What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-09-20 compared with 2023-09-15 · 733 added, 766 removed, 855 unchanged (64% of the section changed)

3 unchanged sentences

Consolidated Balance Sheets as of June 30, 2024 and 2023

Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended June 30, 2023 and 2022

Consolidated Statements of Operations and Comprehensive Loss for the years ended June 30, 2024 and 2023

Consolidated Statements of Changes in Stockholders’ Equity for the years ended June 30, 2024 and 2023

1 unchanged sentence

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of iPower, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of iPower,

and its subsidiaries (the “Company”) as of June 30, 2023 and 2022, and the related consolidated statements of operations

and other comprehensive (loss) income, changes in stockholders’ equity, and cash flows for each of the years in the two-year period

ended June 30, 2023 and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated

financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and

the results of their operations and their cash flows for each of the years in the two-year period ended June 30, 2023, in conformity with

accounting principles generally accepted in the United States of America.

We have audited the accompanying

consolidated balance sheets of iPower, Inc.

and its subsidiaries (the “Company”) as of June 30, 2024 and 2023, and the related

consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for each of the years

in the two-year period ended June 30, 2024 and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company

as of June 30, 2024 and 2023, and the results of their operations and their cash flows for each of the years in the two-year period ended

June 30, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the

Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based

on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and

are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules

and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements

are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform,

an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal

control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

control over financial reporting.

These consolidated

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance

with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to

have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required

to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness

of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material

misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as

evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for

Our audits included performing

procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing

procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2020.

Irvine, California

September 14, 2023

and Subsidiaries

Balance Sheets

As of June 30, 2023 and

As of June 30, 2024

Current assets

2 unchanged sentences

Inventories, net

Other receivable - related party

Prepayments and other current assets, net

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Property and equipment, net

Deferred tax assets

Non-current prepayments

Investment in joint venture

Deferred tax assets, net

Intangible assets, net

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Current liabilities

Accounts payable

Credit cards payable

Customer deposit

Accounts payable, net

Other payables and accrued liabilities

Advance from shareholders

Investment payable

Lease liability - current

Short-term loan payable

Short-term loan payable - related party

Long-term promissory note payable - current portion

Revolving loan payable, net

Income taxes payable

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Long-term revolving loan payable, net

Long-term promissory note payable, net

Deferred tax liabilities

Lease liability - non-current

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180,000,000 shares authorized;

29,710,939 and

29,572,382 shares issued and outstanding at June 30, 2023 and 2022

31,359,899 and 29,710,939 shares issued and outstanding at June 30, 2024 and 2023

Additional paid in capital

(Accumulated deficits) Retained earnings

Accumulated deficits

( 10,230,601 )

( 8,702,442 )

Non-controlling interest

Accumulated other comprehensive income (loss)

Total liabilities and equity

Accumulated other comprehensive loss

Total stockholders' equity

Total liabilities and stockholders' equity

The accompanying notes are an integral part of these consolidated financial statements.

and Subsidiaries

Consolidated Statements of Operations

For the Years Ended June 30, 2023 and 2022

Statements of Operations and Comprehensive Loss

For the Years Ended June

30, 2024 and 2023

For the Years Ended June 30,

TOTAL REVENUES

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Total operating expenses

(LOSS) INCOME FROM OPERATIONS

LOSS FROM OPERATIONS

( 13,483,543 )

2 unchanged sentences

( 1,066,280 )

Other financing expenses

Loss on equity method investment

Other non-operating income

Other non-operating income (loss)

Total other expenses, net

( 1,184,030 )

(LOSS) INCOME BEFORE INCOME TAXES

LOSS BEFORE INCOME TAXES

( 1,792,813 )

PROVISION FOR INCOME TAX (BENEFIT) EXPENSE

( 14,667,573 )

NET (LOSS) INCOME

PROVISION FOR INCOME TAX BENEFIT

( 2,690,500 )

( 1,541,448 )

( 11,977,073 )

Non-controlling interest

NET (LOSS) INCOME ATTRIBUTABLE TO iPOWER INC.

NET LOSS ATTRIBUTABLE TO iPOWER INC.

$ ( 1,528,159 )

$ ( 11,965,390 )

OTHER COMPREHENSIVE LOSS

Foreign currency translation adjustments

COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO iPOWER

COMPREHENSIVE LOSS ATTRIBUTABLE TO iPOWER INC.

$ ( 1,676,431 )

$ ( 12,033,202 )

WEIGHTED AVERAGE NUMBER OF COMMON STOCK

(LOSSES) EARNINGS PER SHARE

LOSSES PER SHARE

The accompanying notes are an integral part of these consolidated financial statements.

and Subsidiaries

Statements of Changes in Stockholders' Equity

Consolidated Statements

of Changes in Stockholders' Equity

For the Years Ended June 30, 2024 and 2023

Common Stock *

Additional Paid in

Retained Earnings (Accumulated

Non-controlling

Accumulated other Comprehensive

income (loss)

Accumulated other Comprehensive income

Balance, June 30, 2023

1 unchanged sentence

( 1,528,159 )

( 1,541,448 )

Stock-based compensation

Restricted shares issued for vested RSUs

Foreign currency translation adjustments

Restricted shares issued for vested

Common stock issued for cash, net

of issuance costs

Capital injection to DHS

Settled offering cost

(See Note 17)

( 1,300,000 )

Returned and cancelled shares

Foreign currency

translation adjustments

Balance, June 30, 2024

$ ( 10,230,601 )

$ ( 210,406 )

Balance, June 30, 2022

Non-controlling interest

Restricted shares issued for vested RSUs

( 11,965,390 )

( 11,977,073 )

Stock-based compensation

Shares issued for acquisition

Foreign currency translation adjustments

Restricted shares issued for vested

Foreign currency

translation adjustments

Balance, June 30, 2023

$ ( 8,702,442 )

The accompanying notes are an integral part of these consolidated financial statements.

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of Cash Flows

For the Years Ended June 30, 2023 and 2022

For the Years Ended June

30, 2024 and 2023

For the Years Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income

$ ( 1,541,448 )

$ ( 11,977,073 )

Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities:

1 unchanged sentence

Inventory reserve

Credit loss reserve for accounts receivable and other receivables

Credit loss reserve

Loss on equity method investment

1 unchanged sentence

Stock-based compensation expense

Non-cash operating lease expense

Amortization of operating lease right of use assets

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

1 unchanged sentence

Accounts receivable

( 9,535,940 )

( 17,592,451 )

Deferred tax assets/liabilities

Deferred tax assets

( 3,094,365 )

Prepayments and other current assets

Non-current prepayments

Other non-current assets

Accounts payable

Credit cards payable

Customer deposit

( 2,017,841 )

Other payables and accrued liabilities

Income taxes payable

Net cash provided by (used in) operating activities

( 1,728,632 )

Operating lease liabilities

( 1,716,110 )

( 2,583,324 )

Income taxes payable

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of equipment

Cash acquired on acquisition

Investment in joint venture

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Capital injection

Advance from shareholders

Payments of offering cost settlement (See Note 17)

Net proceeds from sale of common stock (See Note 14)

Proceeds from related parties

Payments to related parties

Proceeds from short-term loans - related party

Proceeds from short-term loans

Payments of financing fees

Payment on investment payable

( 1,500,000 )

Payments on short-term loans

Payments on short-term loans - related party

( 2,000,000 )

Payments on promissory note

( 1,750,000 )

Proceeds from long-term loans

Payments on long-term loans

( 2,159,767 )

Net cash (used in ) provided by financing activities

Proceeds from revolving loan

Payments on revolving loan

( 12,000,000 )

( 8,600,000 )

Net cash used in financing activities

( 2,397,801 )

( 7,153,620 )

EFFECT OF EXCHANGE RATE ON CASH

CHANGES IN CASH

( 4,829,758 )

CASH AND CASH EQUIVALENT, beginning of period

4 unchanged sentences

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:

Shares issued for acquisition

Promissory note issued for acquisition

Investment payable for acquisition

Goodwill acquired in business acquisition

Identifiable intangible assets acquired in business acquisition

Net assets acquired in business acquisition

$ ( 638,101 )

Shares returned and cancelled (See Note 17)

Right of use assets acquired under new operating leases

The accompanying notes are an integral part of these consolidated financial statements.

Notes to Consolidated Financial

The accompanying

notes are an integral part of these consolidated financial statements.

Notes to Consolidated Financial Statements

As of June 30, 2024 and 2023 and for the Years

5 unchanged sentences

of consumer home, garden and other products and accessories mainly in the North America.

Effective on March 1, 2020, as amended and restated

pursuant to an agreement dated October 26, 2020, the Company entered into an agreement with E Marketing Solution Inc.

(“E Marketing”),

an entity incorporated in California and owned by one of the shareholders of the Company.

Pursuant to the terms of the agreement, the

Company agreed to provide technical support, management services and other services on an exclusive basis in relation to E Marketing’s

business during the term of the agreement.

The Company also agreed to fund E Marketing for operational cash flow needs and bear the risk

of E Marketing’s losses from operations and E Marketing agreed that iPower has rights to E Marketing’s net profits, if any.

Under the terms of the agreement, the Company may at any time, at its option, acquire for nominal consideration 100% of either the equity

of E Marketing or its assets subject to iPower’s assumption of all of its liabilities.

At that time, E Marketing was considered

a variable interest entity (“VIE”).

On May 18, 2021, the Company acquired 100% equity ownership of E Marketing.

E Marketing has become the Company’s wholly owned subsidiary.

On September 4, 2020, the Company entered into

an agreement with Global Product Marketing Inc.

(“GPM”), an entity incorporated in the State of Nevada on September 4, 2020.

