PART I - FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The company reported increased net losses and a decline in assets and equity, with significant cash used in operations [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased while liabilities increased, resulting in a significant decline in stockholders' equity Condensed Consolidated Balance Sheet Data (in USD) | Balance Sheet Item | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $23,518,560 | $35,071,294 | | Accounts receivable, net | $60,425,835 | $59,734,765 | | Total current assets | $94,026,657 | $102,571,605 | | Total assets | $115,727,726 | $122,640,966 | | **Liabilities & Equity** | | | | Accounts payable – related party | $77,121,850 | $67,046,472 | | Total current liabilities | $96,176,082 | $85,990,532 | | Total liabilities | $100,942,604 | $88,184,626 | | Total stockholders' equity | $14,785,122 | $34,456,340 | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Revenue declined and net loss widened significantly for both periods due to lower gross profit and higher operating expenses Statement of Operations Highlights (in USD) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $26,190,725 | $30,015,036 | $107,356,898 | $114,565,244 | | Gross Profit | $4,775,905 | $6,121,953 | $20,172,854 | $19,219,699 | | Loss from Operations | $(10,585,441) | $(5,655,295) | $(23,208,365) | $(10,453,764) | | Net Loss | $(10,856,495) | $(5,925,123) | $(24,450,154) | $(11,258,622) | | Net Loss Per Share (Basic & Diluted) | $(0.19) | $(0.11) | $(0.43) | $(0.21) | [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity significantly declined due to net loss, partially offset by stock-based compensation and equity issuance - For the nine months ended March 31, 2025, stockholders' equity decreased from **$34,456,340** to **$14,785,122**[22](index=22&type=chunk)[23](index=23&type=chunk) - The main factors reducing equity were a net loss of **$24,450,154** and a common stock repurchase of **$60,488**[22](index=22&type=chunk) - Positive contributions to equity included stock-based compensation of **$3,642,152** and issuance of common stock for equity incentives worth **$1,281,599**[22](index=22&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations improved, but overall cash decreased by $11.5 million due to shifts in investing and reduced financing activities Consolidated Cash Flow Data (in USD) | Cash Flow Activity | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(12,069,519) | $(16,878,126) | | Net cash (used in) provided by investing activities | $(1,689,495) | $5,948,696 | | Net cash provided by financing activities | $2,278,874 | $10,082,584 | | **Net decrease in cash** | **$(11,480,140)** | **$(846,846)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's vaping business, significant customer/supplier concentration, increased credit loss allowance, and a subsequent preference share issuance - The company is engaged in the R&D, design, commercialization, and distribution of branded e-cigarettes and cannabis vaping products, with recent expansion through new subsidiaries in the UAE, California, and the UK[27](index=27&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - For the nine months ended March 31, 2025, one customer (Customer A) accounted for **24%** of consolidated revenue, and one supplier (Supplier C, a related party) accounted for **93%** of total purchases[55](index=55&type=chunk)[56](index=56&type=chunk) - The allowance for credit losses on accounts receivable increased to **$14.6 million** as of March 31, 2025, from **$5.9 million** as of June 30, 2024[62](index=62&type=chunk)[64](index=64&type=chunk) - The company has a **40%** membership interest in a joint venture, IKE Tech LLC, focused on developing age-verification solutions for vapor devices[66](index=66&type=chunk) - Subsequent to the quarter end, on April 24, 2025, the company's Malaysian subsidiary issued a preference share to its government affairs firm, entitling the holder to a **5%** annual dividend of the subsidiary's net profit after tax[98](index=98&type=chunk)[99](index=99&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses revenue decline, widened net loss from increased expenses, significant regulatory and tariff risks, and tightened liquidity [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Nine-month revenue decreased, gross margin improved, but operating expenses surged, leading to a significantly increased net loss Revenue by Region (in USD) | Region | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Europe | $59,174,779 | $49,144,807 | +20.4% | | North America | $29,441,624 | $50,191,212 | -41.3% | | Asia Pacific | $10,453,766 | $14,831,769 | -29.5% | | Africa | $5,840,041 | $261,113 | +2136.4% | | South America | $2,446,688 | $136,343 | +1694.6% | | **Total** | **$107,356,898** | **$114,565,244** | **-6.3%** | - Gross margin for the nine months