What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-02-14 compared with 2024-11-14 · 499 added, 474 removed, 1061 unchanged (48% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

of September 30, 2024 and June 30, 2024

September 30,

As of December 31, 2024 and June 30, 2024

Current assets

22 unchanged sentences

Non-current liabilities

Long-term revolving loan payable, net

Long-term revolving loan payable

Lease liability - non-current

3 unchanged sentences

Stockholders' Equity

Preferred stock, $ 0.001

Preferred stock, $ 0.001 par value;

20,000,000 shares authorized;

shares issued and outstanding at September 30, 2024 and June 30, 2024

0 shares issued and outstanding at December 31, 2024 and June 30, 2024

Common stock, $ 0.001 par value;

180,000,000 shares authorized;

31,359,899 shares issued and outstanding at September 30, 2024 and June 30, 2024

31,359,899 and 31,359,899 shares issued and outstanding at December 31, 2024 and June 30, 2024

Additional paid in capital

6 unchanged sentences

Total liabilities and stockholders' equity

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

The accompanying notes

are an integral part of these unaudited condensed consolidated financial statements

and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

the Three Months Ended September 30, 2024 and 2023

For the Three Months Ended September 30,

Product sales revenues

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

For the Three and Six Months Ended December 31, 2024 and 2023

For the Three Months Ended

For the Six Months Ended

Product sales

Service income

8 unchanged sentences

Total operating expenses

LOSS FROM OPERATIONS

INCOME (LOSS) FROM OPERATIONS

( 2,552,347 )

( 2,062,827 )

( 3,821,024 )

OTHER INCOME (EXPENSE)

1 unchanged sentence

Loss on equity method investment

Other non-operating income (Loss)

Total other income (expenses), net

LOSS BEFORE INCOME TAXES

Other non-operating income (expenses)

Total other expenses, net

INCOME (LOSS) BEFORE INCOME TAXES

( 2,606,922 )

( 2,332,454 )

PROVISION FOR INCOME TAX BENEFIT

( 4,172,155 )

PROVISION FOR INCOME TAX EXPENSE (BENEFIT)

NET INCOME (LOSS)

( 1,917,983 )

( 1,816,453 )

( 3,207,334 )

Non-controlling interest

NET LOSS ATTRIBUTABLE TO IPOWER INC.

NET INCOME (LOSS) ATTRIBUTABLE TO IPOWER INC.

$ ( 1,914,828 )

$ ( 1,810,462 )

OTHER COMPREHENSIVE LOSS

$ ( 3,201,343 )

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustments

COMPREHENSIVE LOSS ATTRIBUTABLE TO IPOWER INC.

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO IPOWER INC.

$ ( 2,075,083 )

$ ( 1,709,386 )

$ ( 3,362,305 )

WEIGHTED AVERAGE NUMBER OF COMMON STOCK

Basic and diluted

LOSSES PER SHARE

Basic and diluted

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

EARNINGS (LOSSES) PER SHARE

The accompanying

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

and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders' Equity

the Three Months Ended September 30, 2024 and 2023

Unaudited Condensed

Consolidated Statements of Changes in Stockholders' Equity

For the Three and Six Months Ended December 31 , 2024 and 2023

Retained Earnings

Non-controlling

Accumulated other Comprehensive

Paid in Capital

income (loss)

Balance, June 30, 2024

8 unchanged sentences

$ ( 265,460 )

Net income (loss)

Stock-based compensation

Foreign currency translation adjustments

Balance, December 31, 2024, unaudited

$ ( 12,041,063 )

$ ( 109,330 )

Balance, June 30, 2023

6 unchanged sentences

$ ( 9,988,957 )

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

( 1,914,828 )

( 1,917,983 )

Stock-based compensation

Foreign currency translation adjustments

Balance, December 31, 2023, unaudited

$ ( 11,903,785 )

$ ( 223,096 )

The accompanying

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

and Subsidiaries

Condensed Consolidated Statements of Cash Flows

the Three Months Ended September 30, 2024 and 2023

For the Three Months Ended September 30,

Unaudited Condensed

Consolidated Statements of Cash Flows

For the Six Months Ended December 31 , 2024 and 2023

For the Six Months Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

$ ( 3,207,334 )

Adjustments to reconcile net loss to cash (used in) provided by

operating activities:

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

Depreciation and amortization expense

3 unchanged sentences

Stock-based compensation expense

Gain on foreign currency exchange rates

Amortization of operating lease right of use assets

3 unchanged sentences

Deferred tax assets

Prepayments and other current assets, net

Prepayments and other current assets

Non-current prepayments

2 unchanged sentences

( 2,373,796 )

( 1,213,634 )

Other payables and accrued liabilities

( 1,040,347 )

Operating lease liabilities

7 unchanged sentences

Payments of offering cost settlement

Payments on Short-term loan - related parties

( 1,000,000 )

Proceeds from short-term loans -related party

Payments on short-term loans - related party

( 1,000,000 )

Payments on promissory note

7 unchanged sentences

EFFECT OF EXCHANGE RATE ON CASH

CHANGES IN CASH AND CASH EQUIVALENTS

CHANGES IN CASH AND CASH EQUIVALENT

( 4,500,380 )

( 2,247,615 )

CASH AND CASH EQUIVALENTS, beginning of period

CASH AND CASH EQUIVALENTS, end of period

CASH AND CASH EQUIVALENT, beginning of period

CASH AND CASH EQUIVALENT, end of period

SUPPLEMENTAL CASH FLOW INFORMATION:

2 unchanged sentences

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:

Right of use assets derecognized due to termination of

operating leases

Right of use assets derecognized due to termination of operating leases

Right of use assets acquired under new operating leases

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

The accompanying

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

Notes to Unaudited Condensed Consolidated Financial

As of September 30, 2024 and June 30, 2024 and

for the Three Months Ended September 30, 2024 and 2023

As of December 31, 2024 and June 30, 2024 and

for the Three and Six Months Ended December 31, 2024 and 2023

Note 1 - Nature of business and organization

14 unchanged sentences

As a result, GPM 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.

