What changed in this filing

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Item 1A. Risk Factors

2024-09-20 compared with 2023-09-15 · 262 added, 314 removed, 1032 unchanged (36% of the section changed)

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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.

Our founders, officers and directors may control, and may continue to control,

our company for the foreseeable future, including the outcome of matters requiring stockholder approval.

The Company faces intense competition in the hydroponics marketplace which could prohibit us from developing or increasing our customer base beyond present levels.

Our ability to ensure consistency in the quality of our products and supply chain.

Approximately 98% of our current revenues are derived from sales of our products through online third-party platforms, including Amazon.com, Walmart and eBay;

Approximately 99% of our current revenues are derived from sales of our products through online third-party platforms, including Amazon.com, Tiktok, Temu, Walmart, and eBay;

any disruption to these business channels could be detrimental to our business.

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 availability and cost of transportation for our products is vital to our success, and the loss

of availability or increase in the cost of transportation or freight costs could have an unfavorable impact on our business, results

of operations, financial condition, and cash flows.

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.

The occurrence of any epidemic, including the COVID-19 pandemic or any pandemic alike, and any resurgence in related infections, whether in the U.S., China or elsewhere, along with any efforts to mitigate their 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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Certain relationships, acquisitions, strategic alliances and investments could result in operating issues, dilutions and other harmful or unintended consequences which may adversely impact our business and the results of our operations.

Our continued investment and development in our in-house branded products is inherently risky and could disrupt our ongoing business.

Our continued investment and development in our in-house branded products are inherently risky and could disrupt our ongoing business.

If the Company is unable to maintain and continue to develop our e-commerce platform, our reputation and operating results may be materially harmed.

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.

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

Risks Related to Our Business and Products

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that contain ingredients or otherwise prevent us from developing and manufacturing certain products and product innovations.

The availability and cost of transportation

for our products is vital to our success, and the loss of availability or increase in the cost of transportation or freight costs could

have an unfavorable impact on our business, results of operations, financial condition, and cash flows.

ability to obtain adequate and reasonably priced means of transportation to import and distribute our products is a key factor in our

Delays in transportation, including weather-related delays and disruptions due to a pandemic or similar public health emergency,

could have a material adverse effect on our business and results of operations.

Further, higher fuel costs and increased line haul costs

due to industry capacity constraints, customer delivery requirements and a more restrictive regulatory environment, could negatively impact

our financial results.

If we were unable to pass higher freight costs to our customers in the form of price increases, those

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

increase in the selling prices for our products resulting from a pass-through of increased freight costs could

also have an adverse impact on the volume of products we sell, and as a result, our business, financial condition, and operating results

The ongoing conflict between Russia and

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results of operations and financial condition.

The COVID-19 pandemic

and the efforts to mitigate its impact may have an adverse effect on our business, liquidity, results of operations, financial condition

and price of our securities.

The ongoing pandemic involving

the novel strain of coronavirus, or COVID-19, and the measures taken to combat it, may have certain and adverse effects on our business.

Public health authorities and governments at local, national and international levels have announced various measures to respond to this

Some measures that directly or indirectly impact our business include:

The occurrence of any epidemic or pandemic,

including but not limited to COVID-19 or similar infectious diseases, and any resurgence in related infections, whether in the U.S., China

or elsewhere, along with efforts to mitigate their impact, could adversely affect our business, liquidity, operations, financial condition,

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

The emergence of any epidemic

or pandemic, and the measures taken to combat such health crises by public health authorities and governments at local, national, and

international levels, may have significant adverse effects on our business.

These measures, which may directly or indirectly impact our

operations, include but are not limited to:

Voluntary or mandatory quarantines;

Restrictions on travel;

limiting gatherings of people in public places.

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.

Limitations on gatherings in public places;

Temporary closures of non-essential businesses;

Supply chain disruptions;

Changes in consumer behavior and spending patterns.

In the event of a future epidemic

or pandemic, we cannot predict the duration of such an outbreak, the effectiveness of our response, or the full extent of the disruption

to our operations.

The impact may vary depending on the nature and severity of the health crisis, as well as the specific measures implemented

to contain its spread and mitigate its effects.

Furthermore, even after an

epidemic or pandemic subsides, we may continue to experience adverse effects to our business as a result of a pandemic’s overall

global economic impact, including any recession, economic downturn or increased unemployment that has occurred or may occur in the future.

We have a limited operating history on which

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An estimated 99% 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.

