What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-02-14 compared with 2024-11-14 · 249 added, 185 removed, 215 unchanged (67% of the section changed)

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we cannot guarantee future results, events, levels of activity, performance, or achievements.

by tech and data, iPower Inc.

is an online supplier of consumer goods, including hydroponics equipment, general gardening supplies, and

consumer home goods.

Through the operations of our e-commerce platforms and channel partners, our combined 121,000 square foot fulfillment

centers in Rancho Cucamonga and Los Angeles, California, we believe we are one of the leading marketers, distributors and retailers in

the consumer gardening and home goods categories, based on management’s estimates.

Our core strategy continues to focus on expanding

our geographic reach across the United States and internationally through organic growth, both in terms of expanding customer base as

well as brand and product development.

iPower has developed a set of methodologies driven by proprietary data formulas to effectively

bring products to market and sales.

are actively developing our in-house branded products and through supply chain partners, which to date include the iPower and Simple

Deluxe brands and more, some of which have been designated as Amazon best seller product leaders and Amazon Choice products,

among others.

and Expectations

Driven by technology and

data, iPower Inc.

(“iPower,” “we,” “us,” or “the Company”) is

an online supplier of consumer goods, including hydroponics equipment, general gardening supplies and consumer home goods.

operations of our e-commerce platforms and channel partners, and our combined 121,000 sq.

of fulfillment centers in Rancho Cucamonga

and Los Angeles, California, we believe we are one of the leading marketers, distributors and retailers in the consumer gardening and

home goods categories, based on management’s estimates.

Our core strategy continues to focus on expanding our geographic reach

across the United States and internationally through organic growth, both in terms of expanding customer base as well as brand and product

iPower has developed a set of methodologies driven by proprietary data formulas to effectively bring products to market

We are actively developing our in-house branded products

and through supply chain partners, which to date include the iPower and Simple Deluxe brands and more,

some of which have been designated as Amazon best seller product leaders and Amazon Choice products, among others.

Trends and Expectations

Product and Brand Development

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Thus far, as a result of the general global economic disruptions, we have experienced a decrease in the

speed with which we are able to purchase new inventory, as well as an increase in costs due to delays in shipping, the resulting increase

in time with which products remain in our warehouse facilities, thus resulting in reduced profits.

In addition, supply chain disruptions

may make it harder for us to find favorable pricing and reliable sources for the materials we need, putting upward pressure on our costs

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

sell hydroponic gardening products to end users that may use such products in new and emerging industries or segments, including the growing

The demand for hydroponic gardening products depends on the uncertain growth of these industries or segments due to varying,

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

consumer perceptions.

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

states plus the District of Columbia have adopted frameworks

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

legalization of hemp and CBD, while the U.S.

Controlled Substances Act and the laws of U.S.

states prohibit growing cannabis.

our products could be impacted by changes in the regulatory environment with respect to such industries and segments.

June 18, 2024, we closed on the registered direct offering (the “Offering”) of 2,083,334 shares of common stock (the “Shares”)

and a concurrent private placement (the “Private Placement”) of warrants (“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 on September 29, 2023.

The Warrants, which were

issued pursuant to an exemption from registration under Section 4(a)(2) or Regulation D of the Securities Act of 1933, as amended (the

“Securities Act”), have a term of five years and are immediately exercisable at $2.40 per share.

The Shares and Warrants were

sold to purchasers named on the signature page of a certain securities purchase agreement, dated June 16, 2024, between the Company and

the purchaser (the “Purchase Agreement”).

Roth Capital Partners, LLC acted as the placement agent, pursuant to a placement

agency agreement.

The Company paid compensation to the placement agent consisting of a cash fee equal to 6.5% of the gross proceeds of

the Offering plus reimbursement of certain expenses and legal fees.

July 9, 2024, as required by the Purchase Agreement, we filed a resale registration statement on Form S-1 with the SEC (the "Resale

Upon filing an amendment on July 23, 2024, the Resale Form S-1 was declared effective by the SEC on July 26, 2024.

speed with which we are able to purchase new inventory, as well as an increase in costs due to delays in shipping, as well as a resulting

increase in time with which products remain in our warehouse facilities, thus resulting in reduced profits.

