What changed in this filing

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Item 1A. Risk Factors

2023-09-15 compared with 2022-09-28 · 303 added, 203 removed, 1043 unchanged (33% of the section changed)

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You should carefully consider all of the risks described below, together with the other information contained in

this Annual Report on Form 10-K, including our financial statements and related notes, before making a decision to invest in our securities.

If any of the following events occur, our business, financial condition and operating results may be materially adversely affected.

that event, the trading price of our securities could decline, and you could lose all or part of your investment.

this Annual Report, including our financial statements and related notes, before making a decision to invest in our securities.

of the following events occur, our business, financial condition and operating results may be materially adversely affected.

In that event,

the trading price of our securities could decline, and you could lose all or part of your investment.

Summary Risk Factors

The risks described

under the heading “ Risk Factors ” beginning on page 8 of this Annual Report on Form 10-K may cause

us not to realize the full benefits of our strengths and/or may cause us to be unable to successfully execute all or part of our

Some of the more significant challenges we face include:

The ongoing conflict between Russia and Ukraine may adversely affect our business, financial condition, results from operations, or the businesses of our suppliers, vendors and logistics partners.

The continuing COVID-19 pandemic and the efforts to mitigate its impact may have an adverse impact on our business, liquidity, operations, financial condition, the businesses of our suppliers, vendors and logistics partners, and the price of our securities.

The risks described under

the heading “Risk Factors” beginning on page 6 of this Annual Report on Form 10-K may cause us to be unable to realize the

full benefits of our strengths and/or may cause us to be unable to successfully execute all or part of our strategy.

Some of the more

significant challenges we face include:

Our Company’s founders own approximately 53.98% of our common stock, which effectively gives our founders full control over the board of directors and management of the Company for the foreseeable future.

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Potential disruption of our business and supply chain that may be caused by any conflicts, trade wars or currency fluctuations or tariffs between China and the U.S.

The ongoing conflict between Russia and Ukraine may adversely affect our business, financial condition, results from operations, or the businesses of our suppliers, vendors and logistics partners.

ongoing COVID-19 epidemic, and any resurgence in related infections, whether in the U.S., China or elsewhere, along with any efforts

to mitigate its impact could have an adverse effect on our business, liquidity, operations, financial condition, the business of our

suppliers, vendors and logistic partners, and the price of our securities.

In the event we require additional capital resources to fund our enterprise, we may not be able to obtain sufficient capital and may be forced to limit the expansion of our operations.

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As the bulk of our sales are carried out through e-commerce, we are subject to certain cyber security risks, including hacking and stealing of customer and confidential data.

If we fail to comply with the continued listing requirements of the

Nasdaq Stock Market, it could result in our common stock being delisted, which could adversely affect the market price and liquidity

of our securities and could have other adverse effects.

There are a myriad of risks, including stock market volatility, inherent in owning our securities.

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limiting gatherings of people in public places.

Although we have been deemed

an “essential” business by state and local authorities in the areas in which we operate, we have undertaken the following

measures in an effort to mitigate the spread of COVID-19 including limiting business hours, and encouraging employees to work remotely

We also have enacted our business continuity plans, including implementing procedures requiring employees to work remotely

where possible which may make maintaining our normal level of corporate operations, quality controls and internal controls difficult.

Moreover, the COVID-19 pandemic has caused temporary or long-term disruptions in our supply chains and/or delays in the delivery of our

Further, the COVID-19 pandemic and mitigation efforts have also adversely affected our customers’ financial condition,

resulting in reduced spending for the products we sell.

As events are rapidly changing, we do not know how long the COVID-19

pandemic and the measures that have been introduced to respond to it will disrupt our operations or the full extent of that disruption.

While we have resumed normal business hours and operations in recent months, it is unknown whether we may have additional COVID-19 restrictions

or health emergencies in the future.

Should we experience such additional restrictions and business disruptions, we may experience unanticipated

costs and operational uncertainty.

We cannot predict how long the effects of COVID-19 and the efforts to contain it will continue to impact

our business after the pandemic is under control.

Governments could take additional restrictive measures to combat the pandemic that could

further impact our business or the economy in the geographies in which we operate.

It is also possible that the impact of the pandemic

and response on our suppliers, customers and markets will persist for some time after governments ease their restrictions.

These measures

have negatively impacted, and may continue to impact, our business and financial condition as the responses to control COVID-19 continue.

Although we were deemed an

“essential” business by state and local authorities during the height of the pandemic in the areas in which we operate, we

have undertaken the following measures in an effort to mitigate the spread of COVID-19 including limiting business hours, and encouraging

employees to work remotely if possible.