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

any disruption in our selling efforts on such third

party platforms could substantially disrupt our business.

While we maintain our own

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

1% of our sales, the bulk of our overall sales, or approximately 99%, occurred on third party platforms such as Amazon.com, Tiktok, Walmart

eBay and other platforms.

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negatively impact our overall revenues.

Many of our suppliers are experiencing operational

difficulties as a result of COVID-19, which in turn may have an adverse effect on our ability to provide, or timely provide, products

to our customers.

Any disruption in our supply chain, including an increase in shipping and/or storage costs, and the consistency and

availability of our supply chain, could negatively affect our revenues and overall business strategy.

The measures being taken to

combat the pandemic are impacting our suppliers and may have a destabilizing affect on our supply chain.

For example, some manufacturing

plants have closed and work at other plants has been curtailed in many places where we source our products.

Some of our suppliers have

had to temporarily close a facility for disinfecting after employees tested positive for COVID-19, and others have faced staffing shortages

from employees who are sick or apprehensive about coming to work.

Further, the ability of our suppliers to ship their goods to us has

become difficult as transportation networks and distribution facilities have had reduced capacity and have been dealing with changes in

the types of goods being shipped, all of which have caused an increase in shipping costs and affected the availability of inventories

to meet our sales demand.

Any disruption in our supply chain, including

an increase in shipping and/or storage costs, and the consistency and availability of our supply chain, could negatively affect our revenues

and overall business strategy.

Any disruption in our supply

chain, including an increase in shipping and/or storage costs, and changes in the consistency and availability of our supply chain, could

negatively affect our revenues and overall business strategy.

For example, during the COVID-19 pandemic, some manufacturing plants closed

and work at other plants was curtailed in many places where we sourced our products and some of our suppliers had to temporarily close

a facility for disinfecting after employees tested positive for COVID-19, and others faced staffing shortages from employees who were

sick or apprehensive about coming to work during the pandemic.

Additionally, we have experienced that the ability of our suppliers to

ship their goods to us became difficult as transportation networks and distribution facilities had reduced capacity and were dealing with

changes in the types of goods being shipped.

All of these factors caused an increase in shipping costs and affected the availability of

inventories to meet our sales demand during those times.

Thus, the difficulties experienced

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Nonetheless, should there be any further disruption,

caused by the pandemic, it may negatively affect our inventory and delay our ability to timely deliver merchandise to our stores and customers,

which in turn will adversely affect our revenues and results of operations.

If the difficulties experienced by our suppliers continues,

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 affected.

it may negatively affect our inventory and delay our ability to timely deliver merchandise to our stores and customers, which in turn

will adversely affect our revenues and results of operations.

If the difficulties experienced by our suppliers and us continues, we cannot

guarantee that we will be able to locate alternative sources of supply for our merchandise on acceptable terms, or at all.

If 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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Uncertain global economic

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

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

conditions could adversely affect our business.

Although the impact of the COVID-19 pandemic has waned, we nonetheless still experience

some follow on effects, which are 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.

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

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

year ended June 30, 2024 were manufactured in and imported from China.

At present, we have 11 suppliers in the U.S.

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

Our China-based

Our China-based subsidiaries, Dayourenzi

(Shenzhen) Technology Co., Ltd.

and Daheshou (Shenzhen) Information Technology Co., Ltd., through which we procure the majority of our

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

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.

We recently acquired two China-based

subsidiaries, Dayourenzi (Shenzhen) Technology Co., Ltd.

and Daheshou (Shenzhen) Information Technology Co., Ltd., through which we procure

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

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.

(the WFOE”) and Daheshou (Shenzhen) Information

Technology Co., Ltd.

(the “Operating Company”).

(The WFOE and the Operating Company together are referred to as our “China-based

Subsidiaries”).

The Operating Company has historically provided the bulk of our China-based procurement and logistical needs and

we believe its acquisition will serve to streamline our procurement of goods and shipping, as well as reduce costs by bringing these services

Our China-based subsidiaries are owned by us through contractual arrangements with our Hong Kong subsidiary, Fly Elephant Limited,

and its parent company, Anivia Limited, a British Virgin Islands company.

In addition, our China-based subsidiaries may be at risk of

influence by the PRC government as they are subject to the laws, rules and regulations of the PRC, which can be complex and evolve rapidly.

The PRC government has the power to exercise significant oversight and discretion over the conduct of our China-based Subsidiaries, and

the regulations to which they are subject may change rapidly and with little notice to us or our shareholders.