In addition, supply chain

disruptions may make it harder for us to find favorable pricing and reliable sources for the materials we need, putting upward pressure

on our costs and increasing the risk that we may be unable to acquire the materials and services we need to continue to make certain

Regulatory Environment

our suite of products, we sell hydroponic gardening products to end users that may use such products in new and emerging industries or

segments, including the growing of cannabis.

The demand for hydroponic gardening products depends on the uncertain growth of these industries

or segments due to varying, inconsistent, and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial

interpretations, and consumer perceptions.

Demand for our products could be impacted by changes in the regulatory environment with respect

to such industries and segments.

RESULTS OF OPERATIONS

For the three months ended September 30,

For the three months ended December 31,

2024 and 2023

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Three Months Ended

September 30, 2024

December 31, 2024

Three Months Ended

September 30, 2023

December 31, 2023

Revenues – product sales

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Operating expenses

Operating income (loss)

Other expenses

Income (loss) before income taxes

Income tax expenses (benefit)

Net income (loss)

Non-controlling interest

Net income (loss) attributable to iPower Inc.

Other comprehensive income (loss)

Comprehensive income (loss) attributable to iPower Inc.

Gross profit % of revenues

Operating income (loss) % of revenues

Net income (loss) % of revenues

for the three months ended December 31, 2024 increased 13.5% to $19,072,571 as compared to $16,800,122 for the three months ended December

While pricing remained stable and with the additional logistics service income, the increase mainly

resulted from an increase in sales volume during the three months ended December 31, 2024 as compared to the three months ended

December 31, 2023.

This was further enhanced by growth in the Company’s SuperSuite supply chain offerings.

Costs of Goods Sold

Costs of goods sold for the

three months ended December 31, 2024 increased 12.7% to $10,682,685 as compared to $9,481,882 for the three months ended December 31,

The increase was primarily due to the combination of an increase in the costs related to the

logistics service income and a decrease in freight costs and lowered product costs resulted from management’s efforts on

supply chain management .

Gross profit for the three months

ended December 31, 2024 was $8,389,886 as compared to $7,318,240 for the three months ended December 31, 2023.

gross profit ratio of the product sales revenues increased to 44.0 % for the three months

ended December 31, 2024 from 43.6 % for the three

months ended December 31, 2023 .

The increase in the gross profit ratio was mainly driven

by the decrease in freight costs and lowered product costs resulted from management’s efforts on supply chain management

during the three months ended December 31, 2024 , as

discussed above.

Operating Expenses

expenses for the three months ended December 31, 2024 decreased 21.9% to $7,706,279 as compared

to $9,870,587 for the three months ended December 31, 2023 .

The decrease was mainly due to

the combination of a decrease in selling and fulfillment expenses of $2.3 million as a result of decreased costs related to advertising,

merchant fees, rental expenses and delivery fees, and an increase in general and administrative expenses of $0.1 million, which included

payroll expenses, stock-based compensation expense, insurance expenses, travel expenses and other operating expenses.

Specifically the

decrease in merchant fees was resulted from sales to different amazon vendor account mix.

However, we cannot guarantee that this trend

will continue.

Income (Loss) from Operations

(loss) from operations was $683,607 for the three months ended December 31, 2024 as compared

to $(2,552,347) for the three months ended December 31, 2023 .

The increase in income was

resulted from the combination of the increase in gross profit and the decrease in operating expenses.

Other Expenses

expenses consist of interest expense and other non-operating income (expenses).

Other expenses for the three months ended December

31, 2024 was $347,432 as compared to $54,575 for the three months ended December 31, 2023 .

The increase in other expenses was mainly due to the combination of an increase in other non-operating expenses of $334,796, including

a foreign currency exchange loss of 45,580, and a decrease in interest, including amortization of debt discount, on the revolving loan

of $41,940 during the three months ended December 31, 2024 resulted from the decreasing loan

Net Income (Loss) Attributable to iPower

income (loss) attributable to iPower Inc.

for the three months ended December 31, 2024 was

$218,819 as compared to $ ( 1,914,828) for the three months ended December 31, 2023 ,

representing an increase in net income of $2,133,647.

The increase was primarily due to the combination of a decrease in the operating

expenses and an increase in gross profit ratio as discussed above.

Comprehensive Income (Loss) Attributable

to iPower Inc.