We also have enacted our business continuity plans, including implementing procedures requiring

employees to work remotely where possible which may make maintaining our normal level of corporate operations, quality controls and internal

controls difficult.

Moreover, the COVID-19 pandemic has caused temporary or long-term disruptions in our supply chains and/or delays in

the delivery of our inventory.

Further, the COVID-19 pandemic and mitigation efforts have also adversely affected our customers’

financial condition, resulting in reduced spending for the products we sell.

As events are rapidly changing,

we do not know how long the COVID-19 pandemic and the measures that have been introduced to respond to it will disrupt our operations

or the full extent of that disruption.

While we have resumed normal business hours and operations in recent months, it is unknown whether

we may have additional COVID-19 restrictions or health emergencies in the future.

Should we experience such additional restrictions and

business disruptions, we may experience unanticipated costs and operational uncertainty.

We cannot predict how long the effects of COVID-19

and the efforts to contain it will continue to impact our business after the pandemic is under control.

Governments could take additional

restrictive measures to combat the pandemic that could further impact our business or the economy in the geographies in which we operate.

It is also possible that the impact of the pandemic and response on our suppliers, customers and markets will persist for some time after

governments ease their restrictions.

These measures have negatively impacted, and may continue to impact, our business and financial condition

as the responses to control COVID-19 continue.

We have a limited operating history on which

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(formerly BZRTH Inc.) until our formation in April 2018.

Thereafter, we launched our e-commerce platform,

www.Zenhydro.com, where we sell our own in-house branded products, marketed under the iPower and Simple Deluxe brands, and provide distribution

for hundreds of other brands manufactured by a number of third-party vendors.

Accordingly, the operation of our e-commerce platform, branding

and marketing of our own in-house branded products, and our relationships with third-party vendors and suppliers has been limited.

we are unable to effectively maintain our relationships with third-party vendors and suppliers, manage our e-commerce operations, as well

as other sales platforms/distribution network, our business is unlikely to succeed.

Our business should be viewed in light of these risks,

challenges and uncertainties.

Thereafter, we launched our e-commerce platforms,

www.Zenhydro.com and www.simpledeluxe.com, where we sell our own in-house branded products, marketed under the iPower and Simple Deluxe

brands, and provide distribution for hundreds of other brands manufactured by a number of third-party vendors.

Accordingly, the operation

of our e-commerce platform, branding and marketing of our own in-house branded products, and our relationships with third-party vendors

and suppliers have been limited.

If we are unable to effectively maintain our relationships with third-party vendors and suppliers, manage

our e-commerce operations, as well as other sales platforms/distribution network, our business is unlikely to succeed.

Our business should

be viewed in light of these risks, challenges and uncertainties.

An estimated 98% of our sales are carried

out through third-party platforms, including Amazon.com, Walmart and eBay;

any disruption in our selling efforts on such third party

platforms could substantially disrupt our business.

any disruption in our selling efforts on such third party platforms

could substantially disrupt our business.

While we maintain our own

website, www.Zenhydro.com , as well as our offline wholesale department, which together account for approximately 10% of

our sales, a large percentage of our overall sales, or approximately 90%, occurred on third party platforms such as Amazon.com,

Walmart, and eBay .

websites, Zenhydro.com and simpledeluxe.com , as well as our offline wholesale department, which together account for approximately

2% of our sales, the bulk of our overall sales, or approximately 98%, occurred on third party platforms such as Amazon.com, Walmart

eBay and other platforms .

As such, should we experience a disruption in our sales on third party platforms, or should such third party

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we cannot guarantee that we will be able to locate alternative sources of supply for our merchandise on acceptable terms, or at all.

we are unable to purchase appropriate amounts of inventory, our business and results of operations may be materially and adversely

we are unable to purchase appropriate amounts of inventory, our business and results of operations may be materially and adversely affected.

Poor economic conditions could adversely

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conditions, particularly in light of the COVID-19 pandemic, could adversely affect our business.

Negative global economic trends, such

as decreased consumer and business spending, high unemployment levels and declining consumer and business confidence, pose challenges

During the COVID-19 pandemic, some of

the effects of which are still ongoing, there have been ongoing negative global economic trends, such as decreased consumer and business

spending, higher than normal unemployment levels and declining consumer and business confidence.

All of these issues have posed challenges

to our business and could result in declining revenues, profitability and cash flow.

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our competitors’ products or result in a shift in our product mix from higher margin to lower margin products.

Heightened inflation, increased interest

rates and other economic conditions including potential recession and credit market disruptions could negatively impact our business.