As a result, the application,

interpretation, and enforcement of new and existing laws and regulations in the PRC are often uncertain.

In addition, these laws and regulations

may be interpreted and applied inconsistently by different agencies or authorities, and inconsistently with our own policies and practices.

New laws, regulations and other government directives in the PRC may also be costly to comply with, and such compliance or any associated

inquiries or investigations or any other government actions may, as regards our China-based subsidiaries:

(the WFOE”) and Daheshou (Shenzhen) Information Technology Co., Ltd.

“Operating Company”).

(The WFOE and the Operating Company together are referred to as our “China-based Subsidiaries”).

The Operating Company has historically provided the bulk of our China-based procurement and logistical needs and we believe its acquisition

will serve to streamline our procurement of goods and shipping, as well as reduce costs by bringing these services in house.

Our China-based

subsidiaries are owned by us through contractual arrangements with our Hong Kong subsidiary, Fly Elephant Limited, and its parent company,

Anivia Limited, a British Virgin Islands company.

In addition, our China-based subsidiaries may be at risk of influence by the PRC government

as they are subject to the laws, rules and regulations of the PRC, which can be complex and evolve rapidly.

The PRC government has the

power to exercise significant oversight and discretion over the conduct of our China-based Subsidiaries, and the regulations to which

they are subject may change rapidly and with little notice to us or our shareholders.

As a result, the application, interpretation, and

enforcement of new and existing laws and regulations in the PRC are often uncertain.

In addition, these laws and regulations may be interpreted

and applied inconsistently by different agencies or authorities, and inconsistently with our own policies and practices.

New laws, regulations

and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations

or any other government actions may, as regards our China-based subsidiaries:

Delay or impede development,

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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.

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.

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.

The 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.

We face intense competition that could prohibit

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tactics may change or have unforeseen effects, which could be detrimental to our business.

Acquisitions, other

strategic alliances, and investments could result in operating difficulties, dilution, and other harmful consequences that may adversely

impact our business and results of operations.

Acquisitions, other strategic alliances,

and investments could result in operating difficulties, dilution, and other harmful consequences that may adversely impact our business

and results of operations.

Acquisitions are an important

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In addition, the anticipated benefits and synergies of many of our acquisitions may not materialize.

Our ongoing investment

in and development of our new in-house branded product line is inherently risky and could disrupt our ongoing businesses.

Our ongoing investment in and development

of our new in-house branded product line is inherently risky and could disrupt our ongoing businesses.

We have invested and expect

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condition, and operating results.

If we are unable

to effectively execute our e-commerce business, our reputation and operating results may be harmed.

If we are unable to effectively execute

our e-commerce business, our reputation and operating results may be harmed.

We sell certain of our products

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or if any garden and distribution centers shut down for any reason, including as a result of fire or other natural disaster, or pursuant

to expanded stay-at-home orders or other restrictions due to the current COVID-19 pandemic, we could face shortages of inventory, which

would result in our inability to properly our online store.

Such a situation could cause us to incur significantly higher costs and lead

to longer lead times associated with distributing products to our customers, which could cause us to lose customers.

Experiencing any

of these issues could have a material adverse effect on our business and harm our reputation.

to expanded stay-at-home orders or other restrictions due to any potential pandemic, we could face shortages of inventory, which would

result in our inability to properly our online store.

Such a situation could cause us to incur significantly higher costs and lead to

longer lead times associated with distributing products to our customers, which could cause us to lose customers.

Experiencing any of

these issues could have a material adverse effect on our business and harm our reputation.

A substantial proportion of our sales occur

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or others, on commercially reasonable terms, or at all.

Our reliance on

a limited base of suppliers for certain products, such as light ballasts, may result in disruptions to our business and adversely affect

our financial results.

We rely on a limited number

of suppliers for certain of our hydroponic products and other supplies.

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

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.

Our reliance on a limited base of suppliers

for certain products, such as light ballasts, may result in disruptions to our business and adversely affect our financial results.

We rely on a limited number of

suppliers for certain of our products and supplies.

For the years ended June 30, 2024 and 2023, one supplier accounted for 10% and 27%

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 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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disruptions in production, which could have a material adverse effect on our financial condition, results of operations and cash flows.

A significant interruption

in the operation of our or our suppliers’ facilities could impact our capacity to produce products and service our customers, which

could adversely affect revenues and earnings.

