What changed in this filing

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Item 1. Financial Statements

2026-02-20 compared with 2025-11-14 · 1045 added, 724 removed, 798 unchanged (69% of the section changed)

1 unchanged sentence

and Subsidiaries

Condensed Consolidated Balance Sheets

As of September 30, 2025 and June 30, 2025

September 30,

Consolidated Balance

As of December 31, 2025 and June 30, 2025

Current assets

2 unchanged sentences

Inventories, net

Restricted Cash - BitGo

Prepayments and other current assets, net

1 unchanged sentence

Non-current assets

Right of use assets - non-current

Right of use - non-current

Property and equipment, net

Deferred tax assets, net

Investment in joint ventures

Investment in joint venture

Intangible assets, net

Digital assets

Other non-current assets

4 unchanged sentences

Other payables and accrued liabilities

Lease liabilities - current

Lease liability - current

Short-term loan payable

Short-term loan payable - related party

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Non-current liabilities

Convertible notes payable

Derivative liability - Conversion option

Lease liability - non-current

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180,000,000 shares authorized;

1,049,790 and 1,045,330 shares issued and outstanding at September 30, 2025 and June 30, 2025

1,081,460 and 1,045,330 shares issued and outstanding at December 31, 2025 and June 30, 2025

Additional paid in capital

Accumulated deficits

( 15,732,537 )

( 15,198,889 )

Non-controlling interest

Accumulated other comprehensive loss (income)

Accumulated other comprehensive loss

Total stockholders' equity

Total liabilities and stockholders' equity

Unless otherwise indicated, all shares of common stock and per share

numbers in the unaudited condensed consolidated financial statements and notes below have been adjusted retroactively to reflect the

1-for-30 reverse stock split effected on October 27, 2025, for all periods presented (see Note 14 for details).

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

Unless otherwise indicated, all shares of common stock and per share numbers in the unaudited condensed consolidated financial statements and notes below have been adjusted retroactively to reflect the 1-for-30 reverse stock split effected on October 27, 2025, for all periods presented (see Note 15 for details).

The accompanying notes

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

and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

For the Three Months Ended September 30, 2025 and 2024

For the Three Months Ended September 30,

Consolidated Statements of Operations and Comprehensive Loss

For the Three and Six

Months Ended December 31, 2025 and 2024

For the Three Months Ended December 31,

For the Six Months Ended December 31,

Product sales

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Total operating expenses

LOSS FROM OPERATIONS

INCOME (LOSS) FROM OPERATIONS

( 2,437,977 )

( 4,133,156 )

( 2,062,827 )

OTHER INCOME (EXPENSE)

Interest expenses

Loss on equity method investments

Loss on equity method investment

Loss on deconsolidation of VIE

Other non-operating income

Total other income, net

LOSS BEFORE INCOME TAXES

Unrealized gain (loss) on digital assets

Change in fair value of derivative liability

Loss on extinguishment of debt

Other non-operating income (expenses)

Total other income (expenses), net

INCOME (LOSS) BEFORE INCOME TAXES

( 2,013,789 )

PROVISION FOR INCOME TAX BENEFIT

( 3,011,021 )

( 2,332,454 )

PROVISION FOR INCOME TAX EXPENSE (BENEFIT)

( 1,284,092 )

NET INCOME (LOSS)

( 1,193,281 )

( 1,726,929 )

( 1,816,453 )

Non-controlling interest

NET LOSS ATTRIBUTABLE TO IPOWER INC.

NET INCOME (LOSS) ATTRIBUTABLE TO IPOWER INC.

$ ( 1,193,281 )

$ ( 1,726,929 )

$ ( 1,810,462 )

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustments

COMPREHENSIVE LOSS ATTRIBUTABLE TO IPOWER INC.

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO IPOWER INC.

$ ( 1,193,660 )

$ ( 1,702,365 )

$ ( 1,709,386 )

WEIGHTED AVERAGE NUMBER OF COMMON STOCK

LOSSES PER SHARE

Unless otherwise indicated, all share of common stock and per share

numbers in the unaudited condensed consolidated financial statements and notes below have been adjusted retroactively to reflect the

1-for-30 reverse stock split effected on October 27, 2025, for all periods presented (see Note 14 for details).

The accompanying notes are

an integral part of these unaudited condensed consolidated financial statements.

EARNINGS (LOSSES) PER SHARE

The accompanying notes

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

and Subsidiaries

Unaudited Condensed

Consolidated Statements of Changes in Stockholders' Equity

For the Three Months Ended September 30, 2025 and 2024

Consolidated Statements

of Changes in Stockholders' Equity

For the Three and Six

Months Ended December 31, 2025 and 2024

**Common Stock

Additional Paid in

Retained Earnings (Accumulated

Non-controlling

Comprehensive

Accumulated other Comprehensive

income (loss)

Balance, June 30, 2025

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Stock-based compensation

Restricted shares issued for vested

Restricted shares issued for vested RSUs

Foreign currency translation adjustments

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( 15,732,537 )

( 1,193,281 )

Stock-based compensation

Shares issued for consulting services

Common stock issued for conversions of note payable

Reverse-Split round up shares

Foreign currency translation adjustments

Balance, December 31, 2025, unaudited

$ ( 16,925,818 )

Balance, June 30, 2024

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$ ( 265,460 )

Unless otherwise indicated, all share of common stock and per share

numbers in the unaudited condensed consolidated financial statements and notes below have been adjusted retroactively to reflect the

1-for-30 reverse stock split effected on October 27, 2025, for all periods presented (see Note 14 for details).

The accompanying notes are

an integral part of these unaudited condensed consolidated financial statements.

Net income (loss)

Stock-based compensation

Foreign currency translation adjustments

Balance, December 31, 2024, unaudited

$ ( 12,041,063 )

$ ( 109,330 )

The accompanying notes

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

and Subsidiaries

Unaudited Condensed

Consolidated Statements of Cash Flows

For the Three Months Ended September 30, 2025 and 2024

For the Three Months Ended

September 30, 2025 and 2024

Consolidated Statements

of Cash Flows

For the Six Months Ended December 31, 2025 and 2024

For the Six Months Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

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$ ( 1,816,453 )

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

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

Depreciation and amortization expense

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Stock-based compensation expense

Gain on foreign currency exchange rates

Shares issued for consulting services

Loss on deconsolidation of VIE

Amortization of operating lease right of use assets

Change in FV of Derivative Liability

Unrealized gain/loss on digital assets

Loss on extinguishment of debt

Gain on disposal of vehicle

Amortization of debt premium / discount and non-cash financing costs

2 unchanged sentences

Deferred tax assets

( 1,028,563 )

Prepayments and other current assets, net

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Investment in joint venture

Restricted cash held in Bitgo account

( 2,209,000 )

Purchase of digital assets

( 2,209,000 )

Prepayments for software development

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Proceeds from short-term loans -related party

Proceeds from short-term loans

Payments on short-term loans - related party

Net proceeds from convertible notes

Proceeds from revolving loan

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( 5,400,000 )

Net cash used in financing activities

( 1,778,026 )

Net cash provided by (used in) financing activities

( 2,558,389 )

2 unchanged sentences

( 4,500,380 )

( 4,800,532 )

CASH AND CASH EQUIVALENT, beginning of period

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SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:

Derivative liability - conversion option

Common stock issued for conversions of note payable

Right of use assets derecognized due to termination of operating leases

$ ( 374,737 )

The accompanying notes are

an integral part of these unaudited condensed consolidated financial statements.

The accompanying notes

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

Notes to Unaudited Condensed Consolidated Financial

As of September 30, 2025 and June 30, 2025 and for

the Three Months Ended September 30, 2025 and 2024

As of December 31 2025 and June 30, 2025 and

for the Six Months Ended December 31, 2025 and 2024

Note 1 - Nature of business and organization

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The Company is principally engaged in the marketing and sale

of consumer home, garden and other products and accessories mainly in the North America.

On May 18, 2021, the Company acquired 100% of the

equity ownership of its variable interest entity, E Marketing Solution Inc.

(“E Marketing”), an entity incorporated in California

and owned by one of the minority shareholders of the Company.

As a result, E Marketing became the Company’s wholly owned subsidiary.

On May 18, 2021, the Company acquired 100% of the

equity ownership of its variable interest entity, Global Product Marketing Inc.

of consumer home, garden and other products and accessories mainly in North America.

On May 18, 2021, the Company acquired 100% of

the equity ownership of its variable interest entity, E Marketing Solution Inc.

(“E Marketing”), an entity incorporated in

California and owned by one of the minority shareholders of the Company.

As a result, E Marketing became the Company’s wholly owned

On May 18, 2021, the Company acquired 100% of

the equity ownership of its variable interest entity, Global Product Marketing Inc.

(“GPM”), an entity which was incorporated

in the State of Nevada on September 4, 2020, and was owned by Chenlong Tan, the Company’s Chairman, CEO and President, and one of

the majority shareholders of the Company.

in the State of Nevada on September 4, 2020, and was owned by Chenlong Tan, the Company’s Chairman, CEO, President and Interim CFO,

and one of the majority shareholders of the Company.

As a result, GPM became the Company’s wholly owned subsidiary.

On January 13, 2022, the Company entered into a joint

venture agreement and formed a Nevada limited liability company, Box Harmony, LLC (“Box Harmony”), for the principal purpose

of providing logistics services primarily for foreign-based manufacturers or distributors who desire to sell their products online in

the United States, with such logistics services to include, without limitation, receiving, storing and transporting such products.

Company owns 40% of the equity interest in Box Harmony, retaining significant influence, but does not own a majority equity interest in

or otherwise control Box Harmony.

On January 13, 2022, the Company entered into

a joint venture agreement and formed a Nevada limited liability company, Box Harmony, LLC (“Box Harmony”), for the principal

purpose of providing logistics services primarily for foreign-based manufacturers or distributors who desire to sell their products online

in the United States, with such logistics services to include, without limitation, receiving, storing and transporting such products.

The Company owns 40% of the equity interest in Box Harmony, retaining significant influence, but does not own a majority equity interest

in or otherwise control Box Harmony.

See details at Note 3 below.

On February 10, 2022, the Company entered into another

joint venture agreement and formed a Nevada limited liability company, Global Social Media, LLC (“GSM”), for the principal

On February 10, 2022, the Company entered into

another joint venture agreement and formed a Nevada limited liability company, Global Social Media, LLC (“GSM”), for the principal

purpose of creating a social media platform in order to provide content and services to assist businesses, including the Company and other

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See details on Note 4 below.

On June 3, 2025, the Company entered into a

joint venture agreement and formed a Nevada limited liability company, United Package NV, LLC (“United Package”), for

the principal purpose of producing packaging materials to serve the rapidly growing demands of U.S.

businesses seeking reliable,

sustainable, and cost-effective supply chain solutions without reliance on offshore manufacturing.

The Company owns approximately

44 % of the equity interest in United Package, retaining significant influence, but does not own a majority equity interest in or

otherwise control United Package.

See details at Note 3 below.

On June 3, 2025, the Company entered into a joint

venture agreement and formed a Nevada limited liability company, United Package NV, LLC (“United Package”), for the principal

purpose of producing packaging materials to serve the rapidly growing demands of U.S.

businesses seeking reliable, sustainable, and cost-effective

supply chain solutions without reliance on offshore manufacturing.

The Company owns approximately 44 % of the equity interest in United

Package, retaining significant influence, but does not own a majority equity interest in or otherwise control United Package.

at Note 3 below.

On October 15, 2025, the Company executed an agreement

(the “Restructuring Agreement” ) with its subsidiaries to modify its corporate structure so that the Company’s consumer goods

and logistics business be operated out of GPM.

Pursuant to the Restructuring Agreement, the Company transferred its ownership in E Marketing

and United Package to GPM.

Execution of the Restructuring Agreement does not have any impact on the consolidated financial statements of

Note 2 – Basis of Presentation and Summary

of significant accounting policies

(the “Restructuring Agreement” ) with its subsidiaries to modify its corporate structure so that the Company’s consumer

goods and logistics business be operated out of GPM.

Pursuant to the Restructuring Agreement, the Company transferred its ownership in

E Marketing and United Package to GPM.

Execution of the Restructuring Agreement does not have any impact on the consolidated financial

statements of the Company.

On October 23, 2025, the Company formed iPower

Smart LLC, a Delaware limited liability company (‘Smart LLC”).

Smart LLC is principally engaged in digital treasury activities.

Note 2 – Basis of Presentation

and Summary of significant accounting policies

Basis of presentation

The unaudited condensed consolidated financial statements

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

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

The unaudited condensed consolidated financial

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

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

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

Securities and Exchange Commission

(“SEC”) for interim reporting.

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

required by U.S.

Securities and Exchange

Commission (“SEC”) for interim reporting.

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

that are normally required by U.S.

GAAP can be condensed or omitted.

These unaudited condensed consolidated financial statements have been prepared on the

same basis as its annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only

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

These interim

results are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2026, or for any other interim

period or for any other future year.

