tuanfang Liu, our co-chief executive officer, lives in mainland China, where Shenzhen Yi Jia is located, the services that he performs for us in his capacity as our co-chief executive officer are performed primarily in Hong Kong and the United States. In addition to serving as our co-chief executive officer, Mr.
See “ Certain Relationships and Related Party Transactions .” Although Tuanfang Liu, our co-chief executive officer, lives in mainland China, where Shenzhen Yi Jia is located, the services that he performs for us in his capacity as our co-chief executive officer are performed primarily in Hong Kong and the United States.
Our intellectual property was developed primarily by our co-chief executive officer, Tuanfang Liu. Our research and development team is headed by Mr. Liu. Our intellectual property was owned by Shenzhen Yi Jia, which had patents or patent application in the United States, the PRC, the European Union and elsewhere relating to various functional and ornamental aspects of our products.
Our research and development team is headed by Mr. Liu. Our intellectual property was owned by Shenzhen Yi Jia, which had patents or patent application in the United States, the PRC, the European Union and elsewhere relating to various functional and ornamental aspects of our products. These patents cover both the cannabis and tobacco products.
Our Strategy We are implementing a multi-prong growth strategy directed at increasing the sales of our e-cigarette and cannabis vaporizer technology products. In addition to increasing sales to our existing customers, we plan to increase sales of our e-cigarette vaporizer technology products by increasing the number of distributors and regions where our products are sold.
In addition to increasing sales to our existing customers, we plan to increase sales of our e-cigarette vaporizer technology products by increasing the number of distributors and regions where our products are sold.
We do not conduct business and we do not have any employees, assets or funds in mainland China. Although most of our cash is in Hong Kong banks, a significant portion of these funds is to be paid to related parties. See “Certain Relationships and Related Party Transactions.” Our operations are primarily in the United States.
We do not conduct business and we do not have any employees, assets or funds in mainland China. Although most of our cash is in Hong Kong banks, a significant portion of these funds is to be paid to related parties.
We strive to comply with all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy, data security, cybersecurity and data protection.
We are also subject to laws restricting disclosure of information relating to our employees. We strive to comply with all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy, data security, cybersecurity and data protection.
Year Ended June 30, 2023 2024 Revenue % Revenue % Europe $ 58,764 50.8 % $ 65,260 43.0 % North America (the U.S. and Canada) 41,608 36.0 % 63,080 41.5 % Asia Pacific (excluding PRC) 14,919 12.9 % 17,589 11.6 % Others 315 0.3 % 5,980 3.9 % Total 115,606 100 % 151,909 100 % Acquisition of Our Business from a Related Party We were formed on June 13, 2022.
Year Ended June 30, 2025 2024 Revenue % Revenue % Europe $ 74,107 58.1 % $ 65,260 43.0 % North America (the U.S. and Canada) 32,568 25.5 % 63,080 41.5 % Asia Pacific (excluding PRC) 12,274 9.6 % 17,589 11.6 % Others 8,545 6.7 % 5,980 3.9 % Total 127,494 100 % 151,909 100 % Acquisition of Our Business from a Related Party We were formed on June 13, 2022.
This makes the CE marking recognizable worldwide even to those unfamiliar with the EEA. 18 Regulations Relating to Privacy and Security We are or may become subject to a variety of laws and regulations in the United States and abroad regarding privacy, data security, cybersecurity and data protection. These laws and regulations are continuously evolving and developing.
Regulations Relating to Privacy and Security We are or may become subject to a variety of laws and regulations in the United States and abroad regarding privacy, data security, cybersecurity and data protection. These laws and regulations are continuously evolving and developing.
Our Malaysian facility has received several ISO certifications, including ISO9001, ISO14001, ISO13485, and a GMP certification. Because we have only recently commenced Malaysian assembly operations, we may encounter unexpected timing issues or operational and regulatory challenges which could impact our ability to be fully operational on our expected time schedule.
Because we have only recently commenced Malaysian assembly operations, we may encounter unexpected timing issues or operational and regulatory challenges which could impact our ability to be fully operational on our expected time schedule.
Ispire Malaysia Sdn Bhd was formed by on our behalf by Tuanfang Liu, our Chairman and Co-Chief Executive Officer, under the laws of the Federation of Malaysia on August 2, 2023, and assigned to us on September 22, 2023. Aspire North America and Aspire Science are our operating companies. 4 The following chart shows our corporate structure.
Ispire Malaysia Sdn Bhd was formed by on our behalf by Tuanfang Liu, our Chairman and Co-Chief Executive Officer, under the laws of the Federation of Malaysia on August 2, 2023, and assigned to us on September 22, 2023.
As of September 24, 2024, we had a total of 98 employees, of which 40 are operations personnel, 24 are general management personnel, 19 are in sales and marketing, and 15, including Tuanfang Liu, our co-chief executive officer, are in research and development relating to our products.
As of September 4, 2025, we had a total of 81 employees, of which 21 are operations personnel, 46 are general management personnel, 9 are in sales and marketing, and 5, including Tuanfang Liu, our co-chief executive officer, are in research and development relating to our products.
We anticipate that the market for vaping products will evolve, with technological innovation, changing standards and changes in needs and preferences of adult vapor users. Vaping devices are more than a reduced-risk alternative to traditional cigarettes.
In terms of volume of legal products sold, by far the largest worldwide producer of tobacco vapor products is Smoore International Holdings Limited. We anticipate that the market for vaping products will evolve, with technological innovation, changing standards and changes in needs and preferences of adult vapor users. Vaping devices are more than a reduced-risk alternative to traditional cigarettes.
This technology, which Aspire Global introduced in 2014, enables the coil to last longer while still giving users what we believe is the purest and cleanest taste from e-liquids. The BVC coils are still very popular for MTL (mouth to lung) vapors today. We believe that our Cleito tank brings new and innovative technological advancement to the vaping industry.
This technology, which Aspire Global introduced in 2014, enables the coil to last longer while still giving users what we believe is the purest and cleanest taste from e-liquids. The BVC coils are still very popular for MTL (mouth to lung) vapors today. 6 Cannabis Products In December 2020, we introduced the Ispire line of cannabis vaping products.
We are looking to increase our OEM and ODM sales of e-cigarette products, which accounted for 4.5% and 25.9% of our e-cigarette revenue for the years ended June 30, 2023 and 2024, respectively.
We are looking to increase our OEM and ODM sales of e-cigarette products, which accounted for 40.2% and 25.9% of our e-cigarette revenue for the years ended June 30, 2025 and 2024, respectively. We secured a major e-cigarette OEM contract in May of 2024.
We cannot assure you that our patent and trademark rights are sufficient to protect all aspects of our brands or that we will be to enforce those rights to prevent third parties from using the same or confusingly similar marks, as trademarks can be opposed, cancelled, or otherwise challenged, especially by parties with rights to similar marks.
We cannot assure you that our patent and trademark rights are sufficient to protect all aspects of our brands or that we will be to enforce those rights to prevent third parties from using the same or confusingly similar marks, as trademarks can be opposed, cancelled, or otherwise challenged, especially by parties with rights to similar marks. 11 Competition Vaping products for both e-cigarette and cannabis compete with tobacco and marijuana cigarettes and a wide range of other tobacco, nicotine and legal and illegal cannabis products.
We plan to continue expanding our production capabilities in Malaysia as a way to diversify our source of supply. In connection with the Malaysian operations, we may purchase components from Shenzhen Yi Jia’s present suppliers as well as other suppliers which we may identify. Quality control will be a crucial part of our manufacturing process.
In connection with the Malaysian operations, we may purchase components from Shenzhen Yi Jia’s present suppliers as well as other suppliers which we may identify. Quality control will be a crucial part of our manufacturing process. We will need to include quality control checks and balances throughout our supply chain and manufacturing process.
It is the responsibility of our customers, which are cannabis brands, to manufacture the cannabis oil and load the oil into our vaping hardware product. None of our products include cannabis oil or hemp oil.
It is the responsibility of our customers, which are cannabis brands, to manufacture the cannabis oil and load the oil into our vaping hardware product. None of our products include cannabis oil or hemp oil. We are also actively pursuing various technological innovations to prevent youth usage of e-cigarettes.
Under federal law and the laws of certain states that continue to broadly restrict production and sale of cannabis, vaping devices intended for use in consuming cannabis products may qualify as prohibited drug paraphernalia.
We use a combination of advanced accounting software and PACT Act compliant carriers to remain compliant with the tax and delivery restrictions of the PACT Act. Under federal law and the laws of certain states that continue to broadly restrict production and sale of cannabis, vaping devices intended for use in consuming cannabis products may qualify as prohibited drug paraphernalia.
The other requirements of the PACT Act applicable to “delivery sellers” and “delivery sales” do not apply to business-to-business sales, as those terms involve delivery to “consumers.” The PACT Act defines “consumer” as “any person that purchases cigarettes or smokeless tobacco” and specifically excludes “any person lawfully operating as a manufacturer, distributor, wholesaler, or retailer of cigarettes or smokeless tobacco.
Further, the most commonly used carriers, Federal Express and UPS, have recently announced that they would cease all deliveries of vapor products in the United States. 14 The other requirements of the PACT Act applicable to “delivery sellers” and “delivery sales” do not apply to business-to-business sales, as those terms involve delivery to “consumers.” The PACT Act defines “consumer” as “any person that purchases cigarettes or smokeless tobacco” and specifically excludes “any person lawfully operating as a manufacturer, distributor, wholesaler, or retailer of cigarettes or smokeless tobacco.
We have structured our operations to comply with applicable laws and regulations in Malaysia. Other requirements for e-cigarettes Replacement e-cigarette parts that could contain nicotine only require notification if they have not already been notified as part of a device or e-cigarette kit in the United Kingdom or European Union (EU).
We are actively working to secure a permanent version of this license. 17 Other requirements for e-cigarettes Replacement e-cigarette parts that could contain nicotine only require notification if they have not already been notified as part of a device or e-cigarette kit in the United Kingdom or European Union (EU).
If we are able to establish manufacturing operations in California, and as part of our current manufacturing Malaysia, we will be required to comply with applicable environmental laws and regulations. We cannot estimate the ongoing costs of such compliance.
As part of our current manufacturing Malaysia, we will be required to comply with applicable environmental laws and regulations. We cannot estimate the ongoing costs of such compliance. As we establish manufacturing facilities, we expect that the cost of such compliance will be included in our capital budget for any facilities we establish.
Similar to the Nautilus series, this technology enables users to create extremely large plumes of vape without burning the cannabis oil.
Our Ispire products use our patented Ducore™ (Dual Coil) technology for cannabis vaporizers. Similar to the Nautilus series, this technology enables users to create extremely large plumes of vape without burning the cannabis oil.
Historically, for our e-cigarette products, we have focused on building and growing our own branded business, with OEM and ODM sales accounting for a minor portion of our revenue.
For ODM products, our customers often consider technology, performance and uniqueness more important than cost, which is often a secondary consideration. Historically, for our e-cigarette products, we have focused on building and growing our own branded business, with OEM and ODM sales accounting for a minor portion of our revenue.
Our total rewards programs are designed to offer competitive compensation, comprehensive benefits and other programs to support employees’ growth, both personally and professionally, and the diverse needs and well-being of our employees worldwide.
Our total rewards programs are designed to offer competitive compensation, comprehensive benefits and other programs to support employees’ growth, both personally and professionally, and the diverse needs and well-being of our employees worldwide. From time to time, we hire part-time employees as needed in connection with our manufacturing. We consider our employee relations to be good.
We will need to include quality control checks and balances throughout our supply chain and manufacturing process. When selecting suppliers, we will have our quality control and procurement team visit potential suppliers. We will need to conduct annual inspections of the factories and we will also visit the factory if any quality issues arise.
When selecting suppliers, we will have our quality control and procurement team visit potential suppliers. We will need to conduct annual inspections of the factories and we will also visit the factory if any quality issues arise. In connection with the establishment of any manufacturing facilities we will have to employ qualified manufacturing, supervisory and administrative personnel.
Research and Development We believe that design and attention to detail are at the heart of our business. Historically, research and development relating to our existing products were conducted primarily by Shenzhen Yi Jia. We have commenced research and development activities independent of Shenzhen Yi Jia, which has related primarily to cannabis vaping products.
Accordingly, a warranty liability has not been deemed necessary. 9 Research and Development We believe that design and attention to detail are at the heart of our business. Historically, research and development relating to our existing products were conducted primarily by Shenzhen Yi Jia.
