iPower Inc.

Previous wording

******Driven by technologyand data, iPower Inc. (“iPower,” “we,” “us,” or “the Company”)is an online supplier of consumer goods, including hydroponics equipment, general gardening supplies and consumer home goods. Through the operations of our e-commerce platforms and channel partners, and our combined 121,000 sq. ft. of fulfillment centers in Rancho Cucamonga and Los Angeles, California, we believe we are one of the leading marketers, distributors and retailers in the consumer gardening and home goods categories, based on management’s estimates. Our core strategy continues to focus on expanding our geographic reach across the United States and internationally through organic growth, both in terms of expanding customer base as well as brand and product development. iPower has developed a set of methodologies driven by proprietary data formulas to effectively bring products to market and sales.

Current wording

Driven bytechnologyand data, iPower Inc. (“iPower,” “we,” “us,” or “the Company”)is an online supplier of consumer goods, including hydroponics equipment, general gardening supplies, and consumer home goods. Through the operations of our e-commerce platforms and channel partners, and our combined 121,000 sq. ft. fulfillment centers in Rancho Cucamonga and Los Angeles, California, we believe we are one of the leading marketers, distributors and retailers in the consumer gardening and home goods categories, based on management’s estimates. Our core strategy continues to focus on expanding our geographic reach across the United States and internationally through organic growth, both in terms of expanding customer base as well as brand and product development. iPower has developed a set of methodologies driven by proprietary data formulas to effectively bring products to market and sales.

Previous wording

We are actively developing our in-house branded products and through supply chain partners, which to date include theiPowerandSimple Deluxe brands and more, some of which have been designated as Amazon best seller product leaders and Amazon Choice products, among others.

Current wording

We are actively developing our in-house branded products and through supply chain partners, which to date include theiPower andSimple Deluxe brands and more, some of which have been designated as Amazon best seller product leaders and Amazon Choice products, among others.

Previous wording

While at present the majority of our products are sourced either in the United States or China, the military conflicts between Russia and Ukraine and Israel and Hamas may nonetheless increase the likelihood of supply chain disruptions and hinder our ability to find the materials we need to make our products. Thus far, as a result of the general global economic disruptions, we have experienced a decrease in the speed with which we are able to purchase new inventory, as well as an increase in costs due to delays in shipping, as well as a resulting increase in time with which products remain in our warehouse facilities, thus resulting in reduced profits. In addition, supply chain disruptions may make it harder for us to find favorable pricing and reliable sources for the materials we need, putting upward pressure on our costs and increasing the risk that we may be unable to acquire the materials and services we need to continue to make certain products.

Current wording

At present the majority of our products are sourced either in the United States or China. On April 10, 2025, the U.S. announced it would be imposing tariffs of 145% on all goods imported from China, and the Chinese government countered by imposing 125% tariffs on all goods exported from the U.S. to China. On May 12, 2025, the United States and China announced a 90-day pause on most of their recent tariffs on each other. The combined U.S. tariff rate on Chinese imports will be cut to 30% from 145%, while China’s levies on U.S. imports will fall to 10% from 125%. We anticipate general economic disruption and uncertainty in trade stability during the near term. This is on top of any global economic disruptions caused by the wars between Ukraine and Russia and Israel and Hamas. We have experienced a decrease in the speed with which we are able to purchase new inventory, as well as an increase in costs due to delays in shipping, as well as a resulting increase in time with which products remain in our warehouse facilities, thus resulting in reduced profits. In addition, supply chain disruptions may make it harder for us to find favorable pricing and reliable sources for the materials we need, putting upward pressure on our costs and increasing the risk that we may be unable to acquire the materials and services we need to continue to make certain products. While we are actively working on a cost-restructuring plan to reduce our costs and expenses, we anticipate that these challenges around trade and general supply chain disruption will remain uncertain in the near term and are unable to predict with certainty the effects of such disruptions on our business.

Previous wording

Revenues for the three months ended December 31, 2024 increased 13.5% to $19,072,571 as compared to $16,800,122 for the three months ended December 31, 2023. While pricing remained stable and with the additional logistics service income, the increase mainly resulted from an increase in sales volume during the three months ended December 31, 2024 as compared to the three months ended December 31, 2023. This was further enhanced by growth in the Company’s SuperSuite supply chain offerings.

