Ispire Technology Inc.
For the period ended Sep 30, 2026. Filed Nov 9, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 9, 2026
ISPR$1.67+7.7%Stored close · as of Nov 9, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001213900-26-053368
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-09.
0001213900-26-117548
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 90 previous paragraphs and 88 current paragraphs.
38 unchanged; 25 reworded; 24 added; 27 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 15 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
The following discussion and analysis of our financial condition and results of operations may contain predictions, estimates, and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under the sections entitled “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” in this Quarterly Report and in our Annual Report on Form 10-K for the fiscal year ended June 30, 2026. These risks could cause our actual results to differ materially from any future performance suggested below.
Current report
Co-Chief Executive Officer Transition
Current report
On July 16, 2026, the Company’s Board of Directors (the “Board”) modified the title of Michael Wang, to CEO of Aspire North America, the Company’s wholly owned subsidiary. As a result, Mr. Wang ceased being the Co-Chief Executive Officer of the Company and Tuanfang Liu was made the sole Chief Executive Officer of the Company.
Current report
President Appointment
Current report
On August 11, 2026, the Company’s Board appointed Mr. Steven Przybyla as the Company’s President with immediate effect. In addition to his role as President, Mr. Przybyla also serves as the Company’s Chief Legal Officer and Secretary.
Current report
Gross profit decreased by $691,986, or 13.4%, from $5,146,772 for the three months ended September 30, 2025, to $4,454,786 for the three months ended September 30, 2026, while our gross margin decreased from 17.0% to 16.2%.
Current report
The decrease in gross margin was primarily due to (i) competitive pricing pressures that lowered selling prices on certain products and (ii) an unfavorable shift in revenue mix, as our higher-margin cannabis vaping products sales decreased from 17.2% to 15.0% of total revenue for the three months ended September 30, 2025 and 2026, respectively.
Current report
Operating expenses increased by $2,761,722 or 35.2%, from $7,842,081 for the three months ended September 30, 2025, to $10,603,803 for the three months ended September 30, 2026.
Current report
Credit loss expenses increased by $2,988,306, or 169.4%, from $1,764,252 for the three months ended September 30, 2025, to $4,752,558 for the three months ended September 30, 2026. The increase was mainly due to lack of improvement in long-aged customer balances under our roll-rate model.
Current report
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 increased by $338,137, or 7.5%, from $4,512,985 for the three months ended September 30, 2025, to $4,851,122 for the three months ended September 30, 2026. The increase was primarily from combined effect of (i) an increase of approximately $0.6 million of professional fee from Aspire HK, and (ii) a decrease of approximately $0.3 million of payroll expense from cost optimization plan in North America.
Current report
Interest income decreased by $11,322, or 11.9%, from $95,472 for the three months ended September 30, 2025, to $84,150 for the three months ended September 30, 2026. The decrease in interest income is mainly due to decrease in interest charged on late fees by North America.
Current report
Interest expense decreased by $49,753, or 44.4% from $112,176 for the three months ended September 30, 2025, to $62,423 for the three months ended September 30, 2026. The decrease in interest expense is mainly due to less interest charged on loan balances for the three months ended September 30, 2026 from Aspire North America.
Current report
Exchange gain, net increased by $62,167, or 634.2%, from net exchange gain of $9,802 for the three months ended September 30, 2025 to net exchange gain of $71,969 for the three months ended September 30, 2026.
Current report
We account for income taxes under ASC 740. 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.
Current report
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. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
Current report
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. 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 three months ended September 30, 2026 and 2025, we did not incur any interest or penalties related to an uncertain tax position. We do not believe that there were any uncertain tax positions as of September 30, 2026 and 2025.
Current report
Critical Accounting Estimates
Current report
Revenue recognition
Current report
We sell our vaping products to customers and recognize revenue in accordance with the guidance of ASC 606, Revenue from Contracts with Customers. We record a sales return asset and a corresponding refund liability based on historical return rates applied to sales generated within the trailing three-month period, as returns are highly unlikely to occur beyond this timeframe. The estimation of return rates requires significant management judgment and historical analysis. These estimates are sensitive to consumer acceptance, product quality, and shifting market demand. Should actual customer return behaviors deviate from our historical patterns, or if there are unexpected changes in the return windows, our estimated refund liabilities would be adjusted, which could materially impact our reported net revenues and gross profit during the period.