This is because the point-of-use age-gating technology could prevent youth usage of vapor devices by biometrically preventing youth from powering-on the device itself. Accordingly, we have submitted a disposable ENDS device PMTA in September of 2024 with several characterizing flavors.
This is because the point-of-use age-gating technology could prevent youth usage of vapor devices by biometrically preventing youth from powering-on the device itself. Accordingly, we plan to submit several PMTA applications for ENDS devices with characterizing flavors when we receive positive news from, or approval of, the IKE age-gating technology from the FDA.
These warranties are of an assurance-type, come standard with all of products we purchase from Shenzhen Yi Jia, and cover repair or replacement should product not perform as expected. We offer these warranties for all major products, including all types of E-vapor kits, atomizers, replacement coils and mods, but no warranty for accessories such as spare parts or packaging consumables.
We offer these warranties for all major products, including all types of E-vapor kits, atomizers, replacement coils and mods, but no warranty for accessories such as spare parts or packaging consumables.
The term “closed system” generally refers to vaping devices that consist of cartridges, which include a heating core (sometimes referred to as atomizers) and is filled with e-liquid, and batteries, which power the cartridges. The closed system vaping devices include rechargeable and disposable vaping devices.
Our open system vaping devices are sold under our own brands, including “Nautilus,” and “Zestquest.” In 2018, we introduced our first “closed system” vaping device. The term “closed system” generally refers to vaping devices that consist of cartridges, which include a heating core (sometimes referred to as atomizers) and is filled with e-liquid, and batteries, which power the cartridges.
We will use online forum and community groups as a means to increase engagement and collect feedback for future improvements in product research and development.
We will use online forum and community groups as a means to increase engagement and collect feedback for future improvements in product research and development. We will seek to introduce new products to meet customer needs based on our assessment of the direction of the market.
Initially, all of our products were “open system” vaping devices. The term “open system” generally refers to vaping devices consisting of tanks, which include heating coils, and battery mods, which include the battery packs. Open system vaping devices allow end consumers to refill the tanks with their own liquid by themselves.
There are generally two types of vaping systems – open systems and closed systems. Initially, all of our products were “open system” vaping devices. The term “open system” generally refers to vaping devices consisting of tanks, which include heating coils, and battery mods, which include the battery packs.
This research and development effort, which is headed by our chairman, Tuanfang Liu, has eleven members, who are primarily based in Los Angeles. Prior to the transfer of the equity of Aspire North America and Aspire Science to us, the research and development activities were conducted by Shenzhen Yi Jia.
We have commenced research and development activities independent of Shenzhen Yi Jia, which has related primarily to cannabis vaping products. This research and development effort, which is headed by our chairman, Tuanfang Liu, has eleven members, who are primarily based in Los Angeles.
To this end, our policies and programs are designed to respond to the needs of our employees in a manner that provides a safe, professional, efficient and rewarding workplace.
Employment Practices and Total Rewards We are committed to the fair, consistent and equitable treatment of our employees in relation to working conditions, wages, benefits, policies and procedures. To this end, our policies and programs are designed to respond to the needs of our employees in a manner that provides a safe, professional, efficient and rewarding workplace.
As discussed under “Business – Intellectual Property” we have rights to intellectual property generated by the research and development efforts of Shenzhen Yi Jia and Mr.
Prior to the transfer of the equity of Aspire North America and Aspire Science to us, the research and development activities were conducted by Shenzhen Yi Jia. As discussed under “ Business – Intellectual Property ” we have rights to intellectual property generated by the research and development efforts of Shenzhen Yi Jia and Mr. Liu.
Major overnight courier services, such as Federal Express, do not ship vaping products that may not be sent using the USPS. We use a combination of advanced accounting software and PACT Act compliant carriers to remain compliant with the tax and delivery restrictions of the PACT Act.
However, the shipping restrictions of the USPS under the PACT Act applied to certain cannabis products, and cannabis products cannot, with certain exceptions, be sent through the USPS. Major overnight courier services, such as Federal Express, do not ship vaping products that may not be sent using the USPS.
We cannot guarantee that our patent rights are sufficient to protect all aspects of our products or that we will be able to enforce those rights against third parties, as patents can be challenged, circumvented, or otherwise found to be invalid. 11 Shenzhen Yi Jia has obtained trademark registrations for Ispire in the countries which we believe are major markets for our products, including the United States, China, the European Union, and other countries.
We cannot guarantee that our patent rights are sufficient to protect all aspects of our products or that we will be able to enforce those rights against third parties, as patents can be challenged, circumvented, or otherwise found to be invalid.
Competition Vaping products for both e-cigarette and cannabis compete with tobacco and marijuana cigarettes and a wide range of other tobacco, nicotine and legal and illegal cannabis products. In each case, vaping products seek to provide the user with pleasure that the user derives from consuming nicotine or cannabis without the disadvantages of other mediums.
In each case, vaping products seek to provide the user with pleasure that the user derives from consuming nicotine or cannabis without the disadvantages of other mediums. The worldwide market for e-cigarette products is highly competitive, with more than 50 companies selling products which compete with our products.
We strictly uphold our extensive internal standards for various aspects of our products and conduct thorough quality assurance and control practices throughout the entire production cycle.
We believe that we have implemented systems of quality control that cover the key steps of supply chain management to provide high-quality products to adult smokers in a consistent manner. We strictly uphold our extensive internal standards for various aspects of our products and conduct thorough quality assurance and control practices throughout the entire production cycle.
We have secured a major e-cigarette OEM contract in May of 2024 and believe that this contract will yield significant revenue increases from the OEM and ODM business in our 2025 fiscal year.
Production for the customer began in fiscal year 2025 and given the ramp up in demand in June, July and August of 2025, we believe that this contract will yield significant revenue increases from the OEM and ODM business in our 2026 fiscal year.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe are an emerging growth company until the earliest of: ● the last day of the fiscal year during which we have total annual gross revenues of $1.235 billion or more; ● the last day of the fiscal year following the fifth anniversary of our initial public offering, which was on April 3, 2023; ● the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; or ● the date on which we are deemed a “large accelerated filer” as defined under the federal securities laws. 41 For so long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act for up to five fiscal years after the date of this our initial public offering.
Biggest changeWe are an emerging growth company until the earliest of: ● the last day of the fiscal year during which we have total annual gross revenues of $1.235 billion or more; ● the last day of the fiscal year following the fifth anniversary of our initial public offering, which was on April 3, 2023; ● the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; or ● the date on which we are deemed a “large accelerated filer” as defined under the federal securities laws.
Our business and the industry in which we operate are subject to inherent risks and uncertainties, including, among others, developments in regulatory landscape, medical discovery and market acceptance of vaping devices.
Our business and the industry in which we operate are subject to inherent risks and uncertainties, including, among others, developments in regulatory landscape, medical discovery and market acceptance of vaping devices.
The loss of services of key personnel or the inability to identify, hire, train and retain other qualified and managerial personnel in the future may materially and adversely affect our business, financial condition, results of operations and prospects. Additionally, in addition to our co-chief executive officer, we rely on our research and development personnel for product development and technology innovation.
The loss of services of key personnel or the inability to identify, hire, train and retain other qualified managerial personnel in the future may materially and adversely affect our business, financial condition, results of operations and prospects. Additionally, in addition to our co-chief executive officer, we rely on our research and development personnel for product development and technology innovation.
We have limited insurance coverage, which could expose us to significant costs and business disruption. We are exposed to various risks associated with our business and operations, and we have limited liability insurance coverage and product liability insurance coverage, and Aspire Science does not have product liability insurance.
We have limited insurance coverage, which could expose us to significant costs and business disruption. We are exposed to various risks associated with our business and operations. We have limited liability insurance coverage and product liability insurance coverage and Aspire Science does not have product liability insurance.
Our business and the vaping industry are subject to inherent risks, challenges and uncertainties, including but not limited to the following: ● the regulatory landscape in the jurisdictions to which we market our products are constantly evolving, and there may be further restrictions, bans or requirements with respect to e-cigarettes and vaping devices that may increase our cost of compliance or prevent us from marketing our products to certain jurisdictions; ● we may face unforeseen capital requirements caused by the changing industry requirements or consumer tastes and demands; demands for our vaping devices may decline significantly due to the decrease in market acceptance for our products or vaping devices generally; ● we may not be able to establish business relationships with customers or compete with other more established competitors as, for an evolving industry, customers generally prefer to choose more established suppliers, including Juul Labs, Inc. the largest producer of nicotine vapor products, rather than us. ● we may not be able to adjust our procurement and/or production in time to meet the changes in market demands; and ● future changes in our industry may not be consistent with our prediction.
Our business and the vaping industry are subject to inherent risks, challenges and uncertainties, including but not limited to the following: ● the regulatory landscape in the jurisdictions to which we market our products are constantly evolving, and there may be further restrictions, bans or requirements with respect to e-cigarettes and vaping devices that may increase our cost of compliance or prevent us from marketing our products to certain jurisdictions; ● we may face unforeseen capital requirements caused by the changing industry requirements or consumer tastes and demands; demands for our vaping devices may decline significantly due to the decrease in market acceptance for our products or vaping devices generally; 26 ● we may not be able to establish business relationships with customers or compete with other more established competitors as, for an evolving industry, customers generally prefer to choose more established suppliers, including Juul Labs, Inc. the largest producer of nicotine vapor products, rather than us. ● we may not be able to adjust our procurement and/or production in time to meet the changes in market demands; and ● future changes in our industry may not be consistent with our prediction.
In addition to the above factors, the price and trading volume of our Common Stock may be highly volatile due to multiple factors, including the following: ● regulatory developments affecting us, our customers, or our industry; ● announcements of studies and reports relating to our service offerings or those of our competitors; ● actual or anticipated fluctuations in our results of operations and changes or revisions of our expected results; ● changes in financial estimates by securities research analysts; ● announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures or capital commitments; ● additions to or departures of our senior management; ● detrimental negative publicity about us, our management or our industry; ● release or expiry of lock-up or other transfer restrictions on our outstanding Common Stock; and ● sales or perceived potential sales of additional Common Stock.
In addition to the above factors, the price and trading volume of our Common Stock may be highly volatile due to multiple factors, including the following: ● regulatory developments affecting us, our customers, or our industry; ● announcements of studies and reports relating to our service offerings or those of our competitors; ● actual or anticipated fluctuations in our results of operations and changes or revisions of our expected results; 34 ● changes in financial estimates by securities research analysts; ● announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures or capital commitments; ● additions to or departures of our senior management; ● detrimental negative publicity about us, our management or our industry; ● release or expiry of lock-up or other transfer restrictions on our outstanding Common Stock; and ● sales or perceived potential sales of additional Common Stock.
See “Business – Sales and Distribution.” Economic factors beyond our control, and changes in the global economic environment, including fluctuations in inflation and currency exchange rates, could result in lower revenues, higher costs and decreased margins and earnings A majority of our products are manufactured and sold outside of the United States which creates exposure to the volatility of global economic conditions, including fluctuations in inflation and foreign currency exchange rates.
See “Business – Sales and Distribution.” Economic factors beyond our control, and changes in the global economic environment, including fluctuations in inflation, tariff rates, and currency exchange rates, could result in lower revenues, higher costs and decreased margins and earnings A majority of our products are manufactured and sold outside of the United States which creates exposure to the volatility of global economic conditions, including fluctuations in inflation, tariff rates, and foreign currency exchange rates.
If any of our key research and development personnel were to leave us, we cannot assure you that we can secure equally competent research and development personnel in a timely manner, or at all. Competition for highly skilled employees is intense, and we may not be able to attract and retain the highly skilled employees needed to support our business.
If any of our key research and development personnel were to leave us, we cannot assure you that we can secure equally competent research and development personnel in a timely manner, or at all. 31 Competition for highly skilled employees is intense, and we may not be able to attract and retain the highly skilled employees needed to support our business.
Our by-laws also provide that the exclusive forum provisions do not apply to actions arising under the Securities Act. There is uncertainty as to whether a court would enforce these provisions, and investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. ITEM 1B. Unresolved Staff Comments Not Applicable
Our by-laws also provide that the exclusive forum provisions do not apply to actions arising under the Securities Act. 35 There is uncertainty as to whether a court would enforce these provisions, and investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. ITEM 1B. Unresolved Staff Comments Not Applicable
If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements, and the quality of our services and our ability to serve customers could diminish, resulting in a material adverse effect on our business. 35 Our business, financial condition and results of operations may be adversely affected by an economic downturn.
