What changed in this filing

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Item 1A. Risk Factors

2025-10-09 compared with 2024-09-20 · 236 added, 210 removed, 1084 unchanged (29% of the section changed)

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the trading price of our securities could decline, and you could lose all or part of your investment.

Summary Risk Factors

The risks described under

the heading “ Risk Factors ” beginning on page 5 of this Annual Report on Form 10-K may cause us to be unable to realize the

full benefits of our strengths and/or may cause us to be unable to successfully execute all or part of our strategy.

Some of the more

significant challenges we face include:

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

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

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

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

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

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

Potential disruption of our business and supply chain that may be caused by any conflicts, trade wars or currency fluctuations or tariffs between China and the U.S.

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

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

of operations, financial condition, and cash flows.

The ongoing conflict between Russia and Ukraine may adversely affect our business, financial condition, results from operations, or the businesses of our suppliers, vendors and logistics partners.

The occurrence of any epidemic, including the COVID-19 pandemic or any pandemic alike, and any resurgence in related infections, whether in the U.S., China or elsewhere, along with any efforts to mitigate their impact could have an adverse effect on our business, liquidity, operations, financial condition, the business of our suppliers, vendors and logistic partners, and the price of our securities.

In the event we require additional capital resources to fund our enterprise, we may not be able to obtain sufficient capital and may be forced to limit the expansion of our operations.

Certain of our products may be purchased for use in new and emerging industries or segments, such as cannabis, and may be subject to varying, inconsistent and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations and consumer perceptions.

Our business depends significantly on the continuing efforts of our management team and our business may be impacted if we should lose their services.

Certain relationships, acquisitions, strategic alliances and investments could result in operating issues, dilutions and other harmful or unintended consequences which may adversely impact our business and the results of our operations.

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

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

As the bulk of our sales are carried out through e-commerce, we are subject to certain cyber security risks, including hacking and stealing of customer and confidential data.

If we fail to comply with the continued listing requirements of the Nasdaq Stock Market, it could result in our common stock being delisted, which could adversely affect the market price and liquidity of our securities and could have other adverse effects.

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

Risks Related to Our Business and Products

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

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

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

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

Further, higher fuel costs and increased line haul costs

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

our financial results.

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

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

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

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

Our ability to obtain adequate

and reasonably priced means of transportation to import and distribute our products is a key factor in our success.

Delays in transportation,

including weather-related delays and disruptions due to a pandemic or similar public health emergency, could have a material adverse effect

on our business and results of operations.

Further, higher fuel costs and increased line haul costs due to industry capacity constraints,

customer delivery requirements and a more restrictive regulatory environment, could negatively impact our financial results.

unable to pass higher freight costs to our customers in the form of price increases, those higher costs could have a material adverse

effect on our business, results of operations, financial condition and cash flows.

Further, an increase in the selling prices for

our products resulting from a pass-through of increased freight costs could also have an adverse impact on the volume of products

we sell, and as a result, our business, financial condition, and operating results may suffer.

The ongoing conflict between Russia and

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be viewed in light of these risks, challenges and uncertainties.

An estimated 99% of our sales are carried

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

any disruption in our selling efforts on such third

party platforms could substantially disrupt our business.

While we maintain our own

websites, Zenhydro.com and simpledeluxe.com , as well as our offline wholesale department, which together account for approximately

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

eBay and other platforms.

As such, should we experience a disruption in our sales on third party platforms, or should such third party

platforms somehow come to rank us unfavorably or fail to list our products, this could negatively affect our overall sales and, thus,

negatively impact our overall revenues.

Any disruption in our supply chain, including

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

and overall business strategy.

Any disruption in our supply

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

negatively affect our revenues and overall business strategy.

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

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

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

sick or apprehensive about coming to work during the pandemic.

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

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

changes in the types of goods being shipped.

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

inventories to meet our sales demand during those times.

Thus, the difficulties experienced

by our suppliers have resulted in longer purchase lead times, increased inventory build up as a result of shipping delays, along with

increased ocean freight and storage costs.