These unaudited condensed consolidated financial statements have

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

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

These interim results are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2026, or for any

other interim period or for any other future year.

All intercompany balances and transactions have been eliminated in consolidation.

These unaudited condensed consolidated financial statements

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

Annual Report for the year ended June 30, 2025, which are included in Form 10-K filed with the SEC on October 9, 2025.

These unaudited condensed consolidated financial

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

in the Annual Report for the year ended June 30, 2025, which are included in Form 10-K filed with the SEC on October 9, 2025.

Principles of Consolidation

The unaudited condensed consolidated financial

statements include the accounts of the Company and its subsidiaries, E Marketing, GPM, GSM, and Anivia Limited and its subsidiaries and

VIE, including Fly Elephant Limited, DYRZ and DHS.

statements include the accounts of the Company and its subsidiaries, E Marketing, GPM, GSM, Smart LLC and Anivia Limited and its subsidiaries

and VIE, including Fly Elephant Limited, DYRZ and DHS.

All inter-company balances and transactions have been eliminated.

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Use of estimates and assumptions

The preparation of financial statements in conformity

GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported and disclosures

of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during

the periods presented.

It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at

the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one

or more future confirming events.

Accordingly, the actual results could differ significantly from those estimates.

The preparation of financial statements in

conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities

reported and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of

revenues and expenses during the periods presented.

It is at least reasonably possible that the estimate of the effect of a

condition, situation or set of circumstances that existed at the date of the financial statements, which management

considered in formulating its estimate, could change in the near term due to one or more future confirming events.

Accordingly, the

actual results could differ significantly from those estimates.

Foreign currency translation and transactions

The reporting and functional currency of iPower and

its subsidiaries is the U.S.

The reporting and functional currency of iPower

and its subsidiaries is the U.S.

dollar (USD).

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the results of operations as incurred.

The balance sheet amounts of the WFOE, with the exception

of equity, on September 30, 2025, were translated at 7.119 RMB to $1.00.

The equity accounts were stated at their historical rates.

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

30, 2025 was 7.157 RMB to $1.00.

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

reported on the statement of cash flows would not necessarily agree with changes in the corresponding balances on the unaudited condensed

consolidated balance sheet.

The balance sheet amounts of the WFOE, with the

exception of equity, on December 31, 2025, were translated at 6.9931 RMB to $1.00.

The equity accounts were stated at their historical

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

December 31, 2025was 7.1235 RMB to $1.00.

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

amounts reported on the statement of cash flows would not necessarily agree with changes in the corresponding balances on the unaudited

condensed consolidated balance sheet.

Cash and cash equivalents

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as cash on hand and financial institution and financial service company deposits.

From time to time, the Company may maintain bank balances

in interest bearing accounts in excess of $250,000, which is currently the maximum amount insured by the FDIC for interest bearing

From time to time, the Company may maintain bank

balances in interest bearing accounts in excess of $250,000, which is currently the maximum amount insured by the FDIC for interest bearing

accounts (there is currently no insurance limit for deposits in noninterest bearing accounts).

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determine if an allowance for credit loss is required.

The Company evaluates the creditworthiness of all

of its customers individually before accepting them and continuously monitors the recoverability of accounts receivable.

any indicators that a customer may not make payment, the Company may consider making provision for non-collectability for that particular

The Company evaluates the creditworthiness of

all of its customers individually before accepting them and continuously monitors the recoverability of accounts receivable.

are any indicators that a customer may not make payment, the Company may consider making provision for non-collectability for that particular

At the same time, the Company may cease further sales or services to such customer.

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at carrying amount less an allowance for credit losses, if any.

The Company maintains an allowance for credit losses resulting from

the inability of its customers to make required payments based on contractual terms.

The Company reviews the collectability of its

receivables on a regular and ongoing basis.

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

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

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

The Company also

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

the potential impact of the COVID-19 pandemic.

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

allowance for credit losses.

During the year ended June 30, 2025, the Company determined that the collectability of certain

refundable amounts withheld by sales channel partners was remote so the Company recorded additional allowance for credit losses up

to $ 1,924,417 .

quarter ended September 30, 2025 and 2024, the credit losses was $ 49,713

and $ 1,475,594 ,

respectively.

The Company maintains an allowance for credit losses resulting from the

inability of its customers to make required payments based on contractual terms.

The Company reviews the collectability of its receivables

on a regular and ongoing basis.

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

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

After all attempts to collect

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

The Company also considers external factors to the specific

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

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

Equity method investment

The Company accounts for its ownership interest

in Box Harmony, a 40 %

owned joint venture, and United Package NV LLC, a 44% owned joint venture, following the equity method of accounting, in accordance

with ASC 323, Investments — Equity Method and Joint Ventures.

Under this method, the carrying cost is initially recorded at

cost and then increased or decreased by recording its percentage of gain or loss in Box Harmony’s statement of operations and

a corresponding charge or credit to the carrying value of the asset.

in Box Harmony, a 40 % owned joint venture, and United Package NV LLC, a 44% owned joint venture, following the equity method of accounting,

in accordance with ASC 323, Investments — Equity Method and Joint Ventures.

Under this method, the carrying cost is initially recorded

at cost and then increased or decreased by recording its percentage of gain or loss in the joint ventures’ statement of operations

and a corresponding charge or credit to the carrying value of the asset.

Digital Assets

The Company accounts for its digital assets, which

currently are comprised solely of Bitcoin (“BTC”) and Ethereum (“ETH”), as indefinite-lived intangible assets

in accordance with Accounting Standards Codification (“ASC”) Topic 350-60, “Intangibles—Goodwill and Other—Crypto

Assets.” The Company has ownership of and control over its digital assets and may use third-party custodial services to secure it.

The Company’s digital assets are initially recorded at cost and are subsequently remeasured on the balance sheet at fair value.

The Company determines the fair value of its digital

assets on a recurring basis in accordance with ASC Topic 820, “Fair Value Measurement,” based on quoted prices on the active

exchange that the Company has determined is its principal market for such digital assets (Level 1 inputs).

The Company determines the

cost basis of digital assets using the specific identification of each unit received.

Realized and unrealized gains and losses from changes

in the fair value of digital assets are recognized in the statement of operations.

Variable interest entities

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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.

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.

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

Upon deconsolidation, the Company derecognized all

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

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.

Goodwill represents the excess of the purchase price

over the fair value of assets acquired and liabilities assumed.

Goodwill represents the excess of the purchase

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

The Company accounts for goodwill under ASC Topic 350, Intangibles-Goodwill

Goodwill is not amortized but is reviewed for potential

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

The Company’s

review for impairment includes an assessment of qualitative factors to determine whether it is more likely than not that the fair value

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

If it is determined that it is more likely than not that the

fair value of a reporting unit is less than its carrying value, including goodwill, a quantitative goodwill impairment test is performed,

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

If the fair value of the reporting

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

However, if the carrying amount of the reporting

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

allocated to that reporting unit.

During the three months ended September 30, 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.

Goodwill is not amortized but is reviewed for

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

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

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

If it is determined that it is more likely than

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

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

If the fair value of

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

However, if the carrying amount

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

total amount of goodwill allocated to that reporting unit.

During the six months ended December 31, 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 December 31, 2025 and June 30, 2025, the goodwill balance amounted to $ 3,034,110 and $ 3,034,110 , respectively.

Intangible assets

Finite life intangible assets at September 30, 2025

Finite life intangible assets at December 31,

2025 include covenant not to compete, supplier relationship, 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 15, 2022.

assets are recorded at the estimated fair value of these items at the date of acquisition, February 15, 2022.

Intangible assets are amortized

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value determinations.

The Company did no t record any impairment charge for the three months ended September 30, 2025 and 2024.

The Company did no t record any impairment charge for the six months ended December 31, 2025 and 2024.

Embedded derivative liability

The Company evaluates the embedded features of

its financial instruments, including its convertible notes payable in accordance with ASC Topic 480, “ Distinguishing Liabilities

from Equity ,” and ASC Topic 815 “ Derivatives and Hedging .” Certain conversion options and redemption features

are required to be bifurcated from their host instrument and accounted for as free-standing derivative financial instruments should certain

criteria be met.

The Company applies significant judgment to identify and evaluate complex terms and conditions for its financial instruments

to determine whether such instruments are derivatives or contain features that qualify as embedded derivatives.

Embedded derivatives must

be separately measured from the host contract if all the requirements for bifurcation are met.

The assessment of the conditions surrounding

the bifurcation of embedded derivatives depends on the nature of the host contract and the features of the derivatives.

Bifurcated embedded

derivatives are recognized at fair value.

The following table provides a roll-forward of

changes for financial instruments measured at fair value on a recurring basis for the six months ended December 31, 2025:

Schedule of roll forward of

changes for financial instruments measured at fair value

Derivative Liability

Balance as of June 30, 2025

Initial fair value upon issuance of convertible notes

Extinguishment of derivative liability upon conversion of convertible notes

Gain on change in fair value of derivative liability

Balance as of June 30, 2025

Fair values of financial instruments

ASC 825, “Disclosures about Fair Value of Financial

Instruments,” requires disclosure of fair value information about financial instruments.

ASC 825, “Disclosures about Fair Value of

Financial Instruments,” requires disclosure of fair value information about financial instruments.

ASC 820, “Fair Value Measurements”

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accounts receivable, accounts payable and all other current assets and liabilities approximate fair values due to their short-term nature.

For other financial instruments to be reported at

fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable

For other financial instruments to be reported

at fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable

inputs to the extent possible.

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in one of the following levels:

Level 1 – Inputs are unadjusted, quoted prices

in active markets for identical assets or liabilities at the measurement date;

Level 1 – Inputs are unadjusted, quoted

prices in active markets for identical assets or liabilities at the measurement date;

Level 2 – Inputs are observable, unadjusted

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

The Company does not have any assets or liabilities

measured at fair value on a recurring basis.

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

a result of those measurements, as of September 30, 2025 and June 30, 2025, the Company had goodwill with a carry book value of $3,034,110,

which approximated its fair value:

Schedule of fair value of financial assets and liabilities

The fair value of goodwill was determined based on

the discounted cash flow method, which is an income approach, which required the use of inputs that were unobservable in the marketplace

The Company measures certain non-financial assets

on a non-recurring basis, including goodwill.

As a result of those measurements, as of December 31, 2025 and June 30, 2025, the Company

had goodwill with a carry book value of $3,034,110, which approximated its fair value:

Schedule of fair value of financial goodwill

The fair value of goodwill was determined based

on the discounted cash flow method, which is an income approach, which required the use of inputs that were unobservable in the marketplace

(Level 3), including a discount rate that would be used by a market participant, projections of revenues and cash flows with the revised

projections reflecting the increase in freight and storage costs in the current interim quarter, among others.

The fair value of financial instruments measured

on a recurring basis as of December 31, 2025 consisted of the following:

Schedule of fair value of financial derivative liability

Fair Value Measurements as of December 31, 2025

Derivative liability

Total recurring fair value measurements

Revenue recognition

The 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 obligation.

The Company recognizes revenues from service and

product sales, net of promotional discounts and return allowances, when the following revenue recognition criteria are met:

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

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

The 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.

The 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

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price of the related transaction.

Sales discounts are recorded in the period in which

the related sales are recorded.

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

related sales.

Sales discounts are recorded in the period in

which the related sales are recorded.

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

the related sales.

Shipping and handling costs are recorded as selling expenses.

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from refund of returns on quality issues are recorded to offset merchant selling fees.

During the three months ended September 30, 2025

and 2024, the Company did not have any vendor credits.

During the six months ended December 31, 2025 and

2024, the Company did not have any vendor credits.

Outbound freight costs related to shipping costs to customers are considered periodic

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Advertising costs are expensed as incurred.

advertising and promotional costs included in selling and fulfillment expenses for the three months ended September 30, 2025 and 2024

were $ 809,990 and $ 651,125 , respectively.

Inventory consists of finished goods ready for sale

and is stated at the lower of cost or market.

advertising and promotional costs included in selling and fulfillment expenses for the three and six months ended December 31, 2025 and

2024 were as following.

Schedule of advertising costs

Three Months Ended

Six Months Ended

Advertising and promotion

Inventory consists of finished goods ready for

sale and is stated at the lower of cost or market.

The Company values its inventory using the weighted average costing method.

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Debt issuance costs

Costs incurred in connection with the issuance of

debt are deferred and amortized as interest expense over the term of the related debt using the effective interest method.

Costs incurred in connection with the issuance

of debt are deferred and amortized as interest expense over the term of the related debt using the effective interest method.

To the extent

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of determination.

As of September 30, 2025 and June 30, 2025, there were no deferred offering costs included in the consolidated balance

As of December 31, 2025 and June 30, 2025, there were no deferred offering costs included in the consolidated balance

Segment reporting

The Company follows ASC 280, Segment Reporting.

The Company’s chief operating decision maker, the Chief Executive Officer, reviews the consolidated results of operations when

making decisions about allocating resources and assessing the performance of the Company as a whole and, hence, the Company has only

one reportable segment.