Current report
Allowance for credit losses
Current report
We estimate allowance for credit losses under Accounting Standards Update 2016-13 “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”, by evaluating historical collection experience, aging of the receivables, economic environment, and the credit history and financial conditions of the customers. This process requires management to make forward-looking assumptions regarding the collectability of accounts receivable portfolios. Our forward-looking estimates are highly dependent on the stability of our customer base and macro-level market conditions. For instance, the tightening of our commercial sales strategy in North America during the fiscal year reduced current-period credit risk for newly boarded accounts; however, this benefit was dynamically balanced against persistent risks identified within certain long-aged customer balances. If the creditworthiness of our customers deteriorates beyond our forecasted expectations, additional credit loss expenses would be required, adversely affecting our operating results.
Current report
Recent Accounting Pronouncements
Current report
The discussion of the recent accounting pronouncements contained in our consolidated financial statements, “Summary of Significant Accounting Policies,” is incorporated herein by reference.
Current report
Emerging Growth Company
Removed paragraphs (27)
Previous report
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this report. See “Cautionary Forward-Looking Statements.” Actual results could differ materially from those discussed below.
Previous report
Malaysian Licensure
Previous report
On March 17, 2026, Ispire Malaysia received full and final licensure from the Ministry of Investment, Trade and Industry of Malaysia (“MITI”) to manufacture nicotine vapor products in the country of Malaysia. This full and final licensure replaces Ispire Malaysia’s interim license issued in May 2025. Ispire Malaysia is the only business in the country of Malaysia with such nicotine vapor manufacturing license, and we are now in the process of securing orders and scheduling production for both nicotine vapor products (expected to commence production at the end of June 2026) and nicotine pouch products.
Previous report
We made the decision not to manufacture any nicotine vapor hardware in Malaysia until the full and final license was issued. Now that such license is secured, the Ispire Malaysia and our business development teams are fielding a backlog of customer demand for nicotine vapor production in Malaysia. We believe our production costs will be comparable to production in China, and will continue to improve as the Ispire Malaysia business scales in volume and capacity. We will also work to establish local supply chain partnerships, which we believe will further bring down the costs of nicotine vapor product manufacturing, aiding in improving competitiveness and our ability to obtain increased profit margins.
Previous report
The Ispire Malaysia business has also been positively impacted by policy shifts from the Chinese government. On April 1, 2026, China cancelled the 13% export VAT rebate for nicotine-containing, non-combustion inhalation products. This rebate cancellation caused an immediate effective price increase for exporting nicotine vapor products from China, which we believe has directly improved the global price competitiveness for Ispire Malaysia’s nicotine vapor manufacturing business.
Previous report
Further, Chinese tobacco authorities have begun requiring nicotine vapor manufacturers in the country to supply information on U.S. FDA PMTA Submission Tracking Numbers (“STNs”) for historical nicotine vapor exports to the U.S. made in calendar year 2025. This development signals enhanced regulatory compliance requirements for Chinese vapor manufacturers which previously did not exist, adding in enhanced compliance costs for shipments to the U.S. These two developments suggest to us that there will be further tax and regulatory headwinds facing China’s domestic nicotine vapor manufacturing industry in the coming months and years, potentially making our Malaysian nicotine vapor manufacturing business more appealing to global brands and Chinese businesses looking to diversify their supply chain.
Previous report
Management expects further improvement in operating cash flow during 2026, driven by (i) continued quarterly operating expense reductions in U.S. operations, (ii) revenue generation in Malaysia, (iii) continued cash generation from Hong Kong operations. Based on these initiatives, the Company expects to achieve positive cash flow in the first half of fiscal year 2027. However, the timing and extent of such improvement remain subject to execution and market conditions.