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.

Company owns 40% of the equity interest in Box Harmony, retaining significant influence while not owning a majority equity interest in

or otherwise controlling Box Harmony.

See details at Note 3 below.

14 unchanged sentences

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”), 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.

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

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,

See details on Note 4 below.

3 unchanged sentences

The unaudited condensed consolidated financial

statements include the accounts of the Company and its subsidiaries and VIE and have been prepared in accordance with accounting principles

generally accepted in the United States of America (“U.S.

statements include the accounts of the Company and its subsidiaries and variable interest entity and have been prepared in accordance

with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and the requirements of the U.S.

Securities and Exchange

Commission (“SEC”) for interim reporting.

As permitted under those rules, certain footnotes or other financial information

that are normally required by U.S.

Securities and Exchange Commission (“SEC”) for interim reporting.

As permitted under those rules, certain footnotes or other

financial information that are normally required by U.S.

GAAP can be condensed or omitted.

These unaudited condensed consolidated financial statements have

been prepared on the same basis as its annual consolidated financial statements and, in the opinion of management, reflect all adjustments,

consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company’s financial information.

These interim results are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2025, or for any

other interim period or for any other future year.

All intercompany balances and transactions have been eliminated in consolidation.

These unaudited condensed consolidated financial

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

in the Annual Report for the year ended June 30, 2024, which are included in Form 10-K filed with the SEC on September 20, 2024.

statements have been prepared on the same basis as its annual consolidated financial statements and, in the opinion of management, reflect

all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company’s financial

These interim results are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2025,

or for any other interim period or for any other future year.

All intercompany balances and transactions have been eliminated in consolidation.

These unaudited condensed consolidated financial statements

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

Annual Report on Form 10-K for the year ended June 30, 2024, which was filed with the SEC on September 20, 2024.

Principles of Consolidation

13 unchanged sentences

Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting

requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not

being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations

requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being

required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations

regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding

38 unchanged sentences

The balance sheet amounts of the VIE, with the

exception of equity, on September 30, 2024, were translated at 7.0181 RMB to $1.00.

exception of equity, on December 31, 2024, were translated at 7.2993 RMB to $1.00.

The equity accounts were stated at their historical

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

ended September 30, 2024 was 7.1623 RMB to $1.00.

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

December 31, 2024 was 7.1764 RMB to $1.00.

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

11 unchanged sentences

Accounts receivable, net

During the ordinary course of business, the

Company extends unsecured credit to its customers.

Accounts receivable are stated at the amount the Company expects to collect from

customers, which includes the amount withheld by sales channel partners and refundable to the Company.

Based on historical and

expected loss rate and status of negotiations with the sales channel partner, management reviews its accounts receivable balances

each reporting period to determine if an allowance for credit loss is required.

During the ordinary course of business, the Company

extends unsecured credit to its customers.

Accounts receivable are stated at the amount the Company expects to collect from customers,

which includes the amount withheld by sales channel partners and refundable to the Company.

Based on historical and expected loss rate

and status of negotiations with the sales channel partner, management reviews its accounts receivable balances each reporting period to

determine if an allowance for credit loss is required.

The Company evaluates the creditworthiness of

18 unchanged sentences

The Company has also included in calculation of allowance for credit losses the potential impact of the

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

After all attempts to collect

a receivable have failed, the receivable is written off against the allowance.

The Company also considers external factors to the specific

customer, including current conditions and forecasts of economic conditions, including the potential impact of the COVID-19 pandemic.

overall economic conditions on our customers’ industry and businesses and their ability to pay our accounts receivable.

attempts to collect a receivable have failed, the receivable is written off against the allowance.

The Company also considers external

factors to the specific customer, including current conditions and forecasts of economic conditions, including the potential impact of

the COVID-19 pandemic.

In the event we recover amounts previously written off, we will reduce the specific allowance for credit losses.

In late October 2024, the Company determined that the collectability of certain shortage claim receivables from

Amazon was remote so recorded additional allowance for credit losses of approximately $ 1.4 million for the quarter ended September 30,

In late October 2024, the Company determined that the collectability of certain refundable amount withheld by sales channel partners was

remote so recorded additional allowance for credit losses of $ 41,346 and $ 1,516,940 for the three and six months ended December 31, 2024.

Equity method investment

21 unchanged sentences

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

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

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

If it is determined that it is more likely

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

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

If the fair value

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

However, if the carrying

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

to the total amount of goodwill allocated to that reporting unit.

During the three months ended September 30,

2024 and 2023, the Company performed a qualitative goodwill impairment analysis following the steps laid out in ASC 350-20-35-3C and

noted no goodwill impairment.

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

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

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

If it is determined that it is more likely than

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

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

If the fair value of

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

However, if the carrying amount

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

total amount of goodwill allocated to that reporting unit.

During the six months ended December 31, 2024

and 2023, the Company performed a qualitative goodwill impairment analysis following the steps laid out in ASC 350-20-35-3C and noted

no goodwill impairment.

As of December 31, 2024 and June 30, 2024, the goodwill balance amounted to $ 3,034,110 .

