What changed in this filing

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Item 1. Financial Statements

2024-05-14 compared with 2024-02-14 · 457 added, 483 removed, 1199 unchanged (44% of the section changed)

1 unchanged sentence

and Subsidiaries

Unaudited Condensed

Consolidated Balance Sheets

As of December 31, 2023

and June 30, 2023

Unaudited Condensed Consolidated Balance Sheets

As of March 31, 2024 and June 30, 2023

Current assets

7 unchanged sentences

Property and equipment, net

Deferred tax assets

Deferred tax assets, net

Non-current prepayments

11 unchanged sentences

Lease liability - current

Short-term loan payable - related party

Long-term promissory note payable - current portion

Revolving loan payable, net

Revolving loan payable

Income taxes payable

5 unchanged sentences

Total liabilities

Commitments and contingency

Commitments and contingencies

Stockholders' Equity

1 unchanged sentence

20,000,000 shares

0 shares issued and outstanding at December 31, 2023 and June 30, 2023

0 shares issued and outstanding at March 31, 2024 and June 30, 2023

Common stock, $ 0.001 par value;

180,000,000 shares

29,710,939 and 29,710,939 shares issued and outstanding at December 31, 2023 and June 30, 2023

29,818,232 and 29,710,939 shares issued and outstanding at March 31, 2024 and June 30, 2023

Additional paid in capital

4 unchanged sentences

Accumulated other comprehensive

Total stockholders’

Total liabilities and

stockholders’ equity

The accompanying notes

are an integral part of these unaudited condensed consolidated financial statements.

Total stockholders’ equity

Total liabilities and stockholders’

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

For the Three and Six Months Ended December 31, 2023 and 2022

Unaudited Condensed Consolidated Statements of

For the Three and Nine Months Ended March 31, 2024

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

TOTAL REVENUES

5 unchanged sentences

Total operating expenses

LOSS FROM OPERATIONS

( 2,552,347 )

INCOME (LOSS) FROM OPERATIONS

( 1,811,198 )

4 unchanged sentences

Loss on equity method investment

Other non-operating income

Total other expenses, net

LOSS BEFORE INCOME TAXES

( 2,606,922 )

( 4,341,023 )

( 4,172,155 )

Other non-operating income (expense)

Total other expenses,

INCOME (LOSS) BEFORE INCOME TAXES

( 2,123,353 )

PROVISION FOR INCOME TAX BENEFIT

( 2,782,539 )

( 11,097,353 )

PROVISION FOR INCOME TAX EXPENSE (BENEFIT)

( 2,085,126 )

NET INCOME (LOSS)

( 1,533,772 )

2 unchanged sentences

Non-controlling interest

NET LOSS ATTRIBUTABLE TO IPOWER INC.

$ ( 1,914,828 )

NET INCOME (LOSS) ATTRIBUTABLE TO IPOWER INC.

$ ( 1,530,534 )

1 unchanged sentence

$ ( 9,003,349 )

OTHER COMPREHENSIVE LOSS

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustments

COMPREHENSIVE LOSS ATTRIBUTABLE TO IPOWER INC.

$ ( 2,075,083 )

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO IPOWER

$ ( 1,512,930 )

2 unchanged sentences

WEIGHTED AVERAGE NUMBER OF COMMON STOCK

LOSSES PER SHARE

The accompanying notes

are an integral part of these unaudited condensed consolidated financial statements.

EARNINGS (LOSSES) PER SHARE

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

and Subsidiaries

Unaudited Condensed

Consolidated Statements of Changes in Stockholders' Equity

For the Three and Six Months Ended December 31, 2023 and 2022

Retained Earnings

Unaudited Condensed Consolidated Statements of

Changes in Stockholders' Equity

For the Three and Nine Months Ended March 31, 2024

Retained Earnings (Accumulated

Non-controlling

Accumulated other

Comprehensive

Paid in Capital

income (loss)

Accumulated Other Comprehensive Income

Balance, June 30, 2023

13 unchanged sentences

$ ( 223,096 )

Stock-based compensation

Restricted shares issued for vested RSUs

Foreign currency translation adjustments

Balance, March 31, 2024, unaudited

$ ( 10,887,703 )

$ ( 153,974 )

Balance, June 30, 2022

12 unchanged sentences

$ ( 4,209,867 )

The accompanying notes

are an integral part of these unaudited condensed consolidated financial statements.

( 1,530,534 )

( 1,533,772 )

Stock-based compensation

Foreign currency translation adjustments

Balance, March 31, 2023, unaudited

$ ( 5,740,401 )

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

and Subsidiaries

Unaudited Condensed

Consolidated Statements of Cash Flows

For the Six Months Ended December 31, 2023 and 2022

For the Six Months Ended December 31,

Unaudited Condensed Consolidated Statements of

For the Nine Months Ended March 31, 2024 and 2023

For the Nine Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

$ ( 9,012,227 )

Adjustments to reconcile net loss

to cash provided by operating activities:

Adjustments to reconcile net loss to cash provided by operating activities:

Depreciation and amortization expense

4 unchanged sentences

Non-cash operating lease expense

Amortization of debt premium / discount and non-cash

financing costs

Amortization of debt premium / discount and non-cash financing costs

Change in operating assets and liabilities

Accounts receivable

( 2,772,149 )

Deferred tax assets/liabilities

8 unchanged sentences

( 1,453,560 )

( 3,473,115 )

Income taxes payable

12 unchanged sentences

Payments on short-term loans

( 1,750,000 )

( 1,781,385 )

Proceeds from long-term loans

15 unchanged sentences

Right of use assets acquired under new operating leases

The accompanying notes

are an integral part of these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

Notes to Unaudited Condensed Consolidated Financial

As of December 31, 2023 and June 30, 2023 and

for the Three and Six Months Ended December 31, 2023 and 2022

As of March 31, 2024 and June 30, 2023 and for

the Three and Nine Months Ended March 31, 2024 and 2023

Note 1 - Nature of business and organization

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All intercompany balances and transactions have been eliminated in consolidation.

These unaudited condensed consolidated

financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes

thereto included in the Annual Report for the year ended June 30, 2023, which are included in Form 10-K filed with the SEC on

September 14, 2023.

These unaudited condensed consolidated financial

statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included

in the Annual Report for the year ended June 30, 2023, which are included in Form 10-K filed with the SEC on September 14, 2023.

Principles of Consolidation

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The balance sheet amounts of the VIE, with the

exception of equity, on December 31, 2023, were translated at 7.0786 RMB to $1.00.

The equity accounts were stated at their historical

The average translation rates applied to statements of operations and comprehensive income (loss) accounts for the six months ended

December 31, 2023 was 7.2201 RMB to $1.00.

Cash flows were also translated at average translation rates for the period and, therefore,

amounts reported on the statement of cash flows would not necessarily agree with changes in the corresponding balances on the unaudited

condensed consolidated balance sheet.

exception of equity, on March 31, 2024, were translated at 7.2212 RMB to $1.00.

The equity accounts were stated at their historical rates.

The average translation rates applied to statements of operations and comprehensive income (loss) accounts for the nine months ended March

31, 2024 was 7.2000 RMB to $1.00.

Cash flows were also translated at average translation rates for the period and, therefore, amounts

reported on the statement of cash flows would not necessarily agree with changes in the corresponding balances on the unaudited condensed

consolidated balance sheet.

Cash and cash equivalents

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other objective evidence indicates non-collectability of the accounts receivable.

Accounts receivable are recognized and

carried at the 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 the COVID-19 pandemic on our customers’ businesses and their ability to pay their

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.

Accounts receivable are recognized and carried

at the 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 the

COVID-19 pandemic on our customers’ businesses and their ability to pay their 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.