Comprehensive

income (loss) attributable to iPower Inc.

for the three months ended December 31, 2024 was $374,949 as compared to $(2,075,083) for the

three months ended December 31, 2023, representing an increase in comprehensive income of $2,450,032.

The increase was due to the reasons

discussed above, along with an increase in other comprehensive income of $316,384 as a result of foreign currency translation adjustments

resulting from the translation of RMB, the functional currency of our VIE in the PRC, to USD, the reporting currency of the Company.

For the six months ended December 31, 2024

The following table presents

certain unaudited condensed consolidated statement of operations information and presentation of that data as a percentage of change from

period to period.

Six Months Ended

December 31, 2024

Six Months Ended

December 31, 2023

Revenues – product sales

Revenues – service income

Cost of revenues – product costs

Cost of revenues – service costs

Operating expenses

Operating loss

Other income (expenses)

Other expenses

Loss before income taxes

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Net loss attributable to iPower Inc.

Other comprehensive loss

Other comprehensive (loss) income

Comprehensive loss attributable to iPower Inc.

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$ (3,362,305 )

Gross profit % of revenues – product sales

Gross profit % of revenues – service income

Gross profit % of revenues

Operating loss % of revenues

Net loss % of revenues

for the three months ended September 30, 2024 decreased 28.3% to $19,008,521 as compared to $26,508,374 for the three months ended September

While pricing remained stable and with the additional logistics service income, the decrease was mainly due to the combination

of decreased orders from Amazon and temporary disruption of product supply during the quarter ended September 30, 2024 and the increased

sales generated from promotional activities in the same quarter in 2023.

for the six months ended December 31, 2024 decreased 12.1% to $38,081,092 as compared to $43,308,496 for the six months ended December

While pricing remained stable and with the additional logistics service income, the decreased revenue mainly resulted from a

decrease in sales volume during the six months ended December 31, 2024 as the Company offered less promotions and clearance activities

due to lower inventory level as compared to the six months ended December 31, 2023.

This was partially offset by growth in the Company’s

SuperSuite supply chain offerings.

Costs of Goods Sold

Costs of goods sold for the

three months ended September 30, 2024 decreased 28.7% to $10,520,624 as compared to $14,749,529 for the three months ended September 30,

The decrease was primarily due to a combination of the costs related to the logistics service income and the decrease in sales,

freight costs, and lowered product costs resulted from management’s efforts on supply chain management.

six months ended December 31, 2024 decreased 12.5% to $21,203,309 as compared to $24,231,411 for the six months ended December 31, 2023.

The decrease was primarily due to a combination of the costs related to the logistics service income

and the decrease in sales, freight costs, and lowered product costs resulted from management’s efforts on supply chain management.

Gross profit was $16,877,783

for the three months ended September 30, 2024 as compared to $11,758,845 for the three months ended September 30, 2023.

The gross profit

ratio of the product sales revenues increased to 45.7% for the three months ended September 30, 2024 from 44.4% for the three months ended

September 30, 2023.

The increase in the gross profit ratio was mainly driven by the decrease in costs of goods sold during the three months

ended September 30, 2024, as discussed above.

for the six months ended December 31, 2024 as compared to $19,077,085 for the six months ended December 31, 2023.

gross profit ratio of the product sales revenues increased to 46.0% for the six months ended December 31, 2024 from

44.0 % for the six months ended December 31, 2023 .

The increase in the gross profit ratio was mainly driven by the decrease in costs of goods sold during the six months ended December

31, 2024 , as discussed above.

Operating Expenses

Operating expenses for the

three months ended September 30, 2024 decreased 13.8% to $11,234,331 as compared to $13,027,522 for the three months ended September 30,

The decrease was mainly due to the combination of a decrease in selling and fulfillment expenses of $4.1 million as a result of

decreased costs related to advertising, merchant fees, rental expenses and delivery fees, and an increase in general and administrative

expenses of $2.4 million, which included payroll expenses, stock-based compensation expense, insurance expenses, allowance for credit

losses, travel expenses and other operating expenses.

The increase in general and administrative expenses was mainly due

to the expansion of our vendor network and development of the SuperSuite platform and an increased allowance for credit loss and inventory

reserves of $1.76 million.

expenses for the six months ended December 31, 2024 decreased 17.3% to $18,940,610 as compared

to $22,898,109 for the six months ended December 31, 2023 .