The Company’s chief operating decision maker, the Chief Executive Officer, reviews the consolidated results of operations when making

decisions about allocating resources and assessing the performance of the Company as a whole and, hence, the Company has only one reportable

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

three months ended September 30, 2025 and 2024, sales through Amazon to Canada and other foreign countries were approximately 5.1 %

of the Company’s total sales, respectively.

During the three months ended September 30, 2025, sales of hydroponic products, including

ventilation and grow light systems, were approximately 9.0 %

of the Company’s total sales and the remaining 91.0 %

consisted of general gardening, home goods, and other products and accessories.

During the three months ended September 30, 2024,

sales of hydroponic products, including ventilation and grow light systems, were approximately 17.2 %

of the Company’s total sales and the remaining 82.8 %

consisted of general gardening, home goods, and other products and accessories.

As of September 30, 2025 and June 30, 2025, the

Company had approximately $ 0.5

million and $ 1.0

million of inventory stored in China, respectively.

The Company’s majority of long-lived assets are located in California, United States,

majority of the deferred tax assets are US related, and a majority of the Company’s revenues are derived from within the

United States.

For the six months ended

December 31, 2025 and 2024, sales through Amazon to Canada and other foreign countries were approximately 3.3 % and 6.9 % of the Company’s

total sales, respectively.

During the six months ended December 31, 2025, sales of hydroponic products, including ventilation and grow

light systems, were approximately 9.4 % of the Company’s total sales and the remaining 90.6 % consisted of general gardening, home

goods, and other products and accessories.

During the three months ended December 31, 2024, sales of hydroponic products, including ventilation

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

home goods, and other products and accessories.

As of December 31, 2025 and June 30, 2025, the Company had approximately $ 0.01 million

and $ 1.0 million of inventory stored in China, respectively.

The Company’s majority of long-lived assets are located in California,

United States, majority of the deferred tax assets are US related, and a majority of the Company’s revenues are derived from within

the United States.

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

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

The Company will recognize forfeitures of such equity-based

compensation as they occur.

The Company accounts for income taxes under the asset

and liability method.

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

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

Deferred tax assets and liabilities

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

to be recovered or settled.

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

period that includes the enactment date.

The Company will recognize forfeitures of such

equity-based compensation as they occur.

The Company accounts for income taxes under the

asset and liability method.

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

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

Deferred tax assets

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

are expected to be recovered or settled.

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

in the period that includes the enactment date.

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

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until the statute of limitations closes with respect to the year in which such attributes are utilized.

The Company believes that our income tax filing positions

and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial

The Company believes that our income tax filing

positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its

financial position.

Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740, Income Taxes.

The Company’s

policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes.

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.

Commitments and contingencies

In the ordinary course of business, the Company is

subject to certain contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters,

such as government investigations and tax matters.

The Company recognizes a liability for such contingency if it determines it is probable

that a loss has occurred and a reasonable estimate of the loss can be made.

The Company may consider many factors in making these assessments

including historical and specific facts and circumstances of each matter.

In the ordinary course of business, the Company

is subject to certain contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of

matters, such as government investigations and tax matters.

The Company recognizes a liability for such contingency if it determines it

is probable that a loss has occurred and a reasonable estimate of the loss can be made.

The Company may consider many factors in making

these assessments including historical and specific facts and circumstances of each matter.

Earnings per share

Basic earnings per share is computed by dividing net

income attributable to holders of common stock by the weighted average number of shares of common stock outstanding during the year.

earnings per share reflect the potential dilution that could occur if securities to issue common stock were exercised.

Basic earnings per share is computed by dividing

net income attributable to holders of common stock by the weighted average number of shares of common stock outstanding during the year.

Diluted earnings per share reflect the potential dilution that could occur if securities to issue common stock were exercised.

Recently issued accounting pronouncements

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credit losses.

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

to Income Tax Disclosures.

Under this ASU, public business entities must annually “(1) disclose specific categories in the rate

reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those

reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income [or loss] by the applicable

statutory income tax rate).” This ASU’s amendments are effective for public business entities for annual periods beginning

In December 2023, the FASB issued ASU 2023-08,

“Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60):

Accounting for and Disclosure of Crypto Assets,”

which requires certain crypto assets to be measured at fair value in the statement of operations, with gains and losses from changes in

the fair value of such crypto assets recognized in net income each reporting period.

ASU 2023-08 also requires certain interim and annual

disclosures for crypto assets within the scope of the standard.

ASU 2023-08 is effective for annual periods beginning after December 15,

2024, including interim periods within those fiscal years.

The Company adopted ASU 2023-08 on July 1, 2025.

The adoption of ASU 2023-08

did not have a material impact on the Company’s interim unaudited condensed financial statements.

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

Improvements to Income Tax Disclosures.

Under this ASU, public business entities must annually “(1) disclose specific categories

in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect

of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income [or loss] by the

applicable statutory income tax rate).” This ASU’s amendments are effective for public business entities for annual periods

beginning after December 15, 2024.

For entities other than public business entities, the amendments are effective for annual periods beginning

after December 15, 2025.

For entities other than public business entities, the amendments are effective for annual periods beginning after

December 15, 2025.

Entities are permitted to early adopt the standard “for annual financial statements that have not yet been issued

or made available for issuance.” The amendments should be applied on a prospective basis.

Entities are permitted to early adopt the standard “for annual financial statements that have not yet been

issued or made available for issuance.” The amendments should be applied on a prospective basis.

Retrospective application is permitted.

The adoption of this standard did not have a material impact on its consolidated financial statements.

In November 2023, The FASB issued ASU 2023-07, Segment

Reporting (Topic 280):

In November 2023, The FASB issued ASU 2023-07,

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The amendments apply to all public entities that are required to

report segment information in accordance with Topic 280, Segment Reporting.

The amendments apply to all public entities that are required

to report segment information in accordance with Topic 280, Segment Reporting.

The amendments in this ASU are intended to improve reportable

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did not have a material impact on its consolidated financial statements.

In October 2023, the FASB issued ASU 2023-06, Disclosure

Improvements:

In October 2023, the FASB issued ASU 2023-06,

Disclosure Improvements:

Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative.

This ASU incorporates

Securities and Exchange Commission (SEC) disclosure requirements into the FASB Accounting Standards Codification™

(“Codification”).

The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of

a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those

entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations.

Securities and Exchange Commission (SEC) disclosure requirements into the FASB Accounting Standards Codification™ (“Codification”).

The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics,

allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously

subject to the requirements, and align the requirements in the Codification with the SEC’s regulations.

In SEC Release No.

33-10532, Disclosure Update and Simplification, issued August 17, 2018, the SEC referred certain of its disclosure

requirements that overlap with, but require incremental information to, generally accepted accounting principles to the FASB for potential

incorporation into the Codification.

Disclosure Update and Simplification, issued August 17, 2018, the SEC referred certain of its disclosure requirements that overlap with,

but require incremental information to, generally accepted accounting principles to the FASB for potential incorporation into the Codification.

The ASU incorporates into the Codification 14 of the 27 disclosures referred by the SEC.

the disclosure or presentation requirements of a variety of Topics in the Codification.

They modify the disclosure or presentation requirements

of a variety of Topics in the Codification.

The requirements are relatively narrow in nature.

Some of the amendments represent clarifications to, or technical corrections of, the current requirements.

Because of the variety of

Topics amended, a broad range of entities may be affected by one or more of those amendments.

For entities subject to the SEC’s

existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation

for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date

for each amendment will be the date on which the SEC removes that related disclosure from its rules.

For all other entities, the amendments

will be effective two years later.

However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations,

the amendments will be removed from the Codification and not become effective for any entity.

The Company does not expect the adoption

of this standard to have a material impact on its consolidated financial statements.

In June 2022, FASB issued ASU 2022-03, Fair Value

Measurement (Topic 820):

Some of the amendments represent clarifications

to, or technical corrections of, the current requirements.

Because of the variety of Topics amended, a broad range of entities may be

affected by one or more of those amendments.

For entities subject to the SEC’s existing disclosure requirements and for entities

required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities

that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC

removes that related disclosure from its rules.

For all other entities, the amendments will be effective two years later.

by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification

and not become effective for any entity.

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

financial statements.

In June 2022, FASB issued ASU 2022-03, Fair

Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.

The amendments in this

ASU clarify the guidance in ASC 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction

The amendments in

this ASU clarify the guidance in ASC 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction

and require specific disclosures related to such an equity security.

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The adoption of this standard did not have a material impact on its consolidated financial statements.

In March 2020 and January 2021, the FASB issued ASU

In March 2020 and January 2021, the FASB issued

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

Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU No.

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

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

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

Topic 848 provides optional expedients

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

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

The expedients and

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

In December 2022, the

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

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

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

Topic 848 provides optional

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

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

The expedients

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

In December 2022,

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

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

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

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

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Box Harmony, LLC

On January 13, 2022, the Company entered into a joint

venture agreement (the “Joint Venture Agreement”) with Titanium Plus Autoparts, Inc., a California corporation (“TPA”),

On January 13, 2022, the Company entered into

a joint venture agreement (the “Joint Venture Agreement”) with Titanium Plus Autoparts, Inc., a California corporation (“TPA”),

Tony Chiu (“Chiu”) and Bin Xiao (“Xiao”).

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2,400 Equity Units in exchange for $2,400 and his agreement to manage the day to day operations of Box Harmony.

Under the terms of the Box Harmony limited

liability operating agreement (the “LLC Agreement”), TPA and Xiao each granted to the Company an unconditional and

irrevocable right and option to purchase from Xiao and TPA at any time within the first 18 months following January 13, 2022, up to

1,200 Class A voting units, at an exercise price of $550 per Class A voting unit, for a total exercise price of up to $660,000.

such option is fully exercised, the Company would own 3,600 Equity Units or 60% of the total outstanding Equity Units.

date of this report, the Company had not exercised the option to purchase additional voting units from Xiao and TPA.

Agreement prohibits the issuance of additional Equity Units and certain other actions unless approved in advance by the Company.

January 2023, TPA and Xiao transferred their 60% equity units to a third party without consideration as the LLC was still in the

development stage and did not have significant operations.

The transfer of equity did not have any impact on the LLC’s

financial statements.

As a result, the Company owns 40 %

of the equity interest in Box Harmony with significant influence but does not own a majority equity interest or otherwise control of

The Company accounts for its ownership interest in Box Harmony following the equity method of accounting, in accordance

with ASC 323, Investments —Equity Method and Joint Ventures.

Under this method, the carrying cost is initially recorded at cost

and then increased or decreased by recording its percentage of gain or loss in its statement of operations and a corresponding charge

or credit to the carrying value of the asset.

As of September 30, 2025 and June 30, 2025, the carrying value of the investment in Box

Harmony was $ 13,264 and $ 13,264 , respectively.

Under the terms of the Box Harmony limited liability

operating agreement (the “LLC Agreement”), TPA and Xiao each granted to the Company an unconditional and irrevocable right

and option to purchase from Xiao and TPA at any time within the first 18 months following January 13, 2022, up to 1,200 Class A voting

units, at an exercise price of $550 per Class A voting unit, for a total exercise price of up to $660,000.

If such option is fully exercised,

the Company would own 3,600 Equity Units or 60% of the total outstanding Equity Units.

As of the date of this report, the Company had

not exercised the option to purchase additional voting units from Xiao and TPA.

The LLC Agreement prohibits the issuance of additional

Equity Units and certain other actions unless approved in advance by the Company.

In January 2023, TPA and Xiao transferred their 60%

equity units to a third party without consideration as the LLC was still in the development stage and did not have significant operations.

The transfer of equity did not have any impact on the LLC’s financial statements.

As a result, the Company owns 40 % of the equity

interest in Box Harmony with significant influence but does not own a majority equity interest or otherwise control of Box Harmony.

Company accounts for its ownership interest in Box Harmony following the equity method of accounting, in accordance with ASC 323, Investments

—Equity Method and Joint Ventures.

Under this method, the carrying cost is initially recorded at cost and then increased or decreased

by recording its percentage of gain or loss in its statement of operations and a corresponding charge or credit to the carrying value

of the asset.

As of December 31, 2025 and June 30, 2025, the carrying value of the investment in Box Harmony was $ 13,264 and $ 13,264 ,

respectively.

Global Social Media, LLC

On February 10, 2022, the Company entered into a joint

venture agreement with Bro Angel, LLC, Ji Shin and Bing Luo (the “GSM Joint Venture Agreement”).

Pursuant to the terms of

the GSM Joint Venture Agreement, the parties formed a Nevada limited liability company, Global Social Media, LLC (“GSM”),

On February 10, 2022, the Company entered into

a joint venture agreement with Bro Angel, LLC, Ji Shin and Bing Luo (the “GSM Joint Venture Agreement”).

Pursuant to the terms

of the GSM Joint Venture Agreement, the parties formed a Nevada limited liability company, Global Social Media, LLC (“GSM”),

for the principal purpose of providing a social media platform, contents and services to assist businesses, including the Company and

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creating a noncontrolling right that would not be substantive to overcome the majority voting interests held by the Company.