If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements, and the quality of our services and our ability to serve customers could diminish, resulting in a material adverse effect on our business. Our business, financial condition and results of operations may be adversely affected by an economic downturn.
Such a result could materially and adversely affect our business, financial condition, and results of operations. On March 17, 2021, the FDA issued letters to four companies operating in the e-cigarette industry, including Aspire North America, requesting documents related to their social media marketing practices.
Such a result could materially and adversely affect our business, financial condition, and results of operations. 22 On March 17, 2021, the FDA issued letters to four companies operating in the e-cigarette industry, including Aspire North America, requesting documents related to their social media marketing practices.
Any failure in maintaining, protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations. We may be subject to intellectual property infringement claims from third parties, which may be expensive to defend with no assurance of success and may disrupt our business and operations.
Any failure in maintaining, protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations. 30 We may be subject to intellectual property infringement claims from third parties, which may be expensive to defend with no assurance of success and may disrupt our business and operations.
In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. 39 The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law.
In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law.
As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States. Our failure to collect accounts receivable from our customers may adversely affect the results of our operations.
As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States. 33 Our failure to collect accounts receivable from our customers may adversely affect the results of our operations.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our Common Stock, and therefore stockholders may have difficulty selling their shares. 40 The trading price of our Common Stock may be volatile, which could result in substantial losses to investors.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our Common Stock, and therefore stockholders may have difficulty selling their shares. The trading price of our Common Stock may be volatile, which could result in substantial losses to investors.
Such negative publicity may reduce users’ confidence in us, our products and our brand, which may adversely affect our business and results of operations. Our business, financial condition and results of operations may be adversely impacted by product defects or other quality issues.
Such negative publicity may reduce users’ confidence in us, our products and our brand, which may adversely affect our business and results of operations. 25 Our business, financial condition and results of operations may be adversely impacted by product defects or other quality issues.
If we are not successful in implementing our business strategies, developing our vaping products, anticipating consumer trends or reaching adult smokers, or if these users do not accept our vaping products, the market for our products may not develop or may develop more slowly than we expect, any of which could materially and adversely affect our profitability and growth prospects. 26 We are exposed to product liability and user complaints arising from the products we sell, which could have a material adverse impact on us.
If we are not successful in implementing our business strategies, developing our vaping products, anticipating consumer trends or reaching adult smokers, or if these users do not accept our vaping products, the market for our products may not develop or may develop more slowly than we expect, any of which could materially and adversely affect our profitability and growth prospects. 24 We are exposed to product liability and user complaints arising from the products we sell, which could have a material adverse impact on us.
We cannot assure you that we will be able to maintain proper inventory levels for our business at all times, and any such failure may have a material and adverse effect on our business, financial condition and results of operations. 30 Inventory levels in excess of distributor demand with respect to tobacco products and customer demand with respect to cannabis products may result in inventory write-downs, expiration of products or an increase in inventory holding costs and a potential negative effect on our liquidity.
We cannot assure you that we will be able to maintain proper inventory levels for our business at all times, and any such failure may have a material and adverse effect on our business, financial condition and results of operations. 27 Inventory levels in excess of distributor demand with respect to tobacco products and customer demand with respect to cannabis products may result in inventory write-downs, expiration of products or an increase in inventory holding costs and a potential negative effect on our liquidity.
If there are significant new regulatory barriers for the U.S. adult use cannabis industry, such increased regulation may negatively impact the sale of our cannabis vaporizer products in the U.S. marketplace. 21 While we believe that our business and sales do not violate the Federal Paraphernalia Law, legal proceedings alleging violations of such law or changes in such law or interpretations thereof could adversely affect our business, financial condition or results of operations.
If there are significant new regulatory barriers for the U.S. adult use cannabis industry, such increased regulation may negatively impact the sale of our cannabis vaporizer products in the U.S. marketplace. 20 While we believe that our business and sales do not violate the Federal Paraphernalia Law, legal proceedings alleging violations of such law or changes in such law or interpretations thereof could adversely affect our business, financial condition or results of operations.
Liu taking actions that are in our best interests, and we run the risk that he may not do so. 22 The recent implementation of regulations relating to e-cigarettes has resulted in our decision not to market nicotine products in the United States until we secure PMTA approvals on our ENDS devices.
Liu taking actions that are in our best interests, and we run the risk that he may not do so. 21 The recent implementation of regulations relating to e-cigarettes has resulted in our decision not to market nicotine products in the United States until we secure PMTA approvals on our ENDS devices.
In addition, we do not have any business disruption insurance. Any business disruption event could result in substantial costs to us and a diversion of our resources. 38 The occurrence of natural disasters may adversely affect our business, financial condition and results of operations.
In addition, we do not have any business disruption insurance. Any business disruption event could result in substantial costs to us and a diversion of our resources. 32 The occurrence of natural disasters may adversely affect our business, financial condition and results of operations.
There can be no assurance that the penetration of vaping products among adult smokers will further deepen, or t hat the tobacco and cannabis vaping market will grow at a pace that we expect.
There can be no assurance that the penetration of vaping products among adult smokers will further deepen, or that the tobacco and cannabis vaping market will grow at a pace that we expect.
In recent years, the United States and other markets have experienced cyclical or episodic downturns, and worldwide economic conditions remain uncertain, including, as a result of the COVID-19 pandemic, supply chain disruptions, the Russian invasion of Ukraine, instability in the U.S. and global banking systems, rising fuel prices, increasing interest rates or foreign exchange rates and increased inflation and the possibility of a recession.
In recent years, the United States and other markets have experienced cyclical or episodic downturns, and worldwide economic conditions remain uncertain, including, as a result of the COVID-19 pandemic, supply chain disruptions, the Russian invasion of Ukraine, the ongoing conflict in the Middle East, instability in the U.S. and global banking systems, rising fuel prices, increasing interest rates or foreign exchange rates and increased inflation and the possibility of a recession.
T hese restrictions on use of the USPS to ship our products and the decisions by private carriers not to deliver vapor products in the United States could materially impair our ability to sell products in the United States which would adversely affect our business, financial condition and results of operations.
These restrictions on use of the USPS to ship our products and the decisions by private carriers not to deliver vapor products in the United States could materially impair our ability to sell products in the United States which would adversely affect our business, financial condition and results of operations.
Central banks deploy various strategies to combat inflation, including increasing interest rates, which impact our borrowing costs. Government shutdowns or the risk of government shutdowns, as well as the impact or expected impact of elections, both in the United States and in other countries around the world, may also increase volatility.
Central banks deploy various strategies to combat inflation, including increasing interest rates, which impact our borrowing costs. Government shutdowns or the risk of government shutdowns, as well as the impact or expected impact of elections, both in the United States and in other countries around the world, may also increase volatility, including through changes in trade policy and tariffs.
As we continue to experience growth, we believe our success depends on the efforts and talents of our employees, including management team and financial personnel. Our future success depends on our continued ability to attract, develop, motivate and retain highly qualified and skilled employees. Competition for highly skilled personnel is extremely intense.
As we continue to operate, we believe our development depends on the efforts and talents of our employees, including management team and financial personnel. Our future development depends on our continued ability to attract, develop, motivate and retain highly qualified and skilled employees. Competition for highly skilled personnel is extremely intense.
In particular, we (a) do not sell any vaping equipment or hardware into the 11 states that have maintained complete or near complete cannabis prohibition (i.e., Georgia, Idaho, Indiana, Kansas, Kentucky, Nebraska, North Carolina, South Carolina, Tennessee, Wisconsin, and Wyoming), and have the distributors we work with covenant that they will not sell our products into these states, and (b) in any states with laws that allow the sale of vaping equipment or hardware, but require such products to be sold to licensed cannabis businesses (such as dispensaries), we limit sales accordingly.
In particular, we (a) do not sell any vaping equipment or hardware into the 4 states that have maintained complete or near complete cannabis prohibition (i.e., Idaho, Indiana, Kansas, and Nebraska), and have the distributors we work with covenant that they will not sell our products into these states, and (b) in any states with laws that allow the sale of vaping equipment or hardware, but require such products to be sold to licensed cannabis businesses (such as dispensaries), we limit sales accordingly.
Although we have more than 150 distributors, our largest distributor, who is a non-exclusive distributor for the United Kingdom and France, accounted for approximately 32.4% and 30.0% of our revenue for the years ended June 30, 2023 and 2024, respectively.
Although we have more than 150 distributors, our largest distributor, who is a non-exclusive distributor for the United Kingdom and France, accounted for approximately 26% and 30% of our revenue for the years ended June 30, 2025 and 2024, respectively.
In particular, we would face a number of data-related challenges related to our business operations, including: (i) protecting the data in and hosted on our system and cloud servers, including against attacks on our system and cloud servers by external parties or fraudulent behavior by our employees; (ii) addressing concerns related to privacy and sharing, safety, security and other factors; and (iii) complying with applicable laws, rules and regulations relating to the collection, use, disclosure or security of personal information, including any requests from regulatory and government authorities relating to such data. 32 We may be subject to liability if private information that we receive is not secure or if we violate privacy laws and regulations.
In particular, we would face a number of data-related challenges related to our business operations, including: (i) protecting the data in and hosted on our system and cloud servers, including against attacks on our system and cloud servers by external parties or fraudulent behavior by our employees; (ii) addressing concerns related to privacy and sharing, safety, security and other factors; and (iii) complying with applicable laws, rules and regulations relating to the collection, use, disclosure or security of personal information, including any requests from regulatory and government authorities relating to such data.
The FDA has repeatedly indicated that the only way it will approve characterizing flavors in ENDS devices is if they are equipped with technology to prevent youth usage.
The FDA has repeatedly indicated that the only way it will approve characterizing flavors in ENDS devices is if they are equipped with technology to prevent youth usage. We believe the technology we have access to will be desirable to the FDA.
Our business relies on the collection of accounts receivable from our customers in a timely manner to maintain liquidity and support our ongoing operations. We recorded an allowance for credit losses of approximately $1.5 million for the year ended June 30, 2023, and approximately $5.9 million for the year ended June 30, 2024.
Our business relies on the collection of accounts receivable from our customers in a timely manner to maintain liquidity and support our ongoing operations. We recorded an allowance for credit losses of approximately $18.0 million as of June 30, 2025, and approximately $5.9 million as of June 30, 2024.
Because our co-chief executive officer, Tuanfang Liu, and his wife own 63.1%, of our Common Stock as of September 24, 2024, they have the power to elect all of our directors and to approve any matter which is subject to stockholder approval. Mr. Liu also own 95% of the equity in Shenzhen Yi Jia, which is currently our major supplier.
Because our co-chief executive officer, Tuanfang Liu, and his wife own 62.5%, of our Common Stock as of June 30, 2025, they have the power to elect all of our directors and to approve any matter which is subject to stockholder approval. Mr. Liu also own 95% of the equity in Shenzhen Yi Jia, which is currently our major supplier.
Although we do not conduct any business in the European Economic Area, in the event that residents of the European Economic Area access our website and input protected information, including information provided in ordering products through our website, we may become subject to provisions of the GDPR.
Although we do not conduct any business in the European Economic Area, in the event that residents of the European Economic Area access our website and input protected information, including information provided in ordering products through our website, we may become subject to provisions of the GDPR. 29 We are also subject to laws restricting disclosure of information relating to our employees.
Risks Related to Our Business and Industry We sustained losses of approximately $6.0 million for the year ended June 30, 2023 (as restated) and $14.8 million for the year ended June 30, 2024, and we cannot assure you that we can or will operate profitably in the future.
Risks Related to Our Business and Industry We sustained losses of approximately $39.2 million for the year ended June 30, 2025 and $14.8 million for the year ended June 30, 2024, and we cannot assure you that we can or will operate profitably in the future.
We sustained a loss of approximately $6.0 million, or $0.12 per share (basic and diluted) in the year ended June 30, 2023 (as restated), and a loss of approximately $14.8 million, or $0.27 per share (basic and diluted) for the year ended June 30, 2024. The losses resulted primarily because of increased operating expenses for both periods.
We sustained a loss of approximately $39.2 million, or $0.69 per share (basic and diluted) in the year ended June 30, 2025, and a loss of approximately $14.8 million, or $0.27 per share (basic and diluted) for the year ended June 30, 2024. The losses resulted primarily because of increased operating expenses for both periods.
Because Tuanfang Liu, our co-chief executive officer, who is also director, and his wife, Jiangyan Zhu, who is also a director, beneficially own 63.1% of our Common Stock as of September 24, 2024 and Mr. Liu owns 95% of the equity of our majority supplier, Mr. Liu has a conflict of interest.