The decrease was mainly due to

the combination of a decrease in selling and fulfillment expenses of $6.5 million as a result of decreased costs related to advertising,

merchant fees, rental expenses and delivery fees, and an increase in general and administrative expenses of $2.5 million, which included

payroll expenses, stock-based compensation expense, insurance expenses, allowance for credit losses, travel expenses and other operating

The increase in general and administrative expenses was mainly due to the expansion of our vendor network and development of

the SuperSuite platform and an increased allowance for credit loss and inventory reserves of $1.8 million.

Loss from Operations

Loss from operations was $2,746,434

for the three months ended September 30, 2024 as compared to $1,268,677 for the three months ended September 30, 2023.

The increase in

loss resulted from the decrease in sales being greater than the decrease in operating expenses and the increase in gross profit ratio.

Other Income (Expenses)

Other income (expenses) consist

of interest expense and other non-operating income (expenses).

Other income (expenses) for the three months ended September 30, 2024 was

$77,805 as compared to $(296,556) for the three months ended September 30, 2023.

The increase in other income (expenses) was mainly due

to the combination of an increase in other non-operating income of $285,852, and a decrease in interest, including amortization of debt

discount, on the revolving loan of $88,403 during the three months ended September 30, 2024 resulted from the decreasing loan balance.

from operations was $2,062,827 for the six months ended December 31, 2024 as compared to

$3,821,024 for the six months ended December 31, 2023 .

The decrease in loss from operations

resulted from the decrease in operating expenses being greater than the decrease in gross profit with the improved gross profit ratio.

Other Expenses

expenses for the six months ended December 31, 2024 was $ 269,627 as

compared to $ 351,131 for the six months ended December 31, 2023 .

The decrease in other expenses was mainly due to the decrease in other non-operating income of $48,944, and the decrease in interest

expenses, including amortization of debt discount, on the revolving loan of $130,343 during the six months ended December 31,

2024 as a result of the decreasing balance on the revolving loan.

Net Loss Attributable to iPower Inc.

Net loss attributable to iPower

for the three months ended September 30, 2024 was $2,029,281 as compared to $1,286,515 for the three months ended September 30, 2023,

representing an increase in net loss of $742,766.

The increase was primarily due to the decrease in sales being greater than the decrease

in operating expenses and the increase in gross profit ratio as discussed above.

Comprehensive Loss Attributable to iPower

loss attributable to iPower Inc.

for the six months ended December 31, 2024 was $1,810,462

as compared to $3,201,343 for the six months ended December 31, 2023 , representing a decrease

in net loss of $1,390,881.

The decrease was primarily due to the decrease in operating expenses being greater than the decrease in gross

profit resulting in the improved gross profit ratio as discussed above.

Comprehensive Loss Attributable

to iPower Inc.

for the three months ended September 30, 2024 was $2,084,335 as compared to $1,287,222 for the three months ended September

30, 2023, representing an increase in comprehensive loss of $797,113.

The increase was due to the reasons discussed above, along with

an increase in other comprehensive loss of $54,347 as a result of foreign currency translation adjustments resulting from the translation

of RMB, the functional currency of our VIE in the PRC, to USD, the reporting currency of the Company.

Comprehensive

loss attributable to iPower Inc.

for the six months ended December 31, 2024 was $1,709,386 as compared to $3,362,305 for the six months

ended December 31, 2023, representing a decrease in comprehensive loss of $1,652,919.

The decrease was due to the reasons discussed above,

along with an increase in other comprehensive income of $262,037 as a result of foreign currency translation adjustments resulting from

the translation of RMB, the functional currency of our VIE in the PRC, to USD, the reporting currency of the Company.

LIQUIDITY AND CAPITAL RESOURCES

the three months ended September 30, 2024, we primarily funded our operations with cash and cash equivalents generated from operations,

as well as through borrowing under our credit facility from JPMorgan Chase Bank (“JPM”).

Additionally, on June 18, 2024,

we closed on the registered direct offering of 2,083,334 Shares and a concurrent Private Placement of Warrants to purchase up to 2,083,334

Warrant Shares, which Shares and Warrants were sold for gross aggregate proceeds of $5,000,002.

As of September 30, 2024, we had cash

and cash equivalents of $2,577,305, representing a $4,800,532 decrease from $7,377,837 in cash as of June 30, 2024.