Nonetheless, we have continued to deliver products to our customers and the fact that we do

not significantly depend on any one supplier has helped to lessen any disruptions.

Nonetheless, should there be any further disruption,

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

will adversely affect our revenues and results of operations.

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

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

If we are unable

to purchase appropriate amounts of inventory, our business and results of operations may be materially and adversely affected.

In addition, our board of directors only authorized our commencement

of the Digital Treasury Strategy in June 17, 2025, so, in the event we launch such strategy, we have only limited experience in that area

and cannot assure investors that we will be successful in executing on a Digital Treasury Strategy.

Almost all of our

sales are carried out through third-party platforms, including Amazon, Temu, Walmart and eBay;

any disruption in our selling efforts on

such third party platforms could substantially disrupt our business.

we maintain our own websites, Zenhydro.com and simpledeluxe.com , as well as our offline wholesale department,

almost all of our sales occurred on third party platforms such as Amazon, Temu, Walmart and other platforms.

As such, should

we experience a disruption in our sales on third party platforms, or should such third party platforms somehow come to rank us

unfavorably or fail to list our products, this could negatively affect our overall sales and, thus, negatively impact our overall

Poor economic conditions could adversely

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Uncertain global economic

conditions could adversely affect our business.

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

some follow on effects, which are ongoing.

There have been ongoing negative global economic trends, such as decreased consumer and business

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

During the COVID-19 pandemic, some of

the effects of which are still ongoing, there have been ongoing negative global economic trends, such as decreased consumer and business

spending, higher than normal unemployment levels and declining consumer and business confidence.

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At present, we have 7 suppliers in the U.S.

and more than 130

suppliers in China.

and more than 144 suppliers

However, all of the goods sourced in China were purchased through our VIE, DHS.

and China have been involved

in ongoing trade disputes, resulting in increased tariffs when such goods arrive in the U.S., among other things.

and China have been involved in ongoing

trade disputes, resulting in increased tariffs when such goods arrive in the U.S., among other things.

Any changes in U.S.

trade policy, or an escalation in the ongoing trade disputes, could trigger retaliatory actions, resulting in “trade wars”

and an increase in costs for goods imported into the United States.

trade policy,

or an escalation in the ongoing trade disputes, could trigger retaliatory actions, resulting in “trade wars” and an increase

in costs for goods imported into the United States.

Such actions could disrupt our supply chain.

In addition, increased

tariffs could, in turn, reduce customer demand for such products as such tariffs could cause us to have to increase the price at which

we sell our goods, or it could result in trading partners limiting their trade with the United States.

To date, iPower has absorbed some

of the costs related to increased tariffs.

However, should we be unable to continue to absorb such costs, or should we need to pass all

such costs on to consumers, such increase could cut into our competitive advantage and our volume of sales activity in the United States

could be materially reduced.

In addition, increased tariffs could,

in turn, reduce customer demand for such products as such tariffs could cause us to have to increase the price at which we sell our goods,

or it could result in trading partners limiting their trade with the United States.

To date, iPower has absorbed some of the costs related

to increased tariffs.

However, should we be unable to continue to absorb such costs, or should we need to pass all such costs on to consumers,

such increase could cut into our competitive advantage and our volume of sales activity in the United States could be materially reduced.

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

Our China-based subsidiaries, Dayourenzi

(Shenzhen) Technology Co., Ltd.

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

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

the Chinese government could potentially exercise significant oversight and/or discretion over the business and operations of our China-based

subsidiaries and could potentially intervene in or influence the operations of those businesses at any time.

We recently acquired two China-based

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

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

“Operating Company”).

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

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

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

Our China-based

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

Anivia Limited, a British Virgin Islands company.

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

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

The PRC government has the

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

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

As a result, the application, interpretation, and

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

In addition, these laws and regulations may be interpreted

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

New laws, regulations

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

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

Our China-based subsidiary, Dayourenzi (Shenzhen)

Technology Co., Ltd., through which we have historically procured much of our inventory and overseas logistical support, is owned through

contractual agreements, as required by the laws of the PRC.

