Ispire Technology Inc.

Previous wording

We are engaged in the research and development, design, commercialization, sales, marketing and distribution of branded and non-branded vaping hardware products in both the nicotine and cannabis spaces. Vaping refers to the practice of inhaling and exhaling the vapor produced by an electronic vaping device. These products are sold into the global nicotine and cannabis markets in the form of e-cigarettes or cartridges filled with oils by our customers, respectively.

Current wording

We are engaged in the research and development, design, commercialization, sales, marketing and distribution of branded and non-branded vaping hardware products in both the nicotine and cannabis spaces, as well as the assembly of nicotine pouch products and other next-generation nicotine products. 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.

Previous wording

We sell our e-cigarette (or nicotine) products globally, in markets where we are legally permitted to do so. To date, our nicotine products are marketed under the “Aspire” brand name and are sold primarily through our expansive distribution network. However, we are expanding our international presence via the launch of nicotine products under the Ispire platform. These products have started to be launched under licensing arrangements with the owners of selected partner brands.

Current wording

We sell our e-cigarette (or nicotine) products globally, in markets where we are legally permitted to do so. To date, our nicotine products are marketed under the “Aspire” brand name and are sold primarily through our expansive distribution network.

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 $18.0 million and $5.9 million at June 30, 2025 and 2024, 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 $26.1 million and $18.0 million at June 30, 2026 and 2025, respectively.

Previous wording

Our revenue decreased by $24,414,387, or 16.1%, from $151,908,691 for the year ended June 30, 2024, to $127,494,304 for the year ended June 30, 2025. The decrease in revenue is the combined effect of (i) decreases in product sales in the United States of $30.5 million from $63.1 million for the year ended June 30, 2024, to $32.6 million for the year ended June 30, 2025, (ii) decreases in product sales in the Asia Pacific (excluding PRC) of $5.3 million from $17.6 million for the year ended June 30, 2024, to $12.3 million for the year ended June 30, 2025, (iii) increases in sales of vaping products in Europe of $8.8 million from $65.3 million for the year ended June 30, 2024 to approximately $74.1 million for the year ended June 30, 2025, and (iv) increases in sales of vaping products in Africa and South America of $2.5 million from $6.0 million for the year ended June 30, 2024 to approximately $8.5 million for the year ended June 30, 2025.

Current wording

Our revenue decreased by $31,479,694, or 24.7%, from $127,494,304 for the year ended June 30, 2025, to $96,014,610 for the year ended June 30, 2026. The decrease in revenue is the combined effect of (i) decreases in product sales in the United States of $17.4 million from $32.6 million for the year ended June 30, 2025, to $15.1 million for the year ended June 30, 2026, due to a tightening of our sales strategy which required higher upfront deposits and stricter payment terms, subsequently leading to a reduced participation from lower-tier accounts (ii) decreases in sales of vaping products in Europe of $12.7 million from $74.1 million for the year ended June 30, 2025 to approximately $61.4 million for the year ended June 30, 2026, which reflects European regulatory uncertainties regarding disposable bans and flavor restrictions, which led distributors to adopt a cautious purchasing strategy and (iii) decreases in product sales in the Asia Pacific (excluding PRC) of $1.4 million from $12.3 million for the year ended June 30, 2025, to $10.9 million for the year ended June 30, 2026.

Previous wording

Cost of revenue mainly consists of cost of purchases of vaping products, that are mostly purchased from Shenzhen Yi Jia. Cost of revenue decreased by $17,281,612, or 14.2%, from $122,126,245 for the year ended June 30, 2024, to $104,844,633 for the year ended June 30, 2025. The decrease in cost of revenue is in line with decrease in sales.

Current wording

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 $21,128,070, or 20.2%, from $104,844,633 for the year ended June 30, 2025, to $83,716,563 for the year ended June 30, 2026. The decrease in cost of revenue was primarily driven by lower sales volumes mostly from North American and European markets, partially offset by a $2.0 million increase in inventory write-downs, from $0.8 million for the year ended June 30, 2025 to $2.8 million for the year ended June 30, 2026.

Previous wording

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%.

Current wording

Gross profit decreased by $10,351,624, or 45.7%, from $22,649,671 for the year ended June 30, 2025, to $12,298,047 for the year ended June 30, 2026, while our gross margin decreased from 17.8% to 12.8%.

Previous wording

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. 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.

Current wording

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 $10,873,473, or 36.2%, from $30,025,334 for the year ended June 30, 2025, to $19,151,861 for the year ended June 30, 2026. The decrease was primarily due to (i) a decrease of approximately $5.0 million of payroll expense due to cutting headcount and cost optimization plan in North America, (ii) a decrease of approximately $2.5 million of legal and professional fee from cost optimization plan by North America, (iii) a decrease of approximately $2.2 million of stock-based compensation expense due to cutting headcount in streamline operations by North America and (iv) a decrease of research and development expenses of approximately $0.2 million by North America.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

Interest income increased by $256,501, from $86,996 for the year ended June 30, 2025, to $343,497 for the year ended June 30, 2026. The increase in interest income is mainly due to increase in interest charged on late fees by North America.

Previous wording

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.

Current wording

Exchange gain/(loss), net increased by $403,011, or 465.5%, from net exchange loss of $86,570 for the year ended June 30, 2025 to net exchange gain of $316,441 for the year ended June 30, 2026.

Previous wording

Other (expense) income mainly consists of interest expense, loss on equity method investment, credits from company credit card, rental income and other miscellaneous expenses. Other (expense) income decreased by $300,494, or 265.0%, from net income of $113,405 for the year ended June 30, 2024 to net expense of $187,089 for the year ended June 30, 2025. The decrease was mainly due to increase in interest expense of $0.2 million.