Current wording

Revenues for the three months ended March 31, 2025 decreased 28.9% to $16,569,678 as compared to $23,308,508 for the three months ended March 31, 2024. While pricing remained stable and with the additional logistics service income, the decrease was mainly due to uncertainty over tariffs and reduction of Amazon vendor orders, offset by an increase of retail channel and service revenues during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Previous wording

Costs of goods sold for the three months ended December 31, 2024 increased 12.7% to $10,682,685 as compared to $9,481,882 for the three months ended December 31, 2023. The increase was primarily due to the combination of an increase in the costs related to the logistics service incomeand a decrease in freight costs and lowered product costs resulted from management’s efforts on supply chain management.

Current wording

Costs of revenues for the three months ended March 31, 2025 decreased 27.4% to $9,392,704 as compared to $12,941,399 for the three months ended March 31, 2024. The decrease was primarily due to the combination of an increase in the costs related to the logistics service incomeand a decrease in sales.

Previous wording

Gross profit for the three months ended December 31, 2024 was $8,389,886 as compared to $7,318,240 for the three months ended December 31, 2023. The gross profit ratio of the product sales revenues increased to 44.0% for the three months ended December 31, 2024 from 43.6% for the three months ended December 31, 2023. The increase in the gross profit ratio was mainly driven by the decrease infreight costs and lowered product costs resulted from management’s efforts on supply chain management during the three months ended December 31, 2024, as discussed above.

Current wording

Gross profit was $7,176,974 for the three months ended March 31, 2025 as compared to $10,367,109 for the three months ended March 31, 2024. While the overall gross profit ratio of the total sales revenues decreased to 43.3% for the three months ended March 31, 2025 from 44.5% for the three months ended March 31, 2024, the gross profit ratio of product sales revenue for the three months ended March 31, 2025 and 2024 was 45.2% and 45.3%, respectively. The decrease in the gross profit ratio was primarily driven by the increase in the logistics service income and secondarily by increases in freight costs and product costs.

Previous wording

Operating expenses for the three months ended December 31, 2024 decreased 21.9% to $7,706,279 as compared to $9,870,587 for the three months ended December 31, 2023. The decrease was mainly due to the combination of a decrease in selling and fulfillment expenses of $2.3 million as a result of decreased costs related to advertising, merchant fees, rental expenses and delivery fees, and an increase in general and administrative expenses of $0.1 million, which included payroll expenses, stock-based compensation expense, insurance expenses, travel expenses and other operating expenses. Specifically the decrease in merchant fees was resulted from sales to different amazon vendor account mix. However, we cannot guarantee that this trend will continue.

Current wording

Operating expenses for the three months ended March 31, 2025 decreased 15.1% to $7,445,977 as compared to $8,765,833 for the three months ended March 31, 2024. The decrease was mainly due to the decrease in general and administrative expenses of $1.4 million, which included payroll expenses, reversal of stock-based compensation expense of $674,720, insurance expenses, travel expenses, legal fee and other operating expenses. Specifically the decrease in merchant fees was resulted from decrease in sales to amazon vendor account.

Previous wording

Other expenses consist of interest expense and other non-operating income (expenses). Other expenses for the three months ended December 31, 2024 was $347,432 as compared to $54,575 for the three months ended December 31, 2023. The increase in other expenses was mainly due to the combination of an increase in other non-operating expenses of $334,796, including a foreign currency exchange loss of 45,580, and a decrease in interest, including amortization of debt discount, on the revolving loan of $41,940 during the three months ended December 31, 2024 resulted from the decreasing loan balance.

Current wording

Other income (expenses) consist of interest expense and other non-operating income (expenses). Other income (expenses) for the three months ended March 31, 2025 was $(47,353) as compared to $(211,660) for the three months ended March 31, 2024. The decrease in other income (expenses) was mainly due to the combination of the increase in other non-operating income of $65,270, including a foreign currency exchange income of $35,601, and a decrease in interest, including amortization of debt discount, on the revolving loan of $99,231 during the three months ended March 31, 2025 resulted from the decreasing loan balance.

Previous wording

Net income (loss) attributable to iPower Inc. for the three months ended December 31, 2024 was $218,819 as compared to $(1,914,828) for the three months ended December 31, 2023, representing an increase in net income of $2,133,647. The increase was primarily due to the combination of a decrease in the operating expenses and an increase in gross profit ratio as discussed above.