Equity method investment

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The Company accounts for goodwill under ASC Topic 350, Intangibles-Goodwill

Goodwill is not amortized but is reviewed

for potential impairment on an annual basis, or if events or circumstances indicate a potential impairment, at the reporting unit

The Company’s review for impairment includes an assessment of qualitative factors to determine whether it is more

likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill.

If it is determined

that it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill, a

quantitative goodwill impairment test is performed, which compares the fair value of the reporting unit with its carrying amounts,

including goodwill.

If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is

considered not impaired.

However, if the carrying amount of the reporting unit exceeds its fair value, an impairment loss will be

recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

engaged an independent third-party valuation firm in August 2022 to conduct an evaluation of goodwill impairment for the Company as

a whole at the consolidated reporting unit level as of June 30, 2022, which evaluation was conducted prior to the Company’s

filing of its Annual Report on Form 10-K for the period ended June 30, 2022.

Due to the decrease in the Company’s share price

subsequent to the filing of the June 30, 2022 Form 10-K and the net loss incurred during the quarter ended September 30, 2022, the

Company engaged the same valuation firm to review goodwill for impairment.

Based on this review, the Company concluded an impairment

loss of $ 3,060,034

as of September 30, 2022 was required.

The impairment amount was determined based on the discounted cash flows with the revised

projections reflecting the increase in freight and storage costs in the quarter ended September 30, 2022.

The Company also

considered the Market Capital Method, an alternative market approach, which suggested the Company’s goodwill is

partially impaired.

During the period ended December 31, 2023,

in addition to a qualitative goodwill impairment analysis following the steps laid out in ASC 350-20-35-3C, the Company also

performed a quantitative analysis using the Discounted Cash Flow and Market Capital Method and noted no goodwill impairment.

December 31, 2023 and 2022, the goodwill balance amounted to $ 3,034,110

and $ 3,034,110 , respectively.

Goodwill is not amortized but is reviewed for

potential impairment on an annual basis, or if events or circumstances indicate a potential impairment, at the reporting unit level.

Company’s review for impairment includes an assessment of qualitative factors to determine whether it is more likely than not that

the fair value of a reporting unit is less than its carrying value, including goodwill.

If it is determined that it is more likely than

not that the fair value of a reporting unit is less than its carrying value, including goodwill, a quantitative goodwill impairment test

is performed, which compares the fair value of the reporting unit with its carrying amounts, including goodwill.

If the fair value of

the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired.

However, if the carrying amount

of the reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the

total amount of goodwill allocated to that reporting unit.

The Company engaged an independent third-party valuation firm in August 2022

to conduct an evaluation of goodwill impairment for the Company as a whole at the consolidated reporting unit level as of June 30, 2022,

which evaluation was conducted prior to the Company’s filing of its Annual Report on Form 10-K for the period ended June 30, 2022.

Due to the decrease in the Company’s share price subsequent to the filing of the June 30, 2022 Form 10-K and the net loss incurred

during the quarter ended September 30, 2022, the Company engaged the same valuation firm to review goodwill for impairment.

Based on this

review, the Company concluded an impairment loss of $ 3,060,034 as of September 30, 2022 was required.

The impairment amount was determined

based on the discounted cash flows with the revised projections reflecting the increase in freight and storage costs in the quarter ended

September 30, 2022.

The Company also considered the Market Capital Method, an alternative market approach, which suggested the Company’s

goodwill is partially impaired.

During the period ended March 31, 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, 2024 and June 30, 2023, the goodwill balance amounted to $ 3,034,110 and $ 3,034,110 , respectively.

Intangible Assets, net

Finite life intangible assets at December

Finite life intangible assets at March 31, 2024

include a covenant not to compete, supplier relationships and software recognized as part of the acquisition of Anivia.

Intangible assets are recorded at the estimated fair value of these items at the date of acquisition, February 15, 2022.

assets are amortized on a straight-line basis over their estimated useful life as followings:

Intangible assets

are recorded at the estimated fair value of these items at the date of acquisition, February 15, 2022.

Intangible assets are amortized

on a straight-line basis over their estimated useful life as followings:

Schedule of estimated useful life

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value determinations.

As of December 31, 2023 and 2022, there were no indicators of impairment.

As of March 31, 2024 and 2023, there were no indicators of impairment.

Fair values of financial instruments

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accounts receivable, accounts payable and all other current assets and liabilities approximate fair values due to their short-term nature.

On February 15, 2022, as part of the

consideration paid for the acquisition of Anivia, the Company issued a two-year unsecured 6% subordinated promissory note, payable

in equal semi-annual installments commencing August 15, 2022 (the “Purchase Note”).

The principal amount of the Purchase

Note was $ 3.5

On February 15, 2022, the Company evaluated the fair value of the Purchase Note to be $ 3.6

million using the following inputs:

On February 15, 2022, as part of the consideration

paid for the acquisition of Anivia, the Company issued a two-year unsecured 6% subordinated promissory note, payable in equal semi-annual

installments commencing August 15, 2022 (the “Purchase Note”).

The principal amount of the Purchase Note was $ 3.5 million.

On February 15, 2022, the Company evaluated the fair value of the Purchase Note to be $ 3.6 million using the following inputs:

Schedule of assumptions for financial instruments

3 unchanged sentences

Discount rate

As of December 31, 2023, the outstanding balance

of the Purchase Note was $ 1,150,508 , including principal due of $ 875,000 , a premium of $ 6,445 , and $ 269,063 of accrued interest.

As of March 31, 2024, the outstanding balance

of the Purchase Note was $ 0 .

For other financial instruments to be reported

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Total advertising and promotional costs included

in selling and fulfillment expenses for the three and six months ended December 31, 2023 and 2022 were as following:

in selling and fulfillment expenses for the three and nine months ended March 31, 2024 and 2023 were as following:

Schedule of advertising costs

Three Months Ended December 31,

Six Months Ended December 31,

Three Months Ended March 31,

Nine Months Ended March 31,

Advertising and promotion

3 unchanged sentences

Operating expenses

Operating expenses, which consist of selling and fulfillment and general

and administrative expenses, are expensed as incurred.

Operating expenses, which consist of selling and

fulfillment and general and administrative expenses, are expensed as incurred.

Vendor warranty credits resulting from refund of returns

on quality issues are recorded to offset merchant selling fees.

During the three and nine months ended March 31, 2024 and 2023, the Company

recorded vendor credit of $ 858,456 and $ 0 , respectively.

Inventory, net

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The Company follows ASC 280, Segment Reporting.

The Company’s chief operating decision maker, the Chief Executive Officer, reviews the consolidated results of operations when

making decisions about allocating resources and assessing the performance of the Company as a whole and, hence, the Company has only

one reportable segment.

The Company’s chief operating decision maker, the Chief Executive Officer, reviews the consolidated results of operations when making

decisions about allocating resources and assessing the performance of the Company as a whole and, hence, the Company has only one reportable

The Company does not distinguish between markets or segments for the purpose of internal reporting.

months ended December 31, 2023 and 2022, sales through Amazon to Canada and other foreign countries were approximately 9.8 %

of the Company’s total sales.

During the six months ended December 31, 2023, sales of hydroponic products, including ventilation

and grow light systems, was approximately 19.3 %

of the Company’s total sales and the remaining 80.7 %

consisted of general gardening, home goods, and other products and accessories.

During the six months ended December 31, 2022, sales

of hydroponic products, including ventilation and grow light systems, were approximately 47 %

of the Company’s total sales and the remaining 53 %

consisted of general gardening, home goods and other products and accessories.

As of December 31, 2023 and June 30, 2023, the Company

had approximately $ 2.1

million and $ 1.6

million of inventory stored in China, respectively.

The Company’s majority of long-lived assets are located in California,

United States, a majority of the deferred tax assets are U.S.

related, and a majority of the Company’s revenues are derived from

within the U.S.