Because Tuanfang Liu, our co-chief executive officer, who is also director, and his wife, Jiangyan Zhu, who is also a director, beneficially own 62.5% of our Common Stock as of June 30, 2025 and Mr. Liu owns 58.1% of the equity of our majority supplier, Mr. Liu has a conflict of interest.
To the extent that the carriers that we currently use change their policies and refuse to ship or are prohibited from shipping vaping products and we are not able to find other carriers that are PACT Act compliant, our business and prospects will be materially impaired, and we may not be able to continue in the cannabis vaping business. 24 We are exposed to risks relating to our relationship with a related party, and we may not be able to successfully operate manufacturing operations.
To the extent that the carriers that we currently use change their policies and refuse to ship or are prohibited from shipping vaping products and we are not able to find other carriers that are PACT Act compliant, our business and prospects will be materially impaired, and we may not be able to continue in the cannabis vaping business.
We are also subject to laws restricting disclosure of information relating to our employees. We strive to comply with all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy, data security, cybersecurity and data protection.
We strive to comply with all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy, data security, cybersecurity and data protection.
Further, defective products may result in compliance issues that could subject us to administrative proceedings and unfavorable results such as product recall and other actions. Such proceedings and unfavorable results could have a material adverse effect on our brand, reputation and results of operations.
Further, defective products may result in compliance issues that could subject us to administrative proceedings and unfavorable results such as product recall and other actions. Such proceedings and unfavorable results could have a material adverse effect on our brand, reputation and results of operations. Our business may be negatively affected by global political events and foreign policy responses, including tariffs.
Although we may implement strategies to mitigate these risks, but there can be no assurance that such measures will be entirely effective, and we may continue to incur write-offs of accounts receivable, which may impair our ability to operate profitably.
Although we may implement strategies to mitigate these risks, but there can be no assurance that such measures will be entirely effective, and we may continue to incur write-offs of accounts receivable, which may impair our ability to operate profitably. Macroeconomic and regulatory conditions in the U.S. Cannabis industry may impact our ability to collect accounts receivable from our customers.
These refunds and the cost of cancellation of orders are reflected as sales return, The amount of sales return for the years ended June 30, 2023 and 2024 was $1,932,280 and $4,764,434.
These refunds and the cost of cancellation of orders are reflected as sales return. The amount of sales return for the years ended June 30, 2025 and 2024 was $2,551,966 and $4,764,434, respectively.
The impact of a potential downgrade to the U.S. government’s sovereign credit rating or its perceived creditworthiness could adversely affect economic conditions, as well as our business, financial condition and operating results. Our need to restate our unaudited financial statements reflected a material weakness in our internal controls over financial reporting .
The impact of a potential downgrade to the U.S. government’s sovereign credit rating or its perceived creditworthiness could adversely affect economic conditions, as well as our business, financial condition and operating results.
Based upon the nature of our existing business operations we do not believe, based on advice from PRC counsel, that we are subject to PRC Laws.
Although we believe that our business is not subject to PRC Laws, our business could be materially impaired if it is determined that our business is subject to PRC Laws. Based upon the nature of our existing business operations we do not believe, based on advice from PRC counsel, that we are subject to PRC Laws.
We are or may become subject to a variety of laws and regulations in the United States and abroad regarding privacy, data security, cybersecurity and data protection. These laws and regulations are continuously evolving and developing.
We may be subject to liability if private information that we receive is not secure or if we violate privacy laws and regulations. We are or may become subject to a variety of laws and regulations in the United States and abroad regarding privacy, data security, cybersecurity and data protection. These laws and regulations are continuously evolving and developing.
On September 6, 2024, we filed a PMTA for a disposable ENDS device with a variety of characterizing flavors. We believe that, when equipped with our IKE Tech LLC Joint Venture age-gating technology, there is a path to getting an approval for these products, as they will have strong technological barriers to prevent youth usage.
We believe that, when equipped with our IKE Tech LLC Joint Venture age-gating technology, there is a path to getting an approval for ENDS products with characterizing flavors other than tobacco and menthol, as they will have strong technological barriers to prevent youth usage.
We believe the technology we have access to will be desirable to the FDA and IKE Tech LLC has a meeting with the FDA on November 13, 2024, to discuss this technology. 23 Further, although we are not marketing e-cigarette products in the United States market, and we can contractually prohibit our distributors from selling our e-cigarette vaping products in the United States market, in the event that those products are sold in the United States market, we cannot assure you that we will not be subject to regulatory or enforcement action as a result of such products’ being sold in the United States.
Further, although we are not marketing e-cigarette products in the United States market, and we can contractually prohibit our distributors from selling our e-cigarette vaping products in the United States market, in the event that those products are sold in the United States market, we cannot assure you that we will not be subject to regulatory or enforcement action as a result of such products’ being sold in the United States.
If changes in technology cause our information technology systems, or those of third parties whom we depend upon, to become obsolete, or if our or their information systems are inadequate to handle our growth, we could lose users, and our business and operating results could be adversely affected. 33 Infringement of our intellectual property by any third party or loss of our intellectual property rights may materially and adversely affect our business, financial condition and results of operations.
If changes in technology cause our information technology systems, or those of third parties whom we depend upon, to become obsolete, or if our or their information systems are inadequate to handle our growth, we could lose users, and our business and operating results could be adversely affected.
There can be no assurance that when conflicts of interest arise, the stockholders of Shenzhen Yi Jia, principally, our chairman as 95% owner, will act in our best interests of or that any conflicts of interest will be resolved in our favor.
There can be no assurance that when conflicts of interest arise, the stockholders of Shenzhen Yi Jia, principally, our chairman as 95% owner, will act in our best interests of or that any conflicts of interest will be resolved in our favor. In addition, these related parties may breach or refuse to renew the existing cooperation arrangements with us.
However, if we are not able to develop or obtain rights to the latest technological developments, we may not be able to market a product that meets the adult consumer’s changing taste.
Such efforts may require substantial investments of additional human capital and financial resources. However, if we are not able to develop or obtain rights to the latest technological developments, we may not be able to market a product that meets the adult consumer’s changing taste.
Currency exchange rate fluctuations could also disrupt the business of the independent manufacturers that produce our products by making their purchases of raw materials more expensive and more difficult to finance.
Currency exchange rate fluctuations could also disrupt the business of the independent manufacturers that produce our products by making their purchases of raw materials more expensive and more difficult to finance. Foreign currency fluctuations have adversely affected and could continue to have an adverse effect on our results of operations and financial condition.
Vaping products for both nicotine and cannabis compete with tobacco and marijuana cigarettes and a wide range of other tobacco and legal and illegal cannabis products. The vaping industry worldwide is intensely competitive.
We face competition from companies in the vaping industry as well as other sources of nicotine and cannabis, and we may fail to compete effectively. Vaping products for both nicotine and cannabis compete with tobacco and marijuana cigarettes and a wide range of other tobacco and legal and illegal cannabis products. The vaping industry worldwide is intensely competitive.
If we fail to cope with the challenges and compete with other industry players in such uncertain and evolving vaping industry, our future prospects, business, financial conditions and results of operations may be materially and adversely affected. 28 We may not be able to develop and introduce new products or upgrade existing products in a timely and cost-effective manner, which may adversely affect our business, results of operations and prospects.
If we fail to cope with the challenges and compete with other industry players in such uncertain and evolving vaping industry, our future prospects, business, financial conditions and results of operations may be materially and adversely affected.
Such prohibitions have been or may in the future be extended to e-cigarettes, including vaping products, and such restrictions may be imposed by local, regional or national governments. As a result of government laws and regulations affecting tobacco products, we ceased selling nicotine vaping products in the United States.
Such prohibitions have been or may in the future be extended to e-cigarettes, including vaping products, and such restrictions may be imposed by local, regional or national governments.
Since most of our revenue from cannabis is derived from sales to other brands rather than sales to distributors and consumers, we compete based on our technology and ability to work with the customers to develop a product that they can successfully market.
Since most of our revenue from cannabis is derived from sales to other brands rather than sales to distributors and consumers, we compete based on our technology and ability to work with the customers to develop a product that they can successfully market. 28 Misconduct, including illegal, fraudulent or collusive activities, by our employees, distributors, retailers, suppliers and manufacturers, may harm our brand and reputation and adversely affect our business and results of operations.
In addition, these related parties may breach or refuse to renew the existing cooperation arrangements with us. 27 Since our products involve inhaling nicotine or cannabis, we may be subject to claims based on the known effects of nicotine or cannabis.
Since our products involve inhaling nicotine or cannabis, we may be subject to claims based on the known effects of nicotine or cannabis.
The CDC also reconfirmed that (i) Vitamin E acetate, which was found in some cannabis-derived vaping cartridges that were mostly obtained illegally, was strongly linked to and indicated to be the primary cause of the severe respiratory illnesses, and (ii) cannabis-derived vaping products from illicit sources were linked to most cases of severe respiratory illnesses. 25 If vaping product usage is determined or perceived to pose long-term health risks or to be linked to illnesses, the usage of vaping products may significantly decline, which would have a material adverse effect on our business, financial condition and results of operations.
The CDC also reconfirmed that (i) Vitamin E acetate, which was found in some cannabis-derived vaping cartridges that were mostly obtained illegally, was strongly linked to and indicated to be the primary cause of the severe respiratory illnesses, and (ii) cannabis-derived vaping products from illicit sources were linked to most cases of severe respiratory illnesses.
Changes and upgrades to our existing products may not be well received by our users, and newly introduced products may not achieve expected results. Going forward, we may introduce new products with different features. Such efforts may require substantial investments of additional human capital and financial resources.
It is difficult to predict the preferences of users or a specific segment of users. Changes and upgrades to our existing products may not be well received by our users, and newly introduced products may not achieve expected results. Going forward, we may introduce new products with different features.
Liu are located in the PRC, we cannot assure you that we will be able to enforce any action or any judgment we may receive from a U.S. court in a Chinese court. 34 As the patents we own or are licensed to us may expire and may not be extended, our patent applications may not be granted and our patent rights may be contested, circumvented, invalidated or limited in scope, our patent rights and license may not protect us.
As the patents we own or are licensed to us may expire and may not be extended, our patent applications may not be granted and our patent rights may be contested, circumvented, invalidated or limited in scope, our patent rights and license may not protect us.
We cannot assure you that government authorities will not impose further restrictions on vaping nicotine products in the future, including but not limited to requirements to obtain and maintain licenses, approvals or permits for relevant business operation. Such restrictions, if any, may adversely affect supplies of raw materials, production and sales activities, taxation or other aspects of our business operation.
As a result of government laws and regulations affecting tobacco products, we ceased selling nicotine vaping products in the United States. 19 We cannot assure you that government authorities will not impose further restrictions on vaping nicotine products in the future, including but not limited to requirements to obtain and maintain licenses, approvals or permits for relevant business operation.
We are unable to control how our users choose to use our products. For example, we cannot prevent the users from misusing or abusing our products or prevent minors from obtaining access to our products.
Misuse or abuse of our products may lead to potential adverse health effects, subjecting us to complaints, product liability claims and negative publicity. We are unable to control how our users choose to use our products. For example, we cannot prevent the users from misusing or abusing our products or prevent minors from obtaining access to our products.
If it is determined or perceived that the usage of nicotine or cannabis vaping products poses long-term health risks, the use of vaping products may decline significantly, which is likely to materially and adversely affect our business, financial condition, and results of operations.
If vaping product usage is determined or perceived to pose long-term health risks or to be linked to illnesses, the usage of vaping products may significantly decline, which would have a material adverse effect on our business, financial condition and results of operations.
We may not be able to comply with any or all changes in existing laws and regulations or any new laws and regulations and may incur significant compliance costs. All of the above may affect our production or market demand for vaping products and thus adversely affect our business, financial condition and results of operations.
Such restrictions, if any, may adversely affect supplies of raw materials, production and sales activities, taxation or other aspects of our business operation. We may not be able to comply with any or all changes in existing laws and regulations or any new laws and regulations and may incur significant compliance costs.
To the extent that we grow in scale and significance, we expect to face increased scrutiny, which may result in increased investment in compliance and related capabilities. 20 The WHO and the United States Centers for Disease Control and Prevention (“CDC”) have been clear in their view of the harmful effects of nicotine.
The WHO and the United States Centers for Disease Control and Prevention (“CDC”) have been clear in their view of the harmful effects of nicotine.
To optimize adult vapers’ experience, we must introduce new products and upgrade our existing products to meet our users’ evolving preferences and to incorporate the latest technological developments. It is difficult to predict the preferences of users or a specific segment of users.