As of the date of this report, the members had not

completed the capital contributions and no receivables were recorded.

Pursuant to the terms of the Agreements, the

Company owns 60 %

of the equity interest in GSM and control of GSM’s operations.

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

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

For the three months ended September 30, 2025

and 2024, the impact of GSM’s activities were immaterial to the Company’s unaudited condensed consolidated financial

As of the date of this report, the

members had not completed the capital contributions and no receivables were recorded.

Pursuant to the terms of the Agreements, the Company

owns 60 % of the equity interest in GSM and control of GSM’s operations.

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

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

For the six months ended December 31, 2025

and 2024, the impact of GSM’s activities were immaterial to the Company’s unaudited condensed consolidated financial statements.

United Package NV, LLC

On June 3, 2025, the Company, Custom Cup

Factory, Inc., a California corporation (“CCF”), and Yi Yang (“Yang”) entered into the Limited Liability

Company Operating Agreement (the “Operating Agreement”) of United Package NV, LLC, a Nevada limited liability

corporation (“United Package”).

United Package focuses on the domestic

production of packaging materials to serve the rapidly growing demands of U.S.

businesses seeking reliable, sustainable, and

cost-effective supply chain solutions without reliance on offshore manufacturing.

Pursuant to the terms of the Operating Agreement,

the Company owns 2,280 Class A Voting Units (as defined in the Operating Agreement) of United Package in consideration for the

Company’s contribution of equipment and facility, Yang owns 1,140 Class A Voting Units of the Joint Venture in consideration

for Yang’s commitment to manage the business of United Package and CCF owns 1,710 Class A Voting Units of United Package in

consideration for CCF’s contribution of its marketing expertise, existing sales channel and customer list.

On June 3, 2025, the Company, Custom Cup Factory,

Inc., a California corporation (“CCF”), and Yi Yang (“Yang”) entered into the Limited Liability Company Operating

Agreement (the “Operating Agreement”) of United Package NV, LLC, a Nevada limited liability corporation (“United Package”).

United Package focuses on the domestic production

of packaging materials to serve the rapidly growing demands of U.S.

businesses seeking reliable, sustainable, and cost-effective supply

chain solutions without reliance on offshore manufacturing.

Pursuant to the terms of the Operating Agreement, the Company owns 2,280 Class

A Voting Units (as defined in the Operating Agreement) of United Package in consideration for the Company’s contribution of equipment

and facility, Yang owns 1,140 Class A Voting Units of the Joint Venture in consideration for Yang’s commitment to manage the business

of United Package and CCF owns 1,710 Class A Voting Units of United Package in consideration for CCF’s contribution of its marketing

expertise, existing sales channel and customer list.

As a result, the Company owns approximately 44 %

of the equity interest in United Package with significant influence but does not own a majority equity interest or otherwise control

of United Package.

of the equity interest in United Package with significant influence but does not own a majority equity interest or otherwise control of

United Package.

The Company accounts for its ownership interest in United Package following the equity method of accounting, in accordance

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or credit to the carrying value of the asset.

As of September 30, 2025 and June 30, 2025, the Company had invested total of $ 665,443

and $ 371,917 to United Package, respectively.

As of December 31, 2025 and June 30, 2025, the Company had invested total of $ 665,443 and

$ 371,917 to United Package, respectively.

Note 4 – Variable Interest Entity

Effective February 15, 2022, upon acquisition of Anivia,

the Company assumed the contractual arrangements between the WFOE and DHS through a variable interest operating entity structure.

26, 2024, Mr.

Effective February 15, 2022, upon acquisition

of Anivia, the Company assumed the contractual arrangements between the WFOE and DHS through a variable interest operating entity structure.

On September 26, 2024, Mr.

Zanyu Li, the equity owner of DHS, transferred his shares to Ms.

Liu has become the Manager and Legal Representative

of DHS and assumed all responsibilities and obligations of Mr.

The transfer of equity ownership did not change the control the

Company had on the VIE, therefore there was no impact on the Company’s financial statements.

The Company did not provide financial or other support

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

On August 4, 2025, the Company entered into

a VIE Contract Termination Agreement with the VIE, pursuant to which all VIE agreements were

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

Liu has become the Manager

and Legal Representative of DHS and assumed all responsibilities and obligations of Mr.

The transfer of equity ownership did

not change the control the Company had on the VIE, therefore there was no impact on the Company’s financial statements.

The Company did not provide financial or other

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

On August 4, 2025, the Company entered into a

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

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

Comparative information for the prior period has not

been adjusted, as the deconsolidation does not represent a discontinued operation under ASC 205-20.

Comparative information for the prior period has

not been adjusted, as the deconsolidation does not represent a discontinued operation under ASC 205-20.

As of June 30, 2025, there was no pledge or collateralization of the VIE assets that would be used to settle obligations of the VIE.

The following table summarizes the carrying amounts

of the VIE’s assets and liabilities derecognized as of August 4, 2025 and the carrying amount of the VIE’s assets and liabilities

as of June 30, 2025:

The following

table summarizes the carrying amounts of the VIE’s assets and liabilities derecognized as of August 4, 2025 and the carrying amount

of the VIE’s assets and liabilities as of June 30, 2025:

Schedule of VIE’s assets and liabilities

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Other payables and accrued liabilities

Upon deconsolidation, the Company recorded $ 39,624 loss on deconsolidation of VIE.

The operating results of the VIE were as follows for

the three months ended September 30, 2025 and 2024:

Upon deconsolidation, the Company recorded a

loss on deconsolidation of VIE.

The operating results of the VIE were as follows

for the six months ended December 31, 2025 and 2024:

Schedule of operating results of the VIE

For the three months ended

September 30, 2025

September 30, 2024

For the six months ended

December 31, 2025

December 31, 2024

Net income (loss) after elimination of intercompany transactions

$ ( 184,218 )

Note 5 – Accounts Receivable

Accounts receivable for the Company consisted of the

following as of the dates indicated below:

Accounts receivable for the Company consisted

of the following as of the dates indicated below:

Schedule of accounts receivable

September 30, 2025

December 31, 2025

June 30, 2025

4 unchanged sentences

Total accounts receivable

The changes in allowance for credit losses on accounts

receivable are summarized below:

The changes in allowance for credit losses on

accounts receivable are summarized below:

Schedule of changes in allowance for credit losses on accounts receivable

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Balance at September 30, 2025

Balance at June 30, 2025

Allowance recorded during the three months ended September 30, 2025

Balance at September 30, 2025

Allowance recorded during the three months ended December 31, 2025

Balance at December 31, 2025

Note 6 – Inventories

As of September 30, 2025 and June 30, 2025, inventories

As of December 31, 2025 and June 30, 2025, inventories

consisting of finished goods ready for sale, net of allowance for obsolescence, amounted to $ 3,611,859 and $ 8,131,203 , respectively.

For the three months ended September 30, 2025 and

For the three and six months ended December 31,

2025, the Company recorded inventory reserve expense of $ 0 and $ 58,453 , respectively.

As of September 30, 2025 and June 30, 2025,

allowance for obsolescence was $ 370,921 and $ 312,468 , respectively.

For the three and six months ended December 31,

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

As of December 31, 2025 and June 30, 2025, allowance

for obsolescence was $ 370,921 and $ 312,468 , respectively.

Note 7 – Prepayments and Other Current Assets

As of September 30, 2025 and June 30, 2025, prepayments and other current

As of December 31, 2025 and June 30, 2025, prepayments and other current

assets consisted of the following:

Schedule of prepayments and other current assets

September 30, 2025

December 31, 2025

June 30, 2025

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Other receivables consisted of delivery fees of

and $ 18,699 from a third party for using the Company’s

courier accounts at September 30, 2025 and June 30, 2025, respectively.

$ 29,691 and $ 18,699 from a third party for using the Company’s courier accounts at December 31, 2025 and June 30, 2025, respectively.

Note 8 - Digital Assets

On December 27, 2025, the Company purchased (1)

15 .12 Bitcoin (BTC) at an average price of $87,686.33 per BTC, for a total amount of approximately $ 1,325,400 and (2) 301 .10 Ethereum

(ETH) at an average price of $2,934.67 per ETH, for a total amount of approximately $ 883,600 .

Pursuant to a Security and Pledge Agreement

(the “Security Agreement”) by and among the Company, each of the direct and indirect Subsidiaries (as defined in the Security

Agreement) of the Company (the “Guarantors”), and an entity that is an affiliate of the Convertible Note Investor, the Company

granted to the Investor, for the ratable benefit of the Investor, a valid, perfected and enforceable first priority security interest

in the cryptocurrency assets of the Company and the Guarantors, including without limitation all Crypto Collateral (as defined in the

Security Agreement) and related assets.

The following table provides a roll-forward of

digital assets measured at fair value on a recurring basis for the six months ended December 31, 2025:

Schedule of digital assets measured at fair value on a recurring basis

Balance as of June 30, 2025

Purchase of BTC

Purchase of ETH

Change in fair value of BTC

Change in fair value of ETH

Balance as of December 31, 2025

During the three and six months ended December

31, 2025, the Company recognized a net unrealized gain of $ 5,759 on its digital asset holdings, consisting of an unrealized loss of $ 4,017

related to BTC and an unrealized gain of $ 9,776 related to ETH.

Digital assets consisted of the following at

December 31, 2025:

Schedule of digital assets

December 31, 2025

Digital assets held:

Note 9 – Intangible Assets

As of September 30, 2025 and June 30, 2025, intangible

As of December 31, 2025 and June 30, 2025, intangible

assets, net, consisted of the following:

Schedule of intangible assets, net

September 30, 2025

December 31, 2025

June 30, 2025

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15, 2022 through acquisition of Anivia.

The weighted average remaining life for finite-lived intangible assets at September 30, 2025 was approximately

The amortization expense for the three months ended September 30, 2025 and 2024 was $ 162,343 and $ 162,343 , respectively.

September 30, 2025, finite-lived intangible assets are expected to be amortized over their estimated useful lives, which ranges from a

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

The weighted average remaining life for finite-lived intangible assets at December 31, 2025 was

approximately 4.7 years.

The amortization expense for the three and six months ended December 31, 2025 was $ 162,343 and $ 324,686 , respectively.

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

At December 31,

2025, finite-lived intangible assets are expected to be amortized over their estimated useful lives, which ranges from a period of five

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

Schedule of amortization expense

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Note 10 – Other Payables and Accrued Liabilities

As of September 30, 2025 and June 30, 2025, other payables and accrued

As of December 31, 2025 and June 30, 2025, other payables and accrued

liabilities consisted of the following:

Schedule of other payables and accrued liabilities

September 30, 2025

December 31, 2025

June 30, 2025

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Note 11 – Loans Payable

Long-term Convertible Notes

On December 22, 2025, the Company entered

into a Securities Purchase Agreement (the “SPA”) with an accredited investor (the “Investor”), providing for

a convertible note facility in the aggregate original principal amount of up to $ 30,000,000

(the “Convertible Note Facility”).

At the initial closing on December 23, 2025, the Investor purchased (i) a Series A

Senior Secured Convertible Promissory Note in the original principal amount of $ 5,184,024

(the “Series A Note”), issued in a private placement under Rule 506(b) of Regulation D, and (ii) a Series B Senior

Secured Convertible Promissory Note in the original principal amount of $ 1,815,976

(the “Series B Note,” together with the Series A Note, the “Convertible Notes”), issued in a registered

direct offering pursuant to the Company’s effective shelf registration statement on Form S-3.

The total original principal amount of the

Convertible Notes issued at the initial closing was $ 7,000,000 .

Pursuant to the SPA, the parties will close on an additional Series A Convertible Note of approximately $ 2,000,000

(the “Additional Series A Notes”), to be issued upon the effectiveness of a resale registration statement, bringing the

total funded amount to $ 9,000,000 .

The Notes were issued at a 6% original issue discount

(“OID”), resulting in gross cash proceeds to the Company of $ 6,580,000 .

After deducting placement agent fees of $ 394,800 and

legal and other transaction expenses of $ 150,000 , the Company received net proceeds of $ 6,035,200 .

The Convertible Notes bear interest at a rate

of 10 % per annum (increasing to 17% per annum upon the occurrence and during the continuance of an Event of Default), with interest payable

monthly on the first Trading Day of each calendar month commencing January 1, 2026, in shares valued at the Alternate Conversion Price

or, at the Company’s election, in cash.

The Convertible Notes mature on December 23, 2027 .

The Convertible Notes are convertible into shares

of Common Stock at a fixed Conversion Price of $17.70 per share, subject to adjustment.

The holder may elect to convert at an Alternate

Conversion Price equal to the lower of (i) the Conversion Price or (ii) the greater of the Floor Price or 95% of the lowest daily VWAP

during the seven consecutive Trading Days preceding conversion.