For the nine months ended

March 31, 2024 and 2023, sales through Amazon to Canada and other foreign countries were approximately 8.5 % and 12.8 % of the Company’s

During the nine months ended March 31, 2024, sales of hydroponic products, including ventilation and grow light systems,

was approximately 21.7 % of the Company’s total sales and the remaining 78.3 % consisted of general gardening, home goods, and other

products and accessories.

During the nine months ended March, 2023, sales of hydroponic products, including ventilation and grow light

systems, were approximately 46 % of the Company’s total sales and the remaining 54 % consisted of general gardening, home goods and

other products and accessories.

As of March, 2024 and June 30, 2023, the Company had approximately $ 1.9 million and $ 1.6 million of inventory

stored in China, respectively.

The Company’s majority of long-lived assets are located in California, United States, a majority

of the deferred tax assets are U.S.

related, and a majority of the Company’s revenues are derived from within the U.S.

The Company records right-of-use (“ROU”)

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The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

In November 2023, The FASB issued ASU 2023-07, Segment Reporting (Topic

In November 2023, The FASB issued ASU 2023-07,

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The amendments apply to all public entities that are required to report segment

information in accordance with Topic 280, Segment Reporting.

The amendments in this ASU are intended to improve reportable segment disclosure

requirements primarily through enhanced disclosures about significant segment expenses.

The amendments apply to all public entities that are required

to report segment information in accordance with Topic 280, Segment Reporting.

The amendments in this ASU are intended to improve reportable

segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The key amendments:

Require that a public entity

disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker

(CODM) and included within each reported measure of segment profit or loss.

Require that a public entity disclose, on an annual and

interim basis, an amount for other segment items by reportable segment and a description of its composition.

The other segment items category

is the difference between segment revenue less the significant expenses disclosed and each reported measure of segment profit or loss.

Require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently

required by FASB Accounting Standards Codification® Topic 280, Segment Reporting, in interim periods.

Clarify that if the CODM

uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources,

a public entity may report one or more of those additional measures of segment profit.

However, at least one of the reported segment profit

or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement

principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements.

a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment

profit or loss in assessing segment performance and deciding how to allocate resources.

Require that a public entity that has a single

reportable segment provide all the disclosures required by the amendments in the ASU and all existing segment disclosures in Topic 280.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December

that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating

decision maker (CODM) and included within each reported measure of segment profit or loss.

Require that a public entity disclose, on

an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition.

The other segment

items category is the difference between segment revenue less the significant expenses disclosed and each reported measure of segment

profit or loss.

Require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets

currently required by FASB Accounting Standards Codification® Topic 280, Segment Reporting, in interim periods.

Clarify that if

the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate

resources, a public entity may report one or more of those additional measures of segment profit.

However, at least one of the reported

segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent

with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements.

Require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s)

of segment profit or loss in assessing segment performance and deciding how to allocate resources.

Require that a public entity that

has a single reportable segment provide all the disclosures required by the amendments in the ASU and all existing segment disclosures

in Topic 280.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning

after December 15, 2024.

Early adoption is permitted.

A public entity should apply the amendments retrospectively to all prior periods presented in the

financial statements.

Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the

significant segment expense categories identified and disclosed in the period of adoption.

The Company does not expect the adoption of

this standard to have a material impact on its consolidated financial statements.

A public entity should apply the amendments retrospectively to all prior periods

presented in the financial statements.

Upon transition, the segment expense categories and amounts disclosed in the prior periods should

be based on the significant segment expense categories identified and disclosed in the period of adoption.

The Company does not expect

the adoption of this standard to have a material impact on its consolidated financial statements.

In October 2023, the FASB issued ASU 2023-06,

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its financial statements due to its majority equity ownership and control over operations.

For the three and six months ended December

For the three and nine months ended March 31,

2024 and 2023, the impact of GSM’s activities were immaterial to the Company’s unaudited condensed consolidated financial

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and the financial statements of DHS have been consolidated from the date such control existed, February 15, 2022.

Total fair value of the consideration for

the transaction was $ 10,629,000 ,

which was paid to White Cherry as follows:

at closing, the Company (i) paid $ 3,500,000

in the form of a two-year unsecured 6% subordinated promissory note, payable in equal semi-annual installments commencing August 15,

2022 (the “Purchase Note”), (ii) issued 3,083,700

restricted shares of the Company’s common stock, which shares were subject to a lock-up period of 180 days and remain subject

to insider trading rules, and (iii) an additional $ 1,500,000

in cash which was to be paid after closing.

Total fair value of the consideration for the

transaction was $ 10,629,000 , which was paid to White Cherry as follows:

at closing, the Company (i) paid $ 3,500,000 in the form of a two-year

unsecured 6% subordinated promissory note, payable in equal semi-annual installments commencing August 15, 2022 (the “Purchase Note”),

(ii) issued 3,083,700 restricted shares of the Company’s common stock, which shares were subject to a lock-up period of 180 days

and remain subject to insider trading rules, and (iii) an additional $ 1,500,000 in cash which was to be paid after closing.

JP Morgan Chase Bank, the Company’s senior

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Li may not engage in other employment without the consent of the WFOE.

The acquisition of Anivia was accounted for

as a business combination under ASC 805.

As the acquirer for accounting purposes, the Company has estimated the fair value of Anivia

and its subsidiaries’ assets acquired and conformed the accounting policies of Anivia to its own accounting policies.

Company applied the income approach and cost approach in determining the fair value of the intangible assets, which intangible

assets consisted of a covenant not to compete, supplier relationship and software.

The fair value of the remaining assets acquired

and liabilities assumed were not significantly different from their carrying values at the acquisition date.

In addition, pursuant

to the Transfer Agreement, the Sellers made certain representations and warranties, including that other than the items presented on

the balance sheet on February 15, 2022, DHS, the operating VIE, was not subject to any loans, debts, liabilities, guarantees or

other contingent liabilities at the Closing date.

In the event of any breach of any of the representations and warranties, the

sellers will bear joint and several liability for any direct or indirect losses suffered by the Company as a result thereof.

Company recognized approximately $ 6.1

million of goodwill in the transaction, which is primarily due to the subsumed assembled workforce intangible assets.

not deductible for income tax purposes.

The Company expensed with the acquisition certain legal and accounting costs of $ 54,702

as general and administration expenses and $ 50,000

The acquisition of Anivia was accounted for as

a business combination under ASC 805.

As the acquirer for accounting purposes, the Company has estimated the fair value of Anivia and

its subsidiaries’ assets acquired and conformed the accounting policies of Anivia to its own accounting policies.

The Company applied

the income approach and cost approach in determining the fair value of the intangible assets, which intangible assets consisted of a covenant

not to compete, supplier relationship and software.

The fair value of the remaining assets acquired and liabilities assumed were not significantly

different from their carrying values at the acquisition date.

In addition, pursuant to the Transfer Agreement, the Sellers made certain

representations and warranties, including that other than the items presented on the balance sheet on February 15, 2022, DHS, the operating

VIE, was not subject to any loans, debts, liabilities, guarantees or other contingent liabilities at the Closing date.

In the event of

any breach of any of the representations and warranties, the sellers will bear joint and several liability for any direct or indirect

losses suffered by the Company as a result thereof.

The Company recognized approximately $ 6.1 million of goodwill in the transaction,

which is primarily due to the subsumed assembled workforce intangible assets.

Goodwill is not deductible for income tax purposes.

Company expensed with the acquisition certain legal and accounting costs of $ 54,702 as general and administration expenses and $ 50,000

paid to JPM as financing fees.

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support to the VIE for the periods presented where the Company was not otherwise contractually required to provide such support.

As of December 31, 2023 and 2022, there was no

pledge or collateralization of the VIE assets that would be used to settle obligations of the VIE.

As of March 31, 2024 and June 30, 2023, there

was no pledge or collateralization of the VIE assets that would be used to settle obligations of the VIE.