Intangible Assets, net

Finite life intangible assets at September 30,

Finite life intangible assets at December 31,

2024 include covenant not to compete, supplier relationship, and software recognized as part of the acquisition of Anivia.

14 unchanged sentences

value determinations.

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

Fair values of financial instruments

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

Fair value of financial instruments

ASC 825, “Disclosures about Fair Value of

21 unchanged sentences

to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The Company does not have any assets or

liabilities measured at fair value on a recurring basis.

We measure certain non-financial assets on a non-recurring basis, including

As a result of those measurements, as of September 30, 2024 and June 30, 2024, the Company had goodwill with a carry book

value of $ 3,034,110 , which approximated its fair value:

Schedule of impairment charges

The fair value of goodwill was determined based on the discounted cash flow method, which is an income

approach, which required the use of inputs that were unobservable in the marketplace (Level 3), including a discount rate that would be

used by a market participant, projections of revenues and cash flows with the revised projections reflecting the increase in freight and

storage costs in the current interim quarter, among others.

The Company does not have any assets or liabilities

measured at fair value on a recurring basis.

We measure certain non-financial assets on a non-recurring basis, including goodwill.

Revenue recognition

6 unchanged sentences

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

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

product returns, are estimated using historical experience.

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

11 unchanged sentences

price of the related transaction.

Sales discounts are recorded in the period in which the related sales

are recorded.

Sales discounts are recorded in the period in

which the related sales are recorded.

Sales return allowances are estimated based on historical amounts and are recorded upon recognizing

3 unchanged sentences

Advertising costs are expensed as incurred.

advertising and promotional costs included in selling and fulfillment expenses for the three months ended September 30, 2024 and 2023

were $ 651,125 and $ 1,570,742 , respectively.

advertising and promotional costs included in selling and fulfillment expenses for the three and six months ended December 31, 2024 and

2023 were as following.

Schedule of advertising costs

Three Months Ended

Six Months Ended

Advertising and promotion

Cost of revenue

6 unchanged sentences

on quality issues are recorded to offset merchant selling fees.

During the three months ended September 30, 2024 and 2023, the Company

did no t have any vendor credits.

During the six months ended December 31, 2024 and 2023, the Company recorded

vendor credits of $48,582 and $0, respectively.

Inventory, net

25 unchanged sentences

of determination.

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

in capital upon closing of the offering.

As of September 30, 2024 and June 30, 2024, there were no deferred offering costs included in

the consolidated balance sheets.

For the year ended June 30, 2024, $1,756,913 was recorded as deferred offering costs and reclassified to additional

paid in capital upon closing of the offering on June 18, 2024.

As of December 31, 2024 and June 30, 2024, there were no deferred offering

costs included in the Company’s consolidated balance sheets.

Segment reporting

3 unchanged sentences

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

For the three months ended

September 30, 2024 and 2023, sales through Amazon to Canada and other foreign countries were approximately 13.4 % and 8.2 % of the Company’s

During the three months ended September 30, 2024, sales of hydroponic products, including ventilation and grow light systems,

was approximately 17.2 % of the Company’s total sales and the remaining 82.8 % consisted of general gardening, home goods, and other

products and accessories.

During the three months ended September 30, 2023, sales of hydroponic products, including ventilation and grow

light systems, were approximately 16.8 % of the Company’s total sales and the remaining 83.2 % consisted of general gardening, home

For the six months ended

December 31, 2024 and 2023, sales through Amazon to Canada and other foreign countries were approximately 6.9 % and 9.8 % of the Company’s

total sales, respectively.

During the six months ended December 31, 2024, sales of hydroponic products, including ventilation and grow

light systems, was approximately 16.8 % of the Company’s total sales and the remaining 83.2 % consisted of general gardening, home

goods, and other products and accessories.

As of September 30, 2024 and June 30, 2024, the Company had approximately $ 1.6 million and $ 1.9

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

and grow light systems, were approximately 19.3 % of the Company’s total sales and the remaining 80.7 % consisted of general gardening,

home goods and other products and accessories.

As of December 31, 2024 and June 30, 2024, the Company had approximately $ 1.4 million and

$ 1.9 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’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

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

12 unchanged sentences

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 costs 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 the 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

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

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 costs 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 the 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 costs

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 also revisits the anticipated timing for meeting the performance conditions.

As per ASC 718-10-55-78, if the expected number

of awards to vest and the fair value remain the same under the new estimates, with the adjustment solely impacting the timing of recognition,

the Company will apply the prospective approach to record the adjustment.

The Company will recognize forfeitures of such

equity-based compensation as they occur.

The Company accounts for income taxes under

the asset and liability method.

Deferred tax assets and liabilities are recognized for future tax consequences attributable to

differences between the financial statement carrying amounts of existing assets and liabilities and their perspective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which

the temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in

tax rates is recognized in income in the period that includes the enactment date.

A valuation allowance must be established for

deferred tax assets when it is more-likely-than-not (a probability level of more than 50%) that they will not be realized.

allowances are recorded, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company accounts for income taxes under the

asset and liability method.

Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences

between the financial statement carrying amounts of existing assets and liabilities and their perspective tax bases.

Deferred tax assets

and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences

are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income

in the period that includes the enactment date.

A valuation allowance must be established for deferred tax assets when it is more-likely-than-not

(a probability level of more than 50%) that they will not be realized.

Valuation allowances are recorded, when necessary, to reduce deferred

tax assets to the amount expected to be realized.

The Company has analyzed filing positions in each

23 unchanged sentences

Recently issued accounting pronouncements

In November 2024, The FASB issued ASU 2024-03, Income Statement—Reporting

Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

requires public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at

each interim and annual reporting period.