Previous report
Ike Tech LLC Business Developments
Previous report
On March 11, 2026, the U.S. Food and Drug Administration (the “FDA”) issued draft guidance outlining evidentiary expectations for Premarket Tobacco Product Applications (“PMTAs”) for flavored electronic nicotine delivery systems (“ENDS”), which could provide a lawful pathway for flavored vaping products, the market for which is largely comprised of illicit products. The guidance marks the first time the FDA has formally outlined a framework for evaluating flavored ENDS products, recognizing that device-level access technologies, or device access restrictions (“DAR”), may factor into whether a product meets the “appropriate for the protection of public health” standard for PMTA authorization. The draft guidance highlights DAR technologies such as biometric authentication, geofencing, and continuous age verification as potential safeguards designed to prevent underage use of ENDS devices. The FDA also emphasized that traditional safeguards such as local age restrictions and point-of-sale verification that do not directly prevent youth use may not, when employed alone, sufficiently reduce youth use.
Previous report
We remain an advocate for technology-driven youth prevention solutions. As previously disclosed in our Current Report on Form 8-K filed with the SEC on April 11, 2024, on April 5, 2024, the Company, Chemular Inc., a Michigan corporation, and Touch Point Worldwide, Inc. d/b/a/ Berify, a Delaware corporation, agreed to form Ike Tech LLC (“IKE”) as a joint venture between the entities that would be in the business of licensing, owning and developing an industry-standard biometric, blockchain-based, point of use age-verification solution for vapor (e-cigarette) devices in the U.S. market. We believe that the FDA guidance is a positive development for IKE and that IKE is well positioned to capitalize on the creation of a pathway to a lawful market for flavored vaping products.
Previous report
Since its founding, IKE has developed two core technology offerings: (i) NFC/RFID smart tags with unique block chain TokenIDs for embedding in packaging, providing its customers’ packaging with a unique digital identity, and (ii) Bluetooth Low Energy (“BLE”) chips embedded in devices such as ENDS that enable live communication with mobile applications and provide services such as continuous age verification, device activation and control, and secure user authentication ((i) and (ii) together, the “Technology”). IKE’s Technology is supported by a secure open ecosystem built on blockchain validation and open standards designed to enable reliable authentication across devices and markets.
Previous report
IKE exclusively licenses in the nicotine vapor field or owns 11 issued patents related to its Technology to date, and in 2025, IKE submitted the first-ever component PMTA to the FDA for a standalone, interoperable age-verification technology designed for integration across ENDS devices. The platform combines BLE chips, biometric authentication, and block-chain secured identity verification to ensure that only verified adult users can activate a device. In addition to age verification, IKE’s Technology can also support product authentication and anti-counterfeiting capabilities, helping manufacturers and regulators identify illicit or counterfeit devices that bypass regulatory safeguards, evade taxes, and undermine consumer safety. IKE’s Technology is currently engaged in a pilot and evaluation program operating within a test environment with a large strategic collaborator, as well as pilot programs with several additional third-party vapor product manufacturers and brands.
Previous report
Our revenue decreased by $38,033,957, or 35.4%, from $107,356,898 for the nine months ended March 31, 2025, to $69,322,941 for the nine months ended March 31, 2026. The decrease in revenue is the combined effect of (i) decreases in sales of vaping products in North America of $19.1 million from $29.4 million for the nine months ended March 31, 2025 to approximately $10.4 million for the nine months ended March 31, 2026 largely due to shorter credit terms in the United States with a focus on higher quality customers, and (ii) decreases in product sales in Europe of $11.9 million from $59.2 million for the nine months ended March 31, 2025, to $47.3 million for the nine months ended March 31, 2026 largely due to market conditions being competitive, and the timing of distribution continuing to evolve, and (iii) decreases in sales in other regions, mainly Africa, of $4.3 million from $8.3 million for the nine months ended March 31, 2025, to $4.0 million for the nine months ended March 31, 2026, (iv) decreases in sales to Asia Pacific regions of $2.8 million from $10.5 million for the nine months ended March 31, 2025 to approximately $7.7 million for the nine months ended March 31, 2026.
Previous report
Cost of revenue decreased by $28,473,401, or 32.7%, from $87,184,044 for the nine months ended March 31, 2025, to $58,710,643 for the nine months ended March 31, 2026. The decrease in cost of revenue is in line with decrease in sales.
Previous report
Gross profit decreased by $2,784,980, or 58.3%, from $4,775,905 for the three months ended March 31, 2025, to $1,990,925 for the three months ended March 31, 2026, while our gross margin decreased from 18.2% to 10.7%. The decrease in gross margin was primarily due to changes in product mix with less higher margin products being sold, and additional inventory provision accrued during the three months ended March 31, 2026.