The carrying amounts of the assets, liabilities

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Schedule of carrying amount of the VIE’s assets and liabilities

December 31, 2023

March 31, 2024

June 30, 2023

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The operating results of the VIE were as follows

for the three and six months ended December 31, 2023:

for the three and nine months ended March 31, 2024:

Schedule of operating results of the VIE

2 unchanged sentences

The operating results of the VIE were as follows for the three and

six months ended December 31, 2022:

nine months ended March 31, 2023:

Net income (loss) after elimination of intercompany transactions

$ ( 177,947 )

$ ( 911,564 )

For the three and six months ended December 31, 2023, the VIE contributed

approximately $ 1.8 million and $ 3.9 million of revenue and $ 0.15 million and $ 0.2 million of net loss before elimination, respectively.

For the three and six months ended December 31, 2022, the VIE contributed approximately $ 1.1 million and $ 4.3 million of revenue and $ 0.1

million and $ 0.6 million of net loss before elimination, respectively.

For the three and nine months ended March 31,

2024, the VIE contributed approximately $ 1.6 million and $ 5.5 million of revenue and $ 0.1 million and $ 0.3 million of net loss before

elimination, respectively.

For the three and nine months ended March 31, 2023, the VIE contributed approximately $ 0.7 million and $ 5 .0

million of revenue and $ 0.1 million and $ 0.7 million of net loss before elimination, respectively.

Note 6 – Accounts receivable, net

2 unchanged sentences

Schedule of accounts receivable

December 31, 2023

March 31, 2024

June 30, 2023

2 unchanged sentences

Total accounts receivable

The changes in allowance for credit losses on

accounts receivable are summarized below:

Schedule of allowance for credit losses on

accounts receivable

Allowance for

Credit Losses

Balance at June 30, 2022

Allowance recorded during the three months ended September 30, 2022

Balance at September 30, 2022

Allowance recorded during the three months ended December 31, 2022

Balance at December 31, 2022

Balance at June 30, 2023

Allowance recorded during the three months ended September 30, 2023

Balance at September 30, 2023

Allowance recorded during the three months ended December 31, 2023

Balance at December 31, 2023

During the three and nine months ended March 31,

2024 and 2023, there were no changes in allowance for credit losses on accounts receivable.

Note 7 – Inventories, net

As of December 31, 2023 and June 30, 2023, inventories

As of March 31, 2024 and June 30, 2023, inventories

consisted of finished goods ready for sale, net of allowance for obsolescence, amounted to $ 11,872,286 and $ 20,593,889 , respectively.

For the three and six months ended December 31,

For the three and nine months ended March 31,

2024, the Company recorded inventory reserve expense of $ 0 and $ 222,755 , respectively.

For the three and six months ended December

For the three and nine months ended March 31, 2023,

the Company recorded inventory reserve expense of $ 163,901 and $ 238,899 , respectively.

As of December 31, 2023 and June 30, 2023,

allowance for obsolescence was $ 781,655 and $ 558,899 , respectively.

As of March 31, 2024 and June 30, 2023, allowance

for obsolescence was $ 781,655 and $ 558,899 , respectively.

Note 8 – Prepayments and other current assets, net

As of December 31, 2023 and June 30, 2023, prepayments and other current

As of March 31, 2024 and June 30, 2023, prepayments and other current

assets consisted of the following:

Schedule of prepayments and other current assets

December 31, 2023

Schedule of prepayments and other current

March 31, 2024

June 30, 2023

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Other receivables consisted of delivery fees of

$ 64,831 and $ 165,962 and receivables from one and two unrelated parties for their use of the Company’s courier accounts at December

31, 2023 and June 30, 2023.

The changes in allowance for credit losses on

other receivables are summarized below:

Schedule of allowance for credit losses on other receivables

Credit Losses

Balance at June 30, 2022

Allowance recorded during the three months ended September 30, 2022

Balance at September 30, 2022

Allowance recorded during the three months ended December 31, 2022

Balance at December 31, 2022

Balance at June 30, 2023

Allowance recorded during the three months ended September 30, 2023

Balance at September 30, 2023

Allowance recorded during the three months ended December 31, 2023

Balance at December 31, 2023

$ 6,619 and $ 165,962 from one and two unrelated parties for their use of the Company’s courier accounts at March 31, 2024 and June

During the three and nine months ended March 31, 2024 and 2023, there

were no changes in allowance for credit losses on other receivables.

Note 9 – Non-current prepayments

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In addition, there was a $ 28,119 down payment on a four-year car lease.

As of December 31, 2023 and June 30, 2023, total non-current

As of March 31, 2024 and June 30, 2023, total non-current

prepayments were $ 320,190 and $ 531,456 , respectively.

For the three and six months ended December 31, 2023, the Company recorded $ 70,422

For the three and nine months ended March 31, 2024, the Company recorded $ 70,422

and $ 211,266 amortization of prepayments in the operating expenses, respectively.

For the three and six months ended December 31, 2022,

For the three and nine months ended March 31, 2023,

the Company recorded $ 107,917 and $ 323,751 amortization of prepayments in the operating expenses, respectively.

Note 10 – Intangible assets, net

As of December 31, 2023 and June 30, 2023, intangible

As of March 31, 2024 and June 30, 2023, intangible

assets, net, consisted of the following:

Schedule of intangible assets, net

December 31, 2023

Schedule of intangible

March 31, 2024

June 30, 2023

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15, 2022 through acquisition of Anivia.

The weighted average remaining life for finite-lived intangible assets at December 31, 2023 was

approximately 6.7 years.

The amortization expense for the three and six months ended December 31, 2023 and 2022 was $ 162,343 and $ 324,686 ,

respectively.

The amortization expense for the three and six months ended December 31, 2022 was $ 162,343 and $ 324,686 , respectively.

December 31, 2023, finite-lived intangible assets are expected to be amortized over their estimated useful lives, which ranges from a

period of five to 10 years, and the estimated remaining amortization expense for each of the five succeeding years thereafter is as follows:

The weighted average remaining life for finite-lived intangible assets at March 31, 2024 was approximately

The amortization expense for the three and nine months ended March 31, 2024 was $ 162,343 and $ 487,028 , respectively.

amortization expense for the three and nine months ended March 31, 2023 was $ 162,343 and $ 487,028 , respectively.

At March 31, 2024, finite-lived

intangible assets are expected to be amortized over their estimated useful lives, which ranges from a period of five to 10 years, and

the estimated remaining amortization expense for each of the five succeeding years thereafter is as follows:

Schedule of amortization expense

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Intangible assets, net

Note 11 – Other payables and accrued liabilities

As of December 31, 2023 and June 30, 2023, other payables and accrued

Note 11 – Other payables and accrued

As of March 31, 2024 and June 30, 2023, other payables and accrued

liabilities consisted of the following:

Schedule of other payables and accrued liabilities

December 31, 2023

Schedule of other payables and accrued

March 31, 2024

June 30, 2023

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the Company in the process of inventory procurement.

During the six months ended December 31, 2023 and 2022, the Company purchased a total

During the nine months ended March 31, 2024 and 2023, the Company purchased a total

of $ 0 and $ 31,385 , respectively, in inventories from a supplier which had a payment term of 90 days with a 2% premium on the purchase

price, which was presented as financing cash flows from short term loans on the statement of cash flows.

As of December 31, 2023 and June

As of March 31, 2024 and June

30, 2023, the outstanding balance included in other payables to this supplier was $ 0 and $ 0 .

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On November 12, 2021, the Company entered into

a Credit Agreement with JPMorgan Chase Bank, N.A.