Customer demand for our products

may be influenced by heightened inflation, increased interest rates and other weak economic conditions including recessionary conditions

and credit market disruptions and volatility.

Continued weak economic conditions may cause a decrease in demand for our products from

our customers.

In addition, these economic conditions may adversely impact certain customers, suppliers and other vendors who are highly

Accordingly, in an environment of heightened inflation, increased interest rates or other recessionary pressures, our business,

financial condition and results of operation may be adversely impacted.

Volatile or weakened economic conditions

and globally may adversely affect our business and operating results.

Moreover, while the recent banking crisis involving

the closure of Silicon Valley Bank (“SVB”) and other small banks did not have a material direct impact on our business, continued

instability in the global banking system may result in additional bank failures, as well as volatility of global financial markets, either

of which may adversely impact our business and financial condition.

Our overall performance depends

in part on U.S.

and international macroeconomic conditions.

and other key international economies, including China, have experienced

and may in the future experience significant economic and market downturns in which economic activity is impacted by falling demand for

a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and

foreign exchange markets, inflation, bankruptcies and overall uncertainty with respect to the economy.

These economic conditions can arise

suddenly and the full impact of such conditions are impossible to predict.

In addition, geopolitical and domestic political developments,

such as existing and potential trade wars and other events beyond our control, such as the war in Ukraine and the trade war between the

and China, can increase levels of political and economic unpredictability globally and increase the volatility of global financial

Moreover, there has been recent

turmoil in the global banking system.

For example, in March 2023, SVB was closed by the California Department of Financial Protection

and Innovation, which appointed the Federal Deposit Insurance Corporation, or the FDIC, as receiver.

First-Citizens Bank & Trust Company

then assumed all of SVB’s customer deposits and certain other liabilities and acquired substantially all of SVB’s loans and

certain other assets from the FDIC.

While the closure of SVB, and the subsequent failures of Signature Bank, First Republic Bank and Heartland

Tri-State Bank, did not have a material direct impact on our business, continued instability in the global banking system may result in

additional bank failures, as well as volatility of global financial markets, either of which may adversely impact our business and financial

Government efforts to combat inflation,

along with other interest rate pressures arising from an inflationary economic environment, could lead to higher financing costs.

Inflation has risen on a global

basis, the U.S.

has been experiencing historically high levels of inflation, and government entities have taken various actions to combat

inflation, such as by raising interest rate benchmarks.

Government entities may continue their efforts, or implement additional efforts,

to combat inflation, which could include, among other things, continuing to raise interest rate benchmarks or maintaining interest rate

benchmarks at elevated levels.

Such government efforts, along with other interest rate pressures arising from an inflationary economic

environment, could lead to higher financing costs and have a material adverse effect on our business, financial condition and results

of operations.

We rely heavily on our access to the China

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We are heavily reliant on

manufacturers in China to produce many of the goods we sell in that approximately 84% of the products we purchased for resale during the

fiscal year ending June 30, 2022 were manufactured in and imported from China.

manufacturers in China to produce many of the goods we sell.

Approximately 90% of the products we purchased for resale during the fiscal

year ending June 30, 2023 were manufactured in and imported from China.

At present, we have 13 suppliers in the U.S.

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suppliers in China.

However, of these, approximately 5% of the goods sourced in China were purchased through our newly acquired VIE,

and China have been involved in ongoing trade disputes, resulting in increased tariffs when such goods arrive in the U.S.,

among other things.

However, all of the goods sourced in China were purchased through our VIE, DHS.

and China have been involved

in ongoing trade disputes, resulting in increased tariffs when such goods arrive in the U.S., among other things.

Any changes in U.S.

trade policy, or an escalation in the ongoing trade disputes, could trigger retaliatory actions,

resulting in “trade wars” and an increase in costs for goods imported into the United States.

Such actions could disrupt our

supply chain.

In addition, increased tariffs could, in turn, reduce customer demand for such products as such tariffs could cause us to

have to increase the price at which we sell our goods, or it could result in trading partners limiting their trade with the United States.

To date, iPower has absorbed some of the costs related to increased tariffs.

However, should we be unable to continue to absorb such costs,

or should we need to pass all such costs on to consumers, such increase could cut into our competitive advantage and our volume of sales

activity in the United States could be materially reduced.

trade policy, or an escalation in the ongoing trade disputes, could trigger retaliatory actions, resulting in “trade wars”

and an increase in costs for goods imported into the United States.

Such actions could disrupt our supply chain.

In addition, increased

tariffs could, in turn, reduce customer demand for such products as such tariffs could cause us to have to increase the price at which

we sell our goods, or it could result in trading partners limiting their trade with the United States.