We may not be able to develop and introduce new products or upgrade existing products in a timely and cost-effective manner, which may adversely affect our business, results of operations and prospects. To optimize adult vapers’ experience, we must introduce new products and upgrade our existing products to meet our users’ evolving preferences and to incorporate the latest technological developments.
We do not presently have any plans to engage another supplier since Shenzhen Yi Jia is familiar with our products, and we are devoting our efforts to establishing our own production facilities with no assurance that we can successfully establish manufacturing facilities.
We do not presently have any plans to engage another supplier since Shenzhen Yi Jia is familiar with our products, and we are devoting our efforts to establishing our own production facilities with no assurance that we can successfully operate our new and to-be developed manufacturing facilities. 23 If it is determined or perceived that the usage of nicotine or cannabis vaping products poses long-term health risks, the use of vaping products may decline significantly, which is likely to materially and adversely affect our business, financial condition, and results of operations.
The majority of our products are presently manufactured by Shenzhen Yi Jia, a related party.
We are exposed to risks relating to our relationship with a related party, and we may not be able to successfully operate manufacturing operations. The majority of our products are presently manufactured by Shenzhen Yi Jia, a related party.
However, the Federal Controlled Substances Act includes an exemption for “any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items.” On April 1, 2024, Germany legalized recreational cannabis use and is likely to accelerate the cannabis debate within the EU and promote the development of the industry at a regional level.
On April 1, 2024, Germany legalized recreational cannabis use and is likely to accelerate the cannabis debate within the EU and promote the development of the industry at a regional level. Georgia, Luxembourg, and Malta have also legalized recreational cannabis use as of the date of this Annual Report.
However, no other countries in Western Europe have legalized recreational cannabis, but the region has some of the most developed cannabis cultures in the world, such as in the Netherlands and Spain. However, great differences persist among consumers, with older generations typically being more reluctant to allow cannabis use.
However, great differences persist among consumers, with older generations typically being more reluctant to allow cannabis use.
Removed
In 2021, Shenzhen Yi Jia suffered a chip shortage resulting in a slowdown in delivery of its products to us from April to August 2021. Since September 2021, Shenzhen Yi Jia has obtained a supply of chips to meet its production need and Shenzhen Yi Jia has advised us that a chip shortage no longer affect its production.
Added
All of the above may affect our production or market demand for vaping products and thus adversely affect our business, financial condition and results of operations. To the extent that we grow in scale and significance, we expect to face increased scrutiny, which may result in increased investment in compliance and related capabilities.
Removed
However, we cannot assure you that we will not suffer from a chip shortage affecting Shenzhen Yi Jia or any other supplier. The delay in shipment and chip shortage had a negative impact on the results of our operation.
Added
However, the Federal Controlled Substances Act includes an exemption for “any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items.” Despite the sale and use of cannabis products generally being prohibited, the Western European region has some of the most developed cannabis cultures in the world, such as in the Netherlands and Spain.
Removed
Although we are not presently experiencing delays in our orders for Shenzhen Yi Jia, we cannot assure you that we will not suffer delays or shortages in the future. We cannot assure you that we will not suffer from a chip shortage affecting Shenzhen Yi Jia or any other supplier.
Added
IKE met with the FDA on November 13, 2024, and submitted a “component” PMTA on this technology in April of 2025; however, there can be no guarantee that the FDA will approve our PMTA or any other PMTA we submit that contains the IKE age-gating technology.
Removed
Outbreaks of communicable diseases, natural disasters or other events, such as the COVID-19 pandemic, have materially and adversely affected, and in the future, may materially and adversely affect our business, results of operations and financial condition. Our business could be adversely affected by the effects of communicable diseases, pandemics and epidemics, such as COVID-19.
Added
Geopolitical uncertainties and events could cause damage or disruption to international commerce and the global economy and thus could have a material adverse effect on us, our suppliers, logistics providers, manufacturing vendors and customers, including our distributors and other channel partners.
Removed
We are also vulnerable to natural disasters and other calamities that may affect our supplier and may affect us when we establish our own manufacturing facilities. 29 Misuse or abuse of our products may lead to potential adverse health effects, subjecting us to complaints, product liability claims and negative publicity.
Added
For example, escalating tensions between the U.S., China and other countries may result in changes in laws or regulations that will affect our ability to manufacture and sell our products.
Removed
Foreign currency fluctuations have adversely affected and could continue to have an adverse effect on our results of operations and financial condition. 31 We face competition from companies in the vaping industry as well as other sources of nicotine and cannabis, and we may fail to compete effectively.
Added
As of the date of this Annual Report, the U.S. tariff rate on all goods imported from China is 30% and the tariff rate on all goods imported from Malaysia is 19%. These tariff rates have been volatile since April 2025 and may further increase or decrease over the near term.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAs such, a cyberattack could have a material adverse impact on our financial condition and results of operations. 42 While we devote resources to implement and maintain security measures to protect our systems and data, these measures cannot provide absolute security against a cyberattack.
Biggest changeWhile we devote resources to implement and maintain security measures to protect our systems and data, these measures cannot provide absolute security against a cyberattack. In such an event, the insurance coverage we maintain may be inadequate to cover claims, costs, and liabilities relating to cybersecurity incidents.
As of the date of this Annual Report on Form 10-K, we are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect us, our business strategy, results of operations or financial condition.
As of the date of this Annual Report on Form 10-K, we are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect us, our business strategy, results of operations or financial condition. 36
Further, the Committee will engage subject matter experts such as consultants and auditors to assist us in establishing processes to assess, identify, and manage potential and actual cybersecurity threats, to actively monitor our systems internally using widely accepted digital applications, processes, and controls, and to provide forensic assistance to facilitate system recovery in the case of an incident.
Further, the Committee will, from time to time and as needed, engage subject matter experts such as consultants and auditors to assist us in establishing processes to assess, identify, and manage potential and actual cybersecurity threats, to actively monitor our systems internally using widely accepted digital applications, processes, and controls, and to provide forensic assistance to facilitate system recovery in the case of an incident.
This will include briefings on any significant cyber incidents and ongoing risk management efforts. These updates will enable the Audit Committee to provide informed reports on cybersecurity matters to the full Board.
This includes briefings on any significant cyber incidents and ongoing risk management efforts. These updates enable the Audit Committee to provide informed reports on cybersecurity matters to the full Board.
The Audit Committee of our Board of Directors oversees our policies and practices with respect to risk assessment and risk management, including the review, in coordination with our management, of our management of cybersecurity. The Audit Committee will receive regular updates from the Cybersecurity Committee on the state of cybersecurity risks we face.
The Audit Committee of our Board of Directors (the “Audit Committee”) oversees our policies and practices with respect to risk assessment and risk management, including the review, in coordination with our management, of our management of cybersecurity. The Audit Committee receives regular updates from the Cybersecurity Committee on the state of cybersecurity risks we face.
In such an event, the insurance coverage we maintain may be inadequate to cover claims, costs, and liabilities relating to cybersecurity incidents. While we have not been subject to cyberattacks and other cyber incidents, we take cybersecurity preparedness seriously. Our risk management framework considers cybersecurity risk alongside other company risks as part of our overall risk assessment process.
While we have not been subject to cyberattacks and other cyber incidents, we take cybersecurity preparedness seriously. Our risk management framework considers cybersecurity risk alongside other company risks as part of our overall risk assessment process.
We plan to implement a Cybersecurity Committee which will be responsible for the day-to-day management of cybersecurity risks, and which will meet bi-monthly to review our practices related to cyber events and risk management. The Committee will be composed of the Chief Financial Officer, Chief Legal Officer, Controller, and Head of Human Resources.
We have implemented a Cybersecurity Committee which met three times last year and is now responsible for the day-to-day management of cybersecurity risks, and the review our practices related to cyber events and risk management. The Committee is composed of the Chief Financial Officer, Chief Legal Officer, Controller, and Head of Human Resources.
The Committee will develop and implement cybersecurity risk mitigation strategies and activities, including the management of comprehensive incident response plans, oversee the cybersecurity risks posed by third-party vendors, ensure policies and procedures are current and followed, and receive regular updates on cybersecurity-related matters.
The Committee is responsible for developing and implementing cybersecurity risk mitigation strategies and activities, including the managing of comprehensive incident response plans, overseeing the cybersecurity risks posed by third-party vendors, keeping our policies and procedures current, assessing compliance with our cybersecurity policies and procedures, and receiving regular updates on cybersecurity-related matters.
This scenario may also result in a deterioration of customer confidence in us and potentially other competitive disadvantages.
This scenario may also result in a deterioration of customer confidence in us and potentially other competitive disadvantages. As such, a cyberattack could have a material adverse impact on our financial condition and results of operations.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth information as to the real property leased by us: Location Square Feet Current Annual Rent Expiration Date 1410 Abbot Kinney Blvd., PH 1, Venice, CA 90291 4,121 $ 388,000 June 30, 2026 19700 Magellan Dr, Los Angeles, CA 90502 37,100 (1) $ 872,719 July 31, 2027 55 King Yip Street, King Palace Plaza, Floor 31, Suite J, Kwun Tong, Hong Kong 1,850 $ 81,323 July 14, 2025 No. 16, Jalan I-Park SAC 3, Taman Perindustrian I-Park SAC, 81400 Senai, Johor, Malaysia 31,000 $ 127,076 August 17, 2026 (1) The number in the table reflects the square feet of building that we occupy.
Biggest changeThe following table sets forth information as to the real property leased by us: Location Square Feet Current Annual Rent Expiration Date 1410 Abbot Kinney Blvd., PH 1, Venice, CA 90291 4,121 $ 388,000 June 30, 2026 19700 Magellan Dr, Los Angeles, CA 90502 37,100 (1) $ 872,719 July 31, 2027 55 King Yip Street, King Palace Plaza, Floor 31, Suite J, Kwun Tong, Hong Kong 1,850 $ 81,323 July 14, 2027 No. 16, Jalan I-Park SAC 3, Taman Perindustrian I-Park SAC, 81400 Senai, Johor, Malaysia 31,000 $ 127,076 August 17, 2026 Lot 210, Jalan Seelong, 81400 Senai, Johor, Malaysia 131,320 $ 594,401 March 16, 2030 (1) The number in the table reflects the square feet of building that we occupy.
ITEM 2. Properties Our headquarters are located at 19700 Magellan Dr, Los Angeles, CA 90502 and we maintain offices, manufacturing and storage facilities at the same location. We do not own any real property, and we leased an aggregate of approximately 74,071 square feet of real property.
ITEM 2. Properties Our headquarters are located at 19700 Magellan Dr, Los Angeles, CA 90502 and we maintain offices, manufacturing and storage facilities at the same location. We do not own any real property, and we leased an aggregate of approximately 205,391 square feet of real property.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not a party to, nor are we aware of, any legal proceedings, investigations or claims which, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition or results of operations. ITEM 4. Mine and Safety Disclosure Not applicable. 43 PART II
Biggest changeWe are not a party to, nor are we aware of, any legal proceedings, investigations or claims which, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition or results of operations. ITEM 4. Mine and Safety Disclosure Not applicable. 37 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+5 added−1 removed3 unchanged
Biggest changeNumber 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 (excluding securities reflected in column (a)) Plan Category (a) (1) (b) (1) (c) Equity compensation plans approved by security holders 3,255,000 $ 9.11 10,063,178 Equity compensation plans not approved by security holders - - - Total 3,255,000 $ 9.11 10,063,178 (1) Excludes 1,681,822 shares of Common Stock reserved under the 2022 Equity Incentive Plan, subject to the issuance of restricted stock units (“RSUs”) and performance stock units (“PSUs”).
Biggest changePlan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) (1) Weighted-average exercise price of outstanding options, warrants and rights (b) (1) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Equity compensation plans approved by security holders 1,438,125 $ 8.15 11,616,039 Equity compensation plans not approved by security holders - $ - - Total 1,438,125 8.15 11,616,039 (1) Excludes 1,582,865 shares of Common Stock reserved under our Amended and Restated 2022 Equity Incentive Plan, subject to the issuance of restricted stock units (“RSUs”) and performance stock units (“PSUs”).
One of our subsidiaries declared a dividend payable to its then sole stockholder, Tuanfang Liu, our co-chief executive officer. See Item 13. Certain Relationships and Related Transactions, and Director Independence Securities Authorized for Issuance under Equity Compensation Plan The following table sets forth information concerning securities authorized under equity compensation plans as of June 30, 2024.