(“JPMorgan”), as administrative agent, issuing bank and swingline lender,

for an asset-based revolving loan (“ABL”) of up to $25 million with key terms listed as follows:

a Credit Agreement with JPM, as administrative agent, issuing bank and swingline lender, for an asset-based revolving loan (“ABL”)

of up to $25 million with key terms listed as follows:

Borrowing base equal to the sum of

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Below is a summary of the interest expense recorded

for the three and six months ended December 31, 2023 and 2022:

for the three and nine months ended March 31, 2024 and 2023:

Schedule of interest expense

Three Months Ended December 31,

Six Months Ended December 31,

Three Months Ended March 31,

Nine Months Ended March 31,

Accrued interest

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Amortization of debt discount

As of December 31, 2023 and June 30, 2023, the

outstanding amount of the revolving loan payable, net of debt discount and including interest payable was $ 2,862,857 and $ 9,791,191 , respectively.

As of March 31, 2024 and June 30, 2023, the outstanding

amount of the revolving loan payable, net of debt discount and including interest payable was $ 6,011,860 and $ 9,791,191 , respectively.

On October 7, 2022, the Company entered into a

second amendment to the credit agreement and consent (the “Second Amendment to the Credit Agreement”), originally dated November

12, 2021, as amended, with JPMorgan.

12, 2021, as amended, with JPM.

The Company entered into the Second Amendment to the Credit Agreement primarily for the purpose of

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that the Company does not generally conduct due diligence on its individual retail customers.

On November 11, 2022, the Company and JPMorgan

On November 11, 2022, the Company and JPM

entered into a default waiver and consent agreement (the “Waiver Letter”) pursuant to which the parties recognized that the

Company was in default on its failure to satisfy the minimum Excess Availability requirement of $7,500,000, as defined in the Credit Agreement,

and deliver a certificate to JPMorgan accurately reflecting the Excess Availability (together, the “Existing Defaults”).

the terms of the Waiver Letter, JPMorgan agreed to waive the right to enforce an event of default based on the aforementioned Existing

As of December 31, 2023, the Company was in compliance with the ABL covenants.

and deliver a certificate to JPM accurately reflecting the Excess Availability (together, the “Existing Defaults”).

the terms of the Waiver Letter, JPM agreed to waive the right to enforce an event of default based on the aforementioned Existing

As of March 31, 2024, the Company was in compliance with the ABL covenants.

Promissory note payable

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In August 2023, the Company paid the third installment of $ 875,000 .

For the three months ended December 31, 2023, the Company recorded accrued interest of $ 13,125

In February 2024, the Company paid the fourth installment of $ 875,000 .

For the three months ended March 31, 2024, the Company recorded interest of $ 6,617

and amortization of note premium of $ 6,445 .

For the six months ended December 31, 2023, the Company recorded accrued interest of $ 32,813

For the nine months ended March 31, 2024, the Company recorded interest of $ 39,429

and amortization of note premium of $ 31,602 .

As of December 31, 2023, including $ 269,063

of accrued interest and $ 6,445

of unamortized premium, the total outstanding balance of the Purchase Note was $ 1,150,508 ,

which is presented on the unaudited condensed consolidated balance sheet as a current portion of $ 1,150,508

and a non-current portion of $ 0 .

In February 2024, the note premium was fully amortized, and the outstanding balance of the principal and interest was fully paid

As of March 31, 2024, the total outstanding balance of the Purchase Note was $ 0 .

As of June 30, 2023, including $ 236,250

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Short-term loan payable

On July 8, 2023, the Company entered into an

agreement with White Cherry Limited (“White Cherry”), a BVI company owned by the former owner of DHS, for an on-demand,

unsecured and subordinated loan (“On-demand Loan”).

Pursuant to the agreement, White Cherry agreed to loan the Company

the amount requested.

The On-demand Loan bears interest at the rate of the Secured Overnight Financing Rate, or SOFR, plus 1% per

The On-demand Loan is due in 30 days upon receipt of White Cherry’s notice of repayment.

On July 16, 2023, the Company

borrowed $ 2,000,000

from White Cherry and repaid $ 1 million

on July 31, 2023.

For the three and six months ended December 31, 2023, the Company recorded accrued interest of $ 26,128

and $ 32,189 ,

respectively.

As of December 31, 2023, including the accrued interest, the outstanding balance of the On-demand Loan was $ 1,032,189 .

On July 8, 2023, the Company entered into an agreement

with White Cherry Limited (“White Cherry”), a BVI company owned by the former owner of DHS, for an on-demand, unsecured and

subordinated loan (“On-demand Loan”).

Pursuant to the agreement, White Cherry agreed to loan the Company the amount requested.

The On-demand Loan bears interest at the rate of the Secured Overnight Financing Rate, or SOFR, plus 1% per annum.

The On-demand Loan

is due in 30 days upon receipt of White Cherry’s notice of repayment.

On July 16, 2023, the Company borrowed $ 2,000,000 from White

Cherry, repaid $ 1 million on July 31, 2023 and $ 1 million on January 31, 2024.

For the three and nine months ended March 31, 2024, the

Company recorded interest of $ 723 and $ 32,911 , respectively.

As of March 31, 2024, the outstanding balance of the On-demand Loan was $ 0 .

Note 13 - Related party transactions

2 unchanged sentences

disclosed in Note 1 and Note 2 above.

For the three and six months ended December 31, 2023, the Company received and recorded sublease

fee of $ 0 and $ 0 as other non-operating income, respectively.

For the three and six months ended December 31, 2022, the Company recorded

a sublease fee of $ 140,000 and $ 387,750 as other non-operating income.

During the period ended December 31, 2023,

the Company started selling products through MII Strategy Inc.

For the three and nine months ended March 31, 2024, the Company received and recorded sublease fee

of $ 0 and $ 0 as other non-operating income, respectively.

For the three and nine months ended March 31, 2023, the Company recorded a sublease

fee of $ 0 and $ 387,750 as other non-operating income.

During the period ended March 31, 2024, the Company

started selling products through MII Strategy Inc.

(“MII”), a company owned by the Company’s CEO, Mr.

Chenlong Tan.

As of December 31, 2023, the total amount due from MII was $ 47,566 .

As of March 31, 2024, the total amount due from MII was $ 59,901 .

On February 15, 2022, the Company assumed $ 92,246

2 unchanged sentences

the local government in accordance with the PRC rules.

As of December 31, 2023 and June 30, 2023, the balance of advance from shareholders

As of March 31, 2024 and June 30, 2023, the balance of advance from shareholders

was $ 85,581 and $ 85,200 , respectively.

On July 8, 2023, the Company entered into an

agreement with White Cherry for an on-demand loan.

On July 8, 2023, the Company entered into an agreement

with White Cherry for an on-demand loan.

See Note 12 above for details.

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States, upon completion of the acquisition of Anivia in February 2022, the Company is subject to corporate income taxes in PRC.

and its subsidiaries are subject to BVI or Hong Kong income taxes but did not have any operations for the six months ended December 31,

and its subsidiaries are subject to BVI or Hong Kong income taxes but did not have any operations for the nine months ended March 31,

2024 and 2023.

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high-tax exclusion for DHS under the Final Regulations (T.D.

As the result of the election, no GILTI tax was recorded as of December

As the result of the election, no GILTI tax was recorded as of March

31, 2024 and 2023.

2 unchanged sentences

a stock acquisition, the Goodwill is not deductible for tax purposes.

For the three and six months ended December 31,

For the three and nine months ended March 31,

2024, as a result of the Company’s inability to establish a reliable estimate for annual effective tax rate, the Company calculated

1 unchanged sentence

in Accounting Standards Codification (ASC) 740-270-30-18.

The income tax provision for the three and six

months ended December 31, 2023 and 2022 consisted of the following:

The income tax provision for the three and nine

months ended March 31, 2024 and 2023 consisted of the following:

Schedule of provision for income tax

Three Months Ended December 31,

Six Months Ended December 31,

Three Months Ended March 31,

Nine Months Ended March 31,

Total current income tax provision

( 1,818,222 )

( 1,259,785 )

Total deferred taxes

( 2,482,995 )

( 1,786,125 )

Total provision for income taxes

2 unchanged sentences

$ ( 2,085,126 )

$ ( 1,495,545 )

The Company is subject to U.S.