ended March 31, 2025, increased to **18.8%** from **16.8%** in the prior year, due to a more favorable product mix with higher-margin products[133](index=133&type=chunk) - General and administrative expenses for the nine months increased by **$11.2 million** (**43.8%**), primarily due to a **$10.1 million** increase in credit loss expense[138](index=138&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity significantly deteriorated with negative working capital and decreased cash, though management expects sufficiency for 12 months Working Capital (in thousands USD) | | March 31, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Current Assets | $94,027 | $102,572 | $(8,545) | | Current Liabilities | $96,176 | $85,991 | $10,185 | | **Working Capital** | **$(2,149)** | **$16,581** | **$(18,730)** | - Net cash used in operating activities for the nine months ended March 31, 2025 was **$12.1 million**, primarily reflecting a net loss of **$24.5 million**, offset by non-cash charges like a **$13.4 million** credit loss expense and a **$4.9 million** stock-based compensation expense[148](index=148&type=chunk) - The company has an outstanding bank loan of **$2.3 million** and a committed but unpaid investment of **$8.2 million** for its IKE Tech LLC joint venture as of March 31, 2025[158](index=158&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is not required to provide this information as it qualifies as a "smaller reporting company" - As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the company is not required to provide information for this item[163](index=163&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to material weaknesses in asset recording, estimate evaluation, policies, and personnel expertise - Management concluded that disclosure controls and procedures were not effective as of March 31, 2025[164](index=164&type=chunk) - Identified material weaknesses include: - Lack of controls for recording assets acquired from a controlling stockholder - Lack of controls for evaluating significant estimates (inventory reserve, credit loss) - Lack of a comprehensive accounting policies and procedures manual - Lack of sufficient personnel with appropriate technical expertise[164](index=164&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings that are expected to have a material adverse effect on its business, financial condition, or results of operations - The company is not a party to, nor aware of, any legal proceedings, investigations or claims likely to have a material adverse effect on its business[168](index=168&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The company highlights significant risks from global political events and tariffs, especially new U.S. tariffs on Chinese and Malaysian goods - The company highlights the risk of geopolitical events, specifically tariffs; as of May 5, 2025, tariffs on most Chinese-made products entering the U.S. are **145%**[170](index=170&type=chunk) - A U.S. executive order instituted a **24%** tariff on Malaysian goods and **54%** on Chinese goods, which was later paused for 90 days (except for China) and replaced with a blanket **10%** tariff for non-China imports[170](index=170&type=chunk) - Since the company purchases the majority of its products from Shenzhen Yi Jia in China, these tariffs could significantly increase its cost of revenue and adversely affect financial results[170](index=170&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered equity sales but initiated a $10 million share repurchase program, buying back 14,600 shares Issuer Purchases of Equity Securities (March 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Maximum Dollar Value that May Yet Be Purchased Under the Programs | | :--- | :--- | :--- | :--- | :--- | | March 2025 | 14,600 | $4.14 | 14,600 | $9,939,556 | - On January 20, 2025, the Board of Directors authorized a share repurchase program for up to **$10 million** of the company's common stock over a 24-month period[173](index=173&type=chunk)[175](index=175&type=chunk) [Other Information](index=40&type=section&id=Item%205.%20Other%20Information) During the reported quarter, no director or Section 16 officer adopted or terminated a trading arrangement under Rule 10b5-1(c) or any other non-Rule 10b5-1 trading arrangement - No director or Section 16 officer adopted or terminated a Rule 10b5-1(c) trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter[177](index=177&type=chunk) [Exhibits](index=41&type=section&id=Item%206.%20Exhibits) The report includes various exhibits filed with the Form 10-Q, such as loan and consulting agreements, officer certifications, and interactive data files - Key exhibits filed include agreements with Avon River Ventures LLC (Master Loan and Security Agreement, Promissory Note, Master Consulting Agreement) and required CEO/CFO certifications (302 and 906)[179](index=179&type=chunk)