As a result, the Chinese government could potentially exercise significant

oversight and/or discretion over the business and operations of our China-based subsidiary and could potentially intervene in or influence

the operations of those businesses at any time.

We recently acquired two

China-based subsidiaries, Dayourenzi (Shenzhen) Technology Co., Ltd.

(“DYRZ”) and Daheshou (Shenzhen) Information Technology

(DYRZ and DHS together are referred to as our “China-based Subsidiary”).

The Operating Company

DYRZ, in conjunction with our since disposed variable interest entity, DHS, has historically provided the bulk of our China-based procurement

and logistical needs and we believe it will help streamline our procurement of goods and shipping, as well as reduce costs by bringing

these services in house.

Our China-based subsidiary is owned by us through contractual arrangements with our Hong Kong subsidiary, Fly

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

In addition, our China-based subsidiary may

be at risk of influence by the PRC government as it is subject to the laws, rules and regulations of the PRC, which can be complex and

evolve rapidly.

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

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

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

these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and inconsistently with

our own policies and practices.

New laws, regulations and other government directives in the PRC may also be costly to comply with, and

such compliance or any associated inquiries or investigations or any other government actions may, as regards our China-based Subsidiary:

Delay or impede development,

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We may compete with companies that have greater capital resources and facilities.

established gardening companies with much greater financial resources which do not currently compete with us may be able to easily adapt

their existing operations to sell hydroponic growing equipment.

Our competitors may also introduce new hydroponic growing equipment, and

manufacturers may sell equipment direct to consumers.

More established gardening companies with much greater financial resources which do not currently compete with us may be able to easily

adapt their existing operations to sell hydroponic growing equipment.

Our competitors may also introduce new hydroponic growing equipment,

and manufacturers may sell equipment direct to consumers.

Due to this competition, there is no assurance that we will not encounter difficulties

in increasing revenues and maintaining and/or increasing market share.

In addition, increased competition may lead to reduced prices and/or

margins for products we sell.

In addition, increased competition may lead to reduced prices

and/or margins for products we sell.

If we need additional capital to fund the

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Our future success depends

substantially on the continued services of our executive officers, especially our Chairman, Chief Executive Officer and President, Chenlong

We do not presently maintain key man life insurance on any of our executive officers or directors, although we intend to obtain such

insurance in the near future.

If one or more of our executive officers are unable or unwilling to continue in their present positions,

we may not be able to replace them readily, if at all.

The loss of any of our executive officers could cause our business to be disrupted,

and we may incur additional and unforeseen expenses to recruit and retain new officers.

substantially on the continued services of our executive officers, especially our Chairman, Chief Executive Officer, President and Interim

Chief Financial Officer, Chenlong Tan.

We do not presently maintain key man life insurance on any of our executive officers or directors,

although we intend to obtain such insurance in the near future.

If one or more of our executive officers are unable or unwilling to continue

in their present positions, we may not be able to replace them readily, if at all.

The loss of any of our executive officers could cause

our business to be disrupted, and we may incur additional and unforeseen expenses to recruit and retain new officers.

If we are not successful in attracting and

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on Amazon and, as such, should our Company experience any negative actions by Amazon, our sales could be significantly affected.

A significant proportion of

our sales occur on the Amazon.com platform.

For the years ended June 30, 2024 and 2023, Amazon Vendor and Amazon Seller customers accounted

for 90% and 91% of the Company's total revenues, respectively, and as of June 30, 2024 and 2023, accounts receivable from Amazon Vendor

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

Any disruption in our sales

or accessibility to Amazon, or any negative action taken by Amazon related to our sales, could negatively affect our business.

A significant proportion

of our sales occur on the Amazon.com platform.