5 unchanged sentences

tax at the calculated statutory rates:

Schedule of reconciliation of effective income tax rate

Three Months Ended December 31,

Six Months Ended December 31,

Schedule of reconciliation of effective income

Three Months Ended March 31,

Nine Months Ended March 31,

Statutory tax rate

3 unchanged sentences

Effective tax rate

As of December 31, 2023, prepaid income taxes

to US tax authorities and income tax payable to Chinese tax authorities was $ 41,987 and $ 283,519 , respectively.

As of March 31, 2024, prepaid income taxes to

US tax authorities and income tax payable to Chinese tax authorities was $ 31,496 and $ 277,921 , respectively.

As of June 30, 2023, prepaid

3 unchanged sentences

Schedule of deferred taxes

December 31, 2023

March 31, 2024

June 30, 2023

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Net deferred tax assets

For the six months ended December 31, 2023, the Company recorded $ 66,104

For the nine months ended March 31, 2024, the Company recorded $ 64,990

of valuation allowance to reduce deferred tax assets for the losses incurred by DHS.

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earnings per share for the periods presented:

Schedule of computation of basic and diluted earnings per share

Three Months Ended December 31,

Six Months Ended December 31,

Net loss attributable to iPower Inc.

$ ( 1,914,828 )

Schedule of computation of basic and diluted

earnings per share

Three Months Ended March 31,

Nine Months Ended March 31,

Net income (loss) attributable to iPower Inc.

$ ( 1,530,534 )

2 unchanged sentences

Weighted-average shares used in computing basic and diluted earnings per share*

Losses per share of ordinary shares - basic and diluted

Due to the anti-dilutive effect, the computation of basic and diluted EPS did not include the shares underlying the exercise of warrants and unvested RSUs as the Company had a net loss for the three and six months ended December 31, 2023 and 2022.

The computation of diluted EPS did not include the shares underlying the exercise of options granted as none of the options were vested as December 31, 2023 and 2022.

For the three and six months ended December 31,

2023, 40,981 and 107,347 vested but unissued shares of restricted stock units under the 2020 Equity Incentive Plan (as discussed in Note

16) are considered issued shares and therefore are included in the computation of basic losses per share when the shares are fully vested.

For the three and six months ended December 31,

2022, 154,261 vested but unissued shares of restricted stock units under the 2020 Equity Incentive Plan (as discussed in Note 16) are

considered issued shares and therefore are included in the computation of basic earnings (losses) per share when the shares are fully

Earnings (losses) per share of ordinary shares - basic and diluted

Due to the anti-dilutive effect, the computation of basic and diluted EPS did not include the shares underlying the exercise of warrants as the Company had a net loss and/or the warrants were out of the money (the exercise price is higher than the market price) for the three and nine months ended March 31, 2024 and 2023.

The computation of diluted EPS did not include the shares underlying the

exercise of options granted as none of the options were vested and the exercise price of the options was higher than the market price

as of March 31, 2024 and 2023.

For the three and nine months ended March 31, 2024, 25,331

vested but unissued shares of restricted stock units under the 2020 Equity Incentive Plan (as discussed in Note 16) are considered

issued shares and therefore are included in the computation of basic earnings (losses) per share when the shares are fully

For the three and nine months ended March 31, 2023, 12,400

vested but unissued shares of restricted stock units under the 2020 Equity Incentive Plan (as discussed in Note 16) are considered

issued shares and therefore are included in the computation of basic losses per share when the shares are fully

Note 16 – Equity

As of December 31, 2023, the total authorized

shares of capital stock were 200,000,000 shares consisting of 180,000,000 shares of Common Stock (“Common Stock”) and 20,000,000

As of March 31, 2024, the total authorized shares

of capital stock were 200,000,000 shares consisting of 180,000,000 shares of Common Stock (“Common Stock”) and 20,000,000

shares of preferred stock (the “Preferred Stock”), each with a par value of $ 0.001 per share.

18 unchanged sentences

of the shares was $ 5,528,373 , calculated with a discount of lack of marketability of 21%, which was determined using the Black Scholes

As of December 31, 2023 and June 30, 2023, there

were 29,710,939 and 29,710,939 shares of Common Stock issued and outstanding, respectively.

During the quarter ended March 31, 2024, the Company

issued 107,293 shares of restricted Common Stock for RSUs vested.

As of March 31, 2024 and June 30, 2023,

there were 29,818,232 and 29,710,939 shares of Common Stock issued and outstanding, respectively.

Preferred Stock

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and the qualifications, limitations or restrictions thereof.

As of December 31, 2023 and June 30, 2023, respectively, there were no shares

As of March 31, 2024 and June 30, 2023, respectively, there were no shares

of Preferred Stock issued and outstanding.

Equity Incentive Plan

On May 5, 2021, the Company’s Board of

Directors adopted, and its stockholders approved and ratified, the iPower Inc.

Amended and Restated 2020 Equity Incentive Plan (the

The Plan allows for the issuance of up to 5,000,000 shares

of Common Stock, whether in the form of stock options, restricted stock, restricted stock units, stock appreciation rights,

performance units, performance shares and other stock or cash awards.

The general purpose of the Plan is to provide an incentive to

the Company’s directors, officers, employees, consultants and advisors by enabling them to share in the future growth of the

Company’s business.

On November 16, 2021 and December 6, 2022, the Company filed a registration statement on Form S-8

registering all shares issuable under the Plan, which Form S-8 was subsequently amended on December 6, 2022, September 15, 2023 and

November 22, 2023.

On May 5, 2021, the Company’s Board of Directors

adopted, and its stockholders approved and ratified, the iPower Inc.

Amended and Restated 2020 Equity Incentive Plan (the “Plan”).

The Plan allows for the issuance of up to 5,000,000 shares of Common Stock, whether in the form of stock options, restricted stock, restricted

stock units, stock appreciation rights, performance units, performance shares and other stock or cash awards.

The general purpose of the

Plan is to provide an incentive to the Company’s directors, officers, employees, consultants and advisors by enabling them to share

in the future growth of the Company’s business.

On November 16, 2021 and December 6, 2022, the Company filed a registration statement

on Form S-8 registering all shares issuable under the Plan, which Form S-8 was subsequently amended on December 6, 2022, September 15,

2023 and November 22, 2023.

Restricted Stock Unit

Following completion of the Company’s

IPO on May 11, 2021, pursuant to their letter agreements, the Company awarded 46,546

restricted stock units (“RSUs”) under the Plan to its independent directors, its Chief Financial Officer, and certain

other employees and consultants, all of which vested over 12 months following the grant date and were subject to other restrictions

until the filing of a Registration Statement on Form S-8 registering the shares.

The fair value of the RSUs was determined based on

$5.00 per share, the initial listing price of the Company’s Common Stock on the grant date.

During the six months ended

December 31, 2023, the Company granted an additional 62,600

shares of RSUs.

For the three and six months ended December 31, 2023, the Company recorded $ 30,863

of stock-based compensation expense.

forfeiture of RSUs occurred during the six months ended December 31, 2023 and 2022.

As of December 31, 2023 and June 30, 2023, the

unvested number of RSUs was 47,481

and the unamortized expense was $ 34,439

and $ 22,500 ,

respectively.

Following completion of the Company’s IPO

on May 11, 2021, pursuant to their letter agreements, the Company awarded 46,546 restricted stock units (“RSUs”) under the

Plan to its independent directors, its Chief Financial Officer, and certain other employees and consultants, all of which vested over

12 months following the grant date and were subject to other restrictions until the filing of a Registration Statement on Form S-8 registering

The fair value of the RSUs was determined based on $5.00 per share, the initial listing price of the Company’s Common

Stock on the grant date.