The cash decrease

was primarily due to the result of cash used in operating activities and financing activities resulting

from our payments to pay down the short-term loans - related party and the JPM revolving line of credit.

Sources of Liquidity

the six months ended December 31, 2024, we primarily funded our operations with cash and cash equivalents generated from operations, as

well as through borrowing under our credit facility from JPMorgan Chase Bank (“JPM”).

Additionally, on June 18, 2024, we closed

on a registered direct offering of 2,083,334 shares of common stock (the “Shares”) and a concurrent private placement of warrants

to purchase up to 2,083,334 shares of common stock (the “Warrants”), which Shares and Warrants were sold for aggregate gross

proceeds of $5,000,002.

As of December 31, 2024, we had cash and cash equivalents of $2,877,457, representing a $4,500,380 decrease from

$7,377,837 in cash as of June 30, 2024.

The cash decrease was primarily due to the result of cash used in operating activities and

financing activities resulting from our payments to pay down the short-term loans - related party and the JPM revolving line of credit.

on our current operating plans, we believe that our existing cash and cash equivalents and cash flows from operations will be sufficient

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cash requirements consist primarily of day-to-day operating expenses and obligations with respect to warehouse leases.

We lease all our

office and warehouse facilities.

We lease all of

our office and warehouse facilities.

We expect to make future payments on existing leases from cash generated from operations.

We have credit

terms in place with our major suppliers, however as we bring on new suppliers, we are often required to prepay our inventory purchases

credit terms in place with our major suppliers, however as we bring on new suppliers, we are often required to prepay our inventory purchases

This is consistent with our historical operating model which allowed us to operate using only cash generated by the business.

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$11.0 million in unused credit under the revolving line with JPM.

Given our current working capital position and available funding from

our revolving credit line, we believe we will be able to manage through the current challenges by managing payment terms with customers

our current working capital position and available funding from our revolving credit line and proceeds from our June registered direct

offering, we believe we will be able to work through the current challenges by managing payment terms with customers and vendors.

of September 30, 2024 and June 30, 2024, our working capital was $12.2 million and $11.2 million, respectively.

The historical

seasonality in our business during the year can cause cash and cash equivalents, inventory and accounts payable to fluctuate,

resulting in changes in our working capital.

We anticipate that past historical trends to remain in place through the balance of the

fiscal year with working capital remaining near this level for the foreseeable future.

Working Capital

of December 31, 2024 and June 30, 2024, our working capital was $13.8 million and $11.2 million, respectively.

The historical seasonality

in our business during the year can cause cash and cash equivalents, inventory and accounts payable to fluctuate, resulting in changes

in our working capital.

We anticipate that past historical trends to remain in place through the balance of the fiscal year with working

capital remaining near this level for the foreseeable future.

Operating Activities

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Net cash (used in) provided by operating activities

for the three months ended September 30, 2024 and 2023 was $(1,415,643) and $4,052,341, respectively.

The decrease in cash provided by

operating activities mainly resulted from a decrease in cash received from customers and an increase in cash paid for cost of revenues

and operating expenses.

cash used in investing activities for the three months ended September 30, 2024 and 2023 was $202,140 and $0, respectively.

was due to the prepayments made for software developments during the quarter ended September 30, 2024.

for the six months ended December 31, 2024 and 2023 was $(1,387,926) and $5,045,731, respectively.

The decrease in cash provided by operating

activities mainly resulted from a decrease in cash received from customers and an increase in cash paid for costs of revenues and operating

Investing Activities

cash used in investing activities for the six months ended December 31, 2024 and 2023 was $(664,366) and $0, respectively.

was due to the prepayments made for software developments during the six months ended December 31, 2024.

Financing Activities

cash used in financing activities was $3,308,599 and $5,075,000, respectively, for the three months ended September 30, 2024 and 2023.

The decrease in net cash used in financing activities was primarily due to a decrease in payments on the revolving loan.

cash used in financing activities was $2,558,389 and $7,175,000, respectively, for the six months ended December 31, 2024 and 2023.

decrease in net cash used in financing activities was primarily due to a decrease in payments on the revolving loan.

OFF-BALANCE SHEET ARRANGEMENTS

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or capital resources.

