What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-05-15 · 248 added, 317 removed, 159 unchanged (78% 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

12 unchanged sentences

results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several

Historical results may

not indicate future performance.

Our forward-looking statements reflect our current views about future events, are based on assumptions

and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated

Historical results may not

indicate future performance.

Our forward-looking statements reflect our current views about future events, are based on assumptions and

are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated

by these statements.

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

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

Product and Brand Development

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, and our 99,347 square foot fulfillment centers

in Rancho Cucamonga, 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 and

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

Brand Development

plan to increase investments in product and brand development.

We actively evaluate potential acquisition opportunities of companies and

product brand names that can complement our product catalog and improve our existing products and supply chain efficiencies.

Global Economic Disruption

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

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.

product brand names that can complement our product catalog and improve on existing products and supply chain efficiencies.

Global Economic

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

may nonetheless increase the likelihood of supply chain interruptions and hinder our ability to find the materials we need to make our

Thus far, as a result of the general global economic disruption, 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, 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.

of Digital Treasury Strategy

June 17, 2025, the Company adopted a digital asset reserve, allocation and development strategy (the “Digital Treasury Strategy”)

with the plan of creating a Digital Treasury Strategy business.

To date, we have not effectuated the Digital Treasury Strategy business

and do not know if it will be effectuated.

As this Digital Treasury Strategy is a newly planned addition to our business model, we cannot

predict its success or know whether we will commence this strategy or, once commenced, if we will continue with this strategy for the

The Company will provide additional updates to shareholders when and if we do effectuate such strategy.

RESULTS OF OPERATIONS

For the three months ended March 31, 2025

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.

For the three months ended September 30, 2025

The following table presents certain

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

Three Months Ended

March 31, 2025

September 30,

Three Months Ended

March 31, 2024

Revenues – product sales

Revenues – service income

Cost of revenues – product costs

Cost of revenues – service costs

Operating expenses

Operating (loss) income

Other expenses

(Loss) income before income taxes

Income tax expenses

Net (loss) income

Non-controlling interest

Net (loss) income attributable to iPower Inc.

Other comprehensive (loss) income

Comprehensive (loss) income attributable to iPower Inc.

Gross profit % of revenues

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

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

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

(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

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

period to period.

Nine Months Ended

March 31, 2025

Nine Months Ended

March 31, 2024

September 30,

Revenues - product sales

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Operating loss

Other expenses

Loss before income taxes

1 unchanged sentence

Non-controlling interest

Net loss attributable to iPower Inc.

Other comprehensive (loss) income

Net loss income attributable to iPower Inc.

Other comprehensive loss

Comprehensive loss attributable to iPower Inc.

$ (2,146,541 )

$ (2,277,101 )

Gross profit % of revenues

Gross profit % of revenues – product sales

Gross profit % of revenues – service income

Operating loss % of revenues

Net loss % of revenues

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 .

for the three months ended September 30, 2025 decreased 36.8% to $12,017,467 as compared to $19,008,521 for the three months ended September

30, 2024.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, 2025.

In addition, the

Company also experienced a significant decrease in amazon orders due to uncertainty over tariffs during quarter ended September 30, 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 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.

three months ended September 30, 2025 decreased 31.5% to $7,210,943 as compared to $10,520,624 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 resulting from management’s efforts on supply

chain management.

Gross profit was $4,806,524 for

the three months ended September 30, 2025 as compared to $8,487,897 for the three months ended September 30, 2024.

the overall gross profit ratio of the total sales revenues decreased to 40.0% for the three months ended September 30, 2025 from

44.7% for the three months ended September 30 , 2024 , the gross profit ratio of product sales

revenue for the three months ended September 30, 2025 and 2024 was 43.9% and 45.7%, 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 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

the combination of a decrease in selling and fulfillment expenses of $6.4 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 $1.1 million, which included

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 losses and inventory reserves of $1.9 million.

Operating expenses for the three months ended September 30, 2025 decreased

42.1% to $6,501,703 as compared to $11,234,331 for the three months ended September 30, 2024.

The decrease was mainly due to the combination

of a decrease in selling and fulfillment expenses of $0.7 million as a result of decreased costs related to advertising, merchant fees,

rental expenses and delivery fees, and a decrease in general and administrative expenses of $4.0 million, which included payroll expenses,

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

in general and administrative expenses was primarily attributable to the implementation of a cost-cutting plan during the current quarter,

as compared to the prior-year period which included expenses related to the expansion of our vendor network, the development of the SuperSuite

platform, and an increase in the allowance for credit losses and inventory reserves totaling $1.76 million for the quarter ended September

Loss from Operations

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

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 .

from operations was $1,695,179 for the three months ended September 30, 2025 as compared

to $2,746,434 for the three months ended September 30, 2024 .

The decrease in loss

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

income consists of interest expense and other non-operating income.

Other income for the three months ended September 30, 2025

was $697,947 as compared to $ 77,805 for the three months

ended September 30, 2024 .

