Ispire Technology Inc.

Previous wording

As stated in our corporate mission, we are committed to delivering superior products that challenge industry norms, with the goal of delivering an unmatched customer and adult consumer experience. In achieving this, risk reduction is central to our mission, and we aim to improve the lives of our consumers through cutting-edge research and development. Our technology platforms look to reduce youth access to vaping products, which in turn, will facilitate our ability to provide adult consumers with the products they desire.

Current wording

As stated in our corporate mission, we are committed to delivering superior products that challenge industry norms, with the goal of delivering an unmatched customer and adult consumer experience. In achieving this, risk reduction is central to our mission, and we aim to improve the lives of our consumers through cutting-edge research and development. Our technology platforms look to reduce youth access to vaping products, which in turn we believe will facilitate our ability to provide adult consumers with the products they desire.

Previous wording

We currently sell our cannabis vaping hardware in the United States, Canada, and South Africa. However, we are continuing to develop our sales network across Europe, South America, and other regions in preparation for legalization in these markets. Our cannabis products are sold under the Ispire brand name, primarily on an ODM basis to other cannabis vapor companies including multi and single-state operators, brand owners and co-packers. ODM generally involves the design and customization of the core products to meet each brand’s unique image and needs. Our hardware products are sold by our customers under their own brand names. We do not “touch the cannabis plant” in the production and sale of our hardware products and thus are not subject to the specific cannabis-related regulatory and taxation provisions of the industry (e.g., IRS Code Section 280E).

Current wording

We currently sell our cannabis vaping hardware in the United States, Canada, and South Africa. However, we are continuing to develop our sales network across Europe, South America, and other regions in preparation for legalization in these markets. Our cannabis products are sold under the Ispire brand name, primarily on an ODM basis to other cannabis vapor companies including multi and single-state operators, brand owners and co-packers. ODM generally involves the design and customization of the core products to meet each brand’s unique image and needs. Our hardware products are sold by our customers under their own brand names. We do not “touch the cannabis plant” in the production and sale of our hardware products and thus are not subject to the specific cannabis-related regulatory and taxation provisions of the industry (e.g., Internal Revenue Code Section 280E).

Previous wording

Our business relies on the collection of accounts receivable from our customers in a timely manner to maintain liquidity and support our ongoing operations. The balance of the allowance for credit losses was $17.3 million and $18.0 million at September 30, 2025 and June 30, 2025, respectively.

Current wording

Our business relies on the collection of accounts receivable from our customers in a timely manner to maintain liquidity and support our ongoing operations. The balance of the allowance for credit losses was $20.9 million and $18.0 million at December 31, 2025 and June 30, 2025, respectively.

Previous wording

Our revenue decreased by $8,987,429, or 22.8%, from $39,338,313 for the three months ended September 30, 2024, to $30,350,884 for the three months ended September 30, 2025. The decrease in revenue is the combined effect of (i) decreases in product sales in the United States of $4.2 million from $9.7 million for the three months ended September 30, 2024, to $5.5 million for the three months ended September 30, 2025, (ii) decreases in sales to other regions of $2.0 million from $3.8 million for the three months ended September 30, 2024 to approximately $1.8 million for the three months ended September 30, 2025, mainly contributed by decrease in sales to South Africa of $2.8 million, and (iii) decreases in sales of vaping products in Asia Pacific of $1.5 million from $3.9 million for the three months ended September 30, 2024 to approximately $2.4 million for the three months ended September 30, 2025, and (iv) decreases in sales of vaping products in Europe of $1.3 million from $22.0 million for the three months ended September 30, 2024 to approximately $20.7 million for the three months ended September 30, 2025.

Current wording

Our revenue decreased by $21,541,304, or 51.5%, from $41,827,860 for the three months ended December 31, 2024, to $20,286,556 for the three months ended December 31, 2025. The decrease in revenue is the combined effect of (i) decreases in product sales in the United States of $9.3 million from $10.9 million for the three months ended December 31, 2024, to $1.6 million for the three months ended December 31, 2025 largely due to shorter credit terms in the United States with a focus on higher quality customers, and (ii) decreases in sales of vaping products in Europe of $9.2 million from $24.0 million for the three months ended December 31, 2024 to approximately $14.8 million for the three months ended December 31, 2025 largely due to market conditions being competitive, and the timing of distribution continuing to evolve, and (iii) decreases in sales to other regions of $1.9 million from $3.3 million for the three months ended December 31, 2024 to approximately $1.4 million for the three months ended December 31, 2025 and (iv) decreases in sales of vaping products in Asia Pacific of $1.1 million from $3.6 million for the three months ended December 31, 2024 to approximately $2.5 million for the three months ended December 31, 2025.