Previous report
Gross profit decreased by $9,560,556, or 47.4%, from $20,172,854 for the nine months ended March 31, 2025, to $10,612,298 for the nine months ended March 31, 2026, while our gross margin decreased from 18.8% to 15.3%. The decrease in gross margin was primarily due to changes in product mix with less higher margin products being sold during the nine months ended March 31, 2026.
Previous report
Operating expenses decreased by $3,886,686 or 25.3%, from $15,361,346 for the three months ended March 31, 2025 to $11,474,660 for the three months ended March 31, 2026. Operating expenses decreased by $13,715,010 or 31.6%, from $43,381,219 for the nine months ended March 31, 2025 to $29,666,209 for the nine months ended March 31, 2026.
Previous report
Sales and marketing expenses decreased by $2,577,359, or 38.4%, from $6,710,438 for the nine months ended March 31, 2025 to $4,133,079 for the nine months ended March 31, 2026. The decrease in sales and marketing expenses was primarily due to a decrease in (i) stock-based compensation expense of $0.9 million comparing the nine months ended March 31, 2026 and 2025, (ii) decrease in travelling expense of $0.5 million as a result of less travelling activities during the nine months ended March 31, 2026, (iii) decrease in brand marketing activities of $0.8 million comparing the nine months ended March 31, 2026 and 2025, and (iv) decrease in trade show costs of $0.3 million comparing the nine months ended March 31, 2026 and 2025.
Previous report
Credit loss expenses decreased by $539,191, or 8.8%, from $6,103,688 for the three months ended March 31, 2025, to $5,564,497 for the three months ended March 31, 2026. 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 March 31, 2026.
Previous report
Credit loss expenses decreased by $1,851,817, or 13.8%, from $13,389,767 for the nine months ended March 31, 2025, to $11,537,950 for the nine months ended March 31, 2026. 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 March 31, 2026.
Previous report
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 $2,782,875, or 36.6%, from $7,601,131 for the three months ended March 31, 2025, to $4,818,256 for the three months ended March 31, 2026. The decrease was primarily due to (i) decrease in payroll of $1.3 million comparing the three months ended March 31, 2026 and 2025 as a result of decrease in headcount of North America, (ii) decrease in stock-based compensation expense of $0.5 million for the three months ended March 31, 2026 as a result of drop in headcount in North America and (iii) decrease in legal and professional fees of $0.6 million for the three months ended March 31, 2026 as a result of cost reduction in North America.
Previous report
General and administrative expenses decreased by $9,285,834, or 39.9%, from $23,281,014 for the nine months ended March 31, 2025, to $13,995,180 for the nine months ended March 31, 2026. The decrease was primarily due to (i) decrease in payroll of $4.1 million comparing the nine months ended March 31, 2026 and 2025 as a result of decrease in headcount of North America, (ii) decrease in legal and professional fees of $1.6 million for the nine months ended March 31, 2026 as a result of cost reduction in North America, (iii) decrease in stock-based compensation expense of $1.3 million for the nine months ended March 31, 2026 as a result of drop in headcount in North America, (iv) decrease of $3 million of miscellaneous administrative expenses from North America as a result of drop in headcount and cost reduction for the nine months ended March 31, 2026, offset by (v) $0.7 million increase of general administrative expenses from Ispire Malaysia from growth of operations during the nine months ended March 31, 2026.
Previous report
Interest income increased by $49,491, from $3,480 for the three months ended March 31, 2025, to $52,971 for the three months ended March 31, 2026. Interest income increased by $190,044, from $63,321 for the nine months ended March 31, 2025, to $253,365 for the nine months ended March 31, 2026. The increase in interest income is mainly due to charging late fees from customers.
Previous report
Interest expense increased by $51,569, from $35,646 for the three months ended March 31, 2025, to $87,215 for the three months ended March 31, 2026. Interest expense increased by $239,399, from $60,183 for the nine months ended March 31, 2025, to $299,582 for the nine months ended March 31, 2026. The increase in interest expense is mainly due to borrowing engaged in February 2025.