A significant interruption in the operation

of our or our suppliers’ facilities could impact our capacity to produce products and service our customers, which could adversely

affect revenues and earnings.

Operations at our and our

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have a material adverse effect on our customer relationships, revenues, earnings, and financial position.

If our suppliers

are unable to source raw materials in sufficient quantities, on a timely basis, and at acceptable costs, our ability to sell our products

may be harmed.

If our suppliers are unable to source raw

materials in sufficient quantities, on a timely basis, and at acceptable costs, our ability to sell our products may be harmed.

The manufacture of some of

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differences between our estimates and the actual amounts of products we require, which could harm our business and results of operations.

Disruptions in

availability or increases in the prices of raw materials sourced by suppliers could adversely affect our results of operations.

Disruptions in availability or increases

in the prices of raw materials sourced by suppliers could adversely affect our results of operations.

We source many of our product

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which can require additional investment and delay bringing a product to market.

If our suppliers

that currently, or in the future, sell directly to the retail market in which we conduct our current or future business, enhance these

efforts and cease or decrease their sales through us, our ability to sell certain products could be harmed.

If our suppliers that currently, or in the

future, sell directly to the retail market in which we conduct our current or future business, enhance these efforts and cease or decrease

their sales through us, our ability to sell certain products could be harmed.

Our distribution and sales

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direct-to-customer efforts, our product offerings, reputation, operation and business could be materially adversely affected.

Our operations

may be impaired if our information technology systems fail to perform adequately or if we are the subject of a data breach or cyber-attack.

Our operations may be impaired if our information

technology systems fail to perform adequately or if we are the subject of a data breach or cyber-attack.

We rely on information technology

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or inadvertent or unauthorized use or disclosure of data that we store or handle as part of providing our products.

We may not be able

to adequately protect our intellectual property and other proprietary rights that are material to our business.

We may not be able to adequately protect

our intellectual property and other proprietary rights that are material to our business.

Our ability to compete effectively

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program and by licensing or acquiring additional products and technologies from third parties.

is dependent upon several factors, including functionality, competitive pricing, ease of use, the safety and efficacy of our products

and our ability to identify, select and acquire the rights to products and technologies on terms that are acceptable to us.

hydroponics industry is characterized by rapid technological change and innovation.

New technologies, techniques or products may emerge

that might offer better combinations of price and performance or better address customer requirements as compared to our current or future

products, as well as those products of third-party vendors that we make available for sale.

Competitors who have greater financial, marketing

and sales resources than we do may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies,

standards, or customer requirements.

Any new product we identify for internal development, licensing or acquisition may require additional

development efforts prior to commercial sale.

Due to the significant lead time and complexity involved in bringing a new product to the

market, we are required to make a number of assumptions and estimates regarding the commercial feasibility of a new product.

These assumptions

and estimates may prove incorrect, resulting in our introduction of a product that is not competitive at the time of launch.

Such success is dependent upon several

factors, including functionality, competitive pricing, ease of use, the safety and efficacy of our products and our ability to identify,

select and acquire the rights to products and technologies on terms that are acceptable to us.

The hydroponics industry is

characterized by rapid technological change and innovation.

New technologies, techniques or products may emerge that might offer better

combinations of price and performance or better address customer requirements as compared to our current or future products, as well as

those products of third-party vendors that we make available for sale.

Competitors who have greater financial, marketing and sales resources

than we do may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards,

or customer requirements.

Any new product we identify for internal development, licensing or acquisition may require additional development

efforts prior to commercial sale.

Due to the significant lead time and complexity involved in bringing a new product to the market, we

are required to make a number of assumptions and estimates regarding the commercial feasibility of a new product.

These assumptions and

estimates may prove incorrect, resulting in our introduction of a product that is not competitive at the time of launch.

We anticipate

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business, financial condition, and results of operation.

ability to attract new customers and increase revenue from existing customers depends in large part on our ability to enhance and improve

our own products, maintain relationships with other vendors and suppliers, and to make compelling new products available for sale through

our enterprise.

Any new product that we develop or offer for sale may not be introduced in a timely or cost-effective manner, may contain

defects or may not achieve the marketplace acceptance necessary to generate significant revenue.

If we are unable to successfully develop,

license or acquire new products to make available for sale, enhance our existing inventory offerings to meet customer requirements, or

otherwise gain market acceptance, our business and financial condition and results of operation would be harmed.