Previous wording

Cost of revenue mainly consists of cost of purchases of vaping products, that the majority of the purchase are from Shenzhen Yi Jia. Cost of revenue decreased by $6,459,823, or 20.4%, from $31,663,935 for the three months ended September 30, 2024, to $25,204,112 for the three months ended September 30, 2025. The decrease in cost of revenue is in line with decrease in sales.

Current wording

Cost of revenue mainly consists of cost of purchases of vaping products, that the majority of the purchase are from Shenzhen Yi Jia. Cost of revenue decreased by $17,293,334, or 50.7%, from $34,105,289 for the three months ended December 31, 2024, to $16,811,955 for the three months ended December 31, 2025. The decrease in cost of revenue is in line with decrease in sales. Cost of revenue mainly consists of the cost of purchases of vaping products, the majority of which are from Shenzhen Yi Jia.

Previous wording

Gross profit decreased by $2,527,606, or 32.9%, from $7,674,378 for the three months ended September 30, 2024, to $5,146,772 for the three months ended September 30, 2025, while our gross margin decreased from 19.5% to 17.0%. The decrease in gross margin was primarily due to changes in product mix with less higher margin products being sold during the three months ended September 30, 2025.

Current wording

Gross profit decreased by $4,247,970, or 55.0%, from $7,722,571 for the three months ended December 31, 2024, to $3,474,601 for the three months ended December 31, 2025, while our gross margin decreased from 18.5% to 17.1%. The decrease in gross margin was primarily due to changes in product mix with less higher margin products being sold during the three months ended December 31, 2025.

Previous wording

Sales and marketing expenses decreased by $1,427,403, or 47.7%, from $2,992,247 for the three months ended September 30, 2024 to $1,564,844 for the three months ended September 30, 2025. The decrease in sales and marketing expenses was primarily due to a decrease in (i) stock-based compensation expense related to selling personnels of $0.9 million comparing the three months ended September 30, 2025 and 2024 and (ii) decrease in travelling expense of $0.4 million as a result of less travelling activities during the three months ended September 30, 2025.

Current wording

Sales and marketing expenses decreased by $585,336, or 28.4%, from $2,061,664 for the three months ended December 31, 2024 to $1,476,328 for the three months ended December 31, 2025. The decrease in sales and marketing expenses was primarily due to a (i) decrease in brand marketing activities of $0.2 million comparing the three months ended December 31, 2025 and 2024, (ii) decrease in trade show costs of $0.2 million comparing the three months ended December 31, 2025 and 2024 and (iii) decrease in travelling expense of $0.1 million as a result of less travelling activities during the three months ended December 31, 2025.

Previous wording

Credit loss expenses decreased by $1,337,829, or 43.1%, from $3,102,081 for the three months ended September 30, 2024, to $1,764,252 for the three months ended September 30, 2025. The decrease is due to more collection of customer payments from repayment plan negotiated and thus less allowance for credit losses were provided as of September 30, 2025.

Current wording

Credit loss expenses decreased by $1,312,626, or 18.0%, from $7,286,079 for the six months ended December 31, 2024, to $5,973,453 for the six months ended December 31, 2025. The decrease is due to more collection of customer payments from repayment plan negotiated and thus less allowance for credit losses were provided as of December 31, 2025.

Previous wording

Our general and administrative expenses consist of employees’ salaries and benefits, rental expense, professional fees, stock-based compensation expenses and other administrative expenses. General and administrative expenses decreased by $2,329,934, or 34.0%, from $6,842,919 for the three months ended September 30, 2024, to $4,512,985 for the three months ended September 30, 2025. The decrease was primarily due to (i) decrease in payroll of $1.2 million comparing the three months ended September 30, 2025 and 2024 as a result of decrease in headcount of North America, and (ii) decrease of $1.1 million of miscellaneous administrative expenses from North America as a result of drop in headcount and cost reduction for the three months ended September 30, 2025.

Current wording

Our general and administrative expenses consist of employees’ salaries and benefits, rental expense, professional fees, stock-based compensation expenses and other administrative expenses. General and administrative expenses decreased by $4,173,025, or 47.2%, from $8,836,964 for the three months ended December 31, 2024, to $4,663,939 for the three months ended December 31, 2025. The decrease was primarily due to (i) decrease in payroll of $1.6 million comparing the three months ended December 31, 2025 and 2024 as a result of decrease in headcount of North America, (ii) decrease in stock-based compensation expense of $0.7 million for the three months ended December 31, 2025 as a result of drop in headcount in North America, (iii) decrease in legal and professional fees of $0.5 million for the three months ended December 31, 2025 as a result of cost reduction in North America, (iv) decrease of $1.7 million of miscellaneous administrative expenses from North America as a result of drop in headcount and cost reduction for the three months ended December 31, 2025, offset by $0.3 million increase of general administrative expenses from Ispire Malaysia from growth of operations during the three months ended December 31, 2025.