For the years ended June 30, 2025 and 2024, Amazon Vendor and Amazon Seller customers

accounted for 82% and 90% of the Company's total revenues, respectively, and as of June 30, 2025 and 2024, accounts receivable from Amazon

Vendor and Amazon Seller accounted for 72% and 91% of the Company’s total accounts receivable, respectively.

Any disruption in

our sales or accessibility to Amazon, or any negative action taken by Amazon related to our sales, could negatively affect our business.

Our reliance on third-party manufacturers could harm our business.

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

We rely on a limited number of

suppliers for certain of our products and supplies.

We rely on a limited number

of suppliers for certain of our products and supplies.

For the years ended June 30, 2025 and 2024, one supplier accounted for 14% and

10% of the Company's total purchases, respectively.

Such reliance on a limited number of suppliers may increase our risk of experiencing disruptions

in our business.

As we do not have any long-term supply agreements, in the event we are unable to maintain supplier arrangements and relationships,

if we are unable to contract with suppliers at the quantity and quality levels needed for our business, if any of our key suppliers becomes

insolvent or experience other financial distress including with respect to staffing and shipping of products, we could experience disruptions

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

Such reliance on a limited number of suppliers may increase our risk of experiencing

disruptions in our business.

As we do not have any long-term supply agreements, in the event we are unable to maintain supplier arrangements

and relationships, if we are unable to contract with suppliers at the quantity and quality levels needed for our business, if any of our

key suppliers becomes insolvent or experience other financial distress including with respect to staffing and shipping of products, we

could experience disruptions in our supply chain, which could have a material adverse effect on our financial condition, results of operations

and cash flows.

Although we continue to implement

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our products or services infringe their intellectual property rights.

Any litigation or claims brought by or against us could result in

substantial costs and diversion of our resources.

A successful claim of intellectual property infringement against us, or any other successful

challenge to the use of our intellectual property, could subject us to damages or prevent us from providing certain products or services,

or using certain of our recognized brand names, which could have a material adverse effect on our business, financial condition, and results

of operations.

Any litigation or claims brought by or against us could result

in substantial costs and diversion of our resources.

A successful claim of intellectual property infringement against us, or any other

successful challenge to the use of our intellectual property, could subject us to damages or prevent us from providing certain products

or services, or using certain of our recognized brand names, which could have a material adverse effect on our business, financial condition,

and results of operations.

We may not be able to develop, license or

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or results of operations which may adversely affect investor confidence in us and, as a result, the value of our common stock.

Effective internal controls over

financial reporting are necessary for us to provide reliable financial reports.

Effective internal controls

over financial reporting are necessary for us to provide reliable financial reports.

If we cannot maintain effective controls and reliable

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price of our common stock may suffer.

and international trade policies, particularly with respect to China, could materially and adversely impact our business and results

of operations.

of our products are manufactured and supplied by unaffiliated third parties, most of which are located in China.

In addition, two of our

subsidiaries are based in China.

government has made statements and taken certain actions that may lead to changes in U.S.

international trade policies towards China.

It remains unclear what additional actions, if any, will be taken by the U.S.

or other governments

with respect to international trade agreements, the imposition of tariffs on goods imported into the United States, tax policy related

to international commerce, or other trade matters.

are closely monitoring the changes in international trade policy, which may be subject to rapid changes and fluctuation, and are assessing

the potential impact of these and other trade policy changes on our business operations and financial performance.

In February and March

2025, the U.S.

administration imposed an additional 20% duty on Chinese imports.

Subsequently, authorities in China announced tariffs

over selected U.S.

products and regulatory investigation against U.S.

companies in response to the tariff imposed by the U.S.

on April 2, 2025, President Trump announced that the United States would impose a 10% tariff on all countries, effective on April 5, 2025,

and an individualized reciprocal higher tariff on countries with which the United States has the largest trade deficits, including a 34%

additional reciprocal tariff on goods imported from China that brings the total tariff rate to 54%.

On April 4, 2025, the Foreign Ministry

of China announced that China would impose a retaliatory 34% tariff on goods imported from the United States starting on April 10, 2025.