GPM was then wholly owned by Chenlong Tan, the Chairman, CEO and President and one of the majority shareholders of the Company.

to the terms of the agreement, the Company was to provide technical support, management services and other services on an exclusive basis

in relation to GPM’s business during the term of the Agreement.

In addition, the Company agreed to fund GPM for operational cash

flow needs and bear the risk of GPM’s losses from operations and GPM agreed that the Company has the right to GPM’s net profits,

Under the terms of the agreement, the Company may at any time, at its option, acquire for nominal consideration 100% of either

the equity of GPM or its assets subject to assumption of all of its liabilities.

At that time, GPM was considered a VIE.

On May 18, 2021,

the Company acquired 100% equity ownership of GPM.

As a result, GPM has become the Company’s wholly owned subsidiary.

On January 13, 2022,

the Company entered into a joint venture agreement and formed a Nevada limited liability company, Box Harmony, LLC (“Box Harmony”),

for the principal purpose of providing logistics services primarily for foreign-based manufacturers or distributors who desire to sell

their products online in the United States, with such logistics services to include, without limitation, receiving, storing and transporting

such products.

The Company owns 40% of the equity interest in Box Harmony, retaining significant influence, but does not own a majority

equity interest in or otherwise control Box Harmony.

On May 18, 2021, the Company acquired 100% of

the equity ownership of its variable interest entity, Global Product Marketing Inc.

(“GPM”), an entity which was incorporated

in the State of Nevada on September 4, 2020, and was owned by Chenlong Tan, the Company’s Chairman, CEO and President, and one of

the majority shareholders of the Company.

As a result, GPM became the Company’s wholly owned subsidiary.

On May 18, 2021, the Company acquired 100% of the

equity ownership of its variable interest entity, E Marketing Solution Inc.

(“E Marketing”), an entity incorporated in California

and owned by one of the shareholders of the Company.

As a result, E Marketing became the Company’s wholly owned subsidiary.

On January 13, 2022, the Company entered into

a joint venture agreement and formed a Nevada limited liability company, Box Harmony, LLC (“Box Harmony”), for the principal

purpose of providing logistics services primarily for foreign-based manufacturers or distributors who desire to sell their products online

in the United States, with such logistics services to include, without limitation, receiving, storing and transporting such products.

The Company owns 40% of the equity interest in Box Harmony, retaining significant influence, but does not own a majority equity interest

in or otherwise control Box Harmony.

See details at Note 3 below.

On February 10, 2022,

the Company entered into another joint venture agreement and formed a Nevada limited liability company, Global Social Media, LLC (“GSM”),

for the principal purpose of providing a social media platform, content and services to assist businesses, including the Company and other

businesses, in marketing their products.

On February 10, 2022, the Company entered into

another joint venture agreement and formed a Nevada limited liability company, Global Social Media, LLC (“GSM”), for the principal

purpose of providing a social media platform, content and services to assist businesses, including the Company and other businesses, in

marketing their products.

The Company owns 60% of the equity interest in GSM and controls its operations.

See details at

Note 3 below.

On February 15, 2022,

the Company acquired 100% of the ordinary shares of Anivia Limited (“Anivia”), a corporation organized under the laws of the

British Virgin Islands (“BVI”), in accordance with the terms of a share transfer framework agreement (the “Transfer

Agreement”), dated February 15, 2022, by and between the Company, White Cherry Limited, a BVI company (“White Cherry”),

White Cherry’s equity holders, Li Zanyu and Xie Jing (together with White Cherry, the “Sellers”), Anivia, Fly Elephant

Limited, a Hong Kong company, Dayourenzai (Shenzhen) Technology Co., Ltd., and Daheshou (Shenzhen) Information Technology Co., Ltd.

owns 100% of the equity of Fly Elephant Limited, which in turn owns 100% of the equity of Dayourenzai (Shenzhen) Technology Co., Ltd.,

a corporation located in the People’s Republic of China (“PRC”) and which is a wholly foreign-owned enterprise (“WFOE”)

of Fly Elephant Limited.

The WFOE controls, through contractual arrangements summarized in Note 4 below, the business, revenues and profits

of Daheshou (Shenzhen) Information Technology Co., Ltd., a company organized under the Laws of the PRC (“DHS”) and located

in Shenzhen, China.

See details at Note 3 below.

On February 15, 2022, the Company acquired 100%

of the ordinary shares of Anivia Limited (“Anivia”), a corporation organized under the laws of the British Virgin Islands

(“BVI”), in accordance with the terms of a share transfer framework agreement (the “Transfer Agreement”), dated

February 15, 2022, by and between the Company, White Cherry Limited, a BVI company (“White Cherry”), White Cherry’s

equity holders, Li Zanyu and Xie Jing (together with White Cherry, the “Sellers”), Anivia, Fly Elephant Limited, a Hong Kong

company, Dayourenzai (Shenzhen) Technology Co., Ltd., and Daheshou (Shenzhen) Information Technology Co., Ltd.

Anivia owns 100% of the

equity of Fly Elephant Limited, which in turn owns 100% of the equity of Dayourenzai (Shenzhen) Technology Co., Ltd., a corporation located

in the People’s Republic of China (“PRC”) and which is a wholly foreign-owned enterprise (“WFOE”) of Fly

Elephant Limited.

The WFOE controls, through contractual arrangements summarized in Note 4 below, the business, revenues and profits of

Daheshou (Shenzhen) Information Technology Co., Ltd., a company organized under the Laws of the PRC (“DHS”) and located in

Shenzhen, China.

See details on Note 4 below.

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All inter-company balances and transactions have been eliminated.

Prior Period Reclassification

Certain prior year amounts in the consolidated

balance sheets and statements of cash flows have been reclassified to conform to the current year presentation, including reclassifications

made in the presentation of non-current assets, current liabilities, and cash flows from operating activities.

These reclassifications

had no impact on the prior year net loss or stockholders’ equity.

Emerging Growth Company Status

46 unchanged sentences

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 year ended June 30,

The average translation rates applied to statements of operations and comprehensive loss accounts for the year ended June 30,

2024 was 7.2103 RMB to $1.00.

3 unchanged sentences

Cash and cash equivalents consist of amounts held

as cash on hand and bank deposits.

as cash on hand and financial institution and financial service company deposits.

From time to time, the Company may maintain bank

42 unchanged sentences

value of the asset.

Business Combination

Variable interest entities

On February 15, 2022, the Company acquired 100%

of the ordinary shares of Anivia and its subsidiaries, including the VIE.

The Company applies the acquisition method of accounting for

business combinations.

Under the acquisition method, the acquiring entity in a business combination recognizes 100% of the assets acquired

and liabilities assumed at their acquisition date fair values.

Management utilizes valuation techniques appropriate for the asset or liability

being measured in determining these fair values.

Any excess of the purchase price over amounts allocated to assets acquired, including

identifiable intangible assets, and liabilities assumed is recorded as goodwill.

Where amounts allocated to assets acquired and liabilities

assumed is greater than the purchase price, a bargain purchase gain is recognized.

Acquisition-related costs are expensed as incurred.

of the ordinary shares of Anivia and its subsidiaries, including Daheshou (Shenzhen) Information Technology Co., Ltd., a company organized

under the Laws of the PRC (“DHS”).

Pursuant to the terms of the Agreements, the Company does not have direct ownership in

DHS but is actively involved in DHS’s operations as the sole manager to direct the activities and significantly impact DHS’s

economic performance.

DHS’s operational funding has been provided by the Company following the February 15, 2022 acquisition.

the term of the Agreements, the Company bears all the risk of loss and has the right to receive all of the benefits from DHS.

based on the determination that the Company is the primary beneficiary of DHS, in accordance with ASC 810-10-25-38A through 25-38J, DHS

is considered a VIE of the Company and the financial statements of DHS have been consolidated from the date such control existed, February

See Note 4 for details regarding the acquisition.

Variable interest entities

On February 15, 2022,

the Company acquired 100% of the ordinary shares of Anivia and its subsidiaries, including Daheshou (Shenzhen) Information Technology

Co., Ltd., a company organized under the Laws of the PRC (“DHS”).

Pursuant to the terms of the Agreements, the Company does

not have direct ownership in DHS but is actively involved in DHS’s operations as the sole manager to direct the activities and significantly

impact DHS’s economic performance.

DHS’s operational funding has been provided by the Company following the February 15, 2022

During the term of the Agreements, the Company bears all the risk of loss and has the right to receive all of the benefits

As such, based on the determination that the Company is the primary beneficiary of DHS, in accordance with ASC 810-10-25-38A

through 25-38J, DHS is considered a VIE of the Company and the financial statements of DHS have been consolidated from the date such control

existed, February 15, 2022.

See Note 4 and Note 5 for details regarding the acquisition.

Goodwill represents the excess of the purchase

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goodwill is partially impaired.

Subsequent to the quarter ended September

30, 2022, during the period ended June 30, 2023, the Company performed a qualitative and quantitative goodwill impairment analysis

following the steps laid out in ASC 350-20-35-3C and noted no goodwill impairment.

As of June 30, 2023 and 2022, the goodwill

balance amounted to $ 3,034,110 and

$ 6,094,144 , respectively.

During the period ended June 30, 2024, the Company

performed a qualitative and quantitative goodwill impairment analysis following the steps laid out in ASC 350-20-35-3C and noted no goodwill

As of June 30, 2024 and 2023, the goodwill balance amounted to $ 3,034,110 and $ 3,034,110 , respectively.

Intangible Assets, net

intangible assets at June 30, 2023 include covenant not to compete, supplier relationship, and software recognized as part of the acquisition

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:

Finite life intangible assets at June 30, 2024

include covenant not to compete, supplier relationship, 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.