The FASB further clarified the effective date in January 2025 with the issuance of ASU

2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation

Disclosures (Subtopic 220-40):

Clarifying the Effective Date (“ASU 2025-01”).

ASU 2024-03 is effective for annual

periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with

early adoption permitted.

The requirements should be applied on a prospective basis while retrospective application is permitted.

Company plans to adopt this pronouncement for its fiscal year beginning July 1, 2027, and is in the process of analyzing the impact on

its consolidated financial statements.

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

52 unchanged sentences

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.

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.

33-10532, 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 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.

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.

The adoption of this standard

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

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.

However, if 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 June 2022, FASB issued ASU 2022-03, Fair

6 unchanged sentences

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

In March 2020 and January 2021, the FASB issued

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU

2021-01, Reference Rate Reform (Topic 848):

Scope, respectively (collectively, “Topic 848”).

Topic 848 provides optional

expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank

Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

The expedients

and exceptions provided by Topic 848 are effective for all entities as of March 12, 2020 through December 31, 2022.

In December 2022,

the FASB issued ASU 2022-06, Reference Rate reform (Topic 848):

Deferral of the Sunset Date of Topic 848, which deferred the sunset date

of Topic 848, Reference Rate Reform to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic

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 adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

The Company does not believe other recently issued

56 unchanged sentences

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 had not completed the capital

contributions and no receivables were recorded.

Pursuant to the terms of the Agreements, the Company

1 unchanged sentence

Based on ASU 2015-02, the Company consolidates GSM into

its financial statements due to its majority equity ownership and control over operations.For the three months ended September 30, 2024

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

For the six months ended December 31, 2024

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

10 unchanged sentences

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

As of September 30, 2024 and June 30, 2024, there

As of December 31, 2024 and June 30, 2024, there

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

4 unchanged sentences

and liabilities were as follows for the periods indicated:

Schedule of VIE’s assets

and liabilities

September 30, 2024

Schedule of VIE’s assets and liabilities

December 31, 2024

June 30, 2024

7 unchanged sentences

The operating results of the VIE were as follows

for the three months ended September 30, 2024:

for the three and six months ended December 31, 2024:

Schedule of operating results of the VIE

September 30, 2024

Net loss after elimination of intercompany transactions

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

ended September 30, 2023 :

September 30, 2023

Net loss after elimination of intercompany transactions

For the three months ended September 30, 2024,

the VIE contributed approximately $ 1.4 million of revenue and $ 0.2 million of net loss before elimination.

For the three months ended

September 30, 2023, the VIE contributed approximately $ 2.1 million of revenue and $ 0.05 million of net loss before elimination.

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

and six months ended December 31, 2023:

Net income (loss) after elimination of intercompany transactions

For the three and six months ended December 31,

2024, the VIE contributed approximately $ 0.8 million and $ 2.2 million of revenue and $ 0.3 million and $ 0.5 million of net loss before

For the three and six months ended December 31, 2023, the VIE contributed approximately $ 1.8 million and $ 3.9 million of

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

Note 5 – Accounts receivable, net

2 unchanged sentences

Schedule of accounts receivable

September 30, 2024

December 31, 2024

June 30, 2024

12 unchanged sentences

Balance at September 30, 2023

Allowance recorded during the three months ended December 31, 2023

Balance at December 31, 2023

Balance at June 30, 2024

1 unchanged sentence

Balance at September 30, 2024

Allowance recorded during the three months ended December 31, 2024

Balance at December 31, 2024

Note 6 – Inventories, net

As of September 30, 2024 and June 30, 2024, inventories

As of December 31, 2024 and June 30, 2024, inventories

consisted of finished goods ready for sale, net of allowance for obsolescence, amounted to $ 9,183,631 and $ 10,546,273 , respectively.

For the three months ended September 30, 2024

and 2023, the Company recorded inventory reserve expense of $ 288,474 and $ 105,192 , respectively.

As of September 30, 2024 and June 30,

For the three and six months ended December 31,

2024, the Company recorded inventory reserve expense of $ 0 and $ 288,474 , respectively.

For the three and six months ended December 31,

2023, the Company recorded inventory reserve expense of $ 117,563 and $ 222,755 , respectively.

As of December 31, 2024 and June 30, 2024,

allowance for obsolescence was $ 936,299 and $ 647,825 , respectively.

Note 7 – Prepayments and other current assets, net

As of September 30, 2024 and June 30, 2024, prepayments and other current

As of December 31, 2024 and June 30, 2024, prepayments and other current

assets consisted of the following:

Schedule of prepayments and other current

September 30, 2024

December 31, 2024

June 30, 2024

3 unchanged sentences

Allowance for credit losses

Other receivables consisted of delivery fees

of $ 2,786 and $ 3,995

from a third party for using the Company’s courier accounts at September

30, 2024 and June 30, 2024.

Other receivables consisted of delivery fees of

$ 64 and $ 3,995 from a third party for using the Company’s courier accounts at December 31, 2024 and June 30, 2024.

The changes in allowance for credit losses on

6 unchanged sentences

Balance at September 30, 2023

Allowance recorded during the three months ended December 31, 2023

Balance at December 31, 2023

Balance at June 30, 2024

1 unchanged sentence

Balance at September 30, 2024

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

Allowance recorded during the three months ended December 31, 2024

Balance at December 31, 2024

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

As of September 30, 2024 and June 30, 2024, intangible

As of December 31, 2024 and June 30, 2024, intangible

assets, net, consisted of the following:

Schedule of intangible

September 30, 2024

December 31, 2024

June 30, 2024

6 unchanged sentences

15, 2022 through acquisition of Anivia.