Previous report
Exchange gain, net changes by $54,635, or 224.5%, from net exchange gain $24,341 for three months ended March 31, 2025, to net exchange loss of $30,294 for three months ended March 31, 2026. Exchange gain, net changes by $372,992, or 361.3%, from net exchange loss $103,247 for nine months ended March 31, 2025, to net exchange gain of $269,745 for nine months ended March 31, 2026.
Previous report
Net cash flow provided by financing activities for the nine months ended March 31, 2025 of $2.3 million reflected primarily proceeds from long term debt of $2.3 million, offset by common stock repurchase of $60 thousand.
Previous report
The Company had no impairment of operating lease right-of-use assets during the three and nine months ended March 31, 2026 and 2025.
Reworded paragraphs (25)
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
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. 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. Business – Regulation” and “Item 1A. Risk Factors” above for our robust discussion of this topic.
Current wording
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. 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. Business – Regulation” and “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2026 for our robust discussion of this topic.
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 $21.5 million and $18.0 million at March 31, 2026 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 $30.3 million and $26.1 million at September 30, 2026 and June 30, 2026, respectively.
Previous wording
Our failure or inability to collect accounts receivable when due results from a number of factors, including (i) our customer’s failure to pay as a result of adverse economic conditions affecting the customer’s cash flow; (ii) our failure to implement effective collection efforts; and (iii) disputes over contract terms, product quality or delays in delivery. 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. 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.
Current wording
Our failure or inability to collect accounts receivable when due results from a number of factors, including (i) our customer’s failure to pay as a result of adverse economic conditions affecting the customer’s cash flow; (ii) our failure to implement effective collection efforts; and (iii) disputes over contract terms, product quality or delays in delivery. Due to federal status of cannabis and the uncertainty of adverse economic conditions in cannabis industry, we have focused more on nicotine business in the past two years. 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.
Previous wording
The following table sets forth a summary of our unaudited condensed consolidated statements of operations and comprehensive loss for the three and nine months ended March 31, 2026 and 2025 (dollars in thousands except per share amounts).
Current wording
The following table sets forth a summary of our unaudited condensed consolidated statements of operations and comprehensive loss for the three months ended September 30, 2026 and 2025 (dollars in thousands except per share amounts).
Previous wording
Our revenue decreased by $7,505,224, or 28.7%, from $26,190,725 for the three months ended March 31, 2025, to $18,685,501 for the three months ended March 31, 2026. The decrease in revenue is the combined effect of (i) decreases in product sales in the United States of $5.5 million from $8.8 million for the three months ended March 31, 2025, to $3.3 million for the three months ended March 31, 2026 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 $1.4 million from $13.2 million for the three months ended March 31, 2025 to approximately $11.8 million for the three months ended March 31, 2026 largely due to market conditions being competitive, and the timing of distribution continuing to evolve, and (iii) decreases in sales to other regions of $0.4 million from $1.2 million for the three months ended March 31, 2025 to approximately $0.8 million for the three months ended March 31, 2026 and (iv) decreases in sales of vaping products in Asia Pacific of $0.2 million from $3.0 million for the three months ended March 31, 2025 to approximately $2.8 million for the three months ended March 31, 2026.
Current wording
Our revenue decreased by $2,808,338, or 9.3%, from $30,350,884 for the three months ended September 30, 2025, to $27,542,546 for the three months ended September 30, 2026. The decrease in revenue is the combined effect of (i) decreases in sales of vaping products in Europe of $5.4 million from $20.7 million for the three months ended September 30, 2025 to approximately $15.3 million for the three months ended September 30, 2026, which reflects European regulatory uncertainties regarding bans on disposable vaping products and flavor restrictions, which led distributors to adopt a cautious purchasing strategy; (ii) decreases in product sales in the Asia Pacific (excluding PRC) of $1.3 million from $2.4 million for the three months ended September 30, 2025, to $1.1 million for the three months ended September 30, 2026 due tomore stringent regulatory requirements from Malaysia, Korea and Vietnam; (iii) decreases in product sales in the United States of $0.6 million from $5.5 million for the three months ended September 30, 2025, to $4.8 million for the three months ended September 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; offset by an increase in product sales in the other regions, mainly from South America of $4.5 million from $1.8 million for the three months ended September 30, 2025, to $6.3 million for the three months ended September 30, 2026.