Intangible assets are amortized

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

Schedule of estimated useful life

10 unchanged sentences

fair value determinations.

As of June 30, 2023, there were no indicators of impairment.

As of June 30, 2024 and 2023, there were no indicators of impairment.

Fair values of financial instruments

6 unchanged sentences

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

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 .

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

Corporate bond yield

Risk-free rate

Liquidity premium

Discount rate

As of June 30, 2023,

the outstanding principal balance of the Purchase Note was $ 2,017,852 , including a premium of $ 31,602 and $ 236,250 of accrued interest.

For other financial instruments to be reported

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a result of those measurements, we recognized an impairment charge of $3.1 million during the year ended June 30, 2023 as follows:

Schedule of fair value on nonrecurring basis

Schedule of fair value of financial assets and liabilities

Goodwill, with a total carrying value of $6.1

6 unchanged sentences

Revenue recognition

The Company recognizes revenue from product sales

revenues, net of promotional discounts and return allowances, when the following revenue recognition criteria are met:

a contract has

been identified, separate performance obligations are identified, the transaction price is determined, the transaction price is allocated

The Company recognizes revenue from service and

product sales, net of promotional discounts and return allowances, when the following revenue recognition criteria are met:

has been identified, separate performance obligations are identified, the transaction price is determined, the transaction price is allocated

to separate performance obligations and revenue is recognized upon satisfying each performance obligation.

The Company transfers the risk

of loss or damage upon shipment, therefore, revenue from product sales is recognized when it is shipped to the customer.

Return allowances,

which reduce product revenue by the Company’s best estimate of expected product returns, are estimated using historical experience.

of loss or damage upon shipment or completion of service, therefore, revenue from product sales is recognized when it is shipped to the

customer and the revenue from services is recognized upon completion of services.

For the years ended June 30, 2024 and 2023, the revenues

from services were immaterial.

Return allowances, which reduce product revenue by the Company’s best estimate of expected product

returns, are estimated using historical experience.

The Company evaluates the criteria of ASC 606

606 - Revenue Recognition Principal Agent Considerations in determining whether it is appropriate to record the gross amount

of product sales and related costs or the net amount earned as commissions.

Generally, when the Company is primarily responsible for

fulfilling the promise to provide a specified good or service, the Company is subject to inventory risk before the good or service

has been transferred to a customer and the Company has discretion in establishing the price, revenue is recorded at gross.

- Revenue Recognition Principal Agent Considerations in determining whether it is appropriate to record the gross amount of product sales

and related costs or the net amount earned as commissions.

Generally, when the Company is primarily responsible for fulfilling the promise

to provide a specified good or service and the Company has discretion in establishing the price, revenue is recorded at gross.

Payments received prior to the delivery of goods to customers are recorded

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Cost of revenue mainly consists of costs for purchases

of products and related inbound freight and delivery fees.

of products, net of purchase discounts and rebates, and related inbound freight and delivery fees.

Operating expenses

1 unchanged sentence

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 years ended June 30, 2024 and 2023, the Company recorded vendor credit of $ 2.48 million and $ 0 , respectively.

Inventory, net

11 unchanged sentences

Debt Issuance Costs

Costs incurred in connection with the issuance of debt are deferred

and amortized as interest expense over the term of the related debt using the effective interest method.

To the extent that the debt is

outstanding, these amounts are reflected in the consolidated balance sheets as direct deductions from the carrying amount of the outstanding

Costs incurred in connection with the issuance

of debt are deferred and amortized as interest expense over the term of the related debt using the effective interest method.

To the extent

that the debt is outstanding, these amounts are reflected in the consolidated balance sheets as direct deductions from the carrying amount

of the outstanding borrowings.

Equity offering costs

The Company capitalizes certain legal, accounting

and other third-party fees that are directly related to an equity financing that is probable of successful completion until such financing

is consummated.

After consummation of an equity financing, these costs are recorded as a reduction of the proceeds received as a result

of the offering.

Should a planned equity financing be abandoned, terminated or significantly delayed, the deferred offering costs are

immediately written off to operating expenses in the consolidated statements of operations and comprehensive income (loss) in the period

of determination.

For the years ended June 30, 2024 and 2023, $ 1,756,913 and $ 0 were recorded as deferred offering costs and reclassed

to additional paid in capital upon closing of the offering.

As of June 30, 2024 and 2023, $ 0 and $ 0 of deferred offering costs were

included in the consolidated balance sheets, respectively.

Segment reporting

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.

For the years

ended June 30, 2023 and 2022, sales through Amazon to Canada and other foreign countries were approximately 10 %

and 7.2 % of the Company’s total sales.

Sales of hydroponic products, including ventilation and grow light systems, was approximately

of the Company’s total sales and the remaining 77 %

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

As of June 30, 2023, the Company had approximately $ 1.6

million of inventory stored in China.

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

majority of the deferred tax assets are US related, and a majority of the Company’s revenues are derived from within the United

For the years ended June

30, 2024 and 2023, sales through Amazon to Canada and other foreign countries were approximately 9.2 % and 10 % of the Company’s total

During the year ended June 30, 2024, sales of hydroponic products, including ventilation and grow light systems, was approximately

22 % of the Company’s total sales and the remaining 78 % consisted of general gardening, home goods, and other products and accessories.

During the year ended June 30, 2023, sales of hydroponic products, including ventilation and grow light systems, was approximately 23 %

of the Company’s total sales and the remaining 77 % consisted of general gardening, home goods, and other products and accessories.

As of June 30, 2024 and 2023, the Company had approximately $ 1.9 and $ 1.6 million of inventory stored in China.

The Company’s majority

of long-lived assets are located in California, United States, majority of the deferred tax assets are US related, and a majority of the

Company’s revenues are derived from within the United States.

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

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Stock-based Compensation

The Company applies ASC

718, “Compensation-Stock Compensation,” which requires that share-based payment transactions with employees and nonemployees

upon adoption of ASU 2018-07, be measured based on the grant date fair value of the equity instrument and recognized as compensation expense

over the requisite service period, with a corresponding addition to equity.

Under this method, compensation cost related to employee share

options or similar equity instruments is measured at the grant date based on the fair value of the award and is recognized over the period

during which an employee is required to provide service in exchange for the award, which generally is the vesting period.

to requisite service period, the Company also evaluates the performance condition and market condition under ASC 718-10-20.

which contains both a performance and a market condition, and where both conditions must be satisfied for the award to vest, the market

condition is incorporated into the fair value of the award, and that fair value is recognized over the employee’s requisite service

period or nonemployee’s vesting period if it is probable the performance condition will be met.

If the performance condition is

ultimately not met, compensation cost related to the award should not be recognized (or should be reversed) because the vesting condition

in the award has not been satisfied.

The Company applies ASC No.

718, “Compensation-Stock

Compensation,” which requires that share-based payment transactions with employees and nonemployees upon adoption of ASU 2018-07,

be measured based on the grant date fair value of the equity instrument and recognized as compensation expense over the requisite service

period, with a corresponding addition to equity.

Under this method, compensation cost related to employee share options or similar equity

instruments is measured at the grant date based on the fair value of the award and is recognized over the period during which an employee

is required to provide service in exchange for the award, which generally is the vesting period.

In addition to requisite service period,

the Company also evaluates the performance condition and market condition under ASC 718-10-20.

For an award which contains both a performance

and a market condition, and where both conditions must be satisfied for the award to vest, the market condition is incorporated into the

fair value of the award, and that fair value is recognized over the employee’s requisite service period or nonemployee’s vesting

period if it is probable the performance condition will be met.

If the performance condition is ultimately not met, compensation cost

related to the award should not be recognized (or should be reversed) because the vesting condition in the award has not been satisfied.

The Company will recognize forfeitures of such

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amount expected to be realized.

As of June 30, 2023, the Company expected that the deferred tax assets are fully realizable so did no t

record any valuation allowance.

The Company has analyzed filing positions in each

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Recently issued accounting pronouncements

In September 2022, FASB issued ASU 2022-04,

Liabilities—Supplier Finance Programs (Subtopic 405-50):

In December 2023, The FASB issued ASU 2023-09,

Improvements to Income Tax Disclosures.

Under this ASU, public business entities must annually “(1) disclose specific categories

in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect

of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income [or loss] by the

applicable statutory income tax rate).” This ASU’s amendments are effective for public business entities for annual periods

beginning after December 15, 2024.

For entities other than public business entities, the amendments are effective for annual periods beginning

after December 15, 2025.

Entities are permitted to early adopt the standard “for annual financial statements that have not yet been

issued or made available for issuance.” The amendments should be applied on a prospective basis.

Retrospective application is permitted.

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 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 key amendments:

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.

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

Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.

This ASU incorporates

Securities and Exchange Commission (SEC) disclosure requirements into the FASB Accounting Standards Codification™ (“Codification”).

The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics,

allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously

subject to the requirements, and align the requirements in the Codification with the SEC’s regulations.

In SEC Release No.

Disclosure Update and Simplification, issued August 17, 2018, the SEC referred certain of its disclosure requirements that overlap with,

but require incremental information to, generally accepted accounting principles to the FASB for potential incorporation into the Codification.

The ASU incorporates into the Codification 14 of the 27 disclosures referred by the SEC.

They modify the disclosure or presentation requirements

of a variety of Topics in the Codification.

The requirements are relatively narrow in nature.

Some of the amendments represent clarifications

to, or technical corrections of, the current requirements.

Because of the variety of Topics amended, a broad range of entities may be

affected by one or more of those amendments.

For entities subject to the SEC’s existing disclosure requirements and for entities

required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities

that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC

removes that related disclosure from its rules.