The increase in other income was mainly due to combination

of the increase in other non-operating income of $620,142 resulted from discounted settlement and write-offs of aged accounts payable,

recognition of loss on deconsolidation of VIE, and a decrease in interest, including amortization of debt discount, on the revolving loan

of $78,243 during the three months ended September 30, 2025 resulted from the decreasing loan balance.

Net Loss Attributable to iPower Inc.

loss attributable to iPower Inc.

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

for the three months ended September 30, 2025 was $533,648

as compared to $2,029,281 for the three months ended September 30, 2024 , representing a decrease

in net loss of $1,495,633.

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

The decrease was primarily due to the decrease in operating expenses and

the increase in other income as discussed above.

Comprehensive Loss Attributable to iPower

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loss attributable to iPower Inc.

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.

for the three months ended September 30, 2025 was $508,705 as compared to $2,084,335 for the three months

ended September 30, 2024, representing a decrease in comprehensive loss of $1,575,630.

The decrease was due to the reasons discussed above,

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.

along with an increase in other comprehensive income of $79,997 as a result of foreign currency translation adjustments resulting from

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

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

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”).

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 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, 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.

the three months ended September 30, 2025, we primarily funded our operations with cash and cash equivalents generated from operations,

borrowing from related party, 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 69,445 shares of common stock (the “Shares”) and a concurrent

private placement of warrants to purchase up to 69,445 shares of common stock (the “Warrants”), which Shares and Warrants

were sold for aggregate gross proceeds of $5,000,002.

As of September 30, 2025, we had cash and cash equivalents of $903,975, representing

a $1,103,915 decrease from $2,007,890 in cash as of June 30, 2025.

The cash decrease was primarily due to the combined result of cash

provided by operating activities, cash used in investing activities and financing activities resulting from our payments to pay down the

JPM revolving line of credit.

on our current operating plan, 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.

However, our liquidity and our ability to meet our obligations and fund our capital

requirements are dependent on our future financial performance, which is subject to general economic, financial and other factors that

are beyond our control, such as rising inflation and potential recession, and our anticipated funding requirements could increase.

“Item 1A - Risk Factors” in our Annual Report on Form 10-K filed with the SEC on October 9, 2025.

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

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$1.0 million in unused credit under the revolving line with JPM.

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.

our current working capital position and available funding from our revolving credit line and proceeds from our June 2024 registered

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

Working Capital

of March 31, 2025 and June 30, 2024, our working capital was $11.9 million and $11.2 million,

of September 30, 2025 and June 30, 2025, our working capital was $4.1 million and $4.9 million,

respectively.

7 unchanged sentences

to suppliers for products, to employees for compensation, and other general expenses.

Net cash (used in) provided by operating activities

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.

Net cash provided by (used in) operating activities

for the three months ended September 30, 2025 and 2024 was $1,686,463 and $(1,415,643), respectively.

The increase in cash provided by operating activities mainly resulted from an increase in cash received

from customers, which was partially offset by an increase in cash paid for cost of revenues and operating expenses.

Investing Activities

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

cash used in investing activities for the three months ended September 30, 2025 and 2024

was $1,037,272 and $202,140, respectively.

The increase was mainly due to deconsolidation of VIE cash, payments made for investment in

joint venture and prepayments made for software developments during the quarter ended September 30, 2025.

Financing Activities

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.

cash used in financing activities was $1,778,026 and $ 3,308,599 , respectively, for the three

months ended September 30, 2025 and 2024.

The 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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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

and pursuant to the rules and regulations of the SEC.

The preparation of consolidated financial statements in conformity with GAAP requires

management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying

Actual results could differ from those estimates.

In some cases, changes in the accounting estimates are reasonably likely to occur

from period to period.

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

to the rules and regulations of the SEC.

The preparation of consolidated financial statements in conformity with GAAP requires management

to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

results could differ from those estimates.

In some cases, changes in the accounting estimates are reasonably likely to occur from period

Accordingly, actual results could differ materially from our estimates.

To the extent that there are material differences

between these estimates and actual results, our financial condition and results of operations will be affected.

We base our estimates

on experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing

We refer to accounting estimates of this type as critical accounting policies, which we discuss further below.

While our significant

accounting policies are more fully described in Note 2 to our unaudited condensed consolidated financial statements, we believe that

the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our

unaudited condensed consolidated financial statements.

To the extent that there are material differences between

these estimates and actual results, our financial condition and results of operations will be affected.

We base our estimates on experience

and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis.

refer to accounting estimates of this type as critical accounting policies, which we discuss further below.

While our significant accounting

policies are more fully described in Note 2 to our unaudited condensed consolidated financial statements, we believe that the following

accounting policies are critical to the process of making significant judgments and estimates in the preparation of our 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

recognition criteria are met:

a contract has been identified, separate performance obligations are identified, the transaction price is

determined, the transaction price is allocated to separate performance obligations and revenue is recognized upon satisfying each performance

The Company transfers the risk of loss or damage upon shipment or completion of service, therefore, revenue from product sales

is recognized when it is shipped to the customer and the revenue from services is recognized upon completion of services.

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

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

Generally, when the Company is

primarily responsible for fulfilling the promise to provide a specified good or service and the Company has discretion in establishing

the price, revenue is recorded at gross.