Our ability to attract new

customers and increase revenue from existing customers depends in large part on our ability to enhance and improve our own products, maintain

relationships with other vendors and suppliers, and to make compelling new products available for sale through our enterprise.

product that we develop or offer for sale may not be introduced in a timely or cost-effective manner, may contain defects or may not achieve

the marketplace acceptance necessary to generate significant revenue.

If we are unable to successfully develop, license or acquire new

products to make available for sale, enhance our existing inventory offerings to meet customer requirements, or otherwise gain market

acceptance, our business and financial condition and results of operation would be harmed.

We have identified certain material weaknesses

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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 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.

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, 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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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

2021, we unilaterally terminated an engagement agreement with Boustead Securities LLC and may be subject to litigation or arbitration

in the event we are not able to come to agreement on amounts Boustead deems itself to be owed under such agreement.

Pursuant to an engagement

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

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

our initial public offering.

The Engagement Agreement set forth certain terms and conditions, including that in the event the Company

completed a private placement or a public offering of its securities, Boustead would receive (i) cash compensation equal to 7% of the

offering proceeds, plus (ii) a non-accountable expense allowance equal to 1% of the gross amount to be disbursed to the Company, plus

(iii) warrants to purchase the equivalent of 7% of the stock issued in such offering.

The term of the Engagement Agreement was the later

to occur of (i) 18 months from the date Boustead received an executed copy of the Engagement Agreement from the Company or (ii) 12 months

from the completion date of the initial public offering or (iii) the mutual written agreement of the Company and Boustead.

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

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.

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.

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.

General Risk Factors Related to Our Business

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Since inception,

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

Legal Proceedings” for additional information.

aside from a dispute with the placement agent of our 2020-2021 pre-IPO private placements, which dispute has been settled as of the date

of this Annual Report, the Company has not been a party to any material litigation.

Legal Proceedings” for additional

If product liability lawsuits are brought

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fluctuate, resulting in changes in our working capital.

Our results of

operations could be materially harmed if we are unable to accurately forecast customer demand for our products and manage our inventory.

Our results of operations could be materially

harmed if we are unable to accurately forecast customer demand for our products and manage our inventory.

We seek to maintain sufficient

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results of operations.

The failure of

third parties to meet their contractual, regulatory, and other obligations could adversely affect our business.

The failure of third parties to meet their

contractual, regulatory, and other obligations could adversely affect our business.

We rely on suppliers, vendors,

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growth and have an adverse impact on our business.

The COVID-19 pandemic may have the effect

of heightening many of the other risks described in this “Risk Factors” section.

To the extent the COVID-19

pandemic may adversely affect our business and financial results, it may also have the effect of heightening many of the other risks described

in this “Risk Factors” section, as well as other risks which we may not be currently aware of.

The conflict between Russia and Ukraine

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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,

and will continue to control, our company for the foreseeable future, including the outcome of matters requiring stockholder approval.

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.

Our common stock is currently listed on the Nasdaq

Capital Market.

Continued listing of a security on Nasdaq is conditioned upon compliance with various continued listing standards.

we believe we currently meet all of the Nasdaq continued listing requirements, there can be no assurance that we will be able to comply

with the applicable listing standards in the future.

If we fail to meet any of the applicable listing requirements, and fail to regain

compliance in any compliance periods provided by Nasdaq, our common stock can be delisted by Nasdaq, which could adversely affect the

market price and liquidity of our securities and could have other adverse effects, including but not limited to (i) reducing the liquidity

and market price of our common stock;

(ii) reducing the number of investors willing to hold or acquire our common stock, which could negatively

impact our ability to raise equity financing;

(iii) limiting our ability to use a registration statement to offer and sell freely tradable

securities, thereby preventing us from accessing the public capital markets;

and (iv) impairing our ability to provide equity incentives

to our employees.

Our founders, officers and directors may

control, and may continue to control, our company for the foreseeable future, including the outcome of matters requiring stockholder

Our founders, officers and

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As a result, such individuals

will, for the foreseeable future, have the ability, acting together, to control the election of our directors and the outcome of corporate

may, for the foreseeable future, have the ability, acting together, to control the election of our directors and the outcome of corporate

actions requiring stockholder approval, such as:

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the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.

Sales of substantial amounts of our common

stock by the selling stockholder in the Private Placement (as defined below) or the perception that these sales could occur, could adversely

affect the price of our common stock.