For all other entities, the amendments will be effective two years later.

by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification

and not become effective for any entity.

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

financial statements.

In September 2022, FASB issued ASU 2022-04, Liabilities—Supplier

Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.

The amendments in this

ASU require that a company that uses a supplier finance program in connection with the purchase of goods or services disclose sufficient

information about the program to allow a user of financial statements to understand the program’s nature, activity during the period,

changes from period to period, and potential magnitude.

ASU 2022-04 is effective for fiscal years, including interim periods within those

fiscal years, beginning after December 15, 2022, except for the rollforward of the supplier finance program obligations, which is effective

for fiscal years beginning after December 15, 2023.

The amendments in this ASU require that a company

that uses a supplier finance program in connection with the purchase of goods or services disclose sufficient information about the program

to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period,

and potential magnitude.

ASU 2022-04 is effective for fiscal years, including interim periods within those fiscal years, beginning after

December 15, 2022, except for the rollforward of the supplier finance program obligations, which is effective for fiscal years beginning

after December 15, 2023.

Early adoption is permitted.

An entity should apply ASU No.

2022-04 retrospectively

to all periods in which a balance sheet is presented, except for the obligation rollforward, which should be applied prospectively.

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

2022-04 retrospectively to all periods in which a

balance sheet is presented, except for the obligation rollforward, which should be applied prospectively.

The adoption of this standard

did not have a material impact on the Company’s consolidated financial statements.

In June 2022, FASB issued ASU 2022-03, Fair

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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 October 2021, the FASB issued ASU 2021-08,

Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

This ASU clarifies

that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance

with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) as if the entity had originated the contracts.

The guidance is

effective for fiscal years beginning after December 15, 2023, with early application permitted.

The Company does not expect the adoption

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

In August 2020, the FASB issued ASU 2020-06, “Debt

– Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity

(Subtopic 815-40).” This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred

stock, as well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based

accounting conclusions.

In addition, this ASU improves and amends the related EPS guidance.

This standard is effective for the Company

on July 1, 2024, including interim periods within those fiscal years.

Adoption is either a modified retrospective method or a fully retrospective

method of transition.

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

In March 2020 and January 2021, the FASB issued

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

In August 2020, the FASB issued ASU 2020-06, “Debt

– Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity

(Subtopic 815-40).” This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred

stock, as well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based

accounting conclusions.

In addition, this ASU improves and amends the related EPS guidance.

This standard is effective for the Company

on July 1, 2024, including interim periods within those fiscal years.

Adoption is either a modified retrospective method or a fully retrospective

method of transition.

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

In January 2020, the FASB issued ASU 2020-01,

“Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging

(Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” This ASU among other things clarifies that

a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting

under Topic 323, Investments—Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance

with Topic 321 immediately before applying or upon discontinuing the equity method.

The new ASU clarifies that, when determining the accounting

for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying

securities would be accounted for under the equity method or fair value option.

ASU 2020-01 is effective for public business entities

for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021.

An entity should apply ASU 2020-01

prospectively at the beginning of the interim period that includes the adoption date.

The Company adopted ASU 2020-01 on July 1, 2022.

The adoption of ASU 2020-01 did not have material impact on the Company's consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12,

Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes.

The update is intended to simplify the current rules regarding

the accounting for income taxes and addresses several technical topics including accounting for franchise taxes, allocating income taxes

between a loss in continuing operations and in other categories such as discontinued operations, reporting income taxes for legal entities

that are not subject to income taxes, and interim accounting for enacted changes in tax laws.

The new standard is effective for fiscal

years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022;

however, early adoption

is permitted.

The Company adopted ASU 2019-12 on July 1, 2022.

The adoption of this standard did not have material impact on its consolidated

financial statements.

In January 2017, the FASB issued ASU 2017-04,

“Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment,” which eliminates step two

from the goodwill impairment test.

Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying

amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit.

ASU 2017-04 became

effective for accelerated filing companies for annual periods or any interim goodwill impairment tests in fiscal years beginning after December

All other entities, including not-for-profit entities, that are adopting the amendments in this Update should do so for their

annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2022.

Early adoption is permitted for interim

or annual goodwill impairment tests performed on testing dates after January 1, 2017.

The Company has adopted ASU 2017-04.

disclosures above on Goodwill for further details.

The Company does not believe other recently issued

but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position,

statements of operations and cash flows.

Subsequent events

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that occurred after the balance sheet date through the date that the consolidated financial statements are available to be issued.

subsequent events that required recognition or additional disclosure in the consolidated financial statements are presented.

subsequent events that required recognition or additional disclosure in the consolidated financial statements are presented therein.

Note 3 - Joint Ventures

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services to include, without limitation, receiving, storing and transporting such products.

Following entry into

the Joint Venture Agreement, Box Harmony issued a total of 6,000 certificated units of membership interest, designated as Class A voting

units (“Equity Units”), as follows:

(i) the Company agreed to contribute $50,000 in cash in exchange for 2,400 Equity Units

in Box Harmony and agreed to provide Box Harmony with the use and access to certain warehouse facilities leased by the Company (see below),

and (ii) TPA received 1,200 Equity Units in exchange for (a) $1,200 and contributing the TPA IP License referred to below, (b) its existing

and future customer contracts, and (c) granting Box Harmony the use of shipping accounts (FedEx and UPS) and all other TPA carrier contracts,

and (iii) Xiao received 2,400 Equity Units in exchange for $2,400 and his agreement to manage the day to day operations of Box Harmony.

Following entry into the Joint Venture Agreement,

Box Harmony issued a total of 6,000 certificated units of membership interest, designated as Class A voting units (“Equity Units”),

(i) the Company agreed to contribute $50,000 in cash in exchange for 2,400 Equity Units in Box Harmony and agreed to provide

Box Harmony with the use and access to certain warehouse facilities leased by the Company (see below), and (ii) TPA received 1,200 Equity

Units in exchange for (a) $1,200 and contributing the TPA IP License referred to below, (b) its existing and future customer contracts,

and (c) granting Box Harmony the use of shipping accounts (FedEx and UPS) and all other TPA carrier contracts, and (iii) Xiao received

2,400 Equity Units in exchange for $2,400 and his agreement to manage the day to day operations of Box Harmony.

Under the terms of the Box Harmony limited liability

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creating a noncontrolling right that would not be substantive to overcome the majority voting interests held by the Company.

As of the date of this

report, the members had not completed the capital contributions and no receivables were recorded.

As of the date of this report, the members have

not completed the capital contributions and no receivables were recorded.

Pursuant to the terms of the Agreements, the Company

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the impact of GSM’s activities were immaterial to the Company’s consolidated financial statements.

Note 4 - Acquisition of Anivia Limited and Subsidiaries and Variable

Interest Entity

On February 15, 2022,

the Company acquired 100% of the ordinary shares of Anivia Limited (“Anivia”), a corporation organized under the laws of the

British Virgin Islands (“BVI”), in accordance with the terms of a share transfer framework agreement (the “Transfer

Agreement”), dated February 15, 2022, by and between the Company, White Cherry Limited, a BVI company (“White Cherry”),

White Cherry’s equity holders, Li Zanyu and Xie Jing (together with White Cherry, the “Sellers”), Anivia, Fly Elephant

Limited, a Hong Kong company, Dayourenzai (Shenzhen) Technology Co., Ltd.

and Daheshou (Shenzhen) Information Technology Co., Ltd.

owns 100% of the equity of Fly Elephant Limited, which in turn owns 100% of the equity of Dayourenzai (Shenzhen) Technology Co., Ltd.,

a corporation located in the People’s Republic of China (“PRC”) and which is a wholly foreign-owned enterprise (“WFOE”)

of Fly Elephant Limited.

The WFOE controls, through contractual arrangements summarized below, the business, revenues and profits of Daheshou

(Shenzhen) Information Technology Co., Ltd., a company organized under the Laws of the PRC (“DHS”) and located in Shenzhen,

The contractual arrangements between the WFOE

and DHS are established through a variable interest operating entity structure, which is reflected in (i) an exclusive business cooperation

agreement, dated December 15, 2021, between the WFOE and DHS, (ii) an exclusive equity interest pledge agreement, dated December 15, 2021,

between the WFOE and DHS in which the equity of DHS was pledged to the WFOE, (iii) an exclusive option agreement, dated December 15, 2021,

between the WFOE, DHS and its equity holders, Li Zanyu and Xie Jing (the “Equity Holders), pursuant to which the Equity Holders

give the WFOE the irrevocable and exclusive right to purchase the equity interests in DHS, and (iii) a power of attorney, dated December

15, 2021, pursuant to which Li Zanyu and Xie Jing, the holders of 100% of the equity interest of DHS, granted the WFOE all voting and

other rights to their equity interest in DHS.

According to the exclusive business cooperation agreement, in consideration for the services

provided by the WFOE, DHS shall pay a service fee to the WFOE on annual basis (or at any time agreed by the Parties).

The service fees

for each year (or for any other period agreed to by the Parties) shall consist of a management fee and a fee for services provided, which

shall be reasonably determined by the WFOE based on the nature, complexity, time, and other market and operation factors.

provide a separate confirmation letter and/or invoice to DHS to indicate the amount of service fees due for each service period;

amount of services fees may be as set forth in the relevant contracts separately executed by the Parties.

DHS is principally engaged in

selling a wide range of products and providing logistic services in the PRC.

Pursuant to the terms of the Agreements, the Company

does not have direct ownership in DHS but is actively involved in DHS’s operations as the sole manager to direct the activities

and significantly impact DHS’s economic performance.