To date, iPower has absorbed some

of the costs related to increased tariffs.

However, should we be unable to continue to absorb such costs, or should we need to pass all

such costs on to consumers, such increase could cut into our competitive advantage and our volume of sales activity in the United States

could be materially reduced.

Any such reduction may materially and adversely affect our sales and our business.

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the majority of our inventory and overseas logistical support, are owned through contractual agreements, as required by the laws of the

People’s Republic of China (“PRC”).

As a result, the Chinese government could potentially exercise significant oversight

and/or discretion over the business and operations of our China-based subsidiaries and could potentially intervene in or influence the

operations of those businesses at any time.

As a result, the Chinese government could potentially exercise significant oversight and/or discretion over the business and operations

of our China-based subsidiaries and could potentially intervene in or influence the operations of those businesses at any time.

recently acquired two China-based subsidiaries, Dayourenzi (Shenzhen) Technology Co., Ltd.

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Require significant management time and attention, and

Subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our China-based business practices.

Subject us to remedies, administrative penalties

and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands

or orders that we modify or even cease our China-based business practices.

promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, could restrict or otherwise unfavorably

impact the ability or manner in which we conduct the business of our China based subsidiaries and could require us to change certain

aspects of their business to ensure compliance, which could delay our procurement of goods, reduce revenues, increase costs, or subject

us to additional liabilities.

To the extent any new or more stringent measures are required to be implemented in the PRC, our business,

financial condition, and results of operations could be adversely affected.

impact the ability or manner in which we conduct the business of our China based subsidiaries and could require us to change certain aspects

of their business to ensure compliance, which could delay our procurement of goods, reduce revenues, increase costs, or subject us to

additional liabilities.

To the extent any new or more stringent measures are required to be implemented in the PRC, our business, financial

condition, and results of operations could be adversely affected.

We face intense competition that could prohibit

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substantially on the continued services of our executive officers, especially our Chairman, Chief Executive Officer and President, Chenlong

We do not presently maintain key man life insurance on any of our executive officers and directors, although we intend to obtain

such insurance in the near future.

We do not presently maintain key man life insurance on any of our executive officers or directors, although we intend to obtain such

insurance in the near future.

If one or more of our executive officers are unable or unwilling to continue in their present positions,

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inconsistent and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations and consumer

For example, certain countries and 36 U.S.

states have adopted frameworks that authorize, regulate and tax the cultivation,

processing, sale and use of cannabis for medicinal and/or non-medicinal use, while the U.S.

Controlled Substances Act and the laws of

For example, certain countries and a total of 46 U.S.

states plus the District of Columbia have adopted frameworks that authorize,

regulate and tax the cultivation, processing, sale and use of cannabis for medicinal and/or non-medicinal use, including legalization

of hemp and CBD, while the U.S.

Controlled Substances Act and the laws of U.S.

states prohibit growing cannabis.

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We sell certain of our products

over the internet through our e-commerce platform, www.Zenhydro.com.

The success of our e-commerce business depends on our investment

in this platform, consumer preferences and buying trends relating to e-commerce, and our ability to both maintain the continuous operation

of our online store and our fulfillment operations and provide a shopping experience that will generate orders and return visits to our

online store.

over the internet through our e-commerce platforms, www.Zenhydro.com and www.simpledeluxe.com.

The success of our e-commerce business

depends on our investment in this platform, consumer preferences and buying trends relating to e-commerce, and our ability to both maintain

the continuous operation of our online store and our fulfillment operations and provide a shopping experience that will generate orders

and return visits to our online store.

We are also vulnerable to

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For the years ended June 30, 2023 and 2022, one supplier accounted

for 18% and three suppliers accounted for 38% (18%, 10% and 10%) of the Company's total purchases, respectively.

Such reliance on a limited

number of suppliers may increase our risk of experiencing disruptions in our business.

As we do not have any long-term supply agreements,

in the event we are unable to maintain supplier arrangements and relationships, if we are unable to contract with suppliers at the quantity

and quality levels needed for our business, if any of our key suppliers becomes insolvent or experience other financial distress or if

any of our key suppliers is negatively impacted by COVID-19, including with respect to staffing and shipping of products, we could experience

disruptions in our supply chain, which could have a material adverse effect on our financial condition, results of operations and cash

for 27% and 18% of the Company's total purchases, respectively.

Such reliance on a limited number of suppliers may increase our risk of

experiencing disruptions in our business.