One of our subsidiaries declared a dividend payable to its then sole stockholder, Tuanfang Liu, our co-chief executive officer. See “Item 13. Certain Relationships and Related Transactions, and Director Independence.” Securities Authorized for Issuance under Equity Compensation Plan The following table sets forth information concerning securities authorized under equity compensation plans as of June 30, 2025.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Common Stock trades on the Nasdaq Stock Market under the symbol “ISPR.” Holders of Record As of September 24, 2024, we had approximately 19 holders of record of our Common Stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Common Stock trades on the Nasdaq Stock Market under the symbol “ISPR.” Holders of Record As of September 15, 2025, we had approximately 16 holders of record of our Common Stock.
Removed
Recent Sales of Unregistered Securities There were no unregistered securities to report which have not been previously included in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K. ITEM 6. [Reserved] 44
Added
Recent Sales of Unregistered Securities During the three months ended June 30, 2025, the Company did not conduct any unregistered sales of equity securities. 38 Purchases of Equity Securities by the Issuer and Affiliated Purchasers Pursuant to the share repurchase program approved by the Company’s board of directors on January 20, 2025, for a period of 24 months, the Company may repurchase up to $10 million of the currently outstanding shares of the Company’s common stock.
Added
Under the approved repurchase program, the Company may purchase shares of the Company’s common stock (i) in the open market, (ii) in privately negotiated transactions, (iii) block purchases, or (iv) otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Exchange Act.
Added
During the three month period ended June 30, 2025, the Company did not repurchase any shares of its common stock.
Added
ISSUER PURCHASES OF EQUITY SECURITIES (1) Period Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs April (April 1, 2025 – April 30, 2025) - - - $ 9,939,556 May (May 1, 2025 – May 31, 2025) - - - $ 9,939,556 June (June 1, 2025 – June 30, 2025) - $ - - $ 9,939,556 Total - $ - - $ 9,939,556 (1) On January 20, 2025, the Company’s board of directors authorized the Company’s entry into a program to repurchase up to $10 million of shares of the Company’s Common Stock, as previously announced in the Company’s Current Report on Form 8-K filed with the SEC on January 22, 2025.
Added
The board of directors’ authorization to conduct such a repurchase program expires on January 20, 2027. ITEM 6. [Reserved]

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 6. [Reserved] 44 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 45 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 54 Item 8. Financial Statements and Supplementary Data 54 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 54 Item 9A. Controls and Procedures 55
Biggest changeItem 6. [Reserved] 39 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 39 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 46 Item 8. Financial Statements and Supplementary Data 46 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 47 Item 9A. Controls and Procedures 47 Item 9B.

Item 7. Management's Discussion & Analysis

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

42 edited+12 added−29 removed21 unchanged
Biggest changeYear Ended June 30, Consolidated cash flow data: 2023 (Restated) 2024 Increase (Decrease) Net cash used in operating activities $ (8,456 ) $ (18,302 ) $ (9,846 ) Net cash (used in) provided by investing activities (10,154 ) 2,990 13,144 Net cash (used in) provided by financing activities (15,570 ) 10,083 25,653 Net decrease in cash $ (34,180 ) $ (5,229 ) $ 28,951 Net cash flow used in operating activities for the year ended June 30, 2023 (as restated), of $8.5 million, reflected our net loss of $6.0 million, adjusted primarily as follows: add back of impairment of account receivable of $3.3 million, an increase in accounts payable of $10.6 million, a decrease in inventories of $7.1 million, offset by an increase in accounts receivable of $19.6 million, an increase in prepaid expenses and other current assets of $3.1 million and payment made for operating lease liabilities of $1.4 million. 51 Net cash flow used in operating activities for the year ended June 30, 2024 of $18.3 million, reflected our net loss of $14.8 million, adjusted primarily as follows: add back of impairment of account receivable of $6.0 million, add back of shared based payment expenses of $6.4 million, add back of depreciation and amortization of $0.5 million, an increase in accounts payable of $17.9 million, an increase in accrued liabilities and other payables of $2.5 million, a decrease in inventory of $0.9 million, a decrease in prepaid expenses and other current assets of $2.4 million, an increase in contract liabilities of $1.2 million offset by an increase in accounts receivable of $41.3 million.
Biggest changeNet cash flow used in operating activities for the year ended June 30, 2024 of $18.3 million, reflected our net loss of $14.8 million, adjusted primarily as follows: add back of impairment of account receivable of $6.0 million, add back of shared based payment expenses of $6.4 million, add back of depreciation and amortization of $0.5 million, an increase in accounts payable of $17.9 million, an increase in accrued liabilities and other payables of $2.5 million, a decrease in inventory of $0.9 million, a decrease in prepaid expenses and other current assets of $2.4 million, an increase in contract liabilities of $1.2 million offset by an increase in accounts receivable of $41.3 million.
As of the date of this Annual Report, we believe that our current cash and cash flows provided by operating activities, and the net proceeds from our equity offerings will be sufficient to meet our working capital needs in the next 12 months.
As of the date of this Annual Report, we believe that our current cash and cash flows provided by operating activities, and the net proceeds from our equity offerings and borrowing will be sufficient to meet our working capital needs in the next 12 months.
We currently sell our cannabis vaping hardware in the United States, Canada, South Africa, and Germany. However, we are continuing to develop our sales network across Europe, South America, and other regions in preparation for legalization in these markets.
We currently sell our cannabis vaping hardware in the United States, Canada, and South Africa. However, we are continuing to develop our sales network across Europe, South America, and other regions in preparation for legalization in these markets.
This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. For the years ended June 30, 2023 and 2024, we did not incur any interest or penalties related to an uncertain tax position.
This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. For the years ended June 30, 2025 and 2024, we did not incur any interest or penalties related to an uncertain tax position.
We had a consolidated net loss for both year ended June 30, 2023 and 2024, which was the combined effect of a profit by Aspire Science and a loss by Aspire North America. The profit from Aspire Science resulted in a current tax expense.
We had a consolidated net loss for both year ended June 30, 2025 and 2024, which was the combined effect of a profit by Aspire Science, a loss by Aspire North America and Ispire Malaysia. The profit from Aspire Science resulted in a current tax expense.
Results of Operations The following table sets forth a summary of our consolidated statements of operations and comprehensive income for the years ended June 30, 2023 (as restated) and 2024 (dollars in thousands except per share amounts).
Results of Operations The following table sets forth a summary of our consolidated statements of operations and comprehensive income for the years ended June 30, 2025 and 2024 (dollars in thousands except per share amounts).
Liquidity and Capital Resources The following table summarizes our changes in working capital from June 30, 2023 (as restated) to June 30, 2024 (dollars in thousands).
Liquidity and Capital Resources The following table summarizes our changes in working capital from June 30, 2024 to June 30, 2025 (dollars in thousands).
We used the net proceeds from this offering in connection with the establishment and operation of our manufacturing facility in Malaysia, the funding of our joint venture with Touch Point Worldwide Inc. d/b/a/ Berify and Chemular Inc. and for working capital and general corporate purposes, including research and development. 45 Regulatory Risks The sale of nicotine and cannabis products is subject to regulations worldwide.
We used the net proceeds from this offering in connection with the establishment and operation of our manufacturing facility in Malaysia, the funding of our joint venture with Touch Point Worldwide Inc. d/b/a/ Berify and Chemular Inc. and for working capital and general corporate purposes, including research and development.
The balance of the allowance for credit losses was $1.5 million and $5.9 million at June 30, 2023 and June 30, 2024, respectively.
The balance of the allowance for credit losses was $18.0 million and $5.9 million at June 30, 2025 and 2024, respectively.
To date, our nicotine products are marketed under the “Aspire” brand name and are sold primarily through our expansive distribution network. However, we are currently preparing to expand our international presence via the launch of nicotine products under the Ispire platform. These products will be launched under licensing arrangements with the owner(s) of selected partner brand(s).
To date, our nicotine products are marketed under the “Aspire” brand name and are sold primarily through our expansive distribution network. However, we are expanding our international presence via the launch of nicotine products under the Ispire platform. These products have started to be launched under licensing arrangements with the owners of selected partner brands.
Vaping refers to the practice of inhaling and exhaling the vapor produced by an electronic vaping device. These products are sold into the global nicotine and cannabis markets in the form of e-cigarettes or cartridges filled with oils by our customers, respectively. We sell our e-cigarette (or nicotine) products globally, in markets where we are legally permitted to do so.
These products are sold into the global nicotine and cannabis markets in the form of e-cigarettes or cartridges filled with oils by our customers, respectively. 39 We sell our e-cigarette (or nicotine) products globally, in markets where we are legally permitted to do so.
Although we may implement strategies to mitigate these risks, there can be no assurance that such measures will be entirely effective, and we may continue to incur write-offs of accounts receivable, which may impair our ability to operate profitably. 47 Key Factors that Affect Our Results of Operations We believe the following key factors may aff ect our financial condition and results of operations: ● The effect of legislation and regulations affecting tobacco and cannabis vaping products. ● If we elect to market tobacco vaping products in the United States, our ability to obtain regulatory approval to market additional tobacco vaping products in the United States and the significant cost of seeking such approval. ● Our ability to develop and market tobacco and cannabis vaping products to meet the changing tastes of adult consumers. ● The effects of competition. ● The development of an international market for cannabis vaping products, which is presently primarily limited to certain states in the United States. ● The effect of both the outbreak any other pandemic or other disease outbreak results in restrictions imposed by governments which may impact our ability to purchase or assemble products as well as the ability of end users to purchase our products.
Although we may implement strategies to mitigate these risks, there can be no assurance that such measures will be entirely effective, and we may continue to incur write-offs of accounts receivable, which may impair our ability to operate profitably. 40 Key Factors that Affect Our Results of Operations We believe the following key factors may affect our financial condition and results of operations: ● The effect of legislation and regulations affecting non-combustable nicotine products and cannabis vaping products. ● If we elect to market nicotine vaping products in the United States, our ability to obtain regulatory approval to market additional nicotine vaping products in the United States and the significant cost of seeking such approval. ● Our ability to develop and market nicotine and cannabis vaping products to meet the changing tastes of adult consumers. ● The effects of competition. ● The development of an international market for cannabis vaping products, which is presently primarily limited to certain states in the United States.
Gross Profit The following tables show the revenue, cost of revenue and gross profit of our products (dollars in thousands).
The decrease in cost of revenue is in line with decrease in sales. Gross Profit The following tables show the revenue, cost of revenue and gross profit of our products (dollars in thousands).
The provisions of ASC 740-10 prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provisions of ASC 740-10 prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return.
As a result of these factors, total other (expense) income increased by $692,529, from other expense of $284,166 for the year ended June 30, 2023 to other expenses of $408,363 for the year ended June 30, 2024. Income Taxes We account for income taxes under ASC 740.
As a result of these factors, total other (expense) income, net decreased by $595,026, from other income, net of $408,363 for the year ended June 30, 2024 to other expense, net of $186,663 for the year ended June 30, 2025. Income Taxes We account for income taxes under ASC 740.
We do not believe that there were any uncertain tax positions as of June 30, 2023 and 2024. Income taxes increased by $36,743 or 3.0%, from $1,245,303 for the year ended June 30, 2023 to $1,282,046 for the year ended June 30, 2024.
We do not believe that there were any uncertain tax positions as of June 30, 2025 and 2024. Income taxes decreased by $78,342 or 6.1%, from $1,282,046 for the year ended June 30, 2024 to $1,203,704 for the year ended June 30, 2025.
The increase in revenue is the combined effect of (i) increases in product sales in the United States of $21.5 million from $41.6 million for the year ended June 30, 2023, to $63.1 million for the year ended June 30, 2024, (ii) increases in sales of vaping products in Europe of $6.5 million from $58.8 million for the year ended June 30, 2023 to approximately $65.3 million for the year ended June 30, 2024, and (iii) increases in sales of vaping products in others of $5.7 million from $0.3 million for the year ended June 30, 2023 to approximately $6.0 million for the year ended June 30, 2024, mainly contributed by increase in sales to South Africa of $5.2 million.
The decrease in revenue is the combined effect of (i) decreases in product sales in the United States of $30.5 million from $63.1 million for the year ended June 30, 2024, to $32.6 million for the year ended June 30, 2025, (ii) decreases in product sales in the Asia Pacific (excluding PRC) of $5.3 million from $17.6 million for the year ended June 30, 2024, to $12.3 million for the year ended June 30, 2025, (iii) increases in sales of vaping products in Europe of $8.8 million from $65.3 million for the year ended June 30, 2024 to approximately $74.1 million for the year ended June 30, 2025, and (iv) increases in sales of vaping products in Africa and South America of $2.5 million from $6.0 million for the year ended June 30, 2024 to approximately $8.5 million for the year ended June 30, 2025.