Company Overview - Ispire Technology Inc. is an innovator in the development and commercialization of vaporization technology and precise dosing [1][2] - The company has over 200 patents for inventions/designs, either owned or licensed from affiliates, and sells products under the Aspire brand globally [2] Financial Performance - Ispire Technology Inc. will hold a performance conference call on May 12, 2025, to discuss its financial results for the third quarter of the fiscal year ending March 31, 2025 [1] Market Presence - The company's vaporization products are primarily sold through an ODM model under the Ispire brand to other vaporization companies [2] - Ispire Technology has recently initiated marketing activities in Canada and Europe, expanding its sales efforts beyond the United States [2]

Core Viewpoint - Ispire Technology Inc. will host an earnings conference call on May 12, 2025, to discuss its financial results for the fiscal third quarter ended March 31, 2025 [1]. Company Overview - Ispire Technology Inc. is involved in the research, development, design, commercialization, sales, marketing, and distribution of branded e-cigarettes and cannabis vaping products [3]. - The company holds or licenses over 200 patents globally [3]. - Ispire's tobacco products are marketed under the Aspire brand and are sold worldwide, excluding the U.S., People's Republic of China, and Russia [3]. - The cannabis products are marketed under the Ispire brand primarily on an ODM basis to other cannabis vapor companies, with sales of cannabis vaping hardware limited to the U.S. and recent marketing activities initiated in Canada and Europe [3]. Conference Call Details - The earnings conference call is scheduled for May 12, 2025, at 8:00 AM ET [5]. - Participants can join the call by dialing North America 888-880-3330 or International +1 646-357-8766 [5]. - A playback of the call will be available until May 15, 2025, at midnight ET [2].

Core Viewpoint - Ispire Technology Inc. has submitted a historic pre-market tobacco product application (PMTA) for its Bluetooth Low Energy (BLE) chip system, marking the first complete PMTA application for an independent, interoperable, blockchain-supported age verification component in the industry [1][2]. Group 1: Company Developments - The company will benefit from the commercial sales of the BLE chip system and has the right to integrate this technology into its own devices, reinforcing its leadership in compliance innovation and unlocking new revenue growth opportunities [1][2]. - The IKE BLE chip is designed to provide a secure, interoperable, terminal-based identity and age verification system aimed at preventing unauthorized use of vaping devices [2][3]. - The PMTA application includes plans for publishing a clinical research protocol for peer review, demonstrating the company's commitment to transparency and scientific rigor [3]. Group 2: Industry Impact - The IKE platform offers continuous, real-time verification at the device usage end, providing unprecedented safety measures to prevent underage usage, contrasting with traditional one-time age verification methods [1][2]. - The technology has shown 100% effectiveness in preventing underage users from activating devices and has a user error rate of less than 1%, indicating high usability for adult users [2]. - The application aims to establish new standards for youth protection and device safety, potentially creating a regulatory pathway for expanding flavor product regulations while providing more alternatives for adult users [3].

Core Insights - Ispire Technology Inc. has announced a strategic investment in IKE Tech LLC, focusing on regulatory readiness and youth prevention in the vaping industry [1][3] - IKE Tech has filed a Pre-Market Tobacco Product Application (PMTA) with the FDA for a Bluetooth Low Energy (BLE) System-on-a-Chip, marking a significant advancement in age-verification technology for vaping devices [1][2] Company Developments - The PMTA submission is the first of its kind for a standalone, blockchain-enabled age-verification component, which requires continuous verification for device access, enhancing security against underage vaping [2][3] - Ispire will benefit from both commercial sales of the component and the rights to integrate the technology into its own devices, positioning the company for regulatory-compliant innovation and new revenue opportunities [3][4] - The technology achieved 100% effectiveness in preventing device activation by underage users and 100% accuracy in demographic verification, with user error rates below 1% [7] Industry Impact - The submission aims to set a new standard for youth prevention and device security, potentially enabling expanded regulatory pathways for flavored vaping products, which is crucial for providing adult smokers with more choices while protecting youth [2][4] - The collaboration between Ispire and IKE Tech is expected to open global regulatory and commercial opportunities, aligning with the highest public health standards [4][5]