As we do not have any long-term supply agreements, in the event we are unable to maintain supplier

arrangements and relationships, if we are unable to contract with suppliers at the quantity and quality levels needed for our business,

if any of our key suppliers becomes insolvent or experience other financial distress or if any of our key suppliers is negatively impacted

by COVID-19, including with respect to staffing and shipping of products, we could experience disruptions in our supply chain, which could

have a material adverse effect on our financial condition, results of operations and cash flows.

Although we continue to implement

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of operations.

We may not be able to develop, license

or acquire new products, enhance the capabilities of our existing products to keep pace with rapidly changing technology and customer

requirements, or successfully manage the transition to new product offerings, any of which could have a material adverse effect on our

business, financial condition and results of operations.

We may not be able to develop, license or

acquire new products, enhance the capabilities of our existing products to keep pace with rapidly changing technology and customer requirements,

or successfully manage the transition to new product offerings, any of which could have a material adverse effect on our business, financial

condition, and results of operations.

Our success depends on our

ability to develop, license or acquire and commercialize additional products and to develop new applications for our technologies in existing

and new markets, while improving the performance and cost-effectiveness of our existing products, in each case in ways that address current

and anticipated customer requirements.

ability to develop, license, or acquire and commercialize additional products and to develop new applications for our technologies in

existing and new markets, while improving the performance and cost-effectiveness of our existing products, in each case in ways that address

current and anticipated customer requirements.

We intend to develop and commercialize additional products through our research and development

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or results of operations which may adversely affect investor confidence in us and, as a result, the value of our common stock.

Effective internal controls

over financial reporting are necessary for us to provide reliable financial reports.

If we cannot maintain effective controls and reliable

financial reports, our business and operating results could be harmed.

Our management has conducted an evaluation of the effectiveness

of our internal controls over financial reporting and concluded that our internal controls over financial reporting were not effective

because, among other things, (i) we did not maintain a sufficient complement of personnel with an appropriate degree of technical

knowledge commensurate with the Company’s accounting and reporting requirements, and (ii) our controls related to financial

statements closing process were not adequately designed or appropriately implemented to identify material misstatements in our financial

reporting on a timely basis.

Effective internal controls over financial reporting are necessary

for us to provide reliable financial reports.

If we cannot maintain effective controls and reliable financial reports, our business and

operating results could be harmed.

Our management has conducted an evaluation of the effectiveness of our internal controls over financial

reporting and concluded that our internal controls over financial reporting were not effective because, among other things, (i) we lack effective communication and reconciliation procedures in

our controlled subsidiaries, and (ii) our controls related to the financial statements closing process were not adequately designed or

appropriately implemented to identify material misstatements in our financial reporting on a timely basis.

Management has evaluated remediation

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registered public accounting firm has not performed an evaluation of our internal control over financial reporting during any period in

accordance with the provisions of Sarbanes-Oxley Act.

Had we performed an evaluation and had our independent registered public accounting

firm performed an audit of our internal control over financial reporting in accordance with the provisions of Sarbanes-Oxley Act,

additional control deficiencies amounting to material weaknesses may have been identified.

If we fail to remedy any material weakness,

our financial statements may be inaccurate, our access to the capital markets may be restricted and the trading price of our common stock

accordance with the provisions under Section 404(b) of Sarbanes-Oxley Act.

Had we performed

an evaluation and had our independent registered public accounting firm performed an audit of our internal control over financial reporting

in accordance with the provisions of Sarbanes-Oxley Act, additional control deficiencies amounting to material weaknesses may have

been identified.

If we fail to remedy any material weakness, our financial statements may be inaccurate, our access to the capital markets

may be restricted and the trading price of our common stock may suffer.

Prior to our initial public offering in

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Upon the termination

or expiration of the Engagement Agreement, the Company was required to pay to Boustead any out-of-pocket expenses incurred up to the

date thereof.

In addition, upon termination or expiration of the Engagement Agreement, Boustead was entitled to a success fee, as set

forth in the Engagement Agreement, if the Company completed a sale, merger, acquisition, joint venture, strategic alliance, or other

similar agreement with a party, including the pre-IPO and IPO investors, or which became aware of the Company or which became known to

the Company prior to such termination or expiration, during the twelve (12) month period following the termination or expiration of the

Engagement Agreement.

On February 28, 2021 we informed Boustead that we were terminating the Engagement Agreement and any continuing

obligations we may have had under its terms.

On April 15, 2021, we provided formal written notice to Boustead of our termination of the

Engagement Agreement and all obligations thereunder, effective immediately.

On April 16, 2021, counsel to Boustead advised us that they

believed our termination of the Engagement Agreement was improper and threatened to seek immediate judicial intervention to obtain injunctive

relief and damages.