As such, based on the determination that the Company is the primary beneficiary

of DHS, in accordance with ASC 810-10-25-38A through 25-38J, DHS is considered a variable interest entity (“VIE”) of the Company

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 (subject to a lock-up period of 180 days and insider trading

rules) of the Company’s common stock, and (iii) an additional $ 1,500,000 in cash was to be paid after closing.

JP Morgan Chase Bank,

the Company’s senior secured lender (“JPM”), consented to the transaction.

In conjunction with obtaining JPM’s

consent, the Company delivered an amendment to the pledge and security agreement with JPM, pursuant to which the Company pledged to JPM

65% of the equity interest of Anivia Limited, Fly Elephant Limited and the WFOE.

On October 7, 2022, in

conjunction with the Company’s entry into the Second Amendment to the Credit Agreement, the Company’s promissory note holder,

White Cherry Limited, an exempted company incorporated under the laws of the British Virgin Islands (“White Cherry”), entered

into an amendment (the “Amendment”) to the subordination agreement, originally dated March 9, 2022 (the “Subordination

The Amendment to the Subordination Agreement was amended solely for purposes of adjusting the definition of payment

conditions under Section 2 of the Subordination Agreement such that “payment conditions” shall be deemed satisfied in connection

with a permitted payment if (a) no event of default has occurred under the credit agreement and is continuing and (b) the Company shall

have Excess Availability in the 30 days prior to the payment (as defined in the Second Amendment to the Credit Agreement) of no less than

In addition, in conjunction

with the closing of the transaction, the WFOE entered into an employment agreement with Li Zanyu, dated February 15, 2022 (the “Employment

Agreement”), pursuant to which Mr.

Li has been appointed to serve as general manager of the WFOE for a term of 10 years (through

February 14, 2032), with annual base compensation of up to 500,000 RMB plus bonus as may be determined by the WFOE from time to time,

in its sole discretion, based on Mr.

Li’s performance.

During such employment, Mr.

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.

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 shall bear joint and several liability

for any direct or indirect losses suffered by the Company as a result thereof.

The Company recognized an 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.

The 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.

The following information

summarizes the purchase consideration and allocation of the fair values assigned to the assets at the purchase date, February 15, 2022:

Schedule of allocation of acquisition price

Fair Value of Purchase Price:

Promissory note issued

Common stock issued

Total purchase consideration

Purchase Price Allocation:

Covenant not to compete

Supplier relationship

Current assets

Property and equipment

Deferred tax liabilities

( 1,389,113 )

Current liabilities

( 1,143,076 )

Lease liability

Total purchase consideration

2022, the $1.5 million cash portion of the consideration, which was presented as investment payable, was fully paid off.

The results of operations

of Anivia since February 16, 2022 have been included in the Company's consolidated financial statements.

Pro Forma Financial Information

The following pro forma

information presents a summary of the Company’s combined operating results for the year ended June 30, 2022 for comparative purposes,

as if the acquisition had occurred on July 1, 2021.

The following pro forma financial information is not necessarily indicative of the

Company’s operating results as they would have been had the acquisition been effected on the assumed date, nor is it necessarily

an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions

used to prepare the pro forma information, basic shares outstanding and dilutive equivalents, cost savings from operating efficiencies,

potential synergies, and the impact of incremental costs incurred in integrating the businesses.

Schedule of Pro Forma information

For the Year Ended

June 30, 2022

Total Revenues

Income from Operations

Basic and diluted income per share

Note 4 – Variable interest entity

1 unchanged sentence

of Anivia, the Company assumed the contractual arrangements between the WFOE and DHS through a variable interest operating entity structure.

See Note 4 for details.

The Company did not provide financial or other

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

As of June 30, 2024 and 2023, there was no pledge

5 unchanged sentences

and liabilities were as follows for the years indicated:

Schedule of carrying amount of VIE assets and liabilities

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

June 30, 2024

12 unchanged sentences

Schedule of operating results of the VIE

June 30, 2024

Net loss after elimination of intercompany transactions

The operating results of the VIE were as follows for the period from

February 15, 2022 to June 30, 2022:

The operating results of the VIE were as follows for the year ended

June 30, 2023:

June 30, 2023

Net loss after elimination of intercompany transactions

For the year ended June 30, 2024, the VIE contributed approximately

million of revenue and $ 1.4

million of net loss before elimination.

For the period from February 16, 2022 to June 30, 2022, the VIE contributed approximately

$ 4.8 million of revenue and $ 0.9 million of net income before elimination.

$ 7.1 million of revenue and $ 0.5 million of net loss before elimination.

For the year ended June 30, 2023, the VIE contributed approximately

$ 7 .0 million of revenue and $ 1.4 million of net loss before elimination.

Note 5 – Accounts receivable, net

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Schedule of accounts receivable

June 30, 2024

June 30, 2023

Accounts receivable

4 unchanged sentences

Schedule of changes in allowance for credit losses

Allowance for Credit Losses

Allowance for

Credit Losses

Balance at June 30, 2022

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of finished goods ready for sale, net of allowance for obsolescence, amounted to $ 10,546,273 and $ 20,593,889 , respectively.

For the years ended June 30, 2023 and 2022, the Company recorded inventory

reserve expense of $ 238,899 and $ 224,426 ,

respectively.

As of June 30, 2023 and 2022, allowance for obsolescence was $ 558,899

and $ 320,000 , respectively.

8 – Prepayments and other current assets, net

For the years ended June 30, 2024 and 2023, the

Company recorded inventory reserve expense of $ 88,926 and $ 238,899 , respectively.

As of June 30, 2024 and 2023, allowance for obsolescence

was $ 647,825 and $ 558,899 , respectively.

Note 7 – Prepayments and other current assets, net

As of June 30, 2024 and 2023, prepayments and other current assets

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other receivables are summarized below:

Schedule of credit losses on other receivables

Schedule of changes in allowance for credit losses on

other receivables

Allowance for Credit Losses

2 unchanged sentences

Balance at June 30, 2023

Allowance recorded during the year ended June 30, 2023

Allowance reversed during the year ended June 30, 2024

Balance at June 30, 2024

Note 9 – Non-current prepayments

Non-current prepayments included $ 484,581 for

product sourcing, marketing research and promotion, and other management advisory and consulting services to companies owned by an employee

and minority shareholder and by relatives of a minority shareholder of the Company.

The terms of these services are from two years to

In addition, there was a $ 46,875 down payment on a four-year car lease.

As of June 30, 2023 and 2022, total non-current prepayments

were $ 531,456 and $ 925,624 , respectively.

For the years ended June 30, 2023 and 2022, the Company recorded amortization expenses of $ 394,168

and $ 431,668 , respectively.

During the year ended June 30,2024, the Company

collected $ 249,128

of aged other receivables and recorded a reduction of bad debts expense as a reversal of the allowance of credit loss.

Note 8 – Intangible assets, net

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Accumulated amortization

The intangible assets were acquired on

February 15, 2022 through acquisition of Anivia.

The weighted average remaining life for finite-lived intangible assets at June 30, 2023

was approximately 7.2

The amortization expense for the years ended June 30, 2023 and 2022 was $ 649,371

and $ 243,515 , respectively.

At June 30, 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:

Schedule of future amortization

( 1,542,257 )

The intangible assets were acquired on February

15, 2022 through acquisition of Anivia.

The weighted average remaining life for finite-lived intangible assets at June 30, 2024 was approximately

The amortization expense for the years ended June 30, 2024 and 2023 was $ 649,371 and $ 649,371 , respectively.

At June 30, 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 estimated remaining amortization expense

Year Ending June 30,

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consisted of the following:

Schedule of accounts payable and accrued liabilities

Schedule of other payables and accrued liabilities

June 30, 2024

1 unchanged sentence

Accrued payables for inventory in transit

Credit cards payable

Customer deposit

Accrued Amazon fees

1 unchanged sentence

Payroll liabilities

Other accrued liabilities and payables

Settlement payable

Other payables

The Company’s controlled VIE, DHS, facilitates

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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.

As of June 30, 2023 and 2022, the outstanding balance included in other payables to this supplier was $ 0 and $ 378,385 , which was presented as financing cash flows from short term loans on

the statement of cash flows.

As of June 30, 2024 and 2023, the outstanding balance included in other payables to this supplier was $ 0 and $ 0 , which was presented as

financing cash flows from short term loans on the statement of cash flows.

Note 10 – Loans payable

Revolving credit facility

On May 3, 2019, the Company entered into an agreement

with WFC Fund LLC (“WFC”) for a revolving loan of up to $2,000,000.

The revolving loan bore interest equal to the prime rate

plus 4.25% per annum on the outstanding amount.

On May 26, 2020, the Loan and Security Agreement was amended and restated as a Receivable

Purchase Agreement (the “Original RPA”).

On November 16, 2020, the Original RPA was further amended and restated (the “Restated

RPA”) to increase the credit limit of the revolving credit facility from $2,000,000 to $3,000,000.

The Restated RPA bore a discount

rate of 3.055555%, subject to a rebate of 0.0277% per day.

This revolving credit facility was secured by all of the Company’s assets

and guaranteed by Chenlong Tan, the CEO and one of the Company’s major shareholders and founders.

Pursuant to the terms of the agreement,

all purchases of accounts receivable were without recourse to the Company, and WFC assumed the risk of nonpayment of the accounts receivable

due to a customer’s financial inability to pay the accounts receivable or the customer’s insolvency but not the risk of non-payment

of the accounts receivable for any other reason.

The Company was obligated to collect the accounts receivable and to repurchase or pay

back the amount drawn down if the accounts receivable were not collected.

During the three months ended September 30, 2021,

the Company terminated the Restated RPA and paid off the balance due to WFC.

As of June 30, 2023 and 2022, the outstanding

balance due under the RPA was $ 0 and $ 0 , respectively.

