What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-15 compared with 2025-02-14 · 177 added, 165 removed, 299 unchanged (53% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following Management’s

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

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.

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.

Through the operations of our e-commerce platforms and channel partners, and our

combined 121,000 sq.

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.

Trends and Expectations

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Global Economic Disruption

at present the majority of our products are sourced either in the United States or China, the military conflicts between Russia and Ukraine

and Israel and Hamas may nonetheless increase the likelihood of supply chain disruptions and hinder our ability to find the materials

we need to make our products.

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, 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

present the majority of our products are sourced either in the United States or China.

On April 10, 2025, the U.S.

announced it would

be imposing tariffs of 145% on all goods imported from China, and the Chinese government countered by imposing 125% tariffs on all goods

exported from the U.S.

On May 12, 2025, the United States and China announced a 90-day pause on most of their recent tariffs

on each other.

The combined U.S.

tariff rate on Chinese imports will be cut to 30% from 145%, while China’s levies on U.S.

will fall to 10% from 125%.

We anticipate general economic disruption and uncertainty in trade stability during the near term.

on top of any global economic disruptions caused by the wars between Ukraine and Russia and Israel and Hamas.

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, 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 products.

While we are actively working on a cost-restructuring plan to reduce our costs and expenses, we anticipate that these challenges around

trade and general supply chain disruption will remain uncertain in the near term and are unable to predict with certainty the effects

of such disruptions on our business.

Regulatory Environment

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RESULTS OF OPERATIONS

For the three months ended December 31,

2024 and 2023

For the three months ended March 31, 2025

The following table presents

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Three Months Ended

December 31, 2024

March 31, 2025

Three Months Ended

December 31, 2023

March 31, 2024

Revenues – product sales

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Operating expenses

Operating income (loss)

Operating (loss) income

Other expenses

Income (loss) before income taxes

Income tax expenses (benefit)

Net income (loss)

(Loss) income before income taxes

Income tax expenses

Net (loss) income

Non-controlling interest

Net income (loss) attributable to iPower Inc.

Other comprehensive income (loss)

Comprehensive income (loss) attributable to iPower Inc.

Net (loss) income attributable to iPower Inc.

Other comprehensive (loss) income

Comprehensive (loss) income 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 (loss) income % of revenues

Net (loss) income % of revenues

for the three months ended March 31, 2025 decreased 28.9% to $16,569,678 as compared to $23,308,508 for the three months ended March 31,

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

tariffs and reduction of Amazon vendor orders, offset by an increase of retail channel and service revenues during

the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Costs of Revenues

Costs of revenues for the

three months ended March 31, 2025 decreased 27.4% to $9,392,704 as compared to $12,941,399 for the three months ended March 31, 2024.

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

service income and a decrease in sales.

Gross profit was

$7,176,974 for the three months ended March 31, 2025 as compared to $10,367,109 for the three months ended March 31, 2024.

the overall gross profit ratio of the total sales revenues decreased to 43.3% for the three months ended March 31, 2025 from

44.5% for the three months ended March 31, 2024 , the gross profit ratio of product

sales revenue for the three months ended March 31, 2025 and 2024 was 45.2% and 45.3%, respectively.

The decrease in the gross

profit ratio was primarily driven by the increase in the logistics service income and secondarily by increases in freight

costs and product costs.

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.

Operating expenses for the

three months ended March 31, 2025 decreased 15.1% to $7,445,977 as compared to $8,765,833 for the three months ended March 31, 2024.

The decrease was mainly due to the decrease in general and administrative expenses of $1.4 million, which included payroll expenses,

reversal of stock-based compensation expense of $674,720, insurance expenses, travel expenses, legal fee and other operating expenses.

Specifically the decrease in merchant fees was resulted from decrease in sales to amazon vendor account.

(Loss) Income from Operations

Income from operations was $(269,003) for the three months ended March 31, 2025 as compared

to $1,601,276 for the three months ended March 31, 2024 .

The decrease in loss resulted from

the combination of decrease in sales and 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

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

Other income (expenses) for the three months

ended March 31, 2025 was $(47,353) as compared to $(211,660) for the three months ended March

The decrease in other income (expenses) was mainly due to the combination of the increase

in other non-operating income of $65,270, including a foreign currency exchange income of $35,601, and a decrease in interest, including

amortization of debt discount, on the revolving loan of $99,231 during the three months ended March 31, 2025 resulted

from the decreasing loan balance.

Net (Loss) Income Attributable to iPower

(loss) income attributable to iPower Inc.

for the three months ended March 31, 2025 was $(339,599)

as compared to $1,016,082 for the three months ended March 31, 2024 , representing an increase

in net loss of $1,355,681.

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

as discussed above.

Comprehensive (Loss) Income 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

(loss) income attributable to iPower Inc.

for the three months ended March 31, 2025 was $(437,155) as compared to $1,085,204 for the three

months ended March 31, 2024, representing an increase in comprehensive loss of $1,522,359.

The decrease was due to the reasons discussed

above, along with an increase in other comprehensive loss of $166,678 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 nine months ended March 31, 2025

The following table presents

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period to period.

Six Months Ended

December 31, 2024

Six Months Ended

December 31, 2023

Nine Months Ended

March 31, 2025

Nine Months Ended

March 31, 2024

Revenues – product sales

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Net loss % of revenues

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

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.