Then on April 10, the U.S.

announced it would charge 145% tariffs on goods imported from China, while the Chinese government announced

that it would impose 125% tariffs on U.S.

exports to China.

As of the date of this filing, the U.S.

and China have agreed to lower the

tariffs for a period of 90 days, with the U.S.

lowering the base tariff rate on most Chinese goods to 30% from 145% and China lowering

the base tariff rate to 10% from 125%, with the goal of negotiating a more permanent trade agreement during the 90 day period.

Any unfavorable

government policies on international trade, such as capital controls or tariffs, and any uncertainty resulting from the changing nature

of such policies, may affect the demand for our products and services, impact the competitive position of our products or prevent us from

selling products in certain countries.

If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements

are renegotiated or, in particular, if the U.S.

government takes additional retaliatory trade actions due to the recent U.S.-China trade

tension, such changes could have an adverse effect on our business, financial condition and results of operations.

extent and duration of any tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend

on various factors, such as negotiations between the United States and China and/or other countries, the response of such countries, exemptions

or exclusions that may be granted, availability and cost of alternative sources of supply of materials we purchase from companies

in China or other countries targeted with tariffs.

We have announced

that we may adopt a digital treasury strategy which, if adopted and effectuated, would expose us to various risks, including risks associated

with holding Bitcoin and other cryptocurrency assets.

While we have only announced that we may adopt

a Digital Treasury Strategy, and we have not yet effectuated such strategy, such strategy, if adopted and effectuated, would expose us

to various risks, including risks associated with holding Bitcoin and other cryptocurrency assets, including the following:

Bitcoin and other digital assets are highly volatile assets.

Bitcoin does not pay interest or dividends.

Our Bitcoin and other digital asset holdings could significantly impact our financial results and the market price of our listed securities.

Should we purchase Bitcoin or other digital assets, such acquisition would be completed primarily using proceeds from equity and debt financings.

Any Digital Treasury Strategy is new to our business, has not been tested and we will be unable to assure its success or successful implementation.

We would be subject to counterparty risks, including in particular risks relating to our custodians.

The broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of Bitcoin and other cryptocurrency or digital assets.

Changes in the accounting treatment of our Bitcoin or other digital currency holdings could have significant accounting impacts, including increasing the volatility of our results.

General Risk Factors Related to Our Business

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growth and have an adverse impact on our business.

The conflict between Russia and Ukraine

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

The conflict between Russia and

Ukraine and the war in the Middle East may have the effect of heightening many of the other risks described in this “Risk

Factors” section.

To the extent the conflict

between Russia and Ukraine may adversely affect our business and financial results, it may also have the effect of heightening many of

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

between Russia and Ukraine and the war in the Middle East may adversely affect our business and financial results, it may also have the

effect of heightening many of the other risks described in this “Risk Factors” section, as well as other risks which we may

not be currently aware of.

Risks Related to Doing Business with the Cannabis

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market price and liquidity of our securities and could have other adverse effects.

Our common stock is currently listed on the Nasdaq

Capital Market.

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

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

with the applicable listing standards in the future.

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

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

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

and market price of our common stock;

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

impact our ability to raise equity financing;

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

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

and (iv) impairing our ability to provide equity incentives

to our employees.

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.

In accordance with Nasdaq

Rules, the Company was provided with an initial period of 180 calendar days, or until July 1, 2025 (the “Initial Grace Period”),

to regain compliance with the Bid Price Requirement.

Since the Initial Grace Period was coming to an end and the Company had not yet regained

compliance, on June 12, 2025, the Company submitted a plan of compliance (the “Plan of Compliance”) to Nasdaq seeking an additional

180-day grace period (the "Additional Grace Period") to regain compliance with the Bid Price Requirement.

The Plan of Compliance

set forth the steps the Company would take to regain compliance with the Bid Price Requirement within the additional 180-day period, including

effectuating a reverse split of its common stock, if deemed necessary.