Current wording

Net (loss) income attributable to iPower Inc. for the three months ended March 31, 2025 was $(339,599) as compared to $1,016,082 for the three months ended March 31, 2024, representing an increase in net loss of $1,355,681. The increase was primarily due to the decrease in sales being greater than the decrease in operating expenses as discussed above.

Previous wording

Comprehensive income (loss) attributable to iPower Inc. for the three months ended December 31, 2024 was $374,949 as compared to $(2,075,083) for the three months ended December 31, 2023, representing an increase in comprehensive income of $2,450,032. The increase was due to the reasons discussed above, along with an increase in other comprehensive income of $316,384 as a result of foreign currency translation adjustments resulting from the translation of RMB, the functional currency of our VIE in the PRC, to USD, the reporting currency of the Company.

Current wording

Comprehensive (loss) income attributable to iPower Inc. for the three months ended March 31, 2025 was $(437,155) as compared to $1,085,204 for the three months ended March 31, 2024, representing an increase in comprehensive loss of $1,522,359. The decrease was due to the reasons discussed above, along with an increase in other comprehensive loss of $166,678 as a result of foreign currency translation adjustments resulting from the translation of RMB, the functional currency of our VIE in the PRC, to USD, the reporting currency of the Company.

Previous wording

Revenues for the six months ended December 31, 2024 decreased 12.1% to $38,081,092 as compared to $43,308,496 for the six months ended December 31, 2023. While pricing remained stable and with the additional logistics service income, the decreased revenue mainly resulted from a decrease in sales volume during the six months ended December 31, 2024 as the Company offered less promotions and clearance activities due to lower inventory level as compared to the six months ended December 31, 2023. This was partially offset by growth in the Company’s SuperSuite supply chain offerings.

Current wording

Revenues for the nine months ended March 31, 2025 decreased 18.0% to $54,650,770 as compared to $66,617,004 for the nine months ended March 31, 2024. While pricing remained stable, the decreased revenue mainly resulted from a decrease in sales volume during the nine months ended March 31, 2025 as the Company offered less promotions and clearance activities due to lower inventory level as compared to the nine months ended March 31, 2024. In addition, the Company also experienced decrease in amazon orders due to uncertainty over tariffs during the three months ended March 31, 2025.

Previous wording

Costs of goods sold for the six months ended December 31, 2024 decreased 12.5% to $21,203,309 as compared to $24,231,411 for the six months ended December 31, 2023. The decrease was primarily due to a combination of the costs related to the logistics service income and the decrease in sales, freight costs, and lowered product costs resulted from management’s efforts on supply chain management.

Current wording

Costs of revenues for the nine months ended March 31, 2025 decreased 17.7% to $30,596,013 as compared to $37,172,810 for the nine months ended March 31, 2024. The decrease was primarily due to a combination of the costs related to the logistics service income and the decrease in product sales, freight costs, and lowered product costs resulted from management’s efforts on supply chain management.

Previous wording

Gross profit was $16,877,783 for the six months ended December 31, 2024 as compared to $19,077,085 for the six months ended December 31, 2023. The gross profit ratio of the product sales revenues increased to 46.0% for the six months ended December 31, 2024 from 44.0% for the six months ended December 31, 2023. The increase in the gross profit ratio was mainly driven by the decrease in costs of goods sold during the six months ended December 31, 2024, as discussed above.

Current wording

Gross profit was $24,054,757 for the nine months ended March 31, 2025 as compared to $29,444,194 for the nine months ended March 31, 2024. The gross profit ratio of the total sales revenues decreased to 44.0% for the nine months ended March 31, 2025 from 44.2% for the nine months ended March 31, 2024. The decrease in the gross profit ratio was mainly driven by the combination of the increase in the logistics service costs and decrease in costs of goods sold during the nine months ended March 31, 2025, as discussed above.