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

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

approximately 5.70 years.

The amortization expense for the three months ended September 30, 2024 and 2023 was $ 162,343 and $ 162,343 , respectively.

At September 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

The amortization expense for the three and six months ended December 31, 2024 was $ 162,343 and $ 324,686 , respectively.

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

At December 31,

2024, finite-lived intangible assets are expected to be amortized over their estimated useful lives, which ranges from a period of five

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

Schedule of amortization expense

2 unchanged sentences

Note 9 – Other payables and accrued liabilities

As of September 30, 2024 and June 30, 2024, other payables and accrued

As of December 31, 2024 and June 30, 2024, other payables and accrued

liabilities consisted of the following:

Schedule of other payables and accrued

September 30, 2024

December 31, 2024

June 30, 2024

21 unchanged sentences

Maturity Date of November 12, 2024

In addition, the ABL includes an accordion feature

that allows the Company to borrow up to an additional $ 25.0 million .

To secure complete payment and performance of the secured obligations,

the Company granted a security interest in all of its right, title and interest in, to and under all of the Company’s assets as

collateral to the ABL.

Upon closing of the ABL, the Company paid $ 796,035 in financing fees including 2% of $25.0 million or $500,000

paid to its financial advisor.

The financing fees are recorded as debt discount and are to be amortized over the three-year term of the

ABL as interest expense.

In addition, the ABL includes an accordion

feature that allows the Company to borrow up to an additional $ 25 .0

To secure complete payment and performance of the secured obligations, the Company granted a security interest in all of

its right, title and interest in, to and under all of the Company’s assets as collateral to the ABL.

Upon closing of the ABL,

the Company paid $ 796,035

in financing fees including 2% of $25.0 million or $500,000 paid to its financial advisor.

The financing fees are recorded as debt

discount and are to be amortized over the three-year term of the ABL as interest expense.

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.

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 8, 2024, the Company entered into

a third amendment (the “Third Amendment”) to that certain credit agreement, initially entered into by and among the Company

and its subsidiaries and JPMorgan Chase Bank, N.A., as administrative agent for the Lender and a lender (the “Administrative Agent”

or “Lender”), on November 12, 2021 (the “Credit Agreement”).

The Third Amendment to the Credit Agreement amended,

among other things, (i) the defined term “Aggregate Revolving Commitment” to mean $15,000,000, and (ii) extended the maturity

date to “November 8, 2027 or any earlier date on which the Revolving Commitments are reduced to zero or otherwise terminated pursuant

to the terms hereof.” The borrowing rate is SOFR plus 2.25% to 2.50% depending on utilization of the borrowing availability.

As of December 31, 2024, the outstanding amount

of the ABL, which was classified as long-term revolving loan payable, including interest payable, was $ 4,042,400 .

As of June 30, 2024, the outstanding amount of the revolving loan payable, net of debt discount and including interest payable, was $ 5,500,739 .

Below is a summary of the interest expense recorded

for the three months ended September 30, 2024 and 2023:

for the three and six months ended December 31, 2024 and 2023:

Schedule of interest expense

Three Months Ended December 31,

Six Months Ended December 31,

Accrued interest

1 unchanged sentence

Amortization of debt discount

As disclosed in Note 18, the maturity date of

the ABL has been extended to November 8, 2027.

As of September 30, 2024, the outstanding amount of the ABL, which was classified as long-term

revolving loan payable, net of debt discount and including interest payable, was $ 3,131,955 .

As of June 30, 2024, the outstanding amount of the revolving loan payable, net of debt discount and including interest payable, was $ 5,500,739 .

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.

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.

As of September 30, 2024, the Company was in compliance with the ABL covenants.

As of December 31, 2024, the Company was

in compliance with the ABL covenants.

Promissory note payable

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 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 .

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 three months ended

September 30, 2024, the Company recorded accrued interest of $ 0 and amortization of note premium of $ 0 .

For the three months ended

September 30, 2023, the Company recorded accrued interest of $ 19,688 and amortization of note premium of $ 12,579 .

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

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 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 .

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 six months ended December 31, 2024, the Company recorded accrued interest

of $ 0 and amortization of note premium of $ 0 .

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

and amortization of note premium of $ 25,157 .

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 December 31, 2024 and June 30, 2024, the total outstanding balance of the Purchase Note

Short-term loan payable

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

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

subordinated loan (“On-demand Loan”).

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

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

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

For the three months ended September 30, 2024 and 2023,

the Company recorded accrued interest of $ 0 and $ 6,060 .

As of September 30, 2024, the outstanding balance of the On-demand Loan was fully

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

On July 8, 2023, the Company entered into an

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

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

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

the amount requested.

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

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

On July 16, 2023, the Company

borrowed $ 2 million

from White Cherry and repaid $ 1 million

on July 31, 2023 and $ 1 million

on January 31, 2024.

For the three and six months ended December 31, 2024, the Company recorded accrued interest of $ 0 .

For the three and six months ended December 31, 2023, the Company recorded accrued interest of $ 26,128 and $ 32,189 , respectively.

of December 31, 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.

The 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 three months ended September 30, 2024, the Company recorded interest expense of $ 3,733 .

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 September

30, 2024, the On-demand Loan 2 had been fully paid off.

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 three and six months ended December 31,

2024, the Company recorded interest expense of $ 0 and $ 3,733 , respectively.

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 December 31, 2024, the On-demand Loan 2 had been fully paid off.

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

2 unchanged sentences

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

As of September 30, 2024 and June 30, 2024, the outstanding

balance of the RP Loan was $ 350,000 and $ 350,000 , respectively.