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 $4,720,244, or 22.0%, from $21,414,820 for the three months ended March 31, 2025, to $16,694,576 for the three months ended March 31, 2026. The decrease in cost of revenue is primarily attributable to the decrease in sales, partially offset by additional inventory provisions accrued.
Current wording
Cost of revenue mainly consists of cost of purchases of vaping products, which are mostly purchased from Shenzhen Yi Jia. Cost of revenue decreased by $2,116,352, or 8.4%, from $25,204,112 for the three months ended September 30, 2025, to $23,087,760 for the three months ended September 30, 2026. The decrease in cost of revenue was primarily in line with decrease in sales.
Previous wording
Sales and marketing expenses decreased by $564,620, or 34.1%, from $1,656,527 for the three months ended March 31, 2025 to $1,091,907 for the three months ended March 31, 2026. The decrease in sales and marketing expenses was primarily due to decrease in brand marketing activities of $0.5 million from Aspire Science comparing the three months ended March 31, 2026 and 2025.
Current wording
Sales and marketing expenses decreased by $564,721, or 36.1%, from $1,564,844 for the three months ended September 30, 2025, to $1,000,123 for the three months ended September 30, 2026. The decrease in sales and marketing expenses was primarily due to a decrease in marketing expenses of approximately $0.6 million from Aspire Science as a reduction of marketing activities.
Previous wording
Other income (expense), net includes interest income, interest expense, exchange loss (gain), net and other income (expense).
Current wording
Other income (expense), net includes interest income, interest expense, exchange gain, net and other income (expense).
Previous 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 changed by $288,936, or 335.0%, from net expense of $86,239 for the three months ended March 31, 2025 to net income of $202,697 for the three months ended March 31, 2026. Other income, net changed by $263,594, or 550.2%, from net income of $47,906 for the nine months ended March 31, 2025 to net income of $215,688 for the nine months ended March 31, 2026. The increase is mainly due to increasing other income from IKE for charging administrative fees.
Current wording
Other income/expense, net mainly consists of loss on equity method investment, credits from company credit card, administrative fee income and other miscellaneous expenses. Other expense, net decreased by $24,564, or 34.8%, from net expense of $70,583 for the three months ended September 30, 2025 to net expense of $46,019 for the three months ended September 30, 2026. The decrease of $0.02 million was driven by a $0.06 million increase in the share of net loss from joint ventures, partially offset by a $0.04 million increase in rental income from a sublessee.
Previous wording
As a result of these factors, total other income (expense), net changed by $232,223, from other expense, net of $94,064 for three months ended March 31, 2025, to other income, net of $138,159 for three months ended March 31, 2026. Total other income (expense), net changed by $587,231, from other expense, net of $148,015 for nine months ended March 31, 2025, to other income, net of $ 439,216 for nine months ended March 31, 2026.
Current wording
As a result of these factors, total other income (expense), net increased by $125,162, or 161.6%, from other expense, net of $77,485 for the three months ended September 30, 2025 to other income, net of $47,677 for the three months ended September 30, 2026.
Previous wording
Income taxes increased slightly by $417 or 0.2%, from $176,990 for three months ended March 31, 2025, to $ 177,407 for three months ended March 31, 2026. Income taxes decreased by $323,712 or 29.6%, from $1,093,774 for nine months ended March 31, 2025, to $770,062 for nine months ended March 31, 2026. We had a consolidated net loss for both three and nine months ended March 31, 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.
Current wording
Income taxes decreased by $149,432 or 30.7%, from $486,069 for the three months ended September 30, 2025 to $336,637 for the three months ended September 30, 2026. We had a consolidated net loss for both three months ended September 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 decreased by $1,333,512, from net loss of $10,856,495, or $(0.19) per share, for the three months ended March 31, 2025, to a net loss of $9,522,983, or $(0.17) per share, for the three months ended March 31, 2026. Net loss decreased by $5,065,397, from net loss of $24,450,154, or $(0.43) per share, for the nine months ended March 31, 2025, to a net loss of $19,384,757, or $(0.34) per share, for the nine months ended March 31, 2026.