Long-term loan

SBA loan payable

On April 18, 2020, the Company entered into an

agreement with the U.S.

Small Business Administration (“SBA”) for a loan of $500,000 under Section 7(b) of the Small Business

Act pursuant to which we issued a promissory note (the “SBA Note”) to the SBA.

The SBA Note bears interest at the rate of

3.75% per annum and matures 30 years from the date of the SBA Note.

Monthly installment payments, including principal and interest, will

begin twelve months from the date of the SBA Note.

During the quarter ended June 30, 2022, the Company paid off the SBA Note, including

accrued interest expense of $ 39,237 .

As of June 30, 2023 and 2022, the outstanding balance of the SBA Note was $ 0 and $ 0 , respectively.

Asset-based revolving loan

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for the years ended June 30, 2024 and 2023:

Schedule of interest on loans payable

Schedule of interest expense

Accrued interest

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As of June 30, 2024, the outstanding amount of

the revolving loan payable, net of debt discount and including interest payable was $ 9,791,191

and $ 12,314,627 ,

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 Chase Bank, N.A., as administrative agent and lender (“JPMorgan”).

The Company entered into the Second Amendment to the Credit Agreement primarily for the purpose of changing the interest rate repayment

calculations from LIBOR to the Secured Overnight Financing Rate, or SOFR, which adjustment had originally been anticipated under the terms

of the original Credit Agreement.

In addition, two of the negative covenants set forth in the original credit agreement were amended in

order to (i) adjust the definition of “Covenant Testing Trigger Period” to increase the required cash availability from $3,000,000

to $4,000,000, or 10% of the aggregate revolving commitment for the preceding 30 days, and (ii) require that the Company will not and

will not permit any of its subsidiaries, after reasonable due diligence and due inquiry, to knowingly sell their products, inventory or

services directly to any commercial businesses that grow or cultivate cannabis;

it being acknowledged, however, that the Company does

not generally conduct due diligence on its individual retail customers.

On November 11, 2022, the Company and JPMorgan 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”).

Under the terms

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

As of June 30, 2023, the Company was in compliance with the ABL covenants.

the revolving loan payable, net of debt discount and including interest payable was $ 5,500,739 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 Chase Bank, N.A., as administrative agent and lender (“JPMorgan”).

The Company entered

into the Second Amendment to the Credit Agreement primarily for the purpose of changing the interest rate repayment calculations from

LIBOR to the Secured Overnight Financing Rate, or SOFR, which adjustment had originally been anticipated under the terms of the original

Credit Agreement.

In addition, two of the negative covenants set forth in the original credit agreement were amended in order to (i) adjust

the definition of “Covenant Testing Trigger Period” to increase the required cash availability from $3,000,000 to $4,000,000,

or 10% of the aggregate revolving commitment for the preceding 30 days, and (ii) require that the Company will not and will not permit

any of its subsidiaries, after reasonable due diligence and due inquiry, to knowingly sell their products, inventory or services directly

to any commercial businesses that grow or cultivate cannabis;

it being acknowledged, however, that the Company does not generally conduct

due diligence on its individual retail customers.

On November 11, 2022, the Company and JPMorgan

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 June 30, 2024 and 2023, the Company was in compliance with the ABL covenants.

Promissory note payable

On February 15, 2022, as part of the consideration

for 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 with a fair value

of $ 3.6 million as of February 15, 2022.

On February 15, 2022, as part of the

consideration for 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

with a fair value of $ 3.6

million as of February 15, 2022.

In October 2022, the Company paid the first installment of $ 875,000 .

And in February 2023, the

Company paid the second installment of $ 875,000 .

For the year ended June 30, 2023, the Company recorded accrued interest of $ 157,500 and

amortization of note premium of $ 50,418 .

As of June 30, 2023, including $ 236,250 of accrued interest and $ 31,602 of unamortized premium,

the total outstanding balance of the Purchase Note was $ 2,017,852 , which is presented on the consolidated balance sheet as a current portion

of $ 2,017,852 and a non-current portion of $ 0 .

For the year ended June 30, 2022, the Company recorded accrued interest of $ 78,750 and

amortization of note premium of $ 18,609 .

As of June 30, 2022, including $ 78,750 of accrued interest and $ 82,020 of unamortized premium,

the total outstanding balance of the Purchase Note was $ 3,660,770 , which was presented on the consolidated balance sheet as a current

portion of $ 1,879,065 and a non-current portion of $ 1,781,705 .

And in February 2023, the Company paid the second installment of $ 875,000 .

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

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

For the year ended June 30, 2024, the Company recorded accrued interest of $ 39,429

and amortization of note premium of $ 31,602 .

In February 2024, the note premium was fully amortized, and the outstanding balance of the principal and accrued interest of $ 275,679 was

fully paid off.

As of June 30, 2024, the total outstanding balance of the Purchase Note was $ 0 .

For the year ended June 30, 2023, the Company recorded accrued interest of $ 157,500

and amortization of note premium of $ 50,418 .

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

of accrued interest and $ 31,602

of unamortized premium, the total outstanding balance of the Purchase Note was $ 2,017,852 ,

which was presented on the consolidated balance sheet as a current portion of $ 2,017,852

and a non-current portion of $ 0 .

Short-term loans 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 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 year ended June 30, 2024, the Company recorded interest of $ 32,911 .

As of June 30, 2024, the outstanding balance of the On-demand Loan was fully paid off.

On April 8, 2024, the Company entered into

an agreement with an unrelated accredited investor (the “Investor”) for an on-demand, unsecured and subordinated loan

(“On-demand Loan 2”).

Pursuant to the agreement, the Investor agreed to loan the Company the amount requested.

On-demand Loan 2 bears interest at the rate of the Secured Overnight Financing Rate, or SOFR, plus 1.5% per annum.

The On-demand

Loan 2 is due in 30 days upon receipt of the Investor’s notice of repayment.

For the year ended June 30, 2024, the Company

borrowed $ 483,599

and recorded interest expense of $ 7,615 .

As of June 30, 2024, the outstanding balance of the On-demand Loan 2, including accrued interest of $ 7,615 ,

was $ 491,214 .

As of the date of this report, the On-demand Loan 2 had been fully paid off.

On April 1, 2024, the

Company borrowed $ 350,000

short-term loan (“RP Loan”) from an entity owned by Mr.

Allan Huang, one of the majority shareholders of the Company.

The RP Loan bears no interest and is due upon receipt of request of repayment.

As of June 30, 2024, the outstanding balance of the

RP Loan was $ 350,000 .

Note 11 - Related party transactions

Starting from March 2022 to January 2023, the

Company subleased 50,000 square feet of its warehouse space to Box Harmony, LLC, which is a 40% owned joint venture of the Company

as disclosed in Note 1 and Note 2 above.

For the year ended June 30, 2023 and 2022, the Company received and recorded sublease fee

of $ 359,373 and

$ 330,000 as other

non-operating income, respectively.

Company subleased 50,000 square feet of its warehouse space to Box Harmony, LLC, which is a 40% owned joint venture of the Company as

disclosed in Note 1 and Note 2 above.

For the year ended June 30, 2024 and 2023, the Company received and recorded sublease fee of $ 0

and $ 359,373 as other non-operating income, respectively.

As of June 30, 2024 and 2023, other receivables due from Box Harmony was $ 0

respectively.

and 0 , respectively.

During the period ended June 30, 2024, the

Company started selling products through MII Strategy Inc.

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

Chenlong Tan.

For the year ended June 30, 2024, the amount sold through MII was $ 95,376 .

As of June 30, 2024, the total amount due

from MII was $ 56,406 .

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

2 unchanged sentences

the local government in accordance with the PRC rules.

As of June 30, 2023 and 2022, the balance of advance from shareholders was $ 85,200

and $ 92,246 , respectively.

During the quarter ended June 30, 2024, DHS had completed and fulfilled the capital

injection requirement.

As of June 30, 2024 and 2023, the balance of advance from shareholders was $ 0 and $ 85,200 , respectively.

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

with White Cherry for an on-demand loan.

See Note 10 above for details.

On April 1, 2024, the Company borrowed $ 350,000

short-term loan from an entity owned by Mr.

Allan Huang, one of the majority shareholders of the Company.

See Note 10 above for

Note 12 – Income taxes

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Anivia and its subsidiaries were subject to BVI or Hong Kong income taxes but

did not have any operations for the year ended June 30, 2022.

DHS, the operating VIE of Anivia, is considered a Controlled Foreign

Corporation (CFC) defined under IRC Sec.

957(a) since the Company indirectly owns more than 50% voting control of DHS as a result of

the Transfer Agreement.

did not have any operations for the year ended June 30, 2024 and 2023.

DHS, the operating VIE of Anivia, is considered a Controlled

Foreign Corporation (CFC) defined under IRC Sec.

957(a) since the Company indirectly owns more than 50% voting control of DHS as a

result of the Transfer Agreement.

Therefore, DHS is subject to the GILTI Tax.

DHS is subject to 25% tax rate in PRC.

The Company made an

election to apply the GILTI high-tax exclusion for DHS under the Final Regulations (T.D.

As the result of the election, no

GILTI tax was recorded as of June 30, 2023 and 2022.

In addition, as a result of the acquisition, the Company booked a $ 6,094,144

DHS is subject to 5% tax rate in PRC until December

Since DHS had tested losses during the year ended June 30, 2024 and 2023 and no

GILTI tax was recorded for as of June 30, 2024 and 2023, the Company is not eligible for the GILTI high-tax exclusion.

as a result of the acquisition, the Company booked a $ 6,094,144

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

1 unchanged sentence

30, 2024 and 2023 consisted of the following:

Schedule of provision for income tax expense

Schedule of provision for income tax

June 30, 2024

6 unchanged sentences

$ ( 251,365 )

$ ( 2,690,500 )

The Company is subject to U.S.