On April 21, 2021, our special litigation counsel responded to such allegations and threats, refuting Boustead’s

On April 23, 2021, counsel to Boustead provided written notice stating that, subject to the size of our initial public offering,

they believe they will be entitled to 7% of the capital raised in addition to warrants.

On April 30, 2021, Boustead filed a statement

of claim with the Financial Industry Regulatory Authority, or FINRA, demanding to arbitrate the dispute, and is seeking, among other

things, monetary damages against the Company and D.A.

or expiration of the Engagement Agreement, the Company was required to pay to Boustead any out-of-pocket expenses incurred up to the date

In addition, upon termination or expiration of the Engagement Agreement, Boustead was entitled to a success fee, as set forth

in the Engagement Agreement, if the Company completed a sale, merger, acquisition, joint venture, strategic alliance, or other similar

agreement with a party, including the pre-IPO and IPO investors, or which became aware of the Company or which became known to the Company

prior to such termination or expiration, during the twelve (12) month period following the termination or expiration of the Engagement

On February 28, 2021 we informed Boustead that we were terminating the Engagement Agreement and any continuing obligations

we may have had under its terms.

On April 15, 2021, we provided formal written notice to Boustead of our termination of the Engagement

Agreement and all obligations thereunder, effective immediately.

On April 16, 2021, counsel to Boustead advised us that they believed

our termination of the Engagement Agreement was improper and threatened to seek immediate judicial intervention to obtain injunctive relief

On April 21, 2021, our special litigation counsel responded to such allegations and threats, refuting Boustead’s claims.

On April 23, 2021, counsel to Boustead provided written notice stating that, subject to the size of our initial public offering, they

believe they will be entitled to 7% of the capital raised in addition to warrants.

On April 30, 2021, Boustead filed a statement of claim

with the Financial Industry Regulatory Authority, or FINRA, demanding to arbitrate the dispute, and is seeking, among other things, monetary

damages against the Company and D.A.

Davidson & Co.

We are presently waiting for the FINRA panel to schedule a hearing

on the matter.

While we believe we have meritorious defenses against Boustead’s claims, we cannot provide assurance that any potential

monetary damages arising from the Boustead dispute will not be in excess of 7% of the capital raised in our initial public offering.

The party prevailing in any proceeding under the Engagement Agreement may be entitled to their costs and attorneys’ fees, which

could be substantial.

As such, any proceeding arising from our Engagement Agreement with Boustead may be expensive to defend and could

result in a substantial settlement payment or damages award, and there can be no assurance of a favorable outcome for us.

we have indemnified D.A.

A pre-hearing conference is presently scheduled for the matter on September 26,

The matter had been previously scheduled to be heard before a FINRA arbitration panel in late September and October.

However, those

hearing dates have been cancelled and have yet to be rescheduled.

While we believe we have meritorious defenses against Boustead’s

claims, we cannot provide assurance that any potential monetary damages arising from the Boustead dispute will not be in excess of 7%

of the capital raised in our initial public offering.

The party prevailing in any proceeding under the Engagement Agreement may be entitled

to their costs and attorneys’ fees, which could be substantial.

As such, any proceeding arising from our Engagement Agreement with

Boustead may be expensive to defend and could result in a substantial settlement payment or damages award, and there can be no assurance

of a favorable outcome for us.

In addition, we have indemnified D.A.

Davidson & Co.

and the other underwriters against any liability or expenses they may be subject to or incur

in connection with the Boustead dispute.

and the other underwriters against any liability

or expenses they may be subject to or incur in connection with the Boustead dispute.

General Risk Factors Related to Our Business

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aside from a dispute with the placement agent of our 2020-2021 pre-IPO private placements, the Company has not been a party to any material

See “ Business—Legal Proceedings ” for additional information.

Legal Proceedings” for additional information.

If product liability lawsuits are brought

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In addition to sales through

our own platform, www.Zenhydro.com, we sell our products through third-party retailers and resellers.

However, it is evident to us that

the movement towards the legalization of cannabis in the U.S.

and its legalization in Canada has ultimately had a significant and positive

impact on our industry.

We are not currently subject directly to any state laws or regulations controlling participants in the legal cannabis

However, regulation of the cannabis industry does impact those that we believe represent many end-users for our products and,

accordingly, there can be no assurance that changes in regulation of the industry and more rigorous enforcement by federal authorities

will not have a material adverse effect on us.

our own platforms, www.Zenhydro.com and www.simpledeluxe.com, we sell our products through third-party retailers and resellers.

it is evident to us that the movement towards the legalization of cannabis in the U.S.

and its legalization in Canada has ultimately had

a significant and positive impact on our industry.