Previous wording

Operating expenses for the six months ended December 31, 2024 decreased 17.3% to $18,940,610 as compared to $22,898,109 for the six months ended December 31, 2023. The decrease was mainly due to the combination of a decrease in selling and fulfillment expenses of $6.5 million as a result of decreased costs related to advertising, merchant fees, rental expenses and delivery fees, and an increase in general and administrative expenses of $2.5 million, which included payroll expenses, stock-based compensation expense, insurance expenses, allowance for credit losses, travel expenses and other operating expenses. The increase in general and administrative expenses was mainly due to the expansion of our vendor network and development of the SuperSuite platform and an increased allowance for credit loss and inventory reserves of $1.8 million.

Current wording

Operating expenses for the nine months ended March 31, 2025 decreased 16.7% to $26,386,587 as compared to $31,663,942 for the nine months ended March 31, 2024. The decrease was mainly due to the combination of a decrease in selling and fulfillment expenses of $6.4 million as a result of decreased costs related to advertising, merchant fees, rental expenses and delivery fees, and an increase in general and administrative expenses of $1.1 million, which included allowance for credit losses, travel expenses and other operating expenses, partly offset by reversal of stock compensation expense of $674,720. The increase in general and administrative expenses was mainly due to the expansion of our vendor network and development of the SuperSuite platform and an increased allowance for credit losses and inventory reserves of $1.9 million.

Previous wording

Loss from operations was $2,062,827 for the six months ended December 31, 2024 as compared to $3,821,024 for the six months ended December 31, 2023. The decrease in loss from operations resulted from the decrease in operating expenses being greater than the decrease in gross profit with the improved gross profit ratio.

Current wording

Loss from operations was $2,331,830 for the nine months ended March 31, 2025 as compared to $2,219,748 for the nine months ended March 31, 2024. The increase in loss resulted from the decrease in sales being greater than the decrease in operating expenses.

Previous wording

Other expenses for the six months ended December 31, 2024 was $269,627 as compared to $351,131 for the six months ended December 31, 2023. The decrease in other expenses was mainly due to the decrease in other non-operating income of $48,944, and the decrease in interest expenses, including amortization of debt discount, on the revolving loan of $130,343 during the six months ended December 31, 2024 as a result ofthe decreasing balance on the revolving loan.

Current wording

Other expenses for the nine months ended March 31, 2025 was $316,980 as compared to $562,791 for the nine months ended March 31, 2024. The decrease in other expenses was mainly due to the increase in other non-operating income of $16,326, and the decrease in interest expenses, including amortization of debt discount, on the revolving loan of $229,574 during the nine months ended March 31, 2025 as a result ofthe decreasing balance on the revolving loan.

Previous wording

Net loss attributable to iPower Inc. for the six months ended December 31, 2024 was $1,810,462 as compared to $3,201,343 for the six months ended December 31, 2023, representing a decrease in net loss of $1,390,881. The decrease was primarily due to the decrease in operating expenses being greater than the decrease in gross profit resulting in the improved gross profit ratio as discussed above.

Current wording

Net loss attributable to iPower Inc. for the nine months ended March 31, 2025 was $2,150,061 as compared to $2,185,261 for the nine months ended March 31, 2024, representing a decrease in net loss of $35,200. The decrease was primarily due to the decrease in other expense.

Previous wording

Comprehensive loss attributable to iPower Inc. for the six months ended December 31, 2024 was $1,709,386 as compared to $3,362,305 for the six months ended December 31, 2023, representing a decrease in comprehensive loss of $1,652,919. The decrease was due to the reasons discussed above, along with an increase in other comprehensive income of $262,037 as a result of foreign currency translation adjustments resulting from the translation of RMB, the functional currency of our VIE in the PRC, to USD, the reporting currency of the Company.

Current wording

Comprehensive loss attributable to iPower Inc. for the nine months ended March 31, 2025 was $2,146,541 as compared to $2,277,101 for the nine months ended March 31, 2024, representing a decrease in comprehensive loss of $130,560. The decrease was due to the reasons discussed above, along with an increase in other comprehensive loss of $95,360 as a result of foreign currency translation adjustments resulting from the translation of RMB, the functional currency of our VIE in the PRC, to USD, the reporting currency of the Company.