Net cash flow used in investing activities for the year ended June 30, 2023 (as restated), of $10.2 million reflected primarily the purchase of short term investment of $9.1 million and purchase of property, plant and equipment of $1.0 million.
Net cash flow used in investing activities for the year ended June 30, 2025, of $5.2 million reflected primarily the repayment of acquisition payable of $3.2 million, purchase of property, plant and equipment of $1.1 million and acquisition of intangible assets of $0.9 million.
Years Ended June 30, 2023 (Restated) 2024 % of Revenue % of Revenue Revenue $ 115,606 100.0 % $ 151,909 100.0 % Cost of revenue (94,828 ) (82.0 )% (122,126 ) (80.4 )% Gross profit 20,777 18.0 % 29,783 19.6 % Operating expenses (25,251 ) (21.8 )% (43,677 ) (28.8 )% Loss from operations (4,474 ) (3.9 )% (13,894 ) (9.1 )% Other (loss) income, net (285 ) (0.2 )% 409 0.3 % Loss before income taxes (4,758 ) (4.1 )% (13,486 ) (8.9 )% Income taxes (1,245 ) (1.1 )% (1,282 ) (0.8 )% Net loss (6,004 ) (5.2 )% (14,768 ) (9.7 )% Other comprehensive (loss) income 21 (0.0 )% 221 0.1 % Comprehensive loss (5,983 ) (5.2 )% (14,546 ) (9.6 )% Net loss per ordinary share (basic and diluted) $ (0.12 ) $ (0.27 ) Weighted ordinary shares outstanding 50,725,814 54,812,900 48 Revenue The following table sets out the breakdown of our revenue percentage by region based on information provided to us by our distributors.
Years Ended June 30, 2025 2024 % of Revenue % of Revenue Revenue $ 127,494 100.0 % $ 151,909 100.0 % Cost of revenue (104,845 ) (82.2 )% (122,126 ) (80.4 )% Gross profit 22,649 17.8 % 29,783 19.6 % Operating expenses (60,499 ) (47.5 )% (43,677 ) (28.8 )% Loss from operations (37,850 ) (29.7 )% (13,894 ) (9.1 )% Other (loss) income, net (187 ) (0.1 )% 409 0.3 % Loss before income taxes (38,037 ) (29.8 )% (13,486 ) (8.9 )% Income taxes (1,204 ) (0.9 )% (1,282 ) (0.8 )% Net loss (39,241 ) (30.8 )% (14,768 ) (9.7 )% Other comprehensive (loss) income (167 ) (0.1 )% 221 0.1 % Comprehensive loss (39,408 ) (30.9 )% (14,546 ) (9.6 )% Net loss per ordinary share (basic and diluted) $ (0.69 ) $ (0.27 ) Weighted ordinary shares outstanding 56,853,552 54,812,900 41 Revenue The following table sets out the breakdown of our revenue percentage by region based on information provided to us by our distributors.
For the year ended June 30, 2023 2024 Europe 50.8 % 43.0 % North America (the U.S. and Canada) 36.0 % 41.5 % Asia Pacific (excluding PRC) 12.9 % 11.6 % Others 0.3 % 3.9 % Total 100.0 % 100.0 % Our revenue increased by $36,303,155, or 31.4%, from $115,605,536 for the year ended June 30, 2023, to $151,908,691 for the year ended June 30, 2024.
For the year ended June 30, 2025 2024 Europe 58.1 % 43.0 % North America (the U.S. and Canada) 25.5 % 41.5 % Asia Pacific (excluding PRC) 9.6 % 11.6 % Others 6.8 % 3.9 % Total 100.0 % 100.0 % Our revenue decreased by $24,414,387, or 16.1%, from $151,908,691 for the year ended June 30, 2024, to $127,494,304 for the year ended June 30, 2025.
Our sales and marketing expenses mainly consist of employee salaries and benefits, marketing expenses, travel expenses, and other miscellaneous expenses. Sales and marketing expenses increased by $2,192,504, or 49.6%, from $4,416,220 for the year ended June 30, 2023 (as restated), to $6,608,724 for the year ended June 30, 2024.
Our sales and marketing expenses mainly consist of employee salaries and benefits, marketing expenses, travel expenses, and other miscellaneous expenses. Sales and marketing expenses increased by $1,830,660, or 27.7%, from $6,608,724 for the year ended June 30, 2024, to $8,439,384 for the year ended June 30, 2025.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 50 Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Net cash flow generated by financing activities for the year ended June 30, 2024, of $10.1 million reflected primarily proceeds from our equity offering of $12.3 million, offset by payment of equity offering costs of $1.5 million.
Net cash flow generated from financing activities for the year ended June 30, 2025, of $1.9 million reflected primarily proceeds from borrowing of $2.1 million, offset by repayment of borrowing of $0.2 million.
The increase in gross margin was primarily due to changes in product mix with more higher margin products being sold during the year ended June 30, 2024. Operating Expenses Operating expenses increased $18,425,364, or 73.0%, from $25,251,221 for the year ended June 30, 2023 (as restated), to $43,676,585 for the year ended June 30, 2024.
The decrease in gross margin was primarily due to changes in product mix with less higher margin products being sold during the year ended June 30, 2025. 42 Operating Expenses Operating expenses increased by $16,822,945 or 38.5%, from $43,676,585 for the year ended June 30, 2024, to $60,499,530 for the year ended June 30, 2025.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date.
June 30, 2023 (Restated) June 30, 2024 Change % Change Current Assets $ 84,811 $ 102,572 $ 17,761 20.9 % Current Liabilities 55,855 85,991 30,136 54.0 % Working Capital 28,956 16,581 (12,375 ) (42.7 )% The following table sets forth information as to consolidated cash flow information for the years ended June 30, 2023 and 2024 (dollars in thousands).
June 30, 2025 June 30, 2024 Change % Change Current Assets $ 72,908 $ 102,572 $ (29,664 ) (28.9 )% Current Liabilities 72,540 85,991 (13,451 ) (15.6 )% Working Capital 368 16,581 (16,213 ) (97.8 )% The following table sets forth information as to consolidated cash flow information for the years ended June 30, 2025 and 2024 (dollars in thousands).
The sale of cannabis vaping products is illegal in the European Union, save for Germany, and the United Kingdom. Accounts Receivable Our business relies on the collection of accounts receivable from our customers in a timely manner to maintain liquidity and support our ongoing operations.
Business – Regulation” and “Item 1A. Risk Factors” above for our robust discussion of this topic. Accounts Receivable Our business relies on the collection of accounts receivable from our customers in a timely manner to maintain liquidity and support our ongoing operations.
Changes in existing law and regulations and the imposition of new laws or regulations in countries and regions that our major customers are in may adversely affect our business. In many markets e-cigarettes and other nicotine products are subject to an excise tax.
As e-cigarettes have become more and more popular recently, many countries are considering imposing more stringent law and regulations to regulate this market. Changes in existing law and regulations and the imposition of new laws or regulations in countries and regions that our major customers are in may adversely affect our business. Please see the sections titled “Item 1.
Allowance for credit losses We adopted Accounting Standards Update 2016-13 “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” in July 2023. We estimate the allowance for current expected credit losses based on an expected loss model. Certain quantitative and qualitative factors used to estimate credit losses are subject to uncertainty.
Allowance for credit losses We adopted Accounting Standards Update 2016-13 “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” on July 1, 2023, under the modified retrospective method of adoption.
To date, we have financed our operations primarily through cash flow from operations and working capital loans from our major stockholders, who are our co-chief executive officer and his wife, when necessary. We plan to support our future operations primarily from cash generated from our operations and cash on hand.
Net cash flow generated by financing activities for the year ended June 30, 2024, of $10.1 million reflected primarily proceeds from our equity offering of $12.3 million, offset by payment of equity offering costs of $1.5 million. 44 To date, we have financed our operations primarily through cash flow from operations and working capital loans from our major stockholders, who are our co-chief executive officer and his wife, when necessary.
Contractual Obligations We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. 52 Trend Information Other than as disclosed elsewhere in this Form 10-K, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.
The maturities of our borrowing are as follows: As of June 30, 2025 July 1, 2025 to June 30, 2026 1,146,766 July 1, 2026 to June 30, 2027 805,361 Total borrowing 1,952,127 As of June 30, 2025, we recorded an unpaid $5.8 million consideration in accrued liabilities and other payables on the consolidated balance sheet for a committed investment of $9 million into a joint venture investment named IKE Tech LLC. 45 Trend Information Other than as disclosed elsewhere in this Form 10-K, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.
Many countries prohibit the sale of any cannabis products, and many countries have regulations relating to nicotine products, with a particular emphasis on underage sales. We work closely with our various global distribution partners to help ensure our nicotine products comply with local regulations (e.g., packaging, ingredient disclosure, health warnings, etc.).
Regulatory Risks The sale of nicotine and cannabis products is subject to regulations worldwide. Many countries prohibit the sale of any cannabis products, and many countries have regulations relating to nicotine products, with a particular emphasis on underage sales.
Year Ended June 30, 2023 (Restated) Revenue Cost of revenue Gross profit Gross profit % $ 115,606 $ 94,828 $ 20,778 18.0 % Year Ended June 30, 2024 Revenue Cost of revenue Gross profit Gross profit % $ 151,909 $ 122,126 $ 29,782 19.6 % 49 Gross profit increased by $9,005,382, or 43.3%, from $20,777,064 for the year ended June 30, 2023 (as restated), to $29,782,446 for the year ended June 30, 2024, while our gross margin increased from 18.0% to 19.6%.
Year Ended June 30, 2025 Revenue Cost of revenue Gross profit Gross profit % $ 127,494 $ 104,845 $ 22,649 17.8 % Year Ended June 30, 2024 Revenue Cost of revenue Gross profit Gross profit % $ 151,909 $ 122,126 $ 29,782 19.6 % Gross profit decreased by $7,132,775, or 23.9%, from $29,782,446 for the year ended June 30, 2024, to $22,649,671 for the year ended June 30, 2025, while our gross margin decreased from 19.6% to 17.8%.
Our general and administrative expenses mainly consist of employee’s salaries and benefits, rental expense, professional fees, share based payment expenses and other administrative expenses. General and administrative expenses increased by $16,232,860, or 77.9%, from $20,835,001 for the year ended June 30, 2023 (as restated), to $37,067,861 for the year ended June 30, 2024.
Our general and administrative expenses (excluding the credit loss expenses) mainly consist of employee’s salaries and benefits, rental expense, professional fees, stock-based compensation expenses and other administrative expenses. General and administrative expenses decreased by $1,026,775, or 3.3%, from $31,052,109 for the year ended June 30, 2024, to $30,025,334 for the year ended June 30, 2025.
Net Loss As a result of the foregoing, net loss increased by $8,764,196, from net loss of $6,003,626, or $(0.12) per share (basic and diluted) for the year ended June 30, 2023 (as restated) to a net loss of $14,767,822, or $(0.27) per share (basic and diluted), for the year ended June 30, 2024.
The increase in valuation allowance reflects our view that the taxable income in the future will not be sufficient to utilize the carryforward loss. 43 Net Loss As a result of the foregoing, net loss increased by $24,472,404, from net loss of $14,767,822, or loss of $0.27 per share (basic and diluted), for the year ended June 30, 2024 to a net loss of $39,240,226, or loss of $0.69 per share (basic and diluted), for the year ended June 30, 2025.
The increase in interest income is mainly due to increase in interest rate and more interest income from bank deposits. Other (expense) income mainly consists of interest expense, loss on equity method investment, credits from company credit card and other miscellaneous expenses.
Other (expense) income mainly consists of interest expense, loss on equity method investment, credits from company credit card, rental income and other miscellaneous expenses. Other (expense) income decreased by $300,494, or 265.0%, from net income of $113,405 for the year ended June 30, 2024 to net expense of $187,089 for the year ended June 30, 2025.
Changes in the regulatory environment can be enacted swiftly and may lead to our products becoming non-compliant in one or more international markets. This regulatory scenario may severely disrupt our business in these markets while we resolve the deficiencies (if possible) with the current product offering.
We work closely with our various global distribution partners to help ensure our nicotine products comply with local regulations (e.g., packaging, ingredient disclosure, health warnings, etc.). Changes in the regulatory environment can be enacted swiftly and may lead to our products becoming non-compliant in one or more international markets.