On July 2, 2025, the

Company received formal approval from Nasdaq granting it an additional 180 days, or until December 29, 2025 (the “Compliance Date”),

to regain compliance with the Bid Price Requirement.

at any time before the Compliance Date the closing bid price for the Company’s Common Stock is at least $1.00 for a minimum of 10

consecutive business days, the Staff will provide the Company written confirmation that it has regained compliance with the Bid Price

If the Company does not regain compliance with the Bid Price Requirement by the Compliance Date, the Staff will provide written

notification to the Company that its Common Stock will be subject to delisting.

At that time, the Company may appeal the Staff’s

delisting determination to a Nasdaq Hearings Panel.

There can be no assurance that the Company will regain compliance or otherwise maintain

compliance with any of the other listing requirements.

Nonetheless, the Company intends to monitor the closing bid price of its Common

Stock and will, if necessary, consider available options to regain compliance with the Bid Price Requirement prior to the Compliance Date.

Our founders, officers and directors may

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

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

Our founders, officers and

directors collectively will beneficially own approximately 50% of our outstanding shares of common stock.

As a result, such individuals

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

actions requiring stockholder approval, such as:

(i) a merger or a sale of our company, (ii) a sale of all or substantially all of our

assets, and (iii) amendments to our articles of incorporation and bylaws.

This concentration of voting power and control could have a

significant effect in delaying, deferring, or preventing an action that might otherwise be beneficial to our other stockholders and be

disadvantageous to our stockholders with interests different from those entities and individuals.

Certain of these individuals also have

significant control over our business, policies and affairs as officers or directors of our company.

Therefore, you should not invest

in reliance on your ability to have any control over our company.

directors collectively beneficially own approximately 51% of our outstanding shares of common stock.

As a result, such individuals may,

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

requiring stockholder approval, such as:

(i) a merger or a sale of our company, (ii) a sale of all or substantially all of our assets,

and (iii) amendments to our articles of incorporation and bylaws.

This concentration of voting power and control could have a significant

effect in delaying, deferring, or preventing an action that might otherwise be beneficial to our other stockholders and be disadvantageous

to our stockholders with interests different from those entities and individuals.

Certain of these individuals also have significant control

over our business, policies and affairs as officers or directors of our company.

Therefore, you should not invest in reliance on your

ability to have any control over our company.

See “Item 12.

Security Ownership of Certain Beneficial Owners

and Management and Related Stockholder Matters” for further discussion of the stockholding of our founders and principal stockholders.

Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matters” for further discussion of the stockholding of our founders and principal stockholders.

Future sales of our common stock in the

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adequacy of these internal controls may adversely affect investor confidence in our Company and, as a result, the value of our common

We are required, pursuant to Section 404

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

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

This assessment needs to include disclosure of any material weaknesses identified

by our management in our internal control over financial reporting.

In addition, our independent registered public accounting firm will

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

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

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

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

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

We are required, pursuant

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

control over financial reporting for the fiscal year ending June 30, 2025.

This assessment needs to include disclosure of any material

weaknesses identified by our management in our internal control over financial reporting.

In addition, our independent registered public

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

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

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

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

once initiated.

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

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

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We could be an “emerging

growth company” for up to five years following the effectiveness of this registration statement, or until the earliest of (i) the

last day of the first fiscal year in which our annual gross revenues exceed $1.235 billion, (ii) the date that we become a “large

accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that

is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii)

the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three year period.

growth company” for up to five years following the effectiveness of the Company’s initial registration statement, or until

the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.235 billion, (ii) the date that

we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value

of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second

fiscal quarter, or (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three year

Additionally, we are a “smaller

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markets, which in turn could cause the market price or trading volume for our common stock to decline.

Now that we are an actively-traded Nasdaq-listed

company, the market price of our common stock may be volatile.

As an actively traded Nasdaq-listed company,

the market price of our common stock may be volatile.

As our securities are publicly-traded

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

What changed 10-K

Item 1A. Risk Factors