Previous wording

Other (expense) income, net includes interest income, interest expense, exchange loss, net and other (expense) income.

Current wording

Other income (expense), net includes interest income, interest expense, exchange loss, net and other (expense) income.

Previous wording

Interest income increased by $95,386, from $86 for the three months ended September 30, 2024, to $95,472 for the three months ended September 30, 2025. The increase in interest income is mainly due to charging late fees from customers.

Current wording

Interest income increased by $45,167, from $59,755 for the three months ended December 31, 2024, to $104,922 for the three months ended December 31, 2025. Interest income increased by $140,553, from $59,841 for the six months ended December 31, 2024, to $200,394 for the six months ended December 31, 2025. The increase in interest income is mainly due to charging late fees from customers.

Previous wording

Interest expense increased by $100,712, from $11,464 for the three months ended September 30, 2024, to $112,176 for the three months ended September 30, 2025. The increase in interest expense is mainly due to borrowing engaged in February 2025.

Current wording

Interest expense increased by $87,118, from $13,073 for the three months ended December 31, 2024, to $100,191 for the three months ended December 31, 2025. Interest expense increased by $187,830, from $24,537 for the six months ended December 31, 2024, to $212,367 for the six months ended December 31, 2025. The increase in interest expense is mainly due to borrowing engaged in February 2025.

Previous wording

Other (expense) income, net mainly consists of loss on equity method investment, credits from company credit card and other miscellaneous expenses. Other (expense) income changed by $88,982, or 483.6%, from net income of $18,399 for the three months ended September 30, 2024 to net expense of $70,583 for the three months ended September 30, 2025.

Current wording

Other income, net mainly consists of loss on equity method investment, credits from company credit card and other miscellaneous expenses. Other income, net changed by $63,640, or 319.3%, from net income of $19,934 for the three months ended December 31, 2024 to net income of $83,574 for the three months ended December 31, 2025. Other income, net changed by $25,342, or 66.1%, from net income of $38,333 for the six months ended December 31, 2024 to net income of $12,991 for the six months ended December 31, 2025.

Previous wording

Exchange gain, net changes by $107,783, or 91.7%, from net exchange gain $117,585 for three months ended September 30, 2024, to net exchange gain of $9,802 for three months ended September 30, 2025.

Current wording

Exchange gain, net changes by $535,410, or 218.4%, from net exchange loss $245,173 for three months ended December 31, 2024, to net exchange gain of $290,237 for three months ended December 31, 2025. Exchange gain, net changes by $427,627, or 335.2%, from net exchange loss $127,588 for six months ended December 31, 2024, to net exchange gain of $300,039 for six months ended December 31, 2025.

Previous wording

As a result of these factors, total other (expense) income, net decreased by $202,091, from other income, net of $124,606 for three months ended September 30, 2024, to other expense, net of $77,485 for three months ended September 30, 2025.

Current wording

As a result of these factors, total other income (expense), net increased by $557,099, from other expense, net of $178,557 for three months ended December 31, 2024, to other income, net of $378,542 for three months ended December 31, 2025. Total other income (expense), net increased by $355,008, from other expense, net of $53,951 for six months ended December 31, 2024, to other income, net of $301,057 for six months ended December 31, 2025.

Previous wording

Income taxes increased by $29,316 or 6.4%, from $456,753 for three months ended September 30, 2024, to $486,069 for three months ended September 30, 2025. We had a consolidated net loss for both three months ended September 30, 2025 and 2024, which was the combined effect of a profit by Aspire Science, a loss by Aspire North America and Ispire Malaysia. The profit from Aspire Science resulted in a current tax expense. The increase in valuation allowance reflects our view that the taxable income in the future will not be sufficient to utilize the carryforward loss.

Current wording

Income taxes decreased by $353,445 or 76.8%, from $460,031 for three months ended December 31, 2024, to $106,586 for three months ended December 31, 2025. Income taxes decreased by $324,129 or 35.4%, from $916,784 for six months ended December 31, 2024, to $592,655 for six months ended December 31, 2025. We had a consolidated net loss for both three and six months ended December 31, 2025 and 2024, which was the combined effect of a profit by Aspire Science, a loss by Aspire North America and Ispire Malaysia. The profit from Aspire Science resulted in a current tax expense. The increase in valuation allowance reflects our view that the taxable income in the future will not be sufficient to utilize the carryforward loss.

Previous wording

As a result of the foregoing, net loss decreased by $2,336,153, from net loss of $5,595,016, or $(0.10) per share, for the three months ended September 30, 2024, to a net loss of $3,258,863, or $(0.06) per share, for the three months ended September 30, 2025.