During an Event of Default, the Alternate Conversion Price becomes the

lower of (i) the Conversion Price or (ii) the greater of the Floor Price or 90% of the lowest daily VWAP during the ten consecutive Trading

Days preceding conversion.

The Floor Price is $2.27 per share, subject to downward adjustment every six months to the lower of the then-current

Floor Price or 20% of the trading price.

On March 23, 2026, the Conversion Price automatically resets to $14.16 if then above such level.

The holder is subject to a 4.99% Beneficial Ownership Cap on outstanding Common Stock, which may be increased to 9.99% upon 61 days’

The Convertible Notes contain the following redemption

(i) upon an Event of Default, the holder may require redemption at 115% of the outstanding Conversion Amount;

(ii) upon a Change

of Control, the holder may require redemption at 110% of the Conversion Amount;

(iii) upon a subsequent equity financing, the holder may

require redemption of up to 20% of net proceeds at 110%;

(iv) upon certain asset sales (only if Crypto Collateral Value falls below 150%

of outstanding principal), the holder may require redemption of up to 20% of net proceeds at 110%;

and (v) the Company may optionally

redeem at 110% of the Conversion Amount (or 115% during an Event of Default period).

The Convertible Notes also contain a modified full-ratchet

anti-dilution provision whereby if the Company issues shares below the then-effective Conversion Price (other than Excluded Securities),

the Conversion Price is automatically reduced to 115% of the new issuance price.

The Convertible Notes are senior secured obligations

of the Company, collateralized by all cryptocurrency digital assets of the Company and certain of its subsidiaries pursuant to a Security

and Pledge Agreement.

The Convertible Notes are guaranteed by all subsidiaries of the Company.

In connection with the issuance of the Convertible

Notes, the Company entered into (i) a Security and Pledge Agreement, dated December 22, 2025, granting the Investor a first priority security

interest in the cryptocurrency digital assets of the Company and its subsidiaries;

(ii) a Guaranty, dated December 23, 2025, pursuant to

which all subsidiaries of the Company jointly and severally guarantee the Company’s obligations under the Convertible Notes;

(iii) a Registration Rights Agreement, dated December 23, 2025, requiring the Company to file a registration statement within 30 days of

issuance to register the resale of Series A Conversion Shares and cause such registration statement to be declared effective within 60

days, with liquidated damages of 1.5% of the holder’s original principal amount payable upon failure to meet these deadlines.

Accounting and Fair Value Measurement for Embedded

Derivative Liability

The Company evaluated the embedded features within

the convertible note in accordance with ASC Topic 480 and ASC Topic 815.

The Company determined that the following embedded features constitute

a compound derivative liability requiring bifurcation from the debt host:

(i) the Conversion Option, which includes multiple pricing mechanisms

(fixed conversion at $17.70, Alternate Conversion Price based on 95% of lowest 7-day VWAP, Event of Default Conversion Price based on

90% of lowest 10-day VWAP, the Floor Price, the March 2026 reset, and anti-dilution adjustments);

(ii) Interest Payment in Shares at the

Alternate Conversion Price;

and (iii) cash-settled put options arising from various redemption features (Event of Default at 115% premium,

Change of Control at 110% premium, Subsequent Placement at 110% premium, and Asset Sale at 110% premium).

These features are not clearly and closely related

to the debt host, meet the definition of a derivative, and do not qualify for the derivative accounting exemptions.

Accordingly, the embedded

features were bifurcated as a single compound derivative liability measured at fair value, with subsequent changes in fair value recognized

in the condensed consolidated statements of operations.

The initial fair value of the compound embedded

derivative liability was determined using a Monte Carlo Simulation valuation model, considering various potential outcomes and scenarios.

The model used the following assumptions:

(i) dividend yield of 0%;

(ii) expected volatility of 141.41%;

(iii) risk-free interest rate

(iv) term of 2.0 years;

(v) fair value of the common shares of $10.46 per share;

and (vi) various probability assumptions.

At December 31, 2025, the Company remeasured the

derivative liability using updated assumptions:

(i) dividend yield of 0%;

(ii) expected volatility of 140.88%;

(iii) risk-free interest

rate of 3.47%;

(iv) remaining term of 1.98 years;

(v) fair value of the common shares of $7.48 per share;

and (vi) various probability

Subsequent changes in fair value are recognized

in the statement of operations for each reporting period.

The issuance costs for the Convertible Notes, along with the fair value of the

bifurcated embedded derivative liability, were collectively treated as a debt discount.

Upon initial recognition, the total debt discount

was $ 2,577,500 , consisting of the fair value of the bifurcated derivative liability of $ 1,612,700 , the original issue discount of $ 420,000 ,

and debt issuance costs of $ 544,800 .

The debt discount is being amortized to interest expense over the two-year term using the effective

interest method at an effective rate of approximately 23.2%.

During the period ended December 31, 2025, the

holder converted an aggregate of $ 100,000 in principal of the Series B Note into 10,948 shares of Common Stock.

The conversions were effected

at the Alternate Conversion Price on the respective conversion dates.

The Company accounted for each conversion as a partial extinguishment

of the debt host and related embedded derivative liability, resulting in a loss on extinguishment of $ 24,100 , representing the excess

of the fair value of shares issued over the carrying amounts derecognized.

As of December 31, 2025, the remaining

outstanding principal balance of the Convertible Notes was $ 6,900,000 ,

consisting of $ 5,184,024

under the Series A Note and $ 1,715,976

under the Series B Note.

The remaining unamortized debt discount balance was $ 2,518,469 ,

for a net carrying amount of $ 4,381,531 .

Interest expense, including amortization of debt discount, recognized on the Convertible Notes during the three and six months ended

December 31, 2025, was $ 37,787 .

Long-term loan

Asset-based revolving loan

On November 12, 2021, the Company entered into a Credit

Agreement with JPMorgan Chase Bank, N.A.

(“JPMorgan”), as administrative agent, issuing bank and swingline lender, for an

asset-based revolving loan (“ABL”) of up to $25 million with key terms listed as follows:

On November 12, 2021, the Company entered into

a Credit Agreement with JPMorgan Chase Bank, N.A.

(“JPMorgan”), as administrative agent, issuing bank and swingline lender,

for an asset-based revolving loan (“ABL”) of up to $25 million with key terms listed as follows:

Borrowing base equal to the sum of

5 unchanged sentences

Maturity Date of November 12, 2024

In addition, the ABL includes an accordion feature

In addition, the ABL included an accordion feature

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

7 unchanged sentences

Below is a summary of the interest expense recorded

for the three months ended September 30, 2025 and 2024:

for the three and six months ended December 31, 2025 and 2024:

Schedule of interest expense

Three Months Ended December 31,

Six Months Ended December 31,

Accrued interest

4 unchanged sentences

65% of its ownership interest in Anivia Limited and its subsidiaries.

On October 7, 2022, the Company entered into a second

amendment to the credit agreement and consent (the “Second Amendment to the Credit Agreement”), originally dated November

On October 7, 2022, the Company entered into a

second amendment to the credit agreement and consent (the “Second Amendment to the Credit Agreement”), originally dated November

12, 2021, as amended, with JPMorgan.

The Company entered into the Second Amendment to the Credit Agreement primarily for the purpose

of changing the interest rate repayment calculations from LIBOR to the Secured Overnight Financing Rate, or SOFR, which adjustment had

originally been anticipated under the terms of the original Credit Agreement.

In addition, two of the negative covenants set forth in

the original Credit Agreement were amended in order to (i) adjust the definition of “Covenant Testing Trigger Period” to

increase the required cash availability from $3,000,000 to $4,000,000, or 10% of the aggregate revolving commitment for the preceding

30 days, and (ii) require that the Company will not and will not permit any of its subsidiaries, after reasonable due diligence and due

inquiry, to knowingly sell their products, inventory or services directly to any commercial businesses that grows or cultivates cannabis;

it being acknowledged, however, that the Company does not generally conduct due diligence on its individual retail customers.

The Company entered into the Second Amendment to the Credit Agreement primarily for the purpose of

changing the interest rate repayment calculations from LIBOR to the Secured Overnight Financing Rate, or SOFR, which adjustment had originally

been anticipated under the terms of the original Credit Agreement.

In addition, two of the negative covenants set forth in the original

Credit Agreement were amended in order to (i) adjust the definition of “Covenant Testing Trigger Period” to increase the required

cash availability from $3,000,000 to $4,000,000, or 10% of the aggregate revolving commitment for the preceding 30 days, and (ii) require

that the Company will not and will not permit any of its subsidiaries, after reasonable due diligence and due inquiry, to knowingly sell

their products, inventory or services directly to any commercial businesses that grows or cultivates cannabis;

it being acknowledged,

however, that the Company does not generally conduct due diligence on its individual retail customers.

On November 8, 2024, the Company entered into

6 unchanged sentences

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

As of September 30, 2025 and June 30, 2025, the

On December 7, 2025, the Company repaid in full

the outstanding amount resulting in the termination of the ABL.

As of December 31, 2025 and June 30, 2025, the

outstanding amount of the ABL, which was classified as current revolving loan payable, including interest payable, was $ 0 and $ 3,737,602 ,

respectively.

As of September 30, 2025, the Company was in default

as a result of covenant violations under the ABL facility.

Short-term loan payable

On April 8, 2024, the Company entered into an agreement

with an unrelated accredited investor (the “Investor”) for an on-demand, unsecured and subordinated loan (“On-demand

On April 8, 2024, the Company entered into an

agreement with an unrelated accredited investor (the “Investor”) for an on-demand, unsecured and subordinated loan (“On-demand

Pursuant to the agreement, the Investor agreed to loan the Company the amount requested.

3 unchanged sentences

of the Investor’s notice of repayment.

For the three months ended September 30, 2024, the Company recorded interest expense of

As of September 30, 2025 and June 30, 2025, the On-demand Loan 2 had been fully paid off.

For the three and six months ended December 31, 2024, the Company recorded interest expense

of $ 0 and $ 3,733 , respectively.

As of December 31, 2025 and June 30, 2025, the On-demand Loan 2 had been fully paid off.

On July 9, 2025, the Company borrowed $ 500,000

as a short-term loan (“RP Loan 2”) from an entity owned by Mr.

Allan Huang, one of the majority shareholders of the

Allan Huang, one of the majority shareholders of the Company.

The RP Loan 2 bears no interest and is due upon receipt of request of repayment.

As of September 30, 2025, the outstanding

balance of the RP Loan was $ 500,000 .

As of December 31, 2025, the outstanding balance of the

RP Loan was $ 500,000 .

On November 24, 2025, the Company issued three promissory notes totaling

$ 2 million (the “Promissory Notes”) in exchange for gross proceeds of $ 2 million.

The Promissory Notes were entered into with

certain investors and related parties, including an entity controlled by the Company’s CEO, Chenlong Tan.

The Promissory Notes bear

6.5% interest per annum and are repayable upon the earlier of 90 days or the Company’s entry into new financing arrangements.

funds received in connection with the Company’s issuance of the Promissory Notes was used to pay off the Company’s existing

ABL with JPMorgan Chase Bank, N.A.

(“JPMorgan”).

Note 12 - Related Party Transactions

2 unchanged sentences

Allan Huang, one of the majority shareholders of the Company.

See Note 10 above for

See Note 11 above for details.

On November 24, 2025, the Company issued a Promissory Note in exchange

for gross proceeds of $ 550,000 to an entity controlled by the Company’s CEO, Chenlong Tan.

See Note 11 above for details.

On June 3, 2025, the Company, Custom Cup Factory,

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In addition, Ms.

Yang’s entity,

(“Pacelor”), manages a warehouse and provides fulfillment services for the Company and receives a monthly

service fee, which fluctuates from month to month.

Yang’s entity, Pacelor

(“Pacelor”), manages a warehouse and provides fulfillment services for the Company and receives a monthly service fee,

which fluctuates from month to month.

Yang is the Founder and Chief Executive Officer of Pacelor.

Pacelor has become a related party of the Company since June 6, 2025.

For the three months ended September 30, 2025, the Company

received $ 435,155

service from Pacelor.

As of September 30, 2025 and June 30, 2025, the (prepayment) accounts payable to Pacelor was $( 66,014 )

and $ 78,831 ,

respectively.

As a result, Pacelor has become

a related party of the Company since June 6, 2025.

For the three and six months ended December 31, 2025, the Company received $ 821,402

and $ 1,267,918 service from Pacelor.

As of December 31, 2025 and June 30, 2025, the (prepayment) accounts payable to Pacelor was $( 565,716 )

and $ 78,831 , respectively.

Yang’s other entity, Pacelor NV Inc.

(“Pacelor NV”) also provides marketing services for the

As of September 30, 2025 and June 30, 2025, the outstanding accounts payable to Pacelor NV was $ 315,019

and $ 315,019 ,

(“Pacelor NV”) also provides marketing services

for the Company.

As of December 31, 2025 and June 30, 2025, the outstanding accounts payable to Pacelor NV was $ 315,019 and $ 315,019 ,

respectively.

Note 13 – Income Taxes

In addition to corporate income taxes in the

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

People’s Republic of China (“PRC”).