During the nine months ended March 31, 2024, the Company granted an additional 62,600 shares of RSUs.

three and nine months ended March 31, 2024, the Company recorded $ 20,075 and $ 58,438 of stock-based compensation expense.

forfeiture of RSUs occurred during the nine months ended March 31, 2024 and 2023.

As of March 31, 2024 and June 30, 2023, the unvested

number of RSUs was 18,900 and 38,793 and the unamortized expense was $ 14,364 and $ 22,500 , respectively.

Information relating to RSU grants is summarized

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Total RSUs Issued

Total Fair Market Value of RSUs Issued as Compensation (1)

Market Value of

RSUs Issued as Compensation (1)

RSUs granted, but not vested, at June 30, 2023

RSUs forfeited

RSUs granted, but not vested, at December 31, 2023

RSUs granted, but not vested, at March 31, 2024

_____________________

The total fair value was based on the current stock price on the grant date.

As of December 31, 2023, of the 285,923 vested

RSUs, 178,576 shares of Common Stock were issued, and 107,347 shares were to be issued in the near future.

On May 12, 2022, the Compensation Committee

of the Board of Directors approved an incentive plan for the Company’s executive officers consisting of a cash performance

bonus of $ 60,000

As of March 31, 2024, of the 314,504 vested RSUs,

285,869 shares, including 107,293 shares issued during the current quarter, of Common Stock were issued, and 28,635 shares were to be issued in the near future.

On May 12, 2022, the Compensation Committee of

the Board of Directors approved an incentive plan for the Company’s executive officers consisting of a cash performance bonus of

$ 60,000 to be awarded to Kevin Vassily, CFO of the Company, and grants of stock option (the “Option Grants”) exercisable to

purchase (i) 3,000,000

shares of Common Stock to Chenlong Tan, CEO and (ii) 330,000

shares of Common Stock to Mr.

The Option Grants, which were issued on May 13, 2022, have an exercise price of $ 1.12

per share, a contractual term of 10 years, and consist of six vesting tranches with a vesting schedule based entirely on the attainment of

both operational milestones (performance conditions) and market conditions, assuming continued employment of the recipients through

each vesting date.

Each of the six vesting tranches of the Option Grants will vest when both (i) the market capitalization milestone

for such tranche, which begins at $150 million for the first tranche and increases by increments of $50 million through the fourth

tranche and $100 million thereafter (based on achieving such market capitalization for five consecutive trading days) has been

achieved, and (ii) any one of the following six operational milestones focused on revenue or any one of the six operational

milestones focused on operating income have been achieved during a given fiscal year.

purchase (i) 3,000,000 shares of Common Stock to Chenlong Tan, CEO and (ii) 330,000 shares of Common Stock to Mr.

Grants, which were issued on May 13, 2022, have an exercise price of $ 1.12 per share, a contractual term of 10 years, and consist of six

vesting tranches with a vesting schedule based entirely on the attainment of both operational milestones (performance conditions) and

market conditions, assuming continued employment of the recipients through each vesting date.

Each of the six vesting tranches of the

Option Grants will vest when both (i) the market capitalization milestone for such tranche, which begins at $150 million for the first

tranche and increases by increments of $50 million through the fourth tranche and $100 million thereafter (based on achieving such market

capitalization for five consecutive trading days) has been achieved, and (ii) any one of the following six operational milestones focused

on revenue or any one of the six operational milestones focused on operating income have been achieved during a given fiscal year.

The estimated achievement status of the operational

milestones as of December 31, 2023 was as follows:

in Fiscal Year

Income in Fiscal Year

milestones as of March 31, 2024 was as follows:

Revenue in Fiscal Year

Operating Income in Fiscal Year

(in Millions)

The Company evaluated the performance condition

23 unchanged sentences

The total fair value of the Option Grants was

$3.2 million of which, at December 31, 2023, $2.3 million is deemed probable of vesting.

As of December 31, 2023, none of the options

For the three and six months ended December 31, 2023, the Company recorded $ 110,382 and $ 220,764 of stock-based compensation

$3.2 million of which, at March 31, 2024, $2.3 million is deemed probable of vesting.

As of March 31, 2024, none of the options had vested.

For the three and nine months ended March 31, 2024, the Company recorded $ 110,382 and $ 331,146 of stock-based compensation expense related

to the Option Grants.

For the three and nine months ended March 31, 2023, the Company recorded $ 110,382 and $ 331,146 of stock-based compensation

expense related to the Option Grants.

For the three and six months ended December 31, 2022, the Company recorded $ 110,382 and $ 220,764

of stock-based compensation expense related to the Option Grants.

As of December 31, 2023, unrecognized compensation cost related to tranches

probable of vesting is approximately $1.5 million and will be recognized over two years to nine years, depending on the tranche.

As of March 31, 2024, unrecognized compensation cost related to tranches probable of vesting is

approximately $1.4 million and will be recognized over two years to nine years, depending on the tranche.

Note 17 – Warrants

9 unchanged sentences

Note investors were reclassified to additional paid in capital as the terms became fixed upon closing of the IPO.

Through December 31,

Through March 31, 2024,

none of the private placement investors exercised any of their warrants.

As such, as of December 31, 2023 and June 30, 2023, the

number of shares issuable under the outstanding warrants was 685,715 , with an average exercise price of $ 5.00 per share.

As such, as of March 31, 2024 and June 30, 2023, the number of

shares issuable under the outstanding warrants was 685,715 , with an average exercise price of $ 5.00 per share.

Note 18 - Concentration of risk

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the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.

As of December 31, 2023 and June 30, 2023, $ 1,488,027

and $ 3,735,642 , respectively,

were deposited with various major financial institutions in the United States and PRC.

Accounts at each institution in the United States

are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000.

As of March 31, 2024 and June 30, 2023, $ 2,714,724

and $ 3,735,642 , respectively, were deposited with various major financial institutions in the United States and PRC.

Accounts at each

institution in the United States are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000.

The Company had approximately

million and $ 2.7 million , respectively, in

excess of the FDIC insurance limit, as of December 31, 2023 and June 30, 2023.

$ 1.1 million and $ 2.7 million , respectively, in excess of the FDIC insurance limit, as of March 31, 2024 and June 30, 2023.

Accounts receivable are typically unsecured and

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Customer and vendor concentration risk

For the six months ended December 31, 2023 and

For the nine months ended March 31, 2024 and 2023,

Amazon Vendor and Amazon Seller customers accounted for 91 % and 91 % of the Company's total revenues, respectively.

As of December

31, 2023 and June 30, 2023, accounts receivable from Amazon Vendor and Amazon Seller accounted for 93 % and 95 % of the Company’s

total accounts receivable.

For the six months ended December 31, 2023 and

As of March 31, 2024

and June 30, 2023, accounts receivable from Amazon Vendor and Amazon Seller accounted for 91 % and 95 % of the Company’s total accounts

receivable, respectively.

For the nine months ended March 31, 2024 and 2023,

two suppliers accounted for 19 % ( 10 % and 9 %) and 39 % ( 28 % and 11 %) of the Company's total purchases, respectively.

As of December

31, 2023 and June 30, 2023, accounts payable to two suppliers accounted for 54 % ( 42 % and 12 %) and 55 % ( 49 % and 6 %) of the Company’s

total accounts payable.

As of March 31, 2024

and June 30, 2023, accounts payable to two suppliers accounted for 45 % ( 36 % and 9 %) and 55 % ( 49 % and 6 %) of the Company’s total

accounts payable, respectively.

Note 19 - Commitments and contingencies

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The financial statements reflected $ 6,632,349 and $ 7,837,345 , respectively, of operating lease right-of-use

assets, and $ 7,568,542 and $ 8,265,220 , respectively, of operating lease liabilities as of December 31, 2023 and June 30, 2023.