Payments received prior

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

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

Such offers include current discount offers, such

as percentage discounts off current purchases and other similar offers.

Current discount offers, when accepted by the Company’s

customers, are treated as a reduction to the purchase price of the related transaction.

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

criteria are met:

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

the transaction price is allocated to separate performance obligations and revenue is recognized upon satisfying each performance obligation.

The Company transfers the risk of loss or damage upon shipment or completion of service, therefore, revenue from product sales is recognized

when it is shipped to the customer and the revenue from services is recognized upon completion of services.

Return allowances, which reduce

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

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

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

Generally, when the Company is primarily

responsible for fulfilling the promise to provide a specified good or service and the Company has discretion in establishing the price,

revenue is recorded at gross.

Payments received prior to

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

periodically provides incentive offers to its customers to encourage purchases.

Such offers include current discount offers, such as percentage

discounts off current purchases and other similar offers.

Current discount offers, when accepted by the Company’s customers, are

treated as a reduction to the purchase price of the related transaction.

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

8 unchanged sentences

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

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

of accounts receivable.

16 unchanged sentences

The Company has also included in calculation of allowance for credit

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

accounts receivable.

losses the potential impact of the 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.

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 $52,092 and $1,569,031 for the

three and nine months ended March 31, 2025.

Inventory, net

The Company also considers external factors to the specific customer, including current conditions and forecasts of economic conditions,

including the potential impact of the recent tariff policy.

In the event we recover amounts previously written off, we will reduce the

specific allowance for credit losses.

Inventories, net

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

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conditions and product obsolescence.

the estimated realizable value of the inventory is less than cost, the Company makes provisions in order to reduce its carrying value

to its estimated market value.

estimated realizable value of the inventory is less than cost, the Company makes provisions in order to reduce its carrying value to its

estimated market value.

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

Variable interest

Variable interest entities

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

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and significantly impact DHS’s economic performance.

DHS’s operational funding is provided by the Company after February 15,

During the term of the agreements, which run for a term of 10 years from February 2022 to February 2032, the Company bears all the

risk of loss and has the right to receive all of the benefits from DHS.

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

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

of the Company and the financial statements of DHS have been consolidated from the date such control existed, February 15, 2022.

DHS’s operational funding has been provided by the Company following

the February 15, 2022 acquisition.

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

all of the benefits from DHS.

As such, based on the determination that the Company is the primary beneficiary of DHS, in accordance with

ASC 810-10-25-38A through 25-38J, DHS is considered a VIE of the Company and the financial statements of DHS have been consolidated from

the date such control existed, February 15, 2022.

On August 4, 2025, the Company

entered into a Variable Interest Entity (“VIE”) Contract Termination Agreement with the VIE, pursuant to which all VIE agreements

were terminated.

As a result, the Company no longer has a controlling financial interest in the VIE.

In accordance with ASC 810-10-40,

Consolidation — Deconsolidation of a Subsidiary or Derecognition of a Group of Assets , the Company deconsolidated the VIE

as of the termination date.

Upon deconsolidation, the

Company derecognized all assets and liabilities of the VIE from its consolidated balance sheet.

Because the Company retains no ownership

interest or continuing involvement in the VIE following the termination of the agreements, no retained interest was recognized.

represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed.

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excess, limited to the total amount of goodwill allocated to that reporting unit.

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

the acquisition of Anivia.

the three months ended September 30, 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 September 30, 2025 and June 30, 2025, the goodwill balance amounted

to $3,034,110 and $3,034,110, respectively.

Intangible Assets, net

life intangible assets at September 30, 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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Supplier relationship

Company reviews the recoverability of long-lived assets, including intangible assets, when events or changes in circumstances occur that

indicate the carrying value of the asset may not be recoverable.

The assessment of possible impairment is based on the ability to recover

the carrying value of the asset from the expected future pretax cash flows (undiscounted and without interest charges) of the related

If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between

estimated fair value and carrying value.

The measurement of impairment requires management to make estimates of these cash flows related

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

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

The Company reviews the recoverability of long-lived

assets, including intangible assets, when events or changes in circumstances occur that indicate the carrying value of the asset may not

be recoverable.

The assessment of possible impairment is based on the ability to recover the carrying value of the asset from the expected

future pretax cash flows (undiscounted and without interest charges) of the related operations.

If these cash flows are less than the

carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value.

measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair

value determinations.

The Company did not record any impairment charge for the three months ended September 30, 2025 and 2024.

Stock-based Compensation

Company applies ASC No.

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

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

applies ASC No.

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

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

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

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be reversed) because the vesting condition in the award has not been satisfied.

Company will recognize forfeitures of such equity-based compensation as they occur.

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.

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

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

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.

A valuation allowance must be established for deferred tax assets when it is

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

Valuation allowances are recorded, when necessary,

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

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.

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.

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.

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

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

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting

company,” we are not required to provide the information required by this Item.

QUANTITATIVE AND

QUALITATIVE DISCLOSURES ABOUT MARKET RISK

“smaller reporting company,” we are not required to provide the information required by this Item.

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