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tax at the calculated statutory rates:

Schedule of reconciliation of effective income tax rate

Schedule of reconciliation of effective income

June 30, 2024

2 unchanged sentences

State (net of federal benefit)

Foreign tax rate difference

Impairment loss on goodwill – permanent difference

Net effect of state income tax deduction and other permanent differences

Prior year adjustment and permanent differences

Effective tax rate

As of June 30, 2023, prepaid income taxes to US tax authorities and

income tax payable to Chinese tax authorities was $ 45,718 and $ 276,683 , respectively.

As of June 30, 2024, prepaid income taxes to US

tax authorities and income tax payable to Chinese tax authorities was $ 31,496 and $ 276,158 , respectively.

The tax effects of temporary differences which give rise to significant

portions of the deferred taxes are summarized as follows:

Schedule of deferred taxes

As of June 30, 2023, prepaid

income taxes to US tax authorities and income tax payable to Chinese tax authorities was $ 45,718 and $ 276,683 , respectively.

The tax effects of temporary differences which

give rise to significant portions of the deferred taxes are summarized as follows:

Schedule of deferred tax assets

Deferred tax assets

6 unchanged sentences

Stock-based compensation

Valuation allowance

Total deferred tax assets

2 unchanged sentences

( 1,149,549 )

( 1,323,720 )

Total deferred tax liabilities

1 unchanged sentence

( 1,254,872 )

Net deferred tax assets (liabilities)

$ ( 939,115 )

Net deferred tax assets

Note 13– Earnings per share

1 unchanged sentence

earnings per share for the years presented:

Schedule of computation of earnings per share

Schedule of computation of basic and diluted

earnings per share

For the year ended

1 unchanged sentence

$ ( 1,528,159 )

$ ( 11,965,390 )

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

Earnings per share of ordinary shares - basic and diluted

*Due to the ani-dilutive effect, the computation

of basic and diluted EPS did not include the shares underlying the exercise of warrants and RSUs as the Company had a net loss for the

year ended June 30, 2023.

*The computation of diluted EPS did not include

the shares underlying the exercise of warrants, which would have been calculated using treasury method for the year ended June 30, 2022,

as the exercise price was greater than the market price of the shares.

*The computation of diluted EPS did not include

the shares underlying the exercise of options granted as none of the options were vested as June 30, 2023 and 2022.

* For the year ended June 30, 2023, 53,435 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 vested.

* For the year ended June 30, 2022, 133,066 vested

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 (loss) per share when the shares are fully vested.

Due to the ani-dilutive effect, the computation of basic

and diluted EPS did not include the shares underlying the exercise of warrants and RSUs as the Company had a net loss for the year

ended June 30, 2024.

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 June 30, 2024 and 2023.

For the year ended June 30, 2024, 44,285 vested but unissued shares of restricted stock units under the 2020 Equity Incentive Plan (as

discussed in Note 14) are considered issued shares and therefore are included in the computation of basic earnings (losses) per share

when the shares are fully vested.

For the year ended June 30, 2023, 53,435 vested shares of restricted stock units under the 2020 Equity Incentive Plan (as discussed in

Note 14) are considered issued shares and therefore are included in the computation of basic earnings (loss) per share when the shares

are fully vested.

Note 14 – Equity

As of June 30, 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 shares of preferred stock (the “Preferred Stock”), each with a par

value of $0.001 per share.

As of June 30, 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.

The holders of Common Stock shall be entitled

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During the year ended June 30, 2023, the Company

issued 40,019 shares of restricted common stock for RSUs vested in the quarter ended September 30, 2021.

issued 138,557 shares of restricted common stock for RSUs vested.

During the year ended June 30, 2024, the Company

issued 107,293 shares of restricted common stock for RSUs vested.

On February 15, 2022, as part of the consideration

for the acquisition of Anivia and subsidiaries, the Company issued 3,083,700 restricted shares of the Company’s common stock, valued

at $ 2.27 per share, which was the closing price of the Company’s Common Stock as traded on Nasdaq on February 15, 2022.

have a lock-up period of 180 days and are subject to insider trading restrictions.

The fair value of the shares was $ 5,528,373 , calculated

with a discount of lack of marketability of 21%, which is determined using the Black Scholes Model.

On June 18, 2024, the Company 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 .

The Shares were sold pursuant to a prospectus supplement, filed on June 18, 2024, to the Registration Statement on Form S-3,

originally filed on September 25, 2023, with the SEC (File No.

333-274665) and declared effective by the SEC on September 29, 2023.

The Warrants, which were issued pursuant to an exemption from registration pursuant to Section 4(a)(2) or Regulation D on the

Securities Act, have a term of five

years and are immediately exercisable at $ 2.40 per

The Shares and Warrants were sold to a purchaser pursuant to a securities purchase agreement, dated June 16, 2024, between

the Company and the purchaser (the “Purchase Agreement”).

Roth Capital Partners, LLC (the “Placement Agent”)

acted as placement agent, pursuant to a placement agency agreement between the Company and the Placement Agent dated June 16, 2024

(the “Placement Agency Agreement”).

The Company paid the Placement Agent as compensation a cash fee equal to 6.5 %

of the gross proceeds of the Offering plus reimbursement of certain expenses and legal fees.

The net proceeds of the Offering, after

deducting $ 456,913 , the Placement Agent’s fees and expenses and other direct offering costs paid by the Company, was $ 4,543,089 .

The Company calculated the fair value of the

Warrants at $ 3.1

million , with a relative fair value of $ 1.7 million after allocation of the fair value of the Shares, using the Black-Scholes Model with the following variables:

Stock Price - $ 2.0

Exercise Price - $ 2.4

Volatility – 104 %

Term – 5 years

Risk Free Rate of Return – 4.24 %

Pursuant to the Warrant agreement, except for

some fundamental transactions within the Company’s control, in no event shall the Company be required to net cash settle the

The Company considered and followed the rules and guidelines under ASC 480-10 and ASC 815 and concluded that the Warrants

should be classified and recorded as equity.

Further, as the warrants were issued as part of the Offering, the relative fair value

of the Warrants was included in the gross proceeds and recorded as additional paid-in capital.

On June 18, 2024, as disclosed in Note 17 below,

in order to recoup the settlement payment made to Boustead Securities, LLC, the Company’s Chief Executive Officer and co-founder,

Lawrence Tan, along with co-founder Allan Huang, returned a total of 541,667 shares to the Company for cancellation (the “Share

Cancellation”).

The Share Cancellation was completed in June 2024 and the par value of $ 542 was reduced against additional paid-in

As of June 30, 2024 and 2023, there were 31,359,899

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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.

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

9 unchanged sentences

and $ 71,268 of stock-based compensation expense.

There was forfeiture of 0 and 4,000 RSUs occurred during the year ended June

30, 2023 and 2022.

As of June 30, 2023 and 2022, the unvested number of RSUs was 38,793 and 6,608 and the unamortized expense was $ 22,500

and $ 15,000 , respectively.

There was no forfeiture of RSUs occurred during the year ended June 30, 2024 and 2023.

As of June 30, 2024 and 2023, the unvested number of RSUs was 3,250 and 38,793 and the unamortized expense was $ 1,788 and $ 22,500 , respectively.

Information relating to RSU grants is summarized

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As of June 30, 2024, of the 330,154 vested RSUs,

178,576 shares of Common Stock were issued, and 53,435 shares were to be issued in the next fiscal year.

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”) in the amount of

60,000(i) 3,000,000

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

285,869 shares, including 107,293 shares issued during the current year, of Common Stock were issued, and 44,285 shares were to be issued

in the next fiscal year.

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

(i) a $ 60,000

to be awarded to Kevin Vassily, CFO of the Company, and (ii) grants of stock options (the “Option Grants”) in the amount

of (a) 3,000,000

shares to Chenlong Tan, CEO and (b) 330,000

shares to Mr.

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

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.

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 achievement status of the operational

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Dividend Yield – 0 %

The total fair value of the Option Grants

The total fair value of the Option Grants was

$3.2 million of which, at June 30, 2024 and 2023, $2.3 million is deemed probable of vesting.

As of June 30, 2023 and 2022, none

of the options had vested.

For the year ended June 30, 2023 and 2022, the Company recorded $ 441,528

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

Unrecognized compensation cost related to tranches probable of

vesting is approximately $ 1.8

million and will be recognized over 2

years to 9 years , depending on the tranche.

As of June 30, 2024 and 2023, none of the

options had vested.

For the year ended June 30, 2024 and 2023, the Company recorded $ 441,528 and $ 441,528 of stock-based compensation

expense related to the Option Grants.

Unrecognized compensation cost related to tranches probable of vesting is approximately $1.3 million

and will be recognized over two years to nine years, depending on the tranche.

Note 15 – Warrant liabilities

On January 27, 2021, the Company completed a private

placement offering pursuant to which the Company sold to two accredited investors an aggregate of $ 3,000,000 in Convertible Notes and

warrants to purchase shares of Class A Common Stock equaling 80% of the number of shares of Class A Common Stock issuable upon conversion

of the Convertible Notes.

The convertible note warrants shall be exercisable for a period of three years from the IPO completion date

at a per share exercise price equal to the IPO.

In accordance with the terms of the warrants, in the event the Convertible Notes are repaid

in cash by the Company, the warrants issued in conjunction with the Convertible Notes will expire and have no further value.