As of December 31, 2024 and June 30, 2024, the outstanding

balance of the RP Loan was $ 350,000 .

Note 11 - Related party transactions

7 unchanged sentences

Chenlong Tan.

As of September 30, 2024 and June 30, 2024, the total amount due from MII was $ 56,406 .

As of the date of this report, the outstanding balance was fully paid off.

As of December 31, 2024 and June 30, 2024, the total amount due from MII was $ 0 and $ 56,406 .

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

2 unchanged sentences

Note 12 – Income taxes

In addition to corporate income taxes in the

United States, upon completion of the acquisition of Anivia in February 2022, the Company is subject to corporate income taxes in People’s

In addition to corporate income taxes in the United

States, upon completion of the acquisition of Anivia in February 2022, the Company is subject to corporate income taxes in People’s

Republic of China (“PRC”).

Anivia and its subsidiaries are subject to BVI or Hong Kong income taxes but did not have any

operations for the year ended June 30, 2022 in those jurisdictions.

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.

Anivia and its subsidiaries are subject to BVI or Hong Kong income taxes but did not have any operations

for the year ended June 30, 2022 in those jurisdictions.

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

Therefore, DHS is subject to the Global Intangible Low-Taxed Income (or GILTI) Tax.

DHS is subject to 5% tax

rate in PRC until December 31, 2027.

Since DHS had losses during the three months ended September 30, 2024 and 2023 and the year ended

June 30, 2024, no GILTI tax was recorded as of September 30, 2024 and June 30, 2024.

DHS is subject to 5% tax rate in PRC until

December 31, 2027.

Since DHS had losses during the six months ended December 31, 2024 and 2023 and the year ended June 30, 2024, no GILTI

tax was recorded as of December 31, 2024 and June 30, 2024.

The Company is not eligible for the GILTI high-tax exclusion.

In addition, as a result of the acquisition, the Company recognized goodwill in the amount of $ 6,094,144 .

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

For the three months ended September 30, 2024,

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

tax expense using the actual effective tax rate year to date, as opposed to the estimated annual effective tax rate, as provided in Accounting

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

The income tax provision for the three months

ended September 30, 2024 and 2023 consisted of the following:

as a result of the acquisition, the Company recognized goodwill in the amount of $ 6,094,144 .

Since the acquisition was a stock acquisition,

the Goodwill is not deductible for tax purposes.

For the three and six months ended December 31,

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

income tax expense using the actual effective tax rate year to date, as opposed to the estimated annual effective tax rate, as provided

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

The income tax provision for the three and six

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

Schedule of income tax provision

September 30, 2024

September 30, 2023

Three Months Ended December 31,

Six Months Ended December 31,

Total current income tax provision

3 unchanged sentences

$ ( 516,001 )

$ ( 964,821 )

The Company is subject to U.S.

3 unchanged sentences

jurisdictions to which the Company is subject.

The following is a reconciliation of income tax expenses at the effective rate to income

tax at the calculated statutory rates:

Schedule of reconciliation of effective income tax expenses

September 30, 2024

September 30, 2023

Statutory tax rate

State (net of federal benefit)

Foreign tax rate difference

Net effect of state income tax deduction and other permanent differences

Effective tax rate

As of September 30, 2024, prepaid income taxes

For the three and six months ended December 31,

2024, The Company recorded income tax expense (benefit) of $ 120,511 and $ ( 516,001 ) , respectively, reflecting an effective tax rate of

35.85 % and ( 22.12 ) %, respectively.

For the three and six months ended December 31, 2023, The Company recorded income tax (benefit) of

$ ( 688,939 ) and $ ( 964,821 ) , respectively, with effective tax rates of ( 26.43 ) % and ( 23.13 ) %, respectively.

The Company's effective tax rates for the three

and six months ended December 31, 2024 and 2023 differ from the federal statutory rate of 21%, primarily due to U.S.

state income tax

deduction, other permanent differences and the impact of foreign jurisdictions subject to a full valuation allowance.

As of December 31, 2024, prepaid income taxes

to US tax authorities and income tax payable to Chinese tax authorities was $ 16,687 and $ 274,946 .97, 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.

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

1 unchanged sentence

Schedule of deferred taxes

September 30, 2024

December 31, 2024

June 30, 2024

13 unchanged sentences

Total deferred tax liabilities

( 1,008,212 )

( 1,054,484 )

Net deferred tax assets

For the three months ended September 30, 2024 and 2023, the Company

recorded $ 20,157 and $ 64,145 of valuation allowance to reduce deferred tax assets for the losses incurred by DHS.

For the six months ended December 31, 2024 and 2023,

the Company recorded $ 30,816 and $ 66,104 of valuation allowance to reduce deferred tax assets for the losses incurred by DHS.

Note 13 – Earnings per share

1 unchanged sentence

earnings per share for the periods presented:

Schedule of computation of basic and diluted

earnings per share

For the three months ended

September 30,

Schedule of computation of basic and diluted earnings per share

Three Months Ended December 31,

Six Months Ended December 31,

Net loss attributable to iPower Inc.

1 unchanged sentence

$ ( 1,810,462 )

$ ( 3,201,343 )

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

Losses per share of ordinary shares - basic and diluted

Due to the anti-dilutive effect, the computation of basic and diluted EPS did not

include the shares underlying the exercise of warrants, options, and unvested RSUs as the Company had a net loss for the three months

ended September 30, 2024 and 2023.