CRITICAL ACCOUNTING POLICIES

AND ESTIMATES

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States, or GAAP,

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unaudited condensed consolidated financial statements.

Revenue recognition

Company recognizes revenues from service and product sales, net of promotional discounts and return allowances, when the following revenue

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is recognized when it is shipped to the 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.

Company evaluates the criteria of ASC 606 - Revenue Recognition Principal Agent Considerations in determining whether it is appropriate

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the price, revenue is recorded at gross.

received prior to the delivery of goods to customers are recorded as customer deposits.

Payments received prior

to the delivery of goods to customers are recorded as customer deposits.

Company periodically provides incentive offers to its customers to encourage purchases.

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Accounts receivable,

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

an 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 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 an 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.

Company evaluates the creditworthiness of all of its customers individually before accepting them and continuously monitors the recoverability

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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.

losses the potential impact of overall economic conditions on our customers’ industry and businesses and their ability to pay our

accounts receivable.

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

The Company also considers

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

impact of the COVID-19 pandemic.

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

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

so the Company recorded additional allowance for credit losses of approximately $1.5 million for the quarter ended September 30, 2024.

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 refundable amount withheld

by sales channel partners was remote so the Company recorded additional allowance for credit losses of $41,346 and $1,516,940 for the

three and six months ended December 31, 2024.

Inventory, net

consists of finished goods ready for sale and is stated at the lower of cost or market.

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average costing method.

The Company’s policy is to include as a part of inventory and cost of goods sold any freight incurred to

The Company’s policy is to include as a part of inventory and costs of goods sold any freight incurred to

ship the product from its vendors to warehouses.

1 unchanged sentence

and reflected in selling and fulfillment expenses.

The Company regularly review inventory and consider forecasts of future demand, market

The Company regularly reviews inventory and considers forecasts of future demand, market

conditions and product obsolescence.

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The Company also reviews inventory for slow moving and obsolescence and records allowance for obsolescence.

interest entities

Variable interest

February 15, 2022, the Company acquired 100% of the ordinary shares of Anivia and its subsidiaries, including Daheshou (Shenzhen) Information

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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 and quantitative 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 2023, the

goodwill balance amounted to $3,034,110 and $3,034,110, respectively.

life intangible assets at September 30, 2024 include a covenant not to compete, supplier relationships and software recognized as part

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,

life intangible assets at December 31, 2024 include a covenant not to compete, supplier relationships and software recognized as part

of the acquisition of Anivia.

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to long-lived assets, as well as other fair value determinations.

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

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

Stock-based Compensation

Company applies ASC No.

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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.

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.

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 of the federal and state jurisdictions where the Company is required to file income tax returns, as well as open tax

years in such jurisdictions.

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.

Valuation allowances are recorded, when

necessary, to reduce deferred tax assets to the amount expected to be realized.

Company has analyzed filing positions in each of the federal and state jurisdictions where the Company is required to file income tax

returns, as well as open tax years in such jurisdictions.

The Company has identified the U.S.

federal jurisdiction, and the states of Nevada and California, as its

“major” tax jurisdictions.

However, the Company has certain tax attribute carryforwards which will remain subject to review

and adjustment by the relevant tax authorities until the statute of limitations closes with respect to the year in which such attributes

are utilized.

The Company believes that

our income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in

a material change to its financial position.

Therefore, no reserves for uncertain income tax positions have been recorded pursuant to

ASC 740, Income Taxes.

The Company’s policy for recording interest and penalties associated with income-based tax audits is to record

such items as a component of income taxes.

issued accounting pronouncements

federal jurisdiction, and the states of

Nevada and California, as its “major” tax jurisdictions.

However, the Company has certain tax attribute carryforwards which

will remain subject to review and adjustment by the relevant tax authorities until the statute of limitations closes with respect to the

year in which such attributes are utilized.

Company believes that our income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments

that will result in a material change to its financial position.

Therefore, no reserves for uncertain income tax positions have been recorded

pursuant to ASC 740, Income Taxes.

The Company’s policy for recording interest and penalties associated with income-based tax audits

is to record such items as a component of income taxes.

Recently issued accounting

pronouncements

than as set forth under Note 2 to the unaudited condensed consolidated financial statements under “Recently issued accounting pronouncements,”

5 unchanged sentences

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 2. Management’s Discussion and Analysis