Anivia and its subsidiaries are subject to BVI or Hong Kong income taxes but

did not have any operations in those jurisdictions for the year ended June 30, 2022.

The Company’s

subsidiary in China, Dayourenzai (Shenzhen) Technology Co., Ltd.

(“WFOE”), is subject to the Global Intangible Low-Taxed

Income (or GILTI) Tax.

WFOE is subject to 5% tax rate in PRC until December 31, 2027.

Since WFOE had losses during the three months

ended September 30, 2025 and 2024 and the year ended June 30, 2025, no GILTI tax was recorded as of September 30, 2025 and June 30,

In addition to corporate income taxes in the United

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

Republic of China (“PRC”).

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

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

The Company’s subsidiary in China, Dayourenzai (Shenzhen) Technology Co.,

(“WFOE”), is subject to the Global Intangible Low-Taxed Income (or GILTI) Tax.

WFOE is subject to 5% tax rate in PRC

until December 31, 2027.

Since WFOE had losses during the six months ended December 31, 2025 and 2024 and the year ended June 30, 2025,

no GILTI tax was recorded as of December 31, 2025 and June 30, 2025.

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

In addition, as a result of the acquisition, the Company

recognized goodwill in the amount of $ 6,094,144 .

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

For the three months ended September 30, 2025, as

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

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

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

The income tax provision for the three months ended

September 30, 2025 and 2024 consisted of the following:

addition, as a result of the acquisition, the Company recognized goodwill in the amount of $ 3,034,110 .

Since the acquisition was a stock

acquisition, the goodwill is not deductible for tax purposes.

For the three and six months ended December 31,

2025, as a result of the Company’s inability to establish a reliable estimate for annual effective tax rate, the Company calculated

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

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

The income tax provision for the three and six

months ended December 31, 2025 and 2024 consisted of the following:

Schedule of income tax provision

September 30, 2025

September 30, 2024

Three Months Ended December 31,

Six Months Ended December 31,

Total current income tax provision

Total deferred taxes

( 1,308,178 )

Total provision for income taxes

1 unchanged sentence

$ ( 1,284,092 )

$ ( 516,001 )

The Company is subject to U.S.

federal income tax

as well as state income tax in certain jurisdictions.

The tax years 2020 to 2024 remain open to examination by the major taxing jurisdictions

to which the Company is subject.

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

statutory rates:

federal income

tax as well as state income tax in certain jurisdictions.

The tax years 2020 to 2024 remain open to examination by the major taxing

jurisdictions to which the Company is subject.

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

tax at the calculated statutory rates:

Schedule of reconciliation of effective income tax rate

September 30, 2025

September 30, 2024

December 31, 2025

December 31, 2024

Statutory tax rate

4 unchanged sentences

Effective tax rate

As of September 30, 2025, prepaid income taxes

to US tax authorities was $ 11,499 .

As of June 30, 2025, prepaid income taxes to US tax authorities and income tax payable to Chinese tax authorities was $ 19,073

and $ 280,155 ,

respectively.

The tax effects of temporary differences which give

rise to significant portions of the deferred taxes are summarized as follows:

As of December 31, 2025, income tax payable to

US tax authorities was $ 3,512 .

As of June 30, 2025, prepaid income taxes to US tax authorities and income tax payable to Chinese tax

authorities was $ 19,073 and $ 280,155 , respectively.

The tax effects of temporary differences which

give rise to significant portions of the deferred taxes are summarized as follows:

Schedule of deferred taxes

September 30, 2025

December 31, 2025

June 30, 2025

16 unchanged sentences

Note 14 – Earnings Per Share

The following table sets forth the computation of basic and diluted earnings

per share for the periods presented:

The following table sets forth the computation of basic and diluted

earnings per share for the periods presented:

Schedule of computation of basic and diluted earnings per share

For the three months ended

September 30,

Three Months Ended

Six Months Ended

Net loss attributable to iPower Inc.

1 unchanged sentence

$ ( 1,726,929 )

$ ( 1,810,462 )

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

Losses per share of ordinary shares - basic and diluted

Due to the anti-dilutive effect, the computation of basic and diluted EPS did not include the shares underlying the exercise of warrants, options, and unvested RSUs as the Company had a net loss for the three months ended September 30, 2025 and 2024.

For the three months ended September 30, 2025 and 2024, 4,166 and 71,343 vested but unissued shares of restricted stock units under the 2020 Equity Incentive Plan (as discussed in Note 14) are considered issued shares and therefore are included in the computation of basic losses per share when the shares are fully vested.

Earnings (losses) per share of ordinary shares - basic and diluted

For the three and six months ended December 31, 2025, 81,676 and 82,217 vested but unissued shares of restricted stock units under the 2020 Equity Incentive Plan (as discussed in Note 15) are considered issued shares and therefore are included in the computation of basic losses per share when the shares are fully vested.

For the three and six months ended December

31, 2024, 2,974 and 3,579 vested but unissued shares of restricted stock units under the 2020 Equity Incentive Plan (as discussed in

Note 15) are considered issued shares and therefore are included in the computation of basic losses per share when the shares are fully

Note 15 – Equity

As of September 30, 2025, the total authorized shares

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

As of December 31, 2025, the total authorized

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

shares of preferred stock (the “Preferred Stock”), each with a par value of $ 0.001 per share.

The holders of Common Stock shall be entitled to one

vote per share in voting to the election of directors and all other corporate purposes.

The holders of Common Stock shall be entitled

to one vote per share in voting to the election of directors and all other corporate purposes.

Subject to the express terms of any outstanding

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

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

issued and outstanding.

On October 27, 2025, the Company effectuated the 1-for-30

Reverse Stock Split.

When the Reverse Stock Split becomes effective, every thirty (30) shares of the Company’s issued and outstanding

Common Stock immediately prior to the Effective Time will automatically be reclassified into one (1) share of Common Stock, without any

change in the par value per share.

The Reverse Stock Split did not change the total number of authorized shares of Common Stock or preferred

As a result, unless otherwise indicated, all references to common stock, restricted stock units, warrants and options to purchase

common stock, share data, per-share data, and related information have been retroactively adjusted, where applicable in the unaudited

condensed consolidated financial statements and notes, to reflect the 1-for-30 reverse stock split of the Company’s common stock

as if the split had occurred at the beginning of the earliest period presented.

During the three months ended September 30,

2025, the Company issued 4,460

shares of restricted Common Stock for RSUs vested.

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

then issued and outstanding.

On October 27, 2025, the Company effectuated the

1-for-30 Reverse Stock Split.

When the Reverse Stock Split became effective, every thirty (30) shares of the Company’s issued and

outstanding Common Stock immediately prior to the Effective Time automatically reclassified into one (1) share of Common Stock, without

any change in the par value per share.

The Reverse Stock Split did not change the total number of authorized shares of Common Stock or

preferred stock.

As a result, unless otherwise indicated, all references to common stock, restricted stock units, warrants and options

to purchase common stock, share data, per-share data, and related information have been retroactively adjusted, where applicable in the

unaudited condensed consolidated financial statements and notes, to reflect the 1-for-30 reverse stock split of the Company’s common

stock as if the split had occurred at the beginning of the earliest period presented.

During the six months ended December 31, 2025,

the Company issued 4,460 shares of restricted Common Stock for RSUs vested.

On June 18, 2024, the Company closed on a registered

direct offering (the “Registered Direct”) of 69,445 shares of common stock (the “Shares”) and a concurrent

private placement (“Private Placement,” and together with the Registered Direct, the “Offering”) of warrants (the

“Warrants”) to purchase 69,445 shares of common stock (the “Warrant Shares”), which were sold for gross aggregate

proceeds of $ 5,000,002 .

The Shares were sold pursuant to a prospectus supplement, filed on June 18, 2024, to the Registration Statement

on Form S-3, originally filed on September 25, 2023, with the SEC (File No.

direct offering (the “Registered Direct”) of 69,445 shares of common stock (the “Shares”) and a concurrent private

placement (“Private Placement,” and together with the Registered Direct, the “Offering”) of warrants (the “Warrants”)

to purchase 69,445 shares of common stock (the “Warrant Shares”), which were sold for gross aggregate proceeds of $ 5,000,002 .

The Shares were sold pursuant to a prospectus supplement, filed on June 18, 2024, to the Registration Statement on Form S-3, originally

filed on September 25, 2023, with the SEC (File No.

333-274665) and declared effective by the SEC on September 29, 2023.

The Warrants, which were issued pursuant to an exemption from registration pursuant to Section 4(a)(2) or Regulation D on the

Securities Act, have a term of five years and are immediately exercisable at $ 72.0 per share.

The Shares and Warrants were sold to a purchaser

pursuant to a securities purchase agreement, dated June 16, 2024, between the Company and the purchaser (the “Purchase Agreement”).

Roth Capital Partners, LLC (the “Placement Agent”) acted as placement agent, pursuant to a placement agency agreement between

the Company and the Placement Agent dated June 16, 2024 (the “Placement Agency Agreement”).

The Company paid the Placement

Agent as compensation a cash fee equal to 6.5% of the gross proceeds of the Offering plus reimbursement of certain expenses and legal

The net proceeds of the Offering, after deducting $ 456,913 , the Placement Agent’s fees and expenses and other direct offering

costs paid by the Company, was $ 4,543,089 .

The Warrants,

which were issued pursuant to an exemption from registration pursuant to Section 4(a)(2) or Regulation D on the Securities Act, have a

term of five years and are immediately exercisable at $ 72.0 per share.

The Shares and Warrants were sold to a purchaser pursuant to a

securities purchase agreement, dated June 16, 2024, between the Company and the purchaser (the “Purchase Agreement”).

Capital Partners, LLC (the “Placement Agent”) acted as placement agent, pursuant to a placement agency agreement between the

Company and the Placement Agent dated June 16, 2024 (the “Placement Agency Agreement”).

The Company paid the Placement Agent

as compensation a cash fee equal to 6.5% of the gross proceeds of the Offering plus reimbursement of certain expenses and legal fees.

The net proceeds of the Offering, after deducting $ 456,913 , the Placement Agent’s fees and expenses and other direct offering costs

paid by the Company, was $ 4,543,089 .

The Company calculated the fair value of the Warrants

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Stock Price - $ 2.00 (pre-reverse-split price)

Exercise Price - $ 2.40

(pre-reverse-split price)

Exercise Price - $ 2.40 (pre-reverse-split price)

Volatility – 104 %

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Risk Free Rate of Return – 4.24 %

Pursuant to the Warrant agreement, except for some

fundamental transactions within the Company’s control, in no event shall the Company be required to net cash settle the Warrants.

Pursuant to the Warrant agreement, except for

some fundamental transactions within the Company’s control, in no event shall the Company be required to net cash settle the Warrants.

The Company considered and followed the rules and guidelines under ASC 480-10 and ASC 815 and concluded that the Warrants should be classified

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in the gross proceeds and recorded as additional paid-in capital.

As of September 30 and June 30, 2025, none of the warrants had been

On June 18, 2024, in

order to recoup the settlement payment made to Boustead Securities, LLC, the Company’s Chief Executive Officer and co-founder, Lawrence

Tan, along with co-founder Allan Huang, returned a total of 18,056 shares to the Company for cancellation (the “Share Cancellation”).

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

As of September 30, 2025 and June 30, 2025,

there were 1,049,790

and 1,045,330

shares of Common Stock issued and outstanding.

As of December 31 and June 30, 2025, none of the warrants had been exercised.

On June 18, 2024, in order to recoup the settlement

payment made to Boustead Securities, LLC, the Company’s Chief Executive Officer and co-founder, Lawrence Tan, along with co-founder

Allan Huang, returned a total of 18,056 shares to the Company for cancellation (the “Share Cancellation”).

The Share Cancellation

was completed in June 2024 and the par value of $ 542 was reduced against additional paid-in capital.

On December 21, 2025, holders of a majority of

the Company’s outstanding voting power (53.1%) approved (1) the Convertible Note Facility, (2) the issuance of in excess of 20%

of the Company’s outstanding common stock at a price less than the “Minimum Price” under Nasdaq Listing Rule 5635(d),

(3) an increase in authorized shares from 200,000,000 to 1,000,000,000, (4) authorization for the Board to approve one or more reverse

stock splits in the range of 1-for-250 shares, and (5) authorization for the Board to adopt a mirror preferred stock.

During the six months ended December 31, 2025,

the Company issued the following common stock of the Company:

· 10,948 shares in connection with the conversion of a $ 100,000 principal amount of convertible notes at

a weighted-average conversion price of $ 9.13 per share;

· 20,680 shares for services to consultants;

· 42 shares were issued as round-up shares in connection with the reverse stock split that became effective

on October 27, 2025.

As of December 31, 2025 and June 30, 2025, there

were 1,081,460 and 1,045,330 shares of Common Stock issued and outstanding.

Preferred Stock

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and the qualifications, limitations or restrictions thereof.