The outstanding warrants held by the Convertible

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

Through June 30, 2023,

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

As such, as of June 30, 2023 and 2022, the number of shares issuable

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

On January 27, 2021, the Company completed a

private placement offering pursuant to which the Company sold to two accredited investors an aggregate of $3,000,000 in Convertible

Notes and warrants to purchase shares of Class A Common Stock equaling 80% of the number of shares of Class A Common Stock issuable

upon conversion of the Convertible Notes.

The convertible note warrants are exercisable for a period of three years from

the IPO completion date at a per share exercise price equal to the IPO.

In accordance with the terms of the warrants, in the event

the Convertible Notes are repaid in cash by the Company, the warrants issued in conjunction with the Convertible Notes will expire

and have no further value.

The outstanding warrants held by the

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

Through June 30, 2024, none of the private placement investors exercised any of their warrants and the warrants were expired in May

As such, as of June 30, 2024 and 2023, the number of shares issuable under the outstanding convertible note warrants was 0

and 685,715 ,

with an average exercise price of $ 5.00

Note 16 - 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 June 30, 2023 and 2022, $ 3,735,642 and

$ 1,821,947 , 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 June 30, 2024 and 2023, $ 7,377,837

and $ 3,735,642 ,

respectively, were deposited with various major financial institutions and financial services companies in the United States and

Accounts at each institution in the United States are insured by the Federal Deposit Insurance Corporation (FDIC) for up to

The Company had approximately $ 5.8

$ 2.7 million and $ 0.5 million , respectively, in excess of the FDIC insurance limit, as of June 30, 2023 and 2022.

million and $ 2.7

million, respectively, in excess of the FDIC insurance limit, as of June 30, 2024 and 2023.

Accounts receivable are typically unsecured and

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accounts receivable from Amazon Vendor and Amazon Seller accounted for 91 % and 95 % of the Company’s total accounts receivable.

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

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

As of June 30, 2023, accounts payable to one supplier

accounted for 49 % of the Company’s total accounts payable.

As of June 30, 2022, accounts payable to two suppliers accounted for

34 % and 10 % of the Company’s total accounts payable.

For the years ended June 30, 2024 and 2023,

one supplier accounted for 10 %

of the Company's total purchases, respectively.

As of June 30, 2024 and 2023, accounts payable to one supplier accounted for 36 %

of the Company’s total accounts payable, net of credits of $1.7 million, respectively.

Note 17 - Commitments and contingencies

Lease commitments

The Company has entered into a lease agreement for office and warehouse space with a lease period from December

1, 2018 until December 31, 2020.

On August 24, 2020, the Company negotiated for new terms to extend the lease through December 21, 2023

at the rate of approximately $42,000 per month.

The Company has entered into a lease agreement

for office and warehouse space with a lease period from December 1, 2018 until December 31, 2020.

On August 24, 2020, the Company negotiated

for new terms to extend the lease through December 21, 2023 at the rate of approximately $42,000 per month.

On December 21, 2023, the

lease expired without renewal.

On September 1, 2020, in addition to the primary

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$29,910 per month through October 31, 2023.

On October 31, 2023, the lease expired without renewal.

On February 15, 2022, upon completion of the acquisition

of Anivia Limited, the Company assumed an operating lease for offices located in the People’s Republic of China.

In July 2023, the

Company renewed the lease contract for its existing office plus additional office space.

The lease term is for three years expiring on

July 14, 2026.

The total base rental fee for these offices is approximately $19,406 per month.

On July 28, 2021, the Company entered into a Lease

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The Lease Agreement does not provide for an option to renew.

In addition, the Company

will be responsible for its pro rata share of certain costs, including utility costs, insurance and common area costs, as further detailed

in the Lease Agreement.

Following the Rent Commencement Date, the first two months of the Base Rent will be abated.

Under the Lease

Agreement, the Company is responsible for its pro rata share of certain costs, including utility costs, insurance and common area costs,

as further detailed in the Lease Agreement.

In addition, following the Rent Commencement Date, the first two months of the Base Rent were

The lease was not started under the original agreement

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The lease commencement date is February 10, 2022, with rent payments commencing May 11, 2022 and the lease expiring on May

The base rental fee is $114,249 to $140,079 per month through the expiration date of May 31, 2028.

The base rental fee is $114,249, increasing gradually over time to $140,079 per month through the expiration date of May 31,

On May 1, 2022, the Company leased another fulfillment

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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 is seeking,

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

Davidson & Co.

(who acted as underwriter in the Company’s

The matter is presently scheduled to have a pre-hearing conference before a FINRA arbitration panel on September

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.

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

authorities across the world have implemented various measures, some of which have been subsequently rescinded or modified, including

travel bans, stay-at-home orders and shutdowns of certain businesses.

The Company anticipates that these actions and the global health

crisis caused by the COVID-19 outbreak, including any resurgences, will continue to negatively impact global economic activity.

the COVID-19 outbreak has not had a material adverse impact on the Company’s operations to date, it is difficult to predict all

of the positive or negative impacts the COVID-19 outbreak may have on the Company’s business in the future.

2022, the Russian Federation began conducting military operations against Ukraine, resulting in global economic uncertainty and increased

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 disruption 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, they did not have a material effect on our results of operations, financial condition, or liquidity for the year ended

June 30, 2023 and 2022.

On April 13, 2020, the Company entered into an agreement with Royal

Business Bank (the “Lender”) for a total amount of $175,500, pursuant to a promissory note issued by the Company to the Lender

(the “PPP Note”).

The loan was made pursuant to the Payroll Protection Program established as part of the Coronavirus Aid,

Relief and Economic Security Act (the “CARES Act”).

On March 22, 2021, the $175,500 PPP Note due to Royal Business Bank was

fully forgiven by the SBA.

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

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.

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

As part of the IPO closing, the Company agreed to indemnify D.A.

and the other underwriters against any liability or expense they may incur or be subject to arising out of the Boustead

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, 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.

As of June 30, 2023, the Company was not able to reasonably

estimate the amount of potential exposure.

On April 3, 2024, the

Company and D.A.

Davidson & Co entered into a settlement agreement and mutual release (the “Settlement Agreement”)

with Boustead Securities, LLC (“Boustead”) 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 Boustead.

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 Boustead against the Company and D.A.

Davidson after

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

offering with D.A.

Pursuant to the terms of 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.

Within five days of its receipt of the final payment, or by July 8, 2024, Boustead 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 Boustead.

For the year ended June 30, 2024, the Company considered and concluded that

the Settlement Amount of $ 1.3

million was incremental costs directly associated with the IPO under ASC 340-10-S99-1 and so recorded as offering costs against

additional paid-in capital.

As of June 30, 2024, the outstanding balance of the Settlement Amount

was $ 325,000 .

As of the date of this report, the Settlement Amount had been paid off and the parties have formally withdrawn all of the

complaints that were before FINRA, with prejudice, and the matter is settled in full.

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.

On June 18, 2024, calculating the shares at $ 2.40 ,

Tan and Huang returned

a total of 541,667 shares as indemnification payment to the Company for cancellation (the “Share Cancellation”).

Cancellation was completed in June 2024.

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 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

agreement with Royal Business Bank (the “Lender”) for a total amount of $175,500, pursuant to a promissory note issued by

the Company to the Lender (the “PPP Note”).

The loan was made pursuant to the Payroll Protection Program established as part

of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).

On March 22, 2021, the $175,500 PPP Note due to

Royal Business Bank was fully forgiven by the Small Business Administration (“SBA”).

The Company is required to retain PPP loan documentation through 2026

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Should the SBA conduct such a review and reject all

or some of the Company’s judgments pertaining to satisfying PPP loan eligibility or forgiveness conditions, the Company may be

required to adjust previously reported amounts and disclosures in the consolidated financial statements.

or some of the Company’s judgments pertaining to satisfying PPP loan eligibility or forgiveness conditions, the Company may be required

to adjust previously reported amounts and disclosures in the consolidated financial statements.

Note 18 - Subsequent events

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that occurred after the balance sheet date through the date that the consolidated financial statements are available to be issued.

than as set forth below, no material subsequent events that required recognition or additional disclosure in the consolidated financial

statements are presented.

On 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”).

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.

Following receipt of Nasdaq’s

deficiency notification, the Company has 180 days, or until February 20, 2024, to regain compliance with the Bid Price Requirement and

may seek an additional 180-day extension thereafter.

During that time, the Company will evaluate what actions it needs to take should

the Company determine that it is unlikely that it will regain compliance within the requisite time period.

While the Company needs to

remain mindful of the timing in which it needs to regain compliance, the deficiency notification has no immediate effect on the Company’s

Nasdaq listing and the Company’s common stock will continue to trade on Nasdaq under the ticker symbol “IPW.”

than the material subsequent events disclosed above in the notes to financial statements, no other material subsequent events that required

recognition or additional disclosure in the consolidated financial statements are presented.

On August 29, 2024, the board of directors (the

“Board”) of the Company, based on the recommendation of the compensation committee of the Board, approved a grant of 1,200,000

stock options (the “Stock Options”) issuable to Chenlong Tan, the Company’s Chief Executive Officer, pursuant to the

terms of the iPower Inc.

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

Following the Board’s approval,

Tan and the Company entered into a stock option award agreement (the "Stock Option Award Agreement").

According to the Stock Option Award Agreement,

and subject to the terms and conditions of the Stock Option Award Agreement and the Plan, upon vesting of the Stock Options, Mr.

have the option to purchase common stock, par value $0.001 per share of the Company, at an exercise price of $1.43 per share (which is

110% of the Fair Market Value of the stock on the grant date).

The Stock Options have a term of five years and will vest as follows:

Stock Options vested on the grant date (August 29, 2024), and 32,500 Stock Options will vest on the first day of each month from September

1, 2024, to August 1, 2027.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

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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 8. Financial Statements and Supplementary Data