For the three months ended September 30, 2024 and 2023, 71,343 and 66,366 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 losses per share when the shares are fully vested.

anti-dilutive effect, the computation of basic and diluted EPS did not include the shares underlying the exercise of warrants, options,

and unvested RSUs as the Company had a net loss/or the warrants and options were out of the money (the exercise price is higher than

the market price) for the three and six months ended December 31, 2024 and 2023.

For the three and six

months ended December 31, 2024, 89,199 and 107,347 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 losses

per share when the shares are fully vested.

For the three and six months ended December 31, 2023, 40,981 and 107,347 vested but unissued shares of restricted stock units under the 2020 Equity Incentive Plan (as discussed in Note 16) are considered issued shares and therefore are included in the computation of basic losses per share when the shares are fully vested.

Note 14 – Equity

As of September 30, 2024, the total authorized

As of December 31, 2024, the total authorized

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

8 unchanged sentences

of any outstanding series of Preferred Stock, the holders of Common Stock shall be entitled to share in the distribution of any remaining

assets available for distribution to the holders of Common Stock ratably in proportion to the total number of shares of Common Stock

then issued and outstanding.

assets available for distribution to the holders of Common Stock ratably in proportion to the total number of shares of Common Stock then

issued and outstanding.

During the year ended June 30, 2024, the Company

18 unchanged sentences

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:

The Company calculated the fair value of the

Warrants at $ 3.1 million at the grant date, 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 - $ 2.00

14 unchanged sentences

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

As of September 30, 2024 and June 30, 2024, there

were 31,359,899 shares of Common Stock

issued and outstanding.

As of December 31, 2024 and June 30, 2024, there

were 31,359,899 shares of Common Stock issued and outstanding.

Preferred Stock

5 unchanged sentences

and the qualifications, limitations or restrictions thereof.

As of September 30, 2024 and June 30, 2024, respectively, there were no shares

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

of Preferred Stock issued and outstanding.

17 unchanged sentences

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

During the three months ended September 30, 2024, the Company granted an additional 71,427 shares of RSUs.

For the three months

ended September 30, 2024 and 2023, the Company recorded $ 31,788 and $ 7,500 of stock-based compensation expense.

There was no forfeiture

of RSUs occurred during the three months ended September 30, 2024 and 2023.

As of September 30, 2024 and June 30, 2024, the unvested number

of RSUs was 47,619 and 3,250 and the unamortized expense was $ 60,000 and $ 1,788 , respectively.

During the six months ended December 31, 2024, the Company granted an additional 71,427 shares of RSUs.

For the three and six months

ended December 31, 2024, the Company recorded $ 22,500 and $ 54,288 of stock-based compensation expense.

There was no forfeiture of RSUs

occurred during the six months ended December 31, 2024 and 2023.

As of December 31, 2024 and June 30, 2024, the unvested number of RSUs

was 29,763 and 3,250 and the unamortized expense was $ 37,500 and $ 1,788 , respectively.

Information relating to RSU grants is summarized

1 unchanged sentence

Total RSUs Issued

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

Market Value of

RSUs Issued as Compensation

RSUs granted, but not vested, at June 30, 2024

RSUs forfeited

RSUs granted, but not vested, at September 30, 2024

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

_____________________

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

As of September 30, 2024, of the 357,212 vested

As of December 31, 2024, of the 375,068 vested

RSUs, 285,869 shares of Common Stock were issued, and 89,199 shares were to be issued in the near future.

12 unchanged sentences

The estimated achievement status of the operational

milestones as of September 30, 2024 was as follows:

milestones as of December 31, 2024 was as follows:

Revenue in Fiscal Year

27 unchanged sentences

The total fair value of the Option Grants was

$3.2 million of which, at September 30, 2023, $2.3 million is deemed probable of vesting.

As of September 30, 2024, none of the options

For the three months ended September 30, 2024 and 2023, the Company recorded $ 110,382 and $ 110,382 of stock-based compensation

expense related to the Option Grants.

As of September 30, 2024, unrecognized compensation cost related to tranches probable of vesting

is approximately $1.2 million and will be recognized over two years to nine years, depending on the tranche.

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

stock options (the “2024 Stock Options”) issuable to Chenlong Tan, the Company’s Chief Executive Officer, pursuant

to the terms of the iPower Inc.

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

During the quarter ended December 31, 2024, the

Company reassessed the expected timing of meeting the performance conditions.

According to ASC 718-10-55-78, since the number of awards

expected to vest and the fair value remained unchanged with the new estimate, the adjustment only affected the recognition timing.

the Company will apply the prospective approach to record the adjustment.

As of December 31, 2024, none of the options had

For the three and six months ended December 31, 2024, the Company recorded $ 75,302 and $ 185,684 of stock-based compensation expense

related to the Option Grants.

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

compensation expense related to the Option Grants.

As of December 31, 2024, unrecognized compensation cost related to tranches probable

of vesting is approximately $1.1 million and will be recognized over two years to nine years, depending on the tranche.

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 “2024 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, Mr.

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

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 2024 Stock

Tan will 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 2024 Stock Options have a term of 10

years and will vest as follows:

2024 Stock Options vested on the grant date (August 29, 2024), and 32,500

2024 Stock Options will vest on the first day of each month from September 1, 2024, to August 1, 2027.

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 2024 Stock Options, Mr.

Tan will 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 2024 Stock Options have a term of 10 years and will vest

30,000 2024 Stock Options vested on the grant date (August 29, 2024), and 32,500 2024 Stock Options will vest on the first

day of each month from September 1, 2024, to August 1, 2027.

On the grant date, a Black-Scholes Model was used

6 unchanged sentences

Dividend Yield – 0 %

The total fair value of the 2024 Stock

Options was $1.22 million as of the grant date.