As of September 30, 2025 and June 30, 2025, respectively, there were no shares

As of December 31, 2025 and June 30, 2025, respectively, there were no shares

of Preferred Stock issued and outstanding.

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Restricted Stock Unit

During the three months ended September 30, 2025

and 2024, the Company granted an additional 1,607

shares of RSUs, respectively.

For the three months ended September 30, 2025 and 2024, the Company recorded $ 10,000

of stock-based compensation expense.

There was no forfeiture of RSUs occurred during the three months ended September 30, 2025 and 2024.

As of September 30, 2025 and June 30, 2025, the unvested number of RSUs was 1,529

and the unamortized expense was $ 28,333

and $ 8,333 ,

respectively.

Information relating to RSU grants is summarized as

For the three months ended September 30, 2025:

On November 12, 2025, the Company granted

in RSUs as bonus to Chenlong Tan, the CEO of the Company.

As a result, 81,136

RSUs, calculated based on the closing price, $ 9.86 ,

on the grant date, were issued to Mr.

The RSUs vested immediately but contained a deferred settlement provision.

settlement of the vested RSUs shall occur on the earliest of the following Code Section 409A-permitted payment events:

(1) change of

control of the Company that qualifies as a “change in control event” as defined under Code Section 409A;

(2) Reporting

Person’s separation from service (subject to any required delay under the Amended and Restated 2020 Equity Incentive Plan;

upon the Reporting Person’s death or disability, or (4) in the event of an “unforeseeable financial emergency,” as

defined under Code Section 409A.

During the six months ended December 31, 2025 and 2024, the Company

granted an additional 1,607 and 2,381 shares of RSUs to the Company’s directors, respectively.

For the three and six months ended December 31,

2025, the Company recorded stock-based compensation expense of $ 810,000 and $ 820,000 , respectively, related to the vesting of RSUs.

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

was no forfeiture of RSUs occurred during the six months ended December 31, 2025 and 2024.

As of December 31, 2025 and June 30, 2025,

the unvested number of RSUs was 989 and 463 and the unamortized expense was $ 18,333 and $ 8,333 , respectively.

Information relating to RSU grants is summarized

For the six months ended December 31, 2025:

Schedule of RSU activity

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RSUs forfeited

RSUs granted, but not vested, at September 30, 2025

RSUs granted, but not vested, at December 31, 2025

_____________________

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

As of September 30, 2025, of the 14,128

vested RSUs, 13,989

shares of Common Stock were issued, and 139

shares were to be issued in the near future.

As of June 30, 2025, of the 13,587 vested RSUs, 9,529 shares of Common Stock were issued, and 4,058 shares were to be issued in the near future.

For the three months ended September 30, 2024:

As of December 31, 2025, of 95,804 vested RSUs,

13,989 shares of Common Stock were issued, and 81,815 shares were to be issued in the future.

As of June 30, 2025, of the 13,587 vested

RSUs, 9,529 shares of Common Stock were issued, and 4,058 shares were to be issued in the near future.

For the six months ended December 31, 2024:

Total RSUs Issued

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RSUs forfeited

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

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

____________________

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

As of September 30, 2024, of the 11,908 vested RSUs, 9,529 shares

of Common Stock were issued, and 2,379 shares were to be issued in the near future.

On May 12, 2022, the Compensation Committee of the

Board of Directors approved an incentive plan for the Company’s executive officers consisting of a cash performance bonus of $ 60,000

to be awarded to Kevin Vassily, CFO of the Company, and grants of stock option (the “Option Grants”) exercisable to purchase

(i) 100,000 shares of Common Stock to Chenlong Tan, CEO and (ii) 11,000 shares of Common Stock to Mr.

The Option Grants, which

were issued on May 13, 2022, have an exercise price of $ 33.6 , a contractual term of 10 years, and consist of six vesting tranches with

a vesting schedule based entirely on the attainment of both operational milestones (performance conditions) and market conditions, assuming

continued employment of the recipients through each vesting date.

Each of the six vesting tranches of the Option Grants will vest when

both (i) the market capitalization milestone for such tranche, which begins at $150 million for the first tranche and increases by increments

of $50 million through the fourth tranche and $100 million thereafter (based on achieving such market capitalization for five consecutive

trading days), has been achieved, and (ii) any one of the following six operational milestones focused on revenue or any one of the six

operational milestones focused on operating income have been achieved during a given fiscal year.

The estimated achievement status of the operational milestones as

of September 30, 2025 was as follows:

As of December 31, 2024, of the 10,124 vested RSUs, 9,529 shares of

Common Stock were issued, and 2,974 shares were to be issued in the near future.

On May 12, 2022, the Compensation Committee of

the Board of Directors approved an incentive plan for the Company’s executive officers consisting of a cash performance bonus of

$ 60,000 to be awarded to Kevin Vassily, CFO of the Company, and grants of stock option (the “Option Grants”) exercisable to

purchase (i) 100,000 shares of Common Stock to Chenlong Tan, CEO and (ii) 11,000 shares of Common Stock to Mr.

The Option Grants,

which were issued on May 13, 2022, have an exercise price of $ 33.6 , a contractual term of 10 years, and consist of six vesting tranches

with a vesting schedule based entirely on the attainment of both operational milestones (performance conditions) and market conditions,

assuming continued employment of the recipients through each vesting date.

Each of the six vesting tranches of the Option Grants will

vest when both (i) the market capitalization milestone for such tranche, which begins at $150 million for the first tranche and increases

by increments of $50 million through the fourth tranche and $100 million thereafter (based on achieving such market capitalization for

five consecutive trading days), has been achieved, and (ii) any one of the following six operational milestones focused on revenue or

any one of the six operational milestones focused on operating income have been achieved during a given fiscal year.

The estimated achievement status of the operational milestones as of

December 31, 2025 was as follows:

Revenue in Fiscal Year

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The market condition

is incorporated into the fair value of the award, and that fair value is recognized over the longer of the implied service period or requisite

service period if it is probable that one of the performance conditions will be met.

In relation to the five awards deemed probable to

vest, the recognition period ranges from five to six years.

If the performance condition is ultimately not met, compensation cost related

to the award should not be recognized (or should be reversed to the extent any expense has been recognized related to such tranche) because

the vesting condition in the award would not have been satisfied.

On the grant date, a Monte Carlo simulation was used

to determine for each tranche (i) a fixed amount of expense for such tranche and (ii) the future time when the market capitalization milestone

for such tranche was expected to be achieved.

Separately, based on a subjective assessment of our future financial performance, each quarter

we determine whether it is probable that the Company will achieve each operational milestone that has not previously been achieved or

deemed probable of achievement and, if so, the future time when the Company expects to achieve that operational milestone.

The Monte Carlo

simulation utilized the following inputs:

is incorporated into the fair value of the award, and compensation cost is recognized over the requisite service period, which is based

on the implied service period derived from valuation model and one of the performance conditions probable achievement.

In relation to

the five awards deemed probable to vest, the recognition period ranges from three to ten years.

If the performance condition is ultimately

not met, compensation cost related to the award should not be recognized (or should be reversed to the extent any expense has been recognized

related to such tranche) because the vesting condition in the award would not have been satisfied.

On the grant date, a Monte Carlo simulation was

used to determine for each tranche (i) a fixed amount of expense for such tranche and (ii) the future time when the market capitalization

milestone for such tranche was expected to be achieved.

Separately, based on a subjective assessment of our future financial performance,

each quarter we determine whether it is probable that the Company will achieve each operational milestone that has not previously been

achieved or deemed probable of achievement and, if so, the future time when the Company expects to achieve that operational milestone.

The Monte Carlo simulation utilized the following inputs:

Stock Price - $ 1.12 (pre-reverse-split price)

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Dividend Yield – 0 %

The total fair value of the Option Grants was $ 3.2 million of which, at September 30, 2025, $1.0 million is deemed probable of vesting.

During the year ended June 30, 2025, the Company

reassessed the expected timing of meeting the performance conditions.

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

to vest and the fair value had changed with the new estimate, the adjustment affected the recognition value and years to vest.

the Company had reversed $701,807 of the expenses recorded for non-vesting tranches and applied the prospective approach to record adjustment

on tranches expected to be vested in future periods.

As of September 30, 2025, none of the options had vested.

For the three months ended

September 30, 2025 and 2024, the Company recorded $ 40,691

The total fair value of the Option Grants was

$ 3.2 million of which, at December 31, 2025, $1.0 million is deemed probable of vesting.

During the year ended June 30, 2025, the

Company reassessed the expected timing of meeting the performance conditions.

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

awards expected to vest and the fair value had changed with the new estimate, the adjustment affected the recognition value and

years to vest.

Therefore, the Company had reversed $701,807 of the expenses recorded for non-vesting tranches and applied the

prospective approach to record adjustment on tranches expected to be vested in future periods.

As of December 31, 2025, none of the

options had vested.

For the three and six months ended December 31, 2025, the Company recorded $ 40,691

and $ 81,382 ,

of stock-based compensation expense related to the Option Grants.

As of September 30, 2025, unrecognized compensation cost related to

tranches probable of vesting is approximately $ 992,045

respectively, of stock-based compensation expense related to the Option Grants.

For the three and six months ended December 31,

2024, the Company recorded $ 75,302

and $ 185,684 , respectively, of stock-based compensation expense related to the Option Grants.

As of December 31, 2025, unrecognized compensation

cost related to tranches probable of vesting is approximately $ 951,354

and will be recognized over five to six years, depending on the tranche.

On August 29, 2024, the board of directors (the “Board”)

of the Company, based on the recommendation of the compensation committee of the Board, approved a grant of 40,000 stock options (the

“2024 Stock Options”) issuable to Chenlong Tan, the Company’s Chief Executive Officer, pursuant to the terms of the

On August 29, 2024, the board of directors (the

“Board”) of the Company, based on the recommendation of the compensation committee of the Board, approved a grant of 40,000

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

the terms of the iPower Inc.

Amended and Restated 2020 Equity Incentive Plan (the “Plan”).

Following the Board’s approval, Mr.

the Company entered into a stock option award agreement (the "Stock Option Award Agreement").

Following the Board’s approval,

Tan and the Company entered into a stock option award agreement (the “Stock Option Award Agreement”).

According to the Stock Option Award Agreement,

and subject to the terms and conditions of the Stock Option Award Agreement and the Plan, upon vesting of the 2024 Stock Options,

Tan will have the option to purchase the Company’s common stock, par value $0.001 per share, at an exercise

price of $ 42.9

per share (which is 110% of the Fair Market Value of the stock on the grant date).

The 2024 Stock Options have a term of 10

years and will vest as follows:

2024 Stock Options vested on the grant date (August 29, 2024), and 1,084

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

and subject to the terms and conditions of the Stock Option Award Agreement and the Plan, upon vesting of the 2024 Stock Options, Mr.

Tan will have the option to purchase the Company’s Common Stock at an exercise price of $ 42.9 per share

(which is 110% of the Fair Market Value of the stock on the grant date).

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

1,000 2024 Stock Options vested on the grant date (August 29, 2024), and 1,084 2024 Stock Options will vest on the first day

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

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

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Stock Price - $ 1.30 (pre-reverse-split price)

Exercise Price - $ 1.43

(pre-reverse-split price)

Exercise Price - $ 1.43 (pre-reverse-split price)

Volatility – 101 %

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Dividend Yield – 0 %

The total fair value of the 2024 Stock Options was

$ 1.22 million as of the grant date.

For the three months ended September 30, 2025 and 2024, 3,250

stock options were vested and the Company recorded $ 99,512

as stock compensation expense, respectively.

As of September 30, 2025, the unrecognized compensation cost of the 2024 Stock Options was

approximately $ 0.76 million and will be recognized monthly through August 1, 2027.

The total fair value of the 2024 Stock Options

was $ 1.22 million as of the grant date.

For the three and six months ended December 31, 2025, 3,250 and 6,500 stock options were vested

and the Company recorded $ 99,512 and $ 199,024 as stock compensation expense, respectively.

For the three and six months ended December

31, 2024, 97,500 and 160,000 stock options were vested and the Company recorded $ 99,512 and $ 163,302 as stock compensation expense.

of December 31, 2025, the unrecognized compensation cost of the 2024 Stock Options was approximately $ 0.66 million and will be recognized

monthly through August 1, 2027.

Note 16 - Concentration of Risk

Financial instruments that potentially subject the

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

As of September 30, 2025 and June 30, 2025,

and $ 1,774,296 ,

respectively, were deposited with various financial institutions and financial services companies in the United States and PRC.

Financial instruments that potentially subject

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

As of December 31, 2025 and June 30, 2025, $ 2,011,738

and $ 2,007,890 , respectively, were deposited with various financial institutions and financial services companies in the United States

Accounts at each institution in the United States are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000.

The Company had approximately $ 0.4

million and $ 1.4

million, respectively, in excess of the FDIC insurance limit, as of September 30, 2025 and June 30, 2025.

Accounts receivable are typically unsecured and derived

from revenue earned from customers, thereby exposing the Company to credit risk.