Current wording
As a result of the foregoing, net loss increased by $3,179,114, or 97.6%, from net loss of $3,258,863, or loss of $0.06 per share (basic and diluted), for the three months ended September 30, 2025 to a net loss of $6,437,977, or loss of $0.11 per share (basic and diluted), for the three months ended September 30, 2026.
Previous wording
The following table sets forth information as to consolidated cash flow information for the nine months ended March 31, 2026 and 2025 (dollars in thousands).
Current wording
The following table sets forth information as to consolidated cash flow information for the three months ended September 30, 2026 and 2025 (dollars in thousands).
Previous wording
Net cash flow used in operating activities for the nine months ended March 31, 2026, of $3.2 million, reflected our net loss of $19.4 million, adjusted primarily as follows: add back of impairment of account receivable of $11.5 million, add back of share-based compensation expense of $2.8 million, add back of inventory impairment expense of $2.4 million, a decrease in accounts receivable of $6.8 million, offset by a decrease in accounts payable and accounts payable – related party of $3.4 million, a decrease in contract liabilities of $1.8 million, an increase in prepaid expenses and other current assets of $1.3 million, an increase in inventories of $1.2 million.
Current wording
Net cash flow used in operating activities for the three months ended September 30, 2026, of $1.6 million, reflected our net loss of $6.4 million, primarily adjusted approximately as follows: add back of impairment of account receivable of $4.8 million, add back of share-based compensation expense of $0.8 million, add back of right-of-use assets amortization of $0.3 million, add back of inventory impairment of $0.4 million, a decrease in accounts payable of $4.3 million, offset by a decrease in accounts receivable of $1.6 million, a decrease in prepaid expense and other current assets of $0.5 million, a decrease in prepaid provisional tax of approximately $0.4 million and an increase from contract liabilities of $0.3 million.
Previous wording
Net cash flow used in operating activities for the nine months ended March 31, 2025 of $12.1 million, reflected our net loss of $24.4 million, adjusted primarily as follows: an add-back of credit loss expenses of $13.4 million, an add-back of stock based compensation expense of $4.9 million, increase in accounts payable-related party of $11.0 million, offset by an increase in accounts receivable of $14.1 million, an increase in accrued liabilities and other payables of $1.0 million, and an increase in inventories of $1.5 million.
Current 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.
Previous wording
Net cash flow used in investing activities for the nine months ended March 31, 2026, of $2.1 million reflected primarily investment in joint venture of $1.3 million, capitalized costs of patents of $0.5 million and purchase of property, plant and equipment of $0.3 million.
Current wording
Net cash flow used in investing activities for the three months ended September 30, 2026, of approximately $1.8 million reflected primarily the repayment of joint venture investment payable of approximately $1.6 million.
Previous wording
Net cash flow used in investing activities for the nine months ended March 31, 2025 of $1.7 million reflected primarily purchase of property, plant and equipment of $0.1 million, acquisition of intangible assets of $0.8 million and payment made for long term investment of $0.8 million.
Current 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.
Previous wording
Net cash flow used in financing activities for the nine months ended March 31, 2026, of $1.0 million reflected primarily repayment of borrowing of $1.0 million, and common stock repurchase of $45 thousand.
Current wording
Net cash flow used in financing activities for the three months ended September 30, 2026, of approximately $0.3 million reflected primarily repayment of borrowing of $0.3 million.
Previous wording
To date, we have financed our operations primarily through cash flow from operations and working capital accounts payable 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 Quarterly 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 Quarterly 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 March 31, 2026 and June 30, 2025, we had contract liabilities of $3,043,470 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 September 30, 2026 and June 30, 2026, we had contract liabilities of $2,188,615 and $1,886,012, 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 March 31, 2026, we have a borrowing balance of $1,092,052 outstanding, and the borrowing will mature within one year.
Current wording
As of September 30, 2026, we have a borrowing balance of $518,670 outstanding, and the borrowing will mature within one year.
Previous wording
As of March 31, 2026, we recorded an unpaid $4.5 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 September 30, 2026, we recorded an unpaid $2.0 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 Inc. (formerly IKE Tech LLC).
Previous 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.
Current wording
Other than as disclosed elsewhere in this Form 10-Q, 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.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Net cash flow used in financing activities for the three months ended September 30, 2025, of approximately $0.3 million reflected primarily repayment of borrowing of $0.3 million.