Three months Ended December 31, 2023 and 2022:

assets, and $ 7,056,669 and $ 8,265,220 , respectively, of operating lease liabilities as of March 31, 2024 and June 30, 2023.

Three months Ended March 31, 2024 and 2023:

Schedule of lease cost and other information

Operating lease cost (included in G&A in the Company's statement of operations)

Operating lease cost (included in selling and fulfillment in the Company's statement of operations)

Other information

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Average discount rate - operating leases

Six Months Ended December 31, 2022 and 2021:

Nine Months Ended March 31, 2024 and 2023:

Operating lease cost (included in selling and fulfillment in the Company's statement of operations)

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or results of operations of the Company.

Pursuant to an engagement agreement, dated and

effective August 31, 2020 (the “Engagement Agreement”), with Boustead Securities LLC (“Boustead”), the Company

engaged Boustead to act as its exclusive placement agent for private placements of its securities and as a potential underwriter for its

initial public offering.

On February 28, 2021, the Company informed Boustead that it was terminating the Engagement Agreement and any

continuing obligations the Company may have had under its terms.

On April 15, 2021, the Company provided formal written notice to Boustead

of its termination of the Engagement Agreement and all obligations thereunder, effective immediately.

On April 30, 2021, Boustead filed

a statement of claim with the Financial Institute Regulatory Authority, or FINRA, demanding to arbitrate the dispute, and seeking, among

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

Pursuant to an engagement

agreement, dated and effective August 31, 2020 (the “Engagement Agreement”), with Boustead Securities LLC (“Boustead”),

the Company engaged Boustead to act as its exclusive placement agent for private placements of its securities and as a potential underwriter

for its initial public offering.

On February 28, 2021, the Company informed Boustead that it was terminating the Engagement Agreement

and any continuing obligations the Company may have had under its terms.

On April 15, 2021, the Company provided formal written notice

to Boustead of its termination of the Engagement Agreement and all obligations thereunder, effective immediately.

On April 30, 2021, Boustead

filed a statement of claim with the Financial Institute Regulatory Authority, or FINRA, demanding to arbitrate the dispute, and seeking,

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

Davidson & Co.

(who acted as underwriter in the Company’s IPO).

This matter is presently scheduled to hold its evidentiary hearing before a FINRA arbitration panel during the first two weeks of March

(who acted as underwriter in the Company’s

This matter was scheduled to hold its evidentiary hearing before a FINRA arbitration panel during the first two weeks of

The Company has agreed to indemnify D.A.

Davidson & Co.

and the other underwriters against any liability or expense they may

incur or be subject to arising out of the Boustead dispute.

Additionally, Chenlong Tan, the Company’s Chairman, President and Chief

Executive Officer and a beneficial owner more than 5% of the Company’s Common Stock, has agreed to reimburse the Company for any

judgments, fines and amounts paid or actually incurred by the Company or an indemnitee in connection with such legal action or in connection

with any settlement agreement entered into by the Company or an indemnitee up to a maximum of $3.5 million in the aggregate, with the

sole source of funding of such reimbursement to come from sales of shares then owned by Mr.

The Company cannot reasonably estimate

the amount of potential exposure as of the date of this report.

and the other underwriters against any liability or expense they

may incur or be subject to arising out of the Boustead dispute.

Additionally, Chenlong Tan, the Company’s Chairman, President and

Chief Executive Officer and a beneficial owner more than 5% of the Company’s Common Stock, has agreed to reimburse the Company for

any judgments, fines and amounts paid or actually incurred by the Company or an indemnitee in connection with such legal action or in

connection with any settlement agreement entered into by the Company or an indemnitee up to a maximum of $3.5 million in the aggregate,

with the sole source of funding of such reimbursement to come from sales of shares then owned by Mr.

On April 3, 2024, the

Company and the underwriter of its initial public offering, D.A.

Davidson & Co (“D.A.

Davidson”), entered into a settlement

agreement and mutual release (the “Settlement Agreement”) with Boustead Securities, LLC (“BSL”) and its current

and former employees, officers, directors, partners, agents and affiliates, pursuant to which all parties agreed to release all claims

in exchange for the Company’s payment of $ 1.3 million (the “Settlement Amount”) to BSL.

The Settlement Agreement was

entered into for purposes of settling in full the FINRA Arbitration (FINRA Case No.

22-01133) which had been brought by BSL against the

Company and D.A.

Davidson after the Company opted not to complete its initial public offering with BSL but instead engaged and completed

its initial public offering with D.A.

In entering into the Settlement Agreement, the Company is required to pay the Settlement

Amount in four equal installments of $325,000 on each of April 3, 2024, May 3, 2024, June 3, 2024 and July 3, 2024, with the April and

May payments having been completed on or about April 3 and May 3, 2024.

Within five days of its receipt of the final payment, or by July

8, 2024, BSL will be obligated to dismiss the FINRA Arbitration against the Company, with prejudice, after which time the Company will

be required to dismiss, with prejudice, all counterclaims brought by the Company against BSL.

As of March 31, 2024, the Company did not

accrue any expenses in connection with the settlement agreement.

In conjunction with

entry into the Settlement Agreement, the Company’s CEO and co-founder, Chenlong Tan, and Allan Huang, also a co-founder of the

Company, entered into a pledge agreement (the “Pledge Agreement”) with the Company pursuant to which they each pledged 1,300,000

shares of their iPower common stock, for a total of 2,600,000

shares (the “Pledged Shares”), in order that the Company may, from time to time, sell such Pledged Shares into the

market on behalf of Messrs.

Tan and Huang in order to recoup the Settlement Amount.

In an effort to contain or slow the COVID-19 outbreak,

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In addition, in February 2022, the Russian Federation

began conducting military operations against Ukraine, and in October 2023, an armed conflict between Hamas-led Palestinian militant

groups and Israeli military forces began, both of which have since escalated into prolonged wars.

While we do not do business in those

regions, the military conflicts in Ukraine and in Israel have resulted in global economic uncertainty and increased the cost of various

In response to these types of events, should they directly impact our supply chain or other operations, we may experience

or be exposed to supply chain disruptions which could cause us to seek alternate sources for product supply or suffer consequences that

are unexpected and difficult to mitigate.

Any of these risks might have a materially adverse impact on our business operations and our

financial position or results of operations.

Although, it is difficult to predict the impact that these factors may have on our business

in the future, we have experienced a delay in, as well as an increase in costs in shipping, and the resulting inventory level increase

in our warehouse facilities, thus resulting in reduced profits.

In addition, supply chain disruptions may put upward pressure on our costs

and increase the risk that we may be unable to acquire the materials and services we need to continue to make certain products.

began conducting military operations against Ukraine, and in October 2023, an armed conflict between Hamas-led Palestinian militant groups

and Israeli military forces began, both of which have since escalated into prolonged wars.

While we do not do business in those regions,

the military conflicts in Ukraine and in Israel have resulted in global economic uncertainty and increased the cost of various commodities.

In response to these types of events, should they directly impact our supply chain or other operations, we may experience or be exposed

to supply chain disruptions which could cause us to seek alternate sources for product supply or suffer consequences that are unexpected

and difficult to mitigate.

Any of these risks might have a materially adverse impact on our business operations and our financial position

or results of operations.

Although, it is difficult to predict the impact that these factors may have on our business in the future, we

have experienced a delay in, as well as an increase in costs in shipping, and the resulting inventory level increase in our warehouse

facilities, thus resulting in reduced profits.

In addition, supply chain disruptions may put upward pressure on our costs and increase

the risk that we may be unable to acquire the materials and services we need to continue to make certain products.

On April 13, 2020, the Company entered into an

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to be issued.

The Company did not have any material subsequent events that required recognition or additional disclosure

in the unaudited condensed consolidated financial statements presented.

Other than as disclosed in Note 19 above, no material subsequent events that required recognition or additional disclosure

in the consolidated financial statements are presented.

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-Q

Item 1. Financial Statements