The risk is mitigated by the Company’s assessment

of its customers’ creditworthiness and its ongoing monitoring of outstanding balances.

The Company maintains reserves for estimated

credit losses, and such losses have generally been within expectations.

The Company had approximately $ 1.5 million and $ 1.4 million, respectively, in excess of the FDIC insurance limit, as of December 31, 2025

and June 30, 2025.

Accounts receivable are typically unsecured and

derived from revenue earned from customers, thereby exposing the Company to credit risk.

The risk is mitigated by the Company’s

assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances.

The Company maintains reserves

for estimated credit losses, and such losses have generally been within expectations.

The business of WFOE in China may be impacted

1 unchanged sentence

Customer and vendor concentration risk

For the three months ended September 30, 2025

For the six months ended December 31, 2025

and 2024, Amazon Vendor and Amazon Seller customers accounted for 75 %

of the Company's total revenues, respectively.

As of September 30, 2025 and June 30, 2025, respectively, accounts receivable from

As of December 31, 2025 and June 30, 2025, respectively, accounts receivable from

Amazon Vendor and Amazon Seller accounted for 78 %

of the Company’s total accounts receivable.

For the three months ended September 30, 2025 and

2024, one supplier accounted for 66 %

of the Company's total purchases, respectively.

As of September 30, 2025 and June 30, 2025, accounts payable to one supplier accounted

of the Company’s total accounts payable.

For the six months ended December 31, 2025 and

2024, one supplier accounted for 64 % and 8 % of the Company's total purchases, respectively.

As of December 31, 2025 and June 30, 2025,

accounts payable to one supplier accounted for 21 % and 10 % of the Company’s total accounts payable.

Note 17 - Leases

1 unchanged sentence

of Anivia Limited, the Company assumed an operating lease for offices located in the People’s Republic of China.

In July 2023,

the Company renewed the lease contract for its existing office plus additional office space.

The lease term is for three years expiring

on July 14, 2026.

In July 2023, the

Company renewed the lease contract for its existing office plus additional office space.

The lease term is for three years expiring on

July 14, 2026.

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

23 unchanged sentences

renewal since May 1, 2025.

In September 2024, DHS entered into a sublease agreement

with a third-party entity for office space in Shenzhen.

In September 2024, DHS entered into a sublease

agreement with a third-party entity for office space in Shenzhen.

The lease term is for one year from October 1, 2024 to September 30,

lease is treated as short-term lease and the base rental fee is approximately $10,000 per month.

The lease is treated as short-term lease and the base rental fee is approximately $10,000 per month.

Schedule of lease cost and other information

For the Three Months Ended

September 30,

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

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Average discount rate - operating leases

The supplemental balance sheet information related to leases for the period

is as follows:

For the Six Months Ended

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

Short-term lease expenses

Other information

Cash paid for amounts included in the measurement of lease liabilities

Remaining term in years

Average discount rate - operating leases

The supplemental balance sheet information related to leases for the

period is as follows:

Schedule of supplemental balance sheet information related to leases

11 unchanged sentences

Note 18 - Commitments and Contingencies

Except as disclosed below, the Company is not currently

a party to any material legal proceedings, investigation or claims.

As the Company may, from time to time, be involved in legal matters

arising in the ordinary course of its business, there can be no assurance that such matters will not arise in the future or that any such

matters in which the Company is involved, or which may arise in the ordinary course of the Company’s business, will not at some

point proceed to litigation or that such litigation will not have a material adverse effect on the business, financial condition or results

of operations of the Company.

In February 2022, the Russian Federation began conducting

military operations against Ukraine, and in October 2023, an armed conflict between Hamas-led Palestinian militant groups and Israeli

military forces began, both of which have since escalated into prolonged wars.

While we do not do business in those regions, the military

conflicts in Ukraine and in Israel have resulted in global economic uncertainty and increased the cost of various commodities.

to these types of events, should they directly impact our supply chain or other operations, we may experience or be exposed to supply

chain disruptions which could cause us to seek alternate sources for product supply or suffer consequences that are unexpected and difficult

Any of these risks might have a materially adverse impact on our business operations and our financial position or results

of operations.

Although, it is difficult to predict the impact that these factors may have on our business in the future, we have experienced

a delay in, as well as an increase in costs in shipping, and the resulting inventory level increase in our warehouse facilities, thus

resulting in reduced profits.

In addition, supply chain disruptions may put upward pressure on our costs and increase the risk that we

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

On April 13, 2020, the Company entered into an agreement with Royal

Business Bank (the “Lender”) for a total amount of $175,500, pursuant to a promissory note issued by the Company to the Lender

(the “PPP Note”).

The loan was made pursuant to the Payroll Protection Program established as part of the Coronavirus Aid,

Relief and Economic Security Act (the “CARES Act”).

On March 22, 2021, the $175,500 PPP Note due to Royal Business Bank was

fully forgiven by the Small Business Administration (“SBA”).

Except as disclosed below, the Company is not

currently a party to any material legal proceedings, investigation or claims.

As the Company may, from time to time, be involved in legal

matters arising in the ordinary course of its business, there can be no assurance that such matters will not arise in the future or that

any such matters in which the Company is involved, or which may arise in the ordinary course of the Company’s business, will not

at some point proceed to litigation or that such litigation will not have a material adverse effect on the business, financial condition

or results of operations of the Company.

In February 2022, the Russian Federation began

conducting military operations against Ukraine, and in October 2023, an armed conflict between Hamas-led Palestinian militant groups and

Israeli military forces began, both of which have since escalated into prolonged wars.

While we do not do business in those regions, the

military conflicts in Ukraine and in Israel have resulted in global economic uncertainty and increased the cost of various commodities.

In response to these types of events, should they directly impact our supply chain or other operations, we may experience or be exposed

to supply chain disruptions which could cause us to seek alternate sources for product supply or suffer consequences that are unexpected

and difficult to mitigate.

Any of these risks might have a materially adverse impact on our business operations and our financial position

or results of operations.

Although, it is difficult to predict the impact that these factors may have on our business in the future, we

have experienced a delay in, as well as an increase in costs in shipping, and the resulting inventory level increase in our warehouse

facilities, thus resulting in reduced profits.

In addition, supply chain disruptions may put upward pressure on our costs and increase

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

On April 13, 2020, the Company entered into an

agreement with Royal Business Bank (the “Lender”) for a total amount of $175,500, pursuant to a promissory note issued by

the Company to the Lender (the “PPP Note”).

The loan was made pursuant to the Payroll Protection Program established as part

of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).

On March 22, 2021, the $175,500 PPP Note due to

Royal Business Bank was fully forgiven by the Small Business Administration (“SBA”).

The Company is required to retain PPP loan documentation

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Should the SBA conduct such a review

and reject all or some of the Company’s judgments pertaining to satisfying PPP loan eligibility or forgiveness conditions, the

Company may be required to adjust previously reported amounts and disclosures in the consolidated financial statements.

and reject all or some of the Company’s judgments pertaining to satisfying PPP loan eligibility or forgiveness conditions, the Company

may be required to adjust previously reported amounts and disclosures in the consolidated financial statements.

Note 19 - Subsequent Events

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in the unaudited condensed consolidated financial statements presented.

Pursuant to such authority granted by the Company’s

stockholders at the Annual Meeting, held on June 23, 2025, the Board approved a reverse stock split of between one-for-twenty (1:20) and

one-for-thirty (1:30) (the “Reverse Stock Split”) of the Common Stock on October 13, 2025, subject to final determination

of the Company’s management.

Company management subsequently determined to effectuate a one-for-thirty (1:30) Reverse Stock Split

and on October 22, 2025, the Company filed a certificate of amendment to amend the Company’s certificate of incorporation (the “Certificate

of Amendment”) with the Secretary of State of the State of Nevada, with an effective date of October 27, 2025 (the “Effective

The Reverse Stock Split became effective at the start of trading on October 27, 2025 (the “Effective Time”).

At the Effective Time, every thirty (30) shares of the Company’s issued and outstanding Common Stock immediately prior to the Effective

Time shall automatically reclassified into one (1) share of Common Stock, without any change in the par value per share.

The Reverse Stock

Split did not change the total number of authorized shares of Common Stock or preferred stock.

As a result, all shares of Common Stock and per

share numbers in the unaudited condensed consolidated financial statements and notes have been adjusted retroactively to reflect the 1-for-30

Reverse Stock Split.

On November 12, 2025, the Company’s Compensation

Committee approved authorizing the Company to issue a grant of $800,000 in RSUs to its Chief Executive Officer, Mr.

Chenlong Tan, which

RSUs shall be calculated as of the grant date, have deferred settlement upon vesting, and shall vest in accordance with the vesting schedule

set forth in the Grant Agreement.

On February 1, 2026, the Company entered into

a software asset transfer agreement (the “Software Asset Transfer Agreement”) with its then-wholly owned subsidiary, Global

Product Marketing, Inc., a Nevada corporation (“GPM”), pursuant to which GPM assigned, transferred and conveyed to the Company

all of GPM’s right, title and interest in its Software Assets (as defined in the agreement), and the Company assumed all outstanding

vendor payables related to the Software Assets.

In addition, the Software Asset Transfer Agreement granted GPM a non-exclusive worldwide,

perpetual, irrevocable and royalty free license to use, reproduce and modify the licensed software, thus allowing the Company and GPM

to collaborate in the software development on a going forward basis.

Further, in the event GPM resells the Original Software code (as

defined in the agreement), GPM shall pay the Company 50% of the proceeds received in relation to such sale.

Thereafter, on February 1, 2026, the Company entered

into a stock purchase agreement (the “SPA”) with ETTS AI Investment LLC, a Nevada limited liability company (“ETTS AI”),

pursuant to which the Company sold its equity interest in GPM and its underlying entities to ETTS AI in exchange for a $2.3 million promissory

note (the “Promissory Note”).

The Promissory Note is repayable in full in seven years, may be prepaid at any time, and repayment

may be credited from time to time by purchase orders (as described below) made under a supply and distribution agreement, dated February

1, 2026 (the “Supply and Distribution Agreement”), between the Company, GPM and ETTS AI.

Under the Supply and Distribution Agreement, the

Company and GPM agreed that the Company will act as exclusive supplier in the United States, Canada and Mexico for all existing SKUs that

have historically been distributed from the Company to GPM, thus allowing the Company to continue in its role of supplier to GPM while

divesting of the cost center associated with GPM’s sales function.

As distributor, The Company will charge GPM, as supplier, a price

mutually agreed on for each product and has the right to add up to 15% margin on top of the net cost.

In addition, GPM will charge the

Company a cooperative marketing fee, which will be defined in a subsequent agreement between the parties.

Under the Supply and Distribution

Agreement, payment on all purchase orders are due within seven days of GPM’s receipt of payment from its customers and amounts

identified as “Margin” (i.e., the Company’s cost x margin on the SKUs purchased by GPM) may be applied on a dollar-for-dollar

as a credit/offset against the outstanding amounts owed under the Promissory Note.

The Supply and Distribution Agreement has a term of

five years and automatically renews thereafter for subsequent two-year terms, unless 90 days’ notice is provided prior to the expiration

of such term.

In addition, the Supply and Distribution Agreement contains standard limitation on liability, indemnification and other

provisions standard for an agreement of this nature.

Pursuant to the Securities Purchase Agreement

dated December 22, 2025 (the “Purchase Agreement”) with an institutional investor (the “Investor”), on February

9, 2026, the Company delivered an Additional Mandatory Closing Notice (as defined in the Purchase Agreement) to the Investor and, on February

10, 2026, consummated the Additional Mandatory Closing in accordance with the Purchase Agreement, receiving $1,880,00 in exchange for

issuing a $2,000,000 aggregate principal amount of the Additional Mandatory Series A Note to the Investor after satisfaction of all applicable

closing conditions, including the effectiveness of the resale registration statement and the absence of any event of default.

As disclosed in the Company’s Information Statement on Schedule

14C, filed with the SEC on January 21, 2026 (the “Information Statement”), a majority of the Company’s stockholders

approved by written consent amending the Company’s Equity Incentive Plan to increase shares authorized for issuance under the Plan

by an additional 40,000,000 shares (the “Increase in EIP Authorized Shares”).

The actions disclosed in the Information Statement,

including the Increase in EIP Authorized Shares, became effective on or about February 10, 2026, 20 days after filing the Information

On February 10, 2026, the Company announced that

its Board has authorized a share repurchase program for up to $2.0 million of common stock (the “Share Buyback Program”).

Share repurchases under the Share Buyback Program, if any, may be made from time to time on the open market or through privately negotiated

transactions, including, without limitation, through Rule 10b5-1 trading plans, any other legally permissible means, or any combination

of the foregoing.

The Share Buyback Program has no time limit, does not obligate the Company to acquire a specified number of shares,

and may be suspended, modified, or terminated at any time, without prior notice.

The number of shares to be repurchased will depend on

market conditions and other factors.

Repurchases under the program are expected to be funded from a combination of existing cash balances

and future cash flow.

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

What changed 10-Q

Item 1. Financial Statements