Current wording

Other income, net mainly consists of loss on equity method investment, credits from company credit card, administrative fee income and other miscellaneous expenses. Other income, net increased by $248,417, or 14,830.9%, from net income of $1,675 for the year ended June 30, 2025 to net income of $250,092 for the year ended June 30, 2026. The increase is mainly due to increasing other income from IKE for charging administrative fees.

Previous wording

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.

Current wording

As a result of these factors, total other income (expense), net increased by $722,525, from other expense, net of $186,663 for the year ended June 30, 2025 to other income, net of $535,862 for the year ended June 30, 2026.

Previous wording

Income taxes decreased by $78,342 or 6.1%, from $1,282,046 for the year ended June 30, 2024 to $1,203,704 for the year ended June 30, 2025. We had a consolidated net loss for both year ended June 30, 2025 and 2024, which was the combined effect of a profit by Aspire Science, a loss by Aspire North America and Ispire Malaysia. The profit from Aspire Science resulted in a current tax expense. The increase in valuation allowance reflects our view that the taxable income in the future will not be sufficient to utilize the carryforward loss.

Current wording

Income taxes decreased slightly by $56,322 or 4.7%, from $1,203,704 for the year ended June 30, 2025 to $1,147,382 for the year ended June 30, 2026. We had a consolidated net loss for both year ended June 30, 2026 and 2025, 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 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.

Current wording

As a result of the foregoing, net loss decreased by $6,036,182, from net loss of $39,240,226, or loss of $0.69 per share (basic and diluted), for the year ended June 30, 2025 to a net loss of $33,204,044, or loss of $0.58 per share (basic and diluted), for the year ended June 30, 2026.

Previous wording

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.

Current wording

Net cash flow used in operating activities for the year ended June 30, 2026, of $0.6 million, reflected our net loss of $33.2 million, primarily adjusted approximately as follows: add back of impairment of account receivable of $20.7 million, add back of share-based compensation expense of $3.5 million, add back of right-of-use assets amortization of $1.8 million, add back of inventory impairment of $2.8 million, add back of loss from equity method investment of $0.9 million, a decrease in accounts receivable of $6.5 million, offset by a decrease in contract liabilities of $3.0 million, and advances to a related party of approximately $0.5 million.

Previous wording

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.

Current wording

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, primarily adjusted approximately 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.

Previous wording

Net cash flow generated from investing activities for the year ended June 30, 2024, of $3.0 million reflected primarily maturity of short term investment of $9.1 million offset by purchase of cost other investment of $2.0 million, purchase of property, plant and equipment of $2.0 million, acquisition of intangible assets of $1.2 million and purchase of equity method investment of $1.0 million.

Current wording

Net cash flow used in investing activities for the year ended June 30, 2026, of approximately $3.1 million reflected primarily the repayment of joint venture investment payable of approximately $2.3 million, purchase of property, plant and equipment of approximately $0.3 million, and acquisition of intangible assets of $0.4 million.

Previous wording

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.

Current wording

Net cash flow used in investing activities for the year ended June 30, 2025, of approximately $5.2 million reflected primarily the repayment of joint venture investment payable of approximately $3.2 million, purchase of property, plant and equipment of approximately $1.1 million and acquisition of intangible assets of approximately $0.9 million.

Previous wording

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.

Current wording

Net cash flow generated from financing activities for the year ended June 30, 2025, of approximately $1.9 million reflected primarily proceeds from borrowing of approximately $2.1 million, offset by repayment of borrowing of approximately $0.2 million.

Previous wording

To date, we have financed our operations primarily through cash flow from operations and working capital loans from our major stockholders, who are our co-chief executive officer and his wife, when necessary. We plan to support our future operations primarily from cash generated from our operations and cash on hand. As of the date of this Annual Report, we believe that our current cash and cash flows provided by operating activities, and the net proceeds from our equity offerings and borrowing will be sufficient to meet our working capital needs in the next 12 months. If we experience an adverse operating environment or incur unanticipated capital expenditure requirements, or if we decide to accelerate our growth, then additional financing may be required. We cannot give any assurance that additional financing will not be required or, if required, would be available on favorable terms if at all. Such financing may include the use of additional debt or the sale of additional equity securities. Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in dilution to our stockholders which may be substantial.

Current wording

To date, we have financed our operations primarily through cash on hand and working capital loans from our major stockholders, who are our chief executive officer and his wife, when necessary. We plan to support our future operations primarily from cash generated from our operations and cash on hand. As of the date of this Annual Report, we believe that our current cash and cash flows provided by operating activities, and the net proceeds from our equity offerings and borrowing will be sufficient to meet our working capital needs in the next 12 months. If we experience an adverse operating environment or incur unanticipated capital expenditure requirements, or if we decide to accelerate our growth, then additional financing may be required. We cannot give any assurance that additional financing will not be required or, if required, would be available on favorable terms if at all. Such financing may include the use of additional debt or the sale of additional equity securities. Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in dilution to our stockholders which may be substantial.

Previous wording

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.

Current wording

As of June 30, 2026 and 2025, we had contract liabilities of $1,886,012 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

As of June 30, 2025, we have a borrowing balance of $1,952,127 outstanding. The maturities of our borrowing are as follows:

Current wording

As of June 30, 2026, we have a borrowing balance of $805,361 outstanding, and the borrowing will mature within one year.

Previous wording

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.

Current wording

As of June 30, 2026, we recorded an unpaid $3.5 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.