On June 18, 2024, we closed

on a registered direct offering (the “Registered Direct”) of 2,083,334 shares of common stock (the “Shares”) and

a concurrent private placement (“Private Placement,” and together with the Registered Direct, the “Offering”)

of warrants (the “Warrants”) to purchase 2,083,334 shares of common stock (the “Warrant Shares”), which were sold

for gross aggregate proceeds of $5,000,002.

According to the stock purchase agreement entered into by the Company and investor thereof

during the Offering, on July 9, 2024, we filed a Form S-1 to register the resale, from time to time, of up to an aggregate of 2,083,334

Warrant Shares, issuable upon the exercise of the Warrants issued in the Private Placement by the selling stockholder named thereto (the

“Resale Prospectus”).

The sale by the selling stockholder

of a significant number of shares of common stock could have a material adverse effect on the market price of our common stock.

the perception in the public markets that the selling stockholder may sell all or a portion of its shares as a result of the registration

of such shares for resale pursuant to the Resale Prospectus could also in and of itself have a material adverse effect on the market price

of our common stock.

We cannot predict the effect, if any, that market sales of those shares of common stock or the availability of those

shares of common stock for resale will have on the market price of our common stock.

General Risk Factors Related to our Common Stock

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business, and this capital might not be available on acceptable terms, if at all.

Prior to our initial public

offering in May 2021, we funded our operations primarily through borrowing funds, the sale of convertible notes and equity securities,

and the sales of our products.

We cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing

operations or the growth of our business.

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

in equity or debt financing to secure additional funds.

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

If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our

business, operating results and financial condition.

If we incur additional debt, the debt holders would have rights senior to holders

of common stock to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends

on our common stock.

Furthermore, if we issue additional equity securities, stockholders will experience dilution, and the new equity

securities could have rights senior to those of our common stock.

Because our decision to issue securities in the future will depend on

numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any future

issuances of debt or equity securities.

As a result, our stockholders bear the risk of future issuances of debt or equity securities reducing

the value of our common stock and diluting their interests.

We cannot be certain when

or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business.

We intend to continue

to make investments to support our business, which may require us to engage in equity or debt financing to secure additional funds.

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

If adequate funds are not available on acceptable terms, we may be

unable to invest in future growth opportunities, which could harm our business, operating results and financial condition.

additional debt, the debt holders would have rights senior to holders of common stock to make claims on our assets, and the terms of any

debt could restrict our operations, including our ability to pay dividends on our common stock.

Furthermore, if we issue additional equity

securities, stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock.

Because our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, we

cannot predict or estimate the amount, timing, or nature of any future issuances of debt or equity securities.

As a result, our stockholders

bear the risk of future issuances of debt or equity securities reducing the value of our common stock and diluting their interests.

As a public company, we are subject to increased

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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

to Section 404 of t he Sarbanes-Oxley Act of 2002, or Section 404, to furnish a report

by management on the effectiveness of our internal control over financial reporting for the fiscal year ending June 30, 2023.

This assessment

will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.

In addition, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control

over financial reporting in our first annual report required to be filed with the SEC following the date we are no longer an “emerging

growth company.” We have recently commenced the costly and challenging process of compiling the system and processing documentation

necessary to perform the evaluation needed to comply with Section 404, but we may not be able to complete our evaluation, testing

and any required remediation in a timely fashion once initiated.

Our compliance with Section 404 requires that we incur substantial

accounting expenses and expend significant management efforts.

We currently do not have an internal audit group, and we will need to hire

additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and compile the

system and process documentation necessary to perform the evaluation needed to comply with Section 404.

We are required, pursuant to Section 404

of the Sarbanes-Oxley Act of 2002, or Section 404, to furnish a report by management on the effectiveness of our internal control over

financial reporting for the fiscal year ending June 30, 2024.

This assessment needs to include disclosure of any material weaknesses identified

by our management in our internal control over financial reporting.

In addition, our independent registered public accounting firm will

be required to attest to the effectiveness of our internal control over financial reporting in our first annual report required to be

filed with the SEC following the date we are no longer an “emerging growth company.” We have recently commenced the costly

and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with

Section 404, but we may not be able to complete our evaluation, testing and any required remediation in a timely fashion once initiated.

Our compliance with Section 404 requires that we incur substantial accounting expenses and expend significant management efforts.

We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate

public company experience and technical accounting knowledge and compile the system and process documentation necessary to perform the

evaluation needed to comply with Section 404.

During the evaluation and

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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