Core Insights - The article discusses the successful results of a Human Factors Validation Study conducted by IKE Tech LLC, which confirms the effectiveness of its biometric BLE Bluetooth chip and blockchain-based application in preventing underage access to electronic nicotine delivery systems (ENDS) [1][2][3] Company Overview - IKE Tech LLC is a joint venture involving Ispire Technology Inc., Berify, and Chemular, focusing on innovative solutions for age verification and biometric authentication in consumer goods [3][8] - Ispire Technology Inc. is engaged in the research, development, and commercialization of branded e-cigarettes and cannabis vaping products, holding over 200 patents globally [9] - Berify specializes in linking physical products to the digital world, offering security and engagement solutions for brands [10] - Chemular provides regulatory consulting and project management services in the tobacco space, having submitted PMTAs for over 200 products [11] Study Findings - The study involved over 100 participants, achieving 100% success in age verification, with no underage individuals able to access the ENDS device [5][7] - The IKE System demonstrated high efficacy in reducing user error, with only 1% of task attempts resulting in errors, and 91% of users rated the app as "Extremely Easy" or "Very Easy" to use [6][7] - The platform includes customizable features such as geofencing and real-time messaging, designed for integration across various ENDS devices [6] Future Implications - The findings suggest a paradigm shift in regulatory frameworks for ENDS, providing powerful tools for the FDA and manufacturers to enhance public health and ensure adult-only access [3][4] - The technology aims to empower better public health outcomes and support evolving FDA standards, indicating a commitment to advancing intelligent hardware solutions [4][8]

Core Viewpoint - Ispire Technology Inc. has launched the Sprout™, an advanced all-in-one cannabis vapor device, in partnership with Raw Garden, aiming to set a new standard in the cannabis vape industry by enhancing purity, performance, and safety [1][2][3] Product Features - The Sprout™ is constructed with PA12, a terpene-safe material that maintains cannabis purity and provides a clean vaping experience [2][7] - It includes an anti-clog overflow chamber to ensure smooth airflow and prevent blockages [7] - The device offers three heat modes (Low: 2.0V, Medium: 2.3V, High: 2.6V) for a customizable vaping experience [7] - It is USB-C rechargeable, ensuring no oil is wasted [7] - The compact design (1.5" x 2.25") makes it portable and discreet [7] - Available formulations include Black Label™ Live Sauce for maximum flavor and Green Label™ Refined Live Resin for high potency [7] Collaboration and Commitment - The year-long collaboration between Ispire and Raw Garden emphasizes a shared commitment to innovation and consumer safety [3][4] - Both companies have meticulously engineered every component of the Sprout™ to enhance the integrity of the cannabis experience [3][4] - Ispire aims to redefine vape quality across the industry and encourages other brands to adopt safer materials and improved technology [5] Company Background - Ispire Technology Inc. specializes in the research, development, and commercialization of branded e-cigarettes and cannabis vaping products, holding over 400 patents worldwide [6] - The company markets its cannabis products primarily on an ODM basis to other cannabis vapor companies and has a global distribution network [6] - Raw Garden has been a leading producer of clean cannabis in California for over fifteen years, using organically-based and Clean Green-certified farming techniques [8]

Core Insights - Ispire Technology Inc. will participate in the 37th Annual ROTH Conference from March 16-18, 2025, in Dana Point, California, with Co-CEO Michael Wang scheduled for a fireside chat on March 18, 2025 [1] - The company will also hold one-on-one meetings with institutional investors during the conference [2] Company Overview - Ispire Technology Inc. focuses on the research, development, design, commercialization, sales, marketing, and distribution of branded e-cigarettes and cannabis vaping products [3] - The company holds over 200 patents globally, either received or filed, through its operating subsidiaries [3] - Ispire's tobacco products are marketed under the Aspire brand and sold worldwide, excluding the U.S., People's Republic of China, and Russia, primarily through a global distribution network [3] - Cannabis products are marketed under the Ispire brand, primarily on an ODM basis to other cannabis vapor companies, with sales of cannabis vaping hardware limited to the U.S. and recent marketing activities initiated in Canada and Europe [3]