For the three months ended September 30, 2024, 62,500 stock

options were vested and the Company recorded $ 63,790 as

stock compensation expense.

As of September 30, 2024, the unrecognized compensation cost of the 2024 Stock Options was approximately

$1.16 million and will be recognized monthly through August 1, 2027.

The total fair value of the 2024 Stock Options

was $1.22 million as of the grant date.

For the three and six months ended December 31, 2024, 97,500 and 160,000 stock options were vested

and the Company recorded $ 99,512 and $ 163,302 as stock compensation expense.

As of December 31, 2024, the unrecognized compensation cost

of the 2024 Stock Options was approximately $1.06 million and will be recognized monthly through August 1, 2027.

Note 15 – Warrant liabilities

9 unchanged sentences

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

Through September 30,

Through December 31,

2023, none of the private placement investors exercised any of their warrants and the warrants expired in May 2024.

As such, there were no warrants outstanding as of September 30, 2024

and June 30, 2024.

As such, there were

no warrants outstanding as of December 31, 2024 and June 30, 2024.

Note 16 - Concentration of risk

1 unchanged sentence

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

As of September 30, 2024 and June 30, 2024, $ 2,577,305

As of December 31, 2024 and June 30, 2024, $ 2,877,457

and $ 7,377,837 , respectively, were deposited with various major financial institutions in the United States and PRC.

2 unchanged sentences

The Company had approximately

$ 1.4 million and $ 5.8 million , respectively, in excess of the FDIC insurance limit, as of September 30, 2024 and June 30, 2024.

$ 1.4 million and $ 5.8 million , respectively, in excess of the FDIC insurance limit, as of December 31, 2024 and June 30, 2024.

Accounts receivable are typically unsecured and

7 unchanged sentences

Customer and vendor concentration risk

For the three months ended September 30, 2024

and 2023, Amazon Vendor and Amazon Seller customers accounted for 89 % and 91% of the Company's total revenues, respectively.

As of September

For the six months ended December 31, 2024 and

2023, Amazon Vendor and Amazon Seller customers accounted for 91 % and 95 % of the Company's total revenues, respectively.

As of December

31, 2024 and June 30, 2024, accounts receivable from Amazon Vendor and Amazon Seller accounted for 80 % and 91 % of the Company’s

total accounts receivable.

For the three months ended September 30, 2024

and 2023, one supplier accounted for 11 % and 15 % of the Company's total purchases, respectively.

As of September 30, 2024 and June 30,

For the six months ended December 31, 2024 and

2023, one supplier accounted for 8 % and 11 % of the Company's total purchases, respectively.

As of December 31, 2024 and June 30, 2024,

accounts payable to one supplier accounted for 12 % and 42 % of the Company’s total accounts payable.

19 unchanged sentences

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

In September 2024, the Company terminated the lease contract of the office space.

In September 2024, the Company terminated

the lease contract of the office space.

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

25 unchanged sentences

The financial statements reflected $ 4,757,429 and $ 6,124,163 , respectively, of operating lease right-of-use

assets, and $ 5,632,824 and $ 6,549,110 , respectively, of operating lease liabilities as of September 30, 2024 and June 30, 2024.

Three months Ended September 30, 2024 and 2023:

assets, and $ 5,153,380 and $ 6,549,110 , respectively, of operating lease liabilities as of December 31, 2024 and June 30, 2024.

Three months Ended December 31, 2024 and 2023:

Schedule of lease cost and other information

4 unchanged sentences

Average discount rate - operating leases

Six months Ended December 31, 2024 and 2023:

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

Other information

Cash paid for amounts included in the measurement of lease liabilities

Remaining term in years

Average discount rate - operating leases

The supplemental balance sheet information related to leases for the

35 unchanged sentences

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.

As of September 30, 2023, the Company cannot reasonably

estimate the amount of potential exposure.

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.

As of December 31, 2023, the Company

cannot reasonably estimate the amount of potential exposure.

On April 3, 2024, the Company and D.A.

16 unchanged sentences

As of June 30, 2024, the outstanding balance of the Settlement Amount was $ 325,000 .

As of September 30, 2024, the Settlement Amount had been paid off and the parties have formally withdrawn all of the complaints that were

As of December 31, 2024, 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.

42 unchanged sentences

in the unaudited condensed consolidated financial statements presented.

On November 8, 2024, the Company entered into

a third amendment (the “Third Amendment”) to that certain credit agreement, initially entered into by and among the Company

and its subsidiaries and JPMorgan Chase Bank, N.A., as administrative agent for the Lender and a lender (the “Administrative Agent”

or “Lender”), on November 12, 2021 (the “Credit Agreement”).

The Third Amendment to the Credit Agreement amended,

among other things, (i) the defined term “Aggregate Revolving Commitment” to mean $15,000,000, and (ii) extended the maturity

date to “November 8, 2027 or any earlier date on which the Revolving Commitments are reduced to zero or otherwise terminated pursuant

to the terms hereof.” The borrowing rate is SOFR plus 2.25% to 2.50% depending on utilization of the borrowing availability.

On January 2, 2025, the Company 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 November 15, 2024 to December 31, 2024, the Company’s common stock had failed to maintain a minimum

closing bid price of $1.00 per share, as required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2)

(the “Minimum Bid Price Requirement”).

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has an initial period of

180 calendar days, or until July 1, 2025 (the “Compliance Period”), to regain compliance with the Minimum Bid Price Requirement.

To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of ten

consecutive trading days, unless such period is extended by Nasdaq.

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

What changed 10-Q

Item 1. Financial Statements