Previous wording

During the six months ended December 31, 2024, we primarily funded our operations with cash and cash equivalents generated from operations, as well as through borrowing under our credit facility from JPMorgan Chase Bank (“JPM”). Additionally, on June 18, 2024, we closed on a registered direct offering of 2,083,334 shares of common stock (the “Shares”) and a concurrent private placement of warrants to purchase up to 2,083,334 shares of common stock (the “Warrants”), which Shares and Warrants were sold for aggregate gross proceeds of $5,000,002. As of December 31, 2024, we had cash and cash equivalents of $2,877,457, representing a $4,500,380 decrease from $7,377,837 in cash as of June 30, 2024. The cash decrease was primarily due to the result of cash used in operating activities and financing activities resulting from our payments to pay down the short-term loans - related party and the JPM revolving line of credit.

Current wording

During the nine months ended March 31, 2025, we primarily funded our operations with cash and cash equivalents generated from operations, as well as through borrowing under our credit facility from JPMorgan Chase Bank (“JPM”). Additionally, on June 18, 2024, we closed on a registered direct offering of 2,083,334 shares of common stock (the “Shares”) and a concurrent private placement of warrants to purchase up to 2,083,334 shares of common stock (the “Warrants”), which Shares and Warrants were sold for aggregate gross proceeds of $5,000,002. As of March 31, 2025, we had cash and cash equivalents of $2,192,254, representing a $5,185,583 decrease from $7,377,837 in cash as of June 30, 2024. The cash decrease was primarily due to the result of cash used in operating activities, investing activities and financing activities resulting from our payments to offering cost settlement, pay down the short-term loans - related party and part of the JPM revolving line of credit.

Previous wording

Based on our current operating plans, we believe that our existing cash and cash equivalents and cash flows from operations will be sufficient to finance our operations during the next 12 months.

Current wording

Based on our current operating plans, we believe that our existing cash and cash equivalents and cash flows from operations and the revolving line of credit will be sufficient to finance our operations during the next 12 months.

Previous wording

Our cash requirements consist primarily of day-to-day operating expenses and obligations with respect to warehouse leases. We lease all of our office and warehouse facilities. We expect to make future payments on existing leases from cash generated from operations. We have credit terms in place with our major suppliers, however as we bring on new suppliers, we are often required to prepay our inventory purchases from them. This is consistent with our historical operating model which allowed us to operate using only cash generated by the business. Beyond the next 12 months we believe that our cash flow from operations should improve as supply chain operations normalize and new suppliers we are bringing online transition to credit terms more favorable to us. In addition, we plan to increase the size of our in-house product catalog, which will have a net beneficial impact to our margin profile and ability to generate cash. Currently, we have approximately $11.0 million in unused credit under the revolving line with JPM.

Current wording

Our cash requirements consist primarily of day-to-day operating expenses and obligations with respect to warehouse leases. We lease all of our office and warehouse facilities. We expect to make future payments on existing leases from cash generated from operations. We have credit terms in place with our major suppliers, however as we bring on new suppliers, we are often required to prepay our inventory purchases from them. This is consistent with our historical operating model which allowed us to operate using only cash generated by the business. Beyond the next 12 months we believe that our cash flow from operations should improve as supply chain operations normalize and new suppliers we are bringing online transition to credit terms more favorable to us. In addition, we plan to increase the size of our in-house product catalog, which will have a net beneficial impact to our margin profile and ability to generate cash. Currently, we have approximately $11.5 million in unused credit under the revolving line with JPM.

Previous wording

As of December 31, 2024 and June 30, 2024, our working capital was $13.8 million and $11.2 million, respectively. The historical seasonality in our business during the year can cause cash and cash equivalents, inventory and accounts payable to fluctuate, resulting in changes in our working capital. We anticipate that past historical trends to remain in place through the balance of the fiscal year with working capital remaining near this level for the foreseeable future.

Current wording

As of March 31, 2025 and June 30, 2024, our working capital was $11.9 million and $11.2 million, respectively. The historical seasonality in our business during the year can cause cash and cash equivalents, inventory and accounts payable to fluctuate, resulting in changes in our working capital. We anticipate that past historical trends to remain in place through the balance of the fiscal year with working capital remaining near this level for the foreseeable future.

Previous wording

Our largest source of cash provided by operations is from sales of products. Our primary uses of cash from operating activities include payments to suppliers for products, to employees for compensation, and other general expenses. Net cash (used in) provided by operating activities for the six months ended December 31, 2024 and 2023 was $(1,387,926) and $5,045,731, respectively. The decrease in cash provided by operating activities mainly resulted from a decrease in cash received from customers and an increase in cash paid for costs of revenues and operating expenses.