Revenues for the nine months ended March 31, 2025 decreased 18.0% to $54,650,770

as compared to $66,617,004 for the nine months ended March 31, 2024.

While pricing remained stable, the decreased revenue mainly resulted

from a decrease in sales volume during the nine months ended March 31, 2025 as the Company offered less promotions and clearance activities

due to lower inventory level as compared to the nine months ended March 31, 2024.

In addition, the Company also experienced decrease in

amazon orders due to uncertainty over tariffs during the three months ended March 31, 2025 .

Costs of Revenues

Costs of revenues for the

nine months ended March 31, 2025 decreased 17.7% to $30,596,013 as compared to $37,172,810 for the nine months ended March 31, 2024.

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

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

Gross profit was $24,054,757

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.

for the nine months ended March 31, 2025 as compared to $29,444,194 for the nine months ended March 31, 2024.

gross profit ratio of the total sales revenues decreased to 44.0% for the nine months ended March 31, 2025 from

44.2% for the nine months ended March 31, 2024 .

The decrease in the gross profit ratio was

mainly driven by the combination of the increase in the logistics service costs and decrease in costs of goods sold during the nine months

ended March 31, 2025, as discussed above.

Operating Expenses

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 .

expenses for the nine months ended March 31, 2025 decreased 16.7% to $26,386,587 as compared

to $31,663,942 for the nine months ended March 31, 2024 .

The decrease was mainly due to

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merchant fees, rental expenses and delivery fees, and an increase in general and administrative expenses of $1.1 million, which included

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

allowance for credit losses, travel expenses and other operating expenses, partly offset by reversal of stock compensation expense of

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.

the SuperSuite platform and an increased allowance for credit losses and inventory reserves of $1.9 million.

Loss from Operations

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.

from operations was $2,331,830 for the nine months ended March 31, 2025 as compared to $2,219,748

for the nine months ended March 31, 2024 .

The increase in loss resulted from the decrease

in sales being greater than the decrease in operating expenses.

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.

Other expenses for the nine

months ended March 31, 2025 was $316,980 as compared to $562,791 for the nine months ended March 31, 2024.

decrease in other expenses was mainly due to the increase in other non-operating income of $16,326, and the decrease in interest expenses,

including amortization of debt discount, on the revolving loan of $229,574 during the nine months ended March 31, 2025 as a result

of the decreasing balance on the revolving loan .

Net Loss Attributable to iPower Inc.

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

for the nine months ended March 31, 2025 was $2,150,061

as compared to $2,185,261 for the nine months ended March 31, 2024 , representing a decrease

in net loss of $35,200.

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.

The decrease was primarily due to the decrease in other expense.

Comprehensive Loss Attributable to iPower

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.

for the nine months ended March 31, 2025 was $2,146,541 as compared to $2,277,101 for the nine months

ended March 31, 2024, representing a decrease in comprehensive loss of $130,560.

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.

along with an increase in other comprehensive loss of $95,360 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

Sources of Liquidity

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

the nine months ended March 31, 2025, 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”).

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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

As of March 31, 2025, we had cash and cash equivalents of $2,192,254, representing a $5,185,583 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

to finance our operations during the next 12 months.

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

activities and financing activities resulting from our payments to offering cost settlement, pay down the short-term loans - related party

and part of 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 and the revolving

line of credit will be sufficient to finance our operations during the next 12 months.

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

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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.

of March 31, 2025 and June 30, 2024, our working capital was $11.9 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 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

for the nine months ended March 31, 2025 and 2024 was $(500,214) and $5,151,956, 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 expenses.

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.

cash used in investing activities for the nine months ended March 31, 2025 and 2024 was $1,519,928

and $0, respectively.

The increase was due to the prepayments made for software developments during the nine months ended March

Financing Activities

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.

cash used in financing activities was $3,168,925 and $6,100,000, respectively, for the nine months ended March 31, 2025 and

The decrease in net cash used in financing activities was primarily due to decrease payments on short-terms loans and decrease in

net borrowing from the revolving loan.

OFF-BALANCE SHEET ARRANGEMENTS

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by sales channel partners was remote so the Company recorded additional allowance for credit losses of $52,092 and $1,569,031 for the

three and six months ended December 31, 2024.

three and nine months ended March 31, 2025.

Inventory, net

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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.

the nine months ended March 31, 2025 and 2024, the Company performed a qualitative goodwill impairment analysis following the steps laid

out in ASC 350-20-35-3C and noted no goodwill impairment.

As of March 31, 2025 and 2024, the goodwill balance amounted to $3,034,110 and

$3,034,110, respectively.

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.

life intangible assets at March 31, 2025 include a covenant not to compete, supplier relationships and software recognized as part of

the acquisition of Anivia.

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

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

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

As of March 31, 2025 and 2024, there were no indicators of impairment.

Stock-based Compensation

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

In assessing the recoverability of its deferred tax assets,

the Company evaluates available positive and negative evidence to estimate whether it is more likely than not that sufficient future taxable

income will be generated to permit use of the existing deferred tax assets in each taxing jurisdiction.

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

17 unchanged sentences

effect on the consolidated financial position, statements of operations and cash flows.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting

1 unchanged sentence

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