Current wording

As a result of the foregoing, net loss decreased by $1,395,732, from net loss of $7,998,643, or $(0.14) per share, for the three months ended December 31, 2024, to a net loss of $6,602,911, or $(0.12) per share, for the three months ended December 31, 2025. Net loss decreased by $3,731,885, from net loss of $13,593,659, or $(0.24) per share, for the six months ended December 31, 2024, to a net loss of $9,861,774, or $(0.17) per share, for the six months ended December 31, 2025.

Previous wording

The following table sets forth information as to consolidated cash flow information for the three months ended September 30, 2025 and 2024 (dollars in thousands).

Current wording

The following table sets forth information as to consolidated cash flow information for the six months ended December 31, 2025 and 2024 (dollars in thousands).

Previous wording

Net cash flow used in operating activities for the three months ended September 30, 2025, of $1.2 million, reflected our net loss of $3.3 million, adjusted primarily as follows: add back of impairment of account receivable of $1.8 million, add back of share-based compensation expense of $0.9 million, a decrease in accounts receivable of $0.7 million, a decrease in prepaid expenses and other current assets of $0.5 million, offset by decrease in contract liabilities of $1.9 million.

Current wording

Net cash flow used in operating activities for the six months ended December 31, 2025, of $5.2 million, reflected our net loss of $9.9 million, adjusted primarily as follows: add back of impairment of account receivable of $6.0 million, add back of share-based compensation expense of $1.8 million, add back of inventory impairment expense of $1.5 million, a decrease in accounts receivable of $3.2 million, offset by a decrease in accounts payable and accounts payable – related party of $7.0 million and an increase in prepaid expenses and other current assets of $1.0 million.

Previous wording

Net cash flow provided by operating activities for the three months ended September 30, 2024 of $3.6 million, reflected our net loss of $5.6 million, adjusted primarily as follows: an add-back of credit loss expenses of $3.1 million, an add-back of stock based compensation expense of $2.0 million, increase in accounts payable of $9.5 million, offset by an increase in accounts receivable of $5.7 million.

Current wording

Net cash flow provided by operating activities for the six months ended December 31, 2024 of $0.4 million, reflected our net loss of $13.6 million, adjusted primarily as follows: an add-back of credit loss expenses of $7.3 million, an add-back of stock based compensation expense of $3.5 million, an added-back of right-of-use assets amortization of $0.6 million and increase in accounts payable – related party of $20.7 million, offset by an increase in accounts receivable of $15.3 million, an increase in inventories, net of $1.7 million, and an increase in prepaid expenses and other current assets of $0.9 million.

Previous wording

Net cash flow used in investing activities for the three months ended September 30, 2025 of $0.1 million reflected primarily acquisition of intangible assets of $0.1 million.

Current wording

Net cash flow used in investing activities for the six months ended December 31, 2025, of $0.9 million reflected primarily investment in joint venture of $0.5 million and capitalized costs of patents of $0.3 million.

Previous wording

Net cash flow used in investing activities for the three months ended September 30, 2024 of $0.9 million reflected primarily purchase of property, plant and equipment of $0.3 million and capitalized costs of patents of 0.6 million.

Current wording

Net cash flow used in investing activities for the six months ended December 31, 2024, of $1.1 million reflected primarily purchase of property, plant and equipment of $0.3 million and capitalized costs of patents of $0.8 million.

Previous wording

Net cash flow generated from financing activities for the three months ended September 30, 2025, of $0.3 million reflected primarily repayment of borrowing of $0.3 million.

Current wording

Net cash flow generated from financing activities for the six months ended December 31, 2025, of $0.7 million reflected primarily repayment of borrowing of $0.6 million.

Previous wording

As of September 30, 2025 and June 30, 2025, we had contract liabilities of $2,962,299 and $4,861,250, 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.

Current wording

As of December 31, 2025 and June 30, 2025, we had contract liabilities of $4,971,135 and $4,861,250, 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.

Previous wording

The Company had no impairment of operating lease right-of-use assets during the three months ended September 30, 2025 and 2024.

Current wording

The Company had no impairment of operating lease right-of-use assets during the three and six months ended December 31, 2025 and 2024.

Previous wording

As of September 30, 2025, we have a borrowing balance of $1,665,435 outstanding. The maturities of our borrowing are as follows:

Current wording

As of December 31, 2025, we have a borrowing balance of $1,378,744 outstanding. The maturities of our borrowing are as follows:

Previous wording

As of September 30, 2025, we recorded an unpaid $5.8 million consideration in accrued liabilities and other payables on the unaudited condensed consolidated balance sheet for a committed investment of $9 million into a joint venture investment named IKE Tech LLC.

Current wording

As of December 31, 2025, we recorded an unpaid $5.3 million consideration in accrued liabilities and other payables on the unaudited condensed consolidated balance sheet for a committed investment of $9 million into a joint venture investment named IKE Tech LLC.

Previous wording

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.

Current wording

Other than as disclosed elsewhere in this Quarterly Report, 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.