Current wording

Our largest source of cash provided by operations is from sales of products. Our primary uses of cash from operating activities include payments to suppliers for products, to employees for compensation, and other general expenses. Net cash (used in) provided by operating activities for the nine months ended March 31, 2025 and 2024 was $(500,214) and $5,151,956, respectively. The decrease in cash provided by operating activities mainly resulted from a decrease in cash received from customers and an increase in cash paid for costs of revenues and operating expenses.

Previous wording

Net cash used in investing activities for the six months ended December 31, 2024 and 2023 was $(664,366) and $0, respectively. The increase was due to the prepayments made for software developments during the six months ended December 31, 2024.

Current wording

Net cash used in investing activities for the nine months ended March 31, 2025 and 2024 was $1,519,928 and $0, respectively. The increase was due to the prepayments made for software developments during the nine months ended March 31, 2025.

Previous wording

Net cash used in financing activities was $2,558,389 and $7,175,000, respectively, for the six months ended December 31, 2024 and 2023. The decrease in net cash used in financing activities was primarily due to a decrease in payments on the revolving loan.

Current wording

Net cash used in financing activities was $3,168,925 and $6,100,000, respectively, for the nine months ended March 31, 2025 and 2024. The decrease in net cash used in financing activities was primarily due to decrease payments on short-terms loans and decrease in net borrowing from the revolving loan.

Previous wording

Accounts receivable are recognized and carried at carrying amount less an allowance for credit losses, if any. The Company maintains an allowance for credit losses resulting from the inability of its customers to make required payments based on contractual terms. The Company reviews the collectability of its receivables on a regular and ongoing basis. The Company has also included in calculation of allowance for credit losses the potential impact of overall economic conditions on our customers’ industry and businesses and their ability to pay our accounts receivable. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. The Company also considers external factors to the specific customer, including current conditions and forecasts of economic conditions, including the potential impact of the COVID-19 pandemic. In the event we recover amounts previously written off, we will reduce the specific allowance for credit losses. In late October 2024, the Company determined that the collectability of certain refundable amount withheld by sales channel partners was remote so the Company recorded additional allowance for credit losses of $41,346 and $1,516,940 for the three and six months ended December 31, 2024.

Current wording

Accounts receivable are recognized and carried at carrying amount less an allowance for credit losses, if any. The Company maintains an allowance for credit losses resulting from the inability of its customers to make required payments based on contractual terms. The Company reviews the collectability of its receivables on a regular and ongoing basis. The Company has also included in calculation of allowance for credit losses the potential impact of overall economic conditions on our customers’ industry and businesses and their ability to pay our accounts receivable. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. The Company also considers external factors to the specific customer, including current conditions and forecasts of economic conditions, including the potential impact of the COVID-19 pandemic. In the event we recover amounts previously written off, we will reduce the specific allowance for credit losses. In late October 2024, the Company determined that the collectability of certain refundable amount withheld by sales channel partners was remote so the Company recorded additional allowance for credit losses of $52,092 and $1,569,031 for the three and nine months ended March 31, 2025.

Previous wording

During the six months ended December 31, 2024 and 2023, the Company performed a qualitative goodwill impairment analysis following the steps laid out in ASC 350-20-35-3C and noted no goodwill impairment. As of December 31, 2024 and June 30, 2024, the goodwill balance amounted to $3,034,110.

Current wording

During the nine months ended March 31, 2025 and 2024, the Company performed a qualitative goodwill impairment analysis following the steps laid out in ASC 350-20-35-3C and noted no goodwill impairment. As of March 31, 2025 and 2024, the goodwill balance amounted to $3,034,110 and $3,034,110, respectively.

Previous wording

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their perspective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the 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 that includes the enactment date. Valuation allowances are recorded, when necessary, to reduce deferred tax assets to the amount expected to be realized.

Current wording

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their perspective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the 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 that includes the enactment date. Valuation allowances are recorded, when necessary, to reduce deferred tax assets to the amount expected to be realized. In assessing the recoverability of its deferred tax assets, the Company evaluates available positive and negative evidence to estimate whether it is more likely than not that sufficient future taxable income will be generated to permit use of the existing deferred tax assets in each taxing jurisdiction.