Company Overview - Ispire Technology Inc. is engaged in the research, development, design, commercialization, sales, marketing, and distribution of branded e-cigarettes and cannabis vaping products [4] - The company owns or licenses over 200 patents globally [4] - Ispire's tobacco products are marketed under the Aspire brand and sold worldwide, excluding the U.S., People's Republic of China, and Russia [4] - Cannabis products are marketed under the Ispire brand primarily on an ODM basis to other cannabis vapor companies, with sales in the U.S. and recent marketing activities in Canada and Europe [4] Recent Highlights - On February 10, 2025, Ispire Technology Inc. reported financial results for the fiscal second quarter of 2025 [2] - On January 22, 2025, the company announced a stock repurchase program [2] - On January 15, 2025, Ispire announced a license arrangement and the successful launch of Burna Boy's BrkFst nicotine products into African markets [2] - On November 25, 2024, Ispire launched VLT, a new pod system designed to enhance the 510-thread vaping experience [2] - On November 18, 2024, IKE Tech LLC and Ispire announced a positive pre-PMTA submission meeting with the FDA [2] Upcoming Events - Michael Wang, Co-CEO of Ispire, will present at the Webull Consumer Webinar Series on February 18, 2025, at approximately 3:00 p.m. ET [6]

Financial Data and Key Metrics Changes - For Q2 2025, the company generated revenues of approximately $41.8 million, a slight increase of $100,000 or about 0.3% from $41.7 million in the same period last year [7][27] - Gross margin increased to 18.5% from 15%, with gross profit rising to $7.7 million from $6.3 million in the same quarter of fiscal 2024 [7][30] - The net loss for the quarter was $8 million or $0.14 per share, compared to a net loss of $4 million or $0.07 per share in the prior year [31] Business Line Data and Key Metrics Changes - The nicotine business accounted for $31 million of overall revenue in Q2 2025, performing in line with expectations [9] - Revenue from Europe was approximately $24 million, representing strong growth of $8.3 million or 53.2% year-over-year [28] - North America saw revenues of approximately $10.9 million, a decline of $9 million or 45.3% compared to the previous year, primarily due to decreased sales of cannabis vaping products [28] - Asia Pacific revenues were approximately $3.6 million, a decline of $2.4 million or 39.6% year-over-year [28] - Revenue from Africa increased to $2.7 million, up $2.6 million from the same period last year, attributed to the launch in South Africa [28] Market Data and Key Metrics Changes - The South African tobacco products market is projected to grow annually by over 5% between now and 2029, presenting significant opportunities for the company [13] - The company has established a presence in over 500 retail locations across South Africa and Nigeria, with plans to expand to over 2,000 stores in the next six months [11] Company Strategy and Development Direction - The company is focused on international growth and enhancing financial stability through a better quality of customer portfolio and revenue [6][8] - A stock repurchase program of up to $10 million has been authorized, reflecting the board's confidence in the company's long-term vision [17] - The company is preparing to launch its age-gating GMAS products in the UK market in the first half of calendar 2025, demonstrating commitment to responsible market entry [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing progress in sales and international expansion, particularly in Africa and Malaysia [10][14] - The company anticipates that the regulatory landscape in the UK will favor its open system products as disposable vape devices are set to be banned [47][48] - Management acknowledged the challenges posed by potential tariff increases on imports from China but believes the company is well-positioned to mitigate these risks through its manufacturing operations in Malaysia [60] Other Important Information - The company has implemented cost-saving initiatives expected to generate over $8 million annually, aimed at optimizing its cost structure [24] - The company is on track to submit the age-gating component of PMTA in April 2025, which could open significant revenue opportunities [21][69] Q&A Session Summary Question: Update on cannabis partnerships and pipeline - Management indicated that the cannabis business has pivoted towards larger MSO customers, with three partnerships already established, which could provide roughly one-third of revenue in the near future [40][42] Question: Performance in Europe - Management noted that the UK market is shifting towards open systems due to regulatory changes, which positions the company favorably [46][48] Question: Rationale behind the stock buyback program - The stock buyback program is designed to provide flexibility over a 24-month period, with expectations for cash flow to improve despite some one-time expenses related to cost-saving initiatives [52][54][56] Question: Impact of U.S. tariffs and regulations - Management expects tariff increases on Chinese products but believes the company will benefit from tighter border controls on illegal products [60][62] Question: Modular PMTA opportunity - The PMTA component represents a unique approach to addressing the flavored e-cigarette market, with potential licensing revenue opportunities from other manufacturers [68][70]