E-cigarette regulation Regulation regarding e-cigarettes varies across countries, from limited regulation to a total ban. The legal status of e-cigarettes is currently pending in many countries. As e-cigarettes have become more and more popular recently, many countries are considering imposing more stringent law and regulations to regulate this market.
This regulatory scenario may severely disrupt our business in these markets while we resolve the deficiencies (if possible) with the current product offering. E-cigarette regulation Regulation regarding e-cigarettes varies across countries, from limited regulation to a total ban. The legal status of e-cigarettes is currently pending in many countries.
Exchange loss, net decreased by $253,932, or 78.3%, from net exchange loss of $324,225 for the year ended June 30, 2023 to net exchange loss of $70,293 for the year ended June 30, 2024.
The decrease was mainly due to increase in interest expense of $0.2 million. Exchange loss, net increased by $16,277, or 23.2%, from net exchange loss of $70,293 for the year ended June 30, 2024 to net exchange loss of $86,570 for the year ended June 30, 2025.
Although management believes it uses the best information necessary to establish the allowance for credit losses, future adjustments to the allowance for credit losses may be necessary and our results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. 53 Recent Accounting Pronouncements The discussion of the recent accounting pronouncements contained in our consolidated financial statements, “Summary of Significant Accounting Policies,” is incorporated herein by reference.
Delinquent account balances are written off against allowance for credit losses after management has determined that the likelihood of collection is not probable. Recent Accounting Pronouncements The discussion of the recent accounting pronouncements contained in our consolidated financial statements, “Summary of Significant Accounting Policies,” is incorporated herein by reference.
Cost of Revenue Cost of revenue mainly consists of cost of purchases of vaping products, that are mostly purchased from Shenzhen Yi Jia though there has been decreased reliance on this factory in 2024 vs 2023.
Cost of Revenue Cost of revenue mainly consists of cost of purchases of vaping products, that are mostly purchased from Shenzhen Yi Jia. Cost of revenue decreased by $17,281,612, or 14.2%, from $122,126,245 for the year ended June 30, 2024, to $104,844,633 for the year ended June 30, 2025.
The increase in sales and marketing expenses was primarily due to an increase in (i) our marketing activities, marketing campaign and trade shows of $1.1 million, (ii) stock-based compensation expense related to selling personnels of $0.5 million incurred in 2024 and (iii) headcount and payroll expense for Aspire Science of $0.2 million.
The increase in sales and marketing expenses was primarily due to an increase in payroll from marketing personnel of $0.9 million, increase in brand advertising activities of $0.4 million and increase in marketing related professional service fee of $0.3 million.
Removed
The amount of excise tax on our products is a key determining factor in our pricing and the value proposition to our adult consumer target market. The structure (i.e., ad valorem vs. specific) and tax burden can vary significantly from market to market. According to a 2023 study by Dauchy E, Fuss C.
Added
Vaping refers to the practice of inhaling and exhaling the vapor produced by an electronic vaping device.
Removed
Global Taxation of Electronic Nicotine and Non-Nicotine Delivery Systems , the tax burden on nicotine vape products in Norway is 81.2% while the tax burden on the same products in Paraguay is 2.9%. The tax burden and resulting retail sales price is a key factor in determining how competitive our products are compared to illicit vaping products.
Added
Due to federal status of cannabis and the uncertainty of adverse economic conditions in cannabis industry, the company has focused more on nicotine business in the past year.
Removed
The greater the price gap between legal and illicit vaping products the greater the incentive for adult consumers to buy illicit products. These illicit vaping products are not subject to the same quality standards as our products and undermine the efforts of legal operators seeking to help adult consumers switch from combustible tobacco products to vaping alternatives.
Added
Credit loss expenses increased by $16,019,060, or 266.3%, from $6,015,752 for the year ended June 30, 2024, to $22,034,812 for the year ended June 30, 2025. The increase is due to longer time in collection of customer payments than expected and more allowance for credit losses were provided.
Removed
United States E-Cigarette Market In the United States, the Federal Food, Drug, and Cosmetic Act requires all Electronic Nicotine Delivery Systems (“ENDS”) product manufacturers that market products in the United States to submit Premarket Tobacco Product Applications (“PMTAs”) to the FDA.
Added
The decrease was primarily due to (i) a decrease of $0.5 million of stock-based compensation expense due to cutting headcount in streamline operations by North America, and (ii) decrease in research and development expenses of $0.4 million by North America. Other (expense) income, net Other (expense) income, net includes interest income, interest expense, exchange loss, net and other income (expense).
Removed
For ENDS products that were on the U.S. market on or before August 8, 2016, a PMTA was required to be submitted to the FDA before September 9, 2020.
Added
Interest income decreased by $278,255, from $365,251 for the year ended June 30, 2024, to $86,996 for the year ended June 30, 2025. The decrease in interest income is mainly due to decrease in interest rate and less interest income from bank deposits.
Removed
For ENDS products that were not on the U.S. market prior to August 8, 2016, and for which a PMTA was not filed before September 9, 2020, a PMTA premarket authorization issued by FDA is required before the subject product may enter the U.S. market.
Added
Year Ended June 30, Increase Consolidated cash flow data: 2025 2024 (Decrease) Net cash used in operating activities $ (7,374 ) $ (18,302 ) $ 10,928 Net cash (used in) provided by investing activities (5,199 ) 2,990 (8,189 ) Net cash provided by financing activities 1,853 10,083 (8,230 ) Net decrease in cash $ (10,720 ) $ (5,229 ) $ (5,491 ) Net cash flow used in operating activities for the year ended June 30, 2025, of $7.4 million, reflected our net loss of $39.2 million, adjusted primarily as follows: add back of impairment of account receivable of $22.0 million, add back of share-based compensation expense of $5.6 million, add back of right-of-use assets amortization of $1.5 million, an increase in accounts payable of $10.8 million, an increase in contract liabilities of $2.6 million, offset by increase in accounts receivable of $9.3 million, and increase in payment made for operating lease liabilities of $1.4 million.
Removed
We have submitted a PMTA filing for one ENDS product, and, under apparent FDA policies, the agency will not enforce the premarket review requirements for that product pending review of its PMTA.
Added
We plan to support our future operations primarily from cash generated from our operations and cash on hand.
Removed
However, even with submission of the PMTA application, the FDA may reject our application and may prevent our ENDS products from being sold in U.S., which will adversely affect our business. As a result of ENDS regulation noted above, we can sell only one tobacco vaping product line, the Nautilus Prime, in the U.S.
Added
Contractual Obligations As of June 30, 2025 and 2024, we had contract liabilities of $4,861,250 and $2,218,166, respectively. These liabilities are advance deposits received from customers after an order has been placed. We expect all of the contract liabilities to be settled in less than one year.
Removed
Our tobacco vaping sales related to this line in the U.S. were approximately $0.6 million and $0.2 million for the twelve months ended June 30, 2023, and 2024, respectively. Because the volume of sales did not justify the marketing and regulatory costs, we have ceased marketing tobacco vaping products in the U.S.
Added
We have operating lease arrangements for office and factory premises for Hong Kong, California and Malaysia, which are treated as right-of-use assets. These leases typically have terms of two to five years. Leases with an initial term of 12 months or less are not presented as right-of-use assets and are expensed over the lease term.
Removed
On September 6, 2024, we submitted a PMTA application for a disposable ENDS product with 4 flavors. This is an important milestone for us, as it signals our re-entry into the US ENDS market.
Added
All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date.
Removed
It is our intention to amend or resubmit this application in the coming months, once we have finalized the age-gating technology solution with our IKE Tech LLC joint venture.
Added
The balances for the right-of-use assets and lease liabilities where we are the lessee are presented as follow: As of As of June 30, 2025 June 30, 2024 Operating lease right-of-use assets $ 5,181,521 $ 3,579,140 Impairment (151,516 ) - Total $ 5,030,005 $ 3,579,140 Operating lease liabilities – current $ 1,838,815 $ 1,207,832 Operating lease liabilities – non-current 3,267,522 2,194,094 Total $ 5,106,337 $ 3,401,926 As of June 30, 2025, the maturities of our lease liabilities (excluding short-term leases) are as follows: As of June 30, 2025 July 1, 2025 to June 30, 2026 $ 2,110,799 July 1, 2026 to June 30, 2027 1,583,109 July 1, 2027 to June 30, 2028 777,402 July 1, 2028 to June 30, 2029 696,727 July 1, 2029 to June 30, 2030 464,484 Total future lease payments 5,632,521 Less: imputed interest (526,184 ) Total lease liabilities $ 5,106,337 As of June 30, 2025, we have a borrowing balance of $1,952,127 outstanding.
Removed
We have further plans to submit additional PMTA applications for pod-based ENDS systems, which will include age-gating technology, in the future as well. 46 Amendments to the Prevent All Cigarette Trafficking (“PACT”) Act, which became law in 2021, extend the PACT Act to include e-cigarettes and all vaping products, and place significant burdens on sellers of vaping products in the United States which may make it difficult to operate profitably in the United States.
Added
In establishing the required allowance for credit losses, we consider historical collection experience, aging of the receivables, economic environment, and the credit history and financial conditions of the customers. We review its receivables on a regular basis to determine if the allowance is adequate and adjusts the allowance when necessary.
Removed
Because of tighter government regulations, we have stopped marketing tobacco vaping products in the United States, as the volume of sales from the one tobacco vaping product which we may sell in the United States does not justify the marketing and regulatory costs involved.
Removed
In the United States, cannabis vaping products are governed by state laws, which vary from state to state. Most states do not permit the adult recreational use of cannabis, and no states permit the sale of recreational cannabis products to minors..
Removed
Further, States may be more willing to permit recreational cannabis use in the future given the DEA’s intention to reschedule cannabis as a Schedule III controlled substance allowing for medicinal use. We cannot predict what action states will take or the nature and amount of taxes they may impose.
Removed
However, to the extent the PACT Act applies to cannabis products that aerosolize liquids, it may be more difficult to sell our products in states that permit the sale of cannabis.
Removed
However, cannabis and its derivatives containing more than 0.3% delta-9 tetrahydrocannabinol on a dry weight basis remain Schedule I controlled substances under U.S. federal law, meaning that federal law generally prohibits their manufacture and distribution.
Removed
United States federal law also deems it unlawful to sell, offer for sale, transport in interstate commerce, import, or export “drug paraphernalia,” which includes “any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance” the possession of which federal law prohibits, including Schedule I “marijuana.” Limited exemptions exist, most notably when state or local law authorizes these items’ manufacture, possession, or distribution.
Removed
European Market The European Commission issued the Tobacco Products Directive (the “TPD”), which became effective on May 19, 2014, and became applicable in the European Union member states on May 20, 2016.
Removed
The TPD regulates e-cigarettes on the packaging, labelling and ingredients of the products on the European Union market, the creation of smoke-free environments, tax measures and activities against illegal trade and anti-smoke campaigns.
Removed
Member states of the European Union are required to ensure that advertisements for any tobacco-related product are prohibited, and no promotion shall be made as to those devices with an intention to promote e-cigarettes.
Removed
For the e-cigarettes released after May 20, 2016, TPD requires e-cigarette manufacturers to submit product sales applications to the regulatory market six months in advance and ensure their products can meet the TPD requirements before they can be released. We have complied with TPD requirements for all our tobacco products sold in Europe.
Removed
Cost of revenue increased by $27,297,773, or 28.8%, from $94,828,472 for the year ended June 30, 2023 (as restated), to $122,126,245 for the year ended June 30, 2024. The increase in cost of revenue is in line with increase in sales.
Removed
The increase was primarily due to (i) stock-based compensation expense of $5.9 million incurred in 2024, as compensation and incentive for management, employees and service providers, (ii) an increase of $4.8 million for payroll and contract worker expenses as more employees were hired and contract workers were engaged by us for expansion of our cannabis business and building our manufacturing plant, (iii) increase in bad debt expense as an allowance for credit losses of $2.7 million from accounts that are under dispute due to delayed shipment, (iv) an increase in professional fees of $2.3 million incurred for expansion of cannabis business.
Removed
Other (expense) income, net Other income, net includes interest income, interest expense, exchange gain (loss), net and other income (expense). Interest income increased $170,042, from $195,209 for the year ended June 30, 2023, to $365,251 for the year ended June 30, 2024.
Removed
Other (expense) income increased by $268,555, or 173.1%, from net expense of $155,150 for the year ended June 30, 2023 to net income of $113,405 for the year ended June 30, 2024.

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