We are not currently subject directly to any state laws or regulations controlling

participants in the legal cannabis industry.

However, regulation of the cannabis industry does impact those that we believe represent

many end-users for our products and, accordingly, there can be no assurance that changes in regulation of the industry and more rigorous

enforcement by federal authorities will not have a material adverse effect on us.

Legislation and regulations pertaining to

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In addition to selling our

products through our own online platform, www.Zenhydro.com, we sell products, including hydroponic gardening products, through third-party

retailers and resellers.

End users may purchase these products for use in new and emerging industries that may not achieve market acceptance

in a manner that we can predict.

The demand for these products is dependent on the growth of these industries, which is uncertain, as

well as the laws governing the growth, possession, and use of cannabis by adults for both adult and medical use.

products through our own online platforms, www.Zenhydro.com and www.simpledeluxe.com, we sell products, including hydroponic gardening

products, through third-party retailers and resellers.

End users may purchase these products for use in new and emerging industries that

may not achieve market acceptance in a manner that we can predict.

The demand for these products is dependent on the growth of these industries,

which is uncertain, as well as the laws governing the growth, possession, and use of cannabis by adults for both adult and medical use.

Laws and regulations affecting

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We sell our products through

our website, www.Zenhydro.com, as well as through online third party retail platforms which do not exclusively sell to customers operating

in the cannabis industry.

Nonetheless, some of our customers may be using our products for purposes of cultivating cannabis.

cannabis industry are subject to a variety of laws and regulations that involve money laundering, financial recordkeeping

and proceeds of crime, including the BSA, as amended by the U.S.

PATRIOT Act, other anti-money laundering laws, and any related or similar

rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the United States.

In February 2014,

the Financial Crimes Enforcement Network of the Treasury Department (“FinCEN”) issued a memorandum (the “FinCEN Memo”)

providing guidance to banks seeking to provide services to cannabis businesses.

The FinCEN Memo outlines circumstances under which banks

may provide services to cannabis businesses without risking prosecution for violation of U.S.

federal money laundering laws.

to supplementary guidance that Deputy Attorney General Cole issued to U.S.

federal prosecutors relating to the prosecution of U.S.

laundering offenses predicated on cannabis violations of the CSA and outlines extensive due diligence and reporting requirements, which

most banks have viewed as onerous.

On June 29, 2020, FinCEN issued additional guidance for financial institutions conducting due

diligence and filing suspicious activity reports in connection with hemp-related business customers.

While these guidelines clarify that

financial institutions are not required to file suspicious activity reports solely based on a customer’s hemp-related business operations,

which must be operating lawfully under applicable state law and regulations, these requirements can still present challenges for certain

end users of our products to establish and maintain banking connections, and restrictions on cannabis-related banking activities remain.

In September 2019, the United States House of Representatives passed the SAFE Banking Act, which would permit commercial banks to

offer services to cannabis companies that are in compliance with state law, but the Senate has not taken up the SAFE Banking Act or other

similar legislation.

our websites, www.Zenhydro.com and www.simpledeluxe.com, as well as through online third-party retail platforms which do not exclusively

sell to customers operating in the cannabis industry.

Nonetheless, some of our customers may be using our products for purposes of cultivating

Investments in the U.S.

cannabis industry are subject to a variety of laws and regulations that involve money laundering, financial

recordkeeping and proceeds of crime, including the BSA, as amended by the U.S.

PATRIOT Act, other anti-money laundering laws, and any

related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the United States.

In February 2014, the Financial Crimes Enforcement Network of the Treasury Department (“FinCEN”) issued a memorandum

(the “FinCEN Memo”) providing guidance to banks seeking to provide services to cannabis businesses.

The FinCEN Memo outlines

circumstances under which banks may provide services to cannabis businesses without risking prosecution for violation of U.S.

money laundering laws.

It refers to supplementary guidance that Deputy Attorney General Cole issued to U.S.

federal prosecutors relating

to the prosecution of U.S.

money laundering offenses predicated on cannabis violations of the CSA and outlines extensive due diligence

and reporting requirements, which most banks have viewed as onerous.

On June 29, 2020, FinCEN issued additional guidance for financial

institutions conducting due diligence and filing suspicious activity reports in connection with hemp-related business customers.

these guidelines clarify that financial institutions are not required to file suspicious activity reports solely based on a customer’s

hemp-related business operations, which must be operating lawfully under applicable state law and regulations, these requirements can

still present challenges for certain end users of our products to establish and maintain banking connections, and restrictions on cannabis-related

banking activities remain.

In September 2019, the United States House of Representatives passed the SAFE Banking Act, which would

permit commercial banks to offer services to cannabis companies that are in compliance with state law, but the Senate has not taken up

the SAFE Banking Act or other similar legislation.

Risks Related to Our Common Stock

If we fail to comply

with the continued listing requirements of the Nasdaq Stock Market, it could result in our common stock being delisted, which could

adversely affect the market price and liquidity of our securities and could have other adverse effects.

August 24, 2023, we received a letter from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”)

stating that for the 30 consecutive business day period between July 13, 2023 to August 23, 2023 the Company’s common stock had

failed to maintain a minimum closing bid price of $1.00 per share, as required for continued listing on The Nasdaq Capital Market pursuant

to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the

Company has an initial period of 180 calendar days, or until February 20, 2024 (the “Compliance Period”), to regain compliance

with the Minimum Bid Price Requirement.

To regain compliance, the closing bid price of the Company’s common stock must meet or exceed

$1.00 per share for a minimum of 10 consecutive trading days, unless such period is extended by Nasdaq.

If the Company does not regain

compliance with the Minimum Bid Price Requirement by February 20, 2024, the Company may be eligible for an additional 180-day period to

regain compliance.

To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held

shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement,

and we would need to provide written notice of our intention to cure the bid price deficiency during the second compliance period, by

effecting a reverse stock split, if necessary.

the Company cannot regain compliance with the Minimum Bid Price Requirement during the Compliance Period or any subsequently granted compliance

period, Nasdaq will provide the Company with notice that our common stock will be subject to delisting.

At that time, the Company may

appeal Nasdaq’s delisting determination to a Nasdaq Hearings Panel.

While Nasdaq’s notice to the Company of noncompliance

has no immediate effect on the listing of our common stock and our common stock will continue to be listed on The Nasdaq Capital Market

under the symbol “IPW,” there can be no assurance that we will regain compliance with the Minimum Bid Price Requirement or

maintain compliance with any of the other Nasdaq continued listing requirements.

We will continue to monitor the closing bid price of

our common stock and may, if appropriate, consider available options to regain compliance with the Minimum Bid Price Requirement.

Our founders, officers and directors control,

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in reliance on your ability to have any control over our company.

See “Principal Stockholders” for further discussion of the

stockholding of our founders and principal stockholders.

See “Item 12.

Security Ownership of Certain Beneficial Owners

and Management and Related Stockholder Matters” for further discussion of the stockholding of our founders and principal stockholders.

Future sales of our common stock in the

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in opinion in the market regarding our business prospects or other factors, many of which may be outside our immediate control.

We do not intend to pay dividends for the foreseeable future

and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our Common Stock .

We do not intend to pay dividends for the

foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our

common stock .

The decision to pay cash dividends

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We intend to continue to make investments to support our business, which may require us to engage

in equity or debt financings to secure additional funds.

in equity or debt financing to secure additional funds.

Additional financing may not be available on terms favorable to us, if at all.

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the value of our common stock and diluting their interests.

As a public company, we are subject to increased costs in relation

to maintaining SEC and Nasdaq-related reporting requirements and our management is required to devote substantial time to compliance with

our public company reporting responsibilities and corporate governance practices.

As a public company, we are subject to increased

costs in relation to maintaining SEC and Nasdaq-related reporting requirements and our management is required to devote substantial time

to compliance with our public company reporting responsibilities and corporate governance practices.

As a Nasdaq-listed public

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predict or estimate the amount of additional costs we will incur as a public company or the specific timing of such costs.

As a result of being a public company, we are obligated to develop

and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal

controls may adversely affect investor confidence in our Company and, as a result, the value of our Common Stock.

As a result of being a public company, we

are obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the

adequacy of these internal controls may adversely affect investor confidence in our Company and, as a result, the value of our common

We are required, pursuant

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and any required remediation in a timely fashion once initiated.

Our compliance with Section 404 will require that we incur substantial

Our compliance with Section 404 requires that we incur substantial

accounting expenses and expend significant management efforts.

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to comply with the more stringent reporting requirements applicable to companies that are deemed accelerated filers or large accelerated

filers, including complying with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.

We cannot predict or estimate

the amount of additional costs we may incur or the timing of such costs.

filers, including complying with the auditor attestation requirements of Section 404.

We cannot predict or estimate the amount of additional

costs we may incur or the timing of such costs.

Our stockholders will experience further

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In this event, stockholders could lose some or all of their investment.

Staff Comments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors