What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-02-20 compared with 2025-11-14 · 417 added, 210 removed, 197 unchanged (76% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following Management’s

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

Historical results may not

indicate future performance.

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

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

Historical results may

not indicate future performance.

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

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

by these statements.

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

by tech and data, iPower Inc.

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

consumer home goods.

Through the operations of our e-commerce platforms and channel partners, and our 99,347 square foot fulfillment centers

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

and home goods categories based on management’s estimates.

Our core strategy continues to focus on expanding our geographic reach

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

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

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

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

among others.

and Expectations

Brand Development

plan to increase investments in product and brand development.

We actively evaluate potential acquisition opportunities of companies and

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

Global Economic

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

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

Thus far, as a result of the general global economic disruption, we have experienced a decrease in the speed with which we are

able to purchase new inventory, as well as an increase in costs due to delays in shipping, resulting increase in time with which products

by technology and data, iPower operates as an online retailer and supplier of consumer goods and provides value-added e-commerce services

to third-party products and brands.

Our capabilities include established online sales channels, robust fulfillment operations, a network

of warehouses serving the United States, competitive last-mile delivery partners, and a differentiated business intelligence platform.

Leveraging these capabilities, we utilize proprietary, data-driven methodologies to support product launches and sales optimization, with

the objective of efficiently bringing products to market and delivering value to customers in the United States and other markets.

sales channels currently include Amazon Vendor Central, Amazon Seller Central (3P), Walmart.com, TikTok, Temu, other online marketplaces,

and our owned e-commerce websites.

are also actively developing and marketing in-house branded products, as well as products offered through supply-chain partners.

brand portfolio includes iPower, Simple Deluxe, and other brands, offering products across categories such as home goods, fans, pet products,

outdoor and gardening products, and consumer electronics.

While we continue to focus on our core product categories, we seek to expand

our product catalog through additional in-house development and partnerships with suppliers, guided by market data analytics.

is positioning itself at the intersection of digital assets and real-world commerce by leveraging its established e-commerce, logistics,

and data infrastructure to support the distribution and integration of compliant digital-asset products through licensed partners.

initiated the Digital Treasury Strategy on June 17, 2025, with the plan of creating a Digital Treasury Strategy business.

As this Digital

Treasury Strategy is a newly planned addition to our business model, we cannot predict its success or how it will affect our business

over the long term.

Digital Treasury Strategy is intended to provide measured, long-term exposure to digital assets that management believes may become increasingly

integrated into commerce, while aligning the Company’s treasury strategy with its operational focus on digital-asset-related initiatives.

Global Economic Disruption

While at present the

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

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

far, as a result of the general global economic disruption, we have experienced a decrease in the speed with which we have been able

to purchase new inventory, as well as an increase in costs due to delays in shipping, resulting increase in time with which products

remain in our warehouse facilities, thus resulting in reduced profits.

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

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

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

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

consumer perceptions.

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

states plus the District of Columbia have adopted frameworks

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

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

Controlled Substances Act and the laws of U.S.

states prohibit growing cannabis.

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

of Digital Treasury Strategy

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

with the plan of creating a Digital Treasury Strategy business.

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

and do not know if it will be effectuated.

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

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

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

Reverse Stock Split

the 2025 annual meeting of stockholders of the Company, the Company’s stockholders approved a proposal authorizing the board of

directors of the Company (the “Board”), in its sole discretion, to effect a reverse stock split of the outstanding shares

of the Company’s common stock, at a reverse split ratio in the range of one-for-two (1:2) to one-for-two hundred (1:200), as determined

by the Board, whereby every two to two hundred shares of the authorized, issued and outstanding common stock will be combined into one

share of authorized, issued and outstanding common stock.

Pursuant to such authority granted by the Company’s stockholders at the

Annual Meeting, the Board approved a reverse 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 October 22, 2025, the Company filed a certificate

of amendment to amend the certificate of incorporation of the Company with the Secretary of State of the State of Nevada, with an effective

date of October 27, 2025.

Reverse Stock Split became effective at the start of trading on October 27, 2025 (the “Effective Time”), at which time, every

thirty (30) shares of the Company’s issued and outstanding common stock immediately prior to the Effective Time was automatically

reclassified into one (1) share of common stock, without any change in the par value per share.

The Reverse Stock Split reduced the number

of shares of common stock issuable upon the exercise or vesting of the Company’s outstanding warrants and restricted stock units

in proportion to the ratio of the Reverse Stock Split and caused a proportionate increase in the exercise prices of such stock options.

The Reverse Stock Split did not change the total number of authorized shares of common stock or preferred stock.

October 27, 2025, trading of the Company’s common stock continued on The Nasdaq Capital Market on a Reverse Stock Split-adjusted

Promissory Notes

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.

Promissory Notes bear 6.5% interest per annum and were repayable upon the earlier of 90 days or the Company’s entry into new financing

arrangements.

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

existing asset-backed lending facility with JPMorgan Chase Bank, N.A.

(“JPMorgan”) pursuant to the Company’s credit

agreement with JPMorgan, originally dated November 12, 2021, as amended (the “Credit Agreement”).

As a result of the repayment,

the Company has initiated the termination of the related Uniform Commercial Code filings.

Promissory Notes were repaid on February 12, 2026.

Stockholder Action

On December 21, 2025, a majority

of the Company’s stockholders (representing 53.1% of the Company’s outstanding voting power) took the following actions to

(1) the Convertible Note Facility (defined below);

(2) the issuance of in excess of 20% of the Company’s outstanding common

stock at a price less than the “Minimum Price” as defined in Nasdaq List Rule 5635(d);

(3) authorizing an amendment to the

Company’s articles of incorporation for the sole purpose of increasing the Company’s authorized shares from 200,000,000 shares,

consisting of 180,000,000 shares of common stock and 20,000,000 shares of preferred stock, to 1,000,000,000 shares, consisting of 950,000,000

shares of common stock and 50,000,000 shares of preferred stock;

(4) authorizing the Board to approve one or more reverse stock splits,

in the range of 1-for-250 shares, with the Board to determine when, if ever, to effectuate such reverse stock split;

and (5) authorizing

the Company’s Board to adopt a mirror preferred stock in order to allow the Company to more easily achieve quorum in the event the

Company needs to call a meeting to effectuate a reverse stock split for purposes of maintaining its Nasdaq listing or increase the Company’s

Authorized shares.

The Company filed a preliminary

information statement on Schedule 14C (the “Schedule 14C”) with the SEC on January 7, 2026.

Following any SEC review, the

Company will then finalize and mail the Schedule 14C to stockholders as of the December 22, 2025 record date.

Convertible Note Facility

On December 22, 2025, the

Company entered into a Securities Purchase Agreement with a certain institutional investor (the “Investor”) named therein

(the “Purchase Agreement”) providing for the purchase by the Investor of a 6% original issue discount (OID) convertible note

facility in the aggregate original principal amount of $30,000,000 (the “Convertible Note Facility”), in which the Investor

initial purchased (i) a series A senior secured convertible note in the aggregate original principal amount of $5,184,024 (the “Series

A Convertible Note”), and shares of the Company’s common stock, issuable pursuant to the terms of the Series A Convertible

Notes (the “Series A Conversion Shares”) in reliance upon the exemption from securities registration afforded by Section 4(a)(2)

of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506(b) of Regulation D as promulgated by the Securities

and Exchange Commission (the “SEC”) under the Securities Act, and (ii) $1,815,976 aggregate principal amount of a series B

senior secured convertible note (the “Series B Convertible Notes,” together with the Series A Convertible Notes, the “Convertible

Notes”), and shares of the Company’s common stock issuable pursuant to the terms of the Series B Convertible Notes (the “Series

B Conversion Shares”) in a registered direct offering pursuant to a currently effective shelf registration statement on Form S-3

333-274665), which has been declared effective by the SEC on September 29, 2023.

In addition, pursuant to the Purchase Agreement,

the parties closed on an additional approximately $2,000,000 of Series A Convertible Notes (the “Additional Series A Notes”),

bringing the total amount of 6% OID Convertible Notes sold to $9,000,000, with the Additional Series A Notes to be paid for and issuable

upon the effectiveness of a resale registration statement registering the Series A Convertible Notes.

At closing, as consideration for

issuance of the Convertible Notes, the Company received gross proceeds of $6,580,000, before deducting expenses.

Digital Offering LLC acted

as placement agent and received $394,800 in placement agent fees.

The Convertible Notes are

convertible into shares of the Company’s common stock at a fixed Conversion Price of $17.70 per share, subject to adjustment as

provided in the Convertible Notes.

The holder may elect to convert at an Alternate Conversion Price, which provides for conversion at

a discounted price based on recent trading VWAP.

The Alternate Optional Conversion Price is equal to the lower of (i) the Conversion Price

or (ii) the greater of (x) the Floor Price (as defined below) or (y) 95% of the lowest VWAP during the seven (7) consecutive trading day

period ending on the trading day immediately preceding delivery of the conversion notice.

The Alternate Event of Default Conversion Price

is equal to the lower of (i) the Conversion Price or (ii) the greater of (x) the Floor Price or (y) 90% of the lowest VWAP during the

ten (10) consecutive trading day period ending on the trading day immediately preceding delivery of the conversion notice.

The Floor Price

is $2.27 per share, subject to adjustment.

The Convertible Notes are

senior secured obligations of the Company, secured by Collateral (as defined in the Security and Pledge Agreement), consisting of all

of the cryptocurrency and cryptocurrency related assets of the Company and certain of its subsidiaries.

On December 23, 2025, the

Company entered into a Registration Rights Agreement with the Investor (the “Registration Rights Agreement”), which provides

the Investor with certain registration rights with respect to the resale of the Series A Conversion Shares issuable upon conversion of

the Series A Convertible Notes.

Pursuant to the Registration Rights Agreement, the Company filed a registration statement with the SEC

on January 12, 2026 to register the resale of the Series A Conversion Shares.

On February 9, 2026, the Company

delivered an Additional Mandatory Closing Notice 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.

Acquisitions under the Digital Treasury Strategy

June 17, 2025, the Company adopted a digital asset reserve, allocation and development strategy with the plan of creating a Digital

Treasury Strategy business.

On December 29, 2025, the Company announced the following initial acquisitions under the Digital Treasury

(1) the purchase of 15.1 Bitcoin (BTC) at an average price of $87,686.33 per BTC, for a total notional value of approximately

$1,325,400 and (2) the purchase of 301.1 Ethereum (ETH) at an average price of $2,934.67 per ETH, for a total notional value of approximately

As this Digital Treasury Strategy

is a new addition to our business model, we cannot predict its success or if we will continue with this strategy for the long term.

RESULTS OF OPERATIONS

For the three months ended September 30, 2025

The following table presents certain

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

For the three months ended December 31,

2025 and 2024

The following table presents

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

period to period.

Three Months Ended

September 30,

Three Months Ended

September 30,

Revenues - product sales

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Loss before income taxes

Income tax benefit

Income tax (benefit) expense

Non-controlling interest

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Operating loss % of revenues

Net income (loss) % of revenues

for the three months ended December 31, 2025 decreased 62.6% to $7,133,602 as compared to $19,072,571 for the three months ended December

While pricing remained stable, the decrease was mainly due to the combination of decreased orders from Amazon, disruption of

product supply, and decreased logistic service income, during the quarter ended December 31, 2025.

In addition, the Company also experienced

a significant decrease in Amazon orders as a result of the negative impact from uncertainty over tariffs during quarter ended December

Costs of Revenues

Costs of revenues for the

three months ended December 31, 2025 decreased 62.6% to $3,994,680 as compared to $10,682,685 for the three months ended December 31,

The decrease was primarily due to the decrease in sales.

Gross profit was $3,138,922

for the three months ended December 31, 2025 as compared to $8,389,886 for the three months ended December 31, 2024.

While the gross profit

ratio of the product sales revenues decreased to 44% for the three months ended December 31, 2025 from 46.3% for the three months ended

December 31, 2024, the overall gross profit ratio of the total sales revenues for the three months ended December 31, 2025 and 2024 was

The decrease in the gross profit ratio of the product sales revenues was primarily driven by increases in product costs.

Operating Expenses

Operating expenses for the

three months ended December 31, 2025 decreased 27.6% to $5,576,899 as compared to $7,706,279 for the three months ended December 31, 2024.

The decrease was mainly due to the combination of a decrease in selling and fulfillment expenses of $1.6 million as a result of decrease

in sales and a decrease in general and administrative expenses of $0.6 million, which included payroll expenses, stock-based compensation

expense, insurance expenses, allowance for credit losses, travel expenses and other operating expenses.

The decrease in general and administrative

expenses was primarily attributable to the implementation of a cost-cutting plan during the current quarter, as compared to the prior-year

period which included expenses related to the expansion of our vendor network, the development of the SuperSuite platform, and an increase

in the allowance for credit losses and inventory reserves totaling $1.76 million for the quarter ended December 31, 2024.

Income (Loss) from Operations

(loss) from operations was $(2,437,977) for the three months ended December 31, 2025 as compared to $683,607 of income from operations

for the three months ended December 31, 2024.

The decrease in income was primary due to the combination of decrease in sales and operating

expenses as discussed above.

Other Income (Expense)

Other income (expense) consists

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

Other income (expense) for the three months ended December 31, 2025 was

$424,188 as compared to $(347,432) for the three months ended December 31, 2024.

The increase in other income was mainly due to combination

of the increase in other non-operating income of $639,109 resulted from refund of Employee Retention Tax Credit, change in fair value

of derivative liability, and gain on disposal of vehicle.

Net Income (Loss) Attributable to iPower

Net income (loss) attributable

to iPower Inc.

for the three months ended December 31, 2025 was $(1,193,281) as compared to $218,819 for the three months ended December

31, 2024, representing an increase in net loss of $1,412,100, which was primarily due to a combination of the increase in loss from operations

and the increase in other income as discussed above.

Comprehensive Income (Loss) Attributable

to iPower Inc.

Comprehensive

income (loss) attributable to iPower Inc.

for the three months ended December 31, 2025 was $(1,193,660) as compared to $374,949 for the

three months ended December 31, 2024, representing an increase in comprehensive loss of $1,568,609.

The increase was due to the reasons

discussed above, along with a decrease in other comprehensive income of $156,509 due to reduced foreign currency translation adjustments

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

For the six months ended December 31, 2025

The following table presents

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

period to period.

Six Months Ended

Revenues - product sales

Revenues - service income

Cost of revenues - product costs

Cost of revenues - service costs

Operating expenses

Operating loss

Other income (expenses)

Loss before income taxes

Income tax (benefit) expense

Non-controlling interest

Net loss income attributable to iPower Inc.

Other comprehensive income

Comprehensive loss attributable to iPower Inc.

Gross profit % of revenues – product sales

Gross profit % of revenues – service income

Operating loss % of revenues

Net loss % of revenues

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

30, 2024.While pricing remained stable and with the additional logistics service income, the decrease was mainly due to the combination

of decreased orders from Amazon and temporary disruption of product supply during the quarter ended September 30, 2025.

In addition, the

Company also experienced a significant decrease in amazon orders due to uncertainty over tariffs during quarter ended September 30, 2025.

for the six months ended December 31, 2025 decreased 49.7% to $19,151,069 as compared to $38,081,092 for the six months ended December

While pricing remained stable, the decrease was mainly due to the combination of decreased orders from Amazon and disruption

of product supply during the six months ended December 31, 2025.

In addition, the Company also experienced a significant decrease in Amazon

orders due to uncertainty over tariffs during the six months ended December 31, 2025.

Costs of Revenues

Costs of revenues for the

three months ended September 30, 2025 decreased 31.5% to $7,210,943 as compared to $10,520,624 for the three months ended September 30,

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

service income and the decrease in sales, freight costs, and lowered product costs resulting from management’s efforts on supply

chain management.

Gross profit was $4,806,524 for

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

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

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

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

The decrease in the gross profit

ratio was primarily driven by the increase in the logistics service income and secondarily by increases in freight costs and product costs.

six months ended December 31, 2025 decreased 47.2% to $11,205,623 as compared to $21,203,309 for the six months ended December 31, 2024.

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

Gross profit was $7,945,446

for the six months ended December 31, 2025 as compared to $16,877,783 for the six months ended December 31, 2024.

While the overall gross

profit ratio of the total sales revenues decreased to 41.5% for the six months ended December 31, 2025 from 44.3% for the six months ended

December 31, 2024, the gross profit ratio of product sales revenue for the six months ended December 31, 2025 and 2024 was 44.0% and 46.0%,

respectively.

The decrease in the gross profit ratio was primarily driven by the decrease in the logistics service income and secondarily

by increases in freight costs and product costs.

Operating Expenses

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

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

The decrease was mainly due to the combination

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

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

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

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

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

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

Operating expenses for the

six months ended December 31, 2025 decreased 36.2% to $12,078,602 as compared to $18,940,610 for the six months ended December 31, 2024.

The decrease was mainly due to the combination of a decrease in selling and fulfillment expenses of $2.3 million as a result of decreased

sales and costs related to advertising, merchant fees, rental expenses and delivery fees, and a decrease in general and administrative

expenses of $4.6 million, which included payroll expenses, stock-based compensation expense, insurance expenses, allowance for credit

losses, travel expenses and other operating expenses.

The decrease in general and administrative expenses was primarily attributable to

the implementation of a cost-cutting plan during the current period, as compared to the prior-year period which included expenses related

to the expansion of our vendor network, the development of the SuperSuite platform, and an increase in the allowance for credit losses

and inventory reserves totaling $1.8 million for the six months ended December 31, 2024.

Loss from Operations

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

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

The decrease in loss

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

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

Other income for the three months ended September 30, 2025

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

ended September 30, 2024 .

The increase in other income was mainly due to combination

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

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

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

Net Loss Attributable to iPower Inc.

loss attributable to iPower Inc.

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

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

in net loss of $1,495,633.

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

the increase in other income as discussed above.

Loss from operations was $4,133,156

for the six months ended December 31, 2025 as compared to $2,062,827 for the six months ended December 31, 2024.

The increase in loss

was primary due to the combination of decrease in sales and operating expenses as discussed above.

Other Income (expense)

Other income (expense) consists

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

Other income (expense) for the six months ended December 31, 2025 was $1,122,135

as compared to $(269,627) for the six months ended December 31, 2024.

The increase in other income was mainly due to combination of the

increase in other non-operating income of $1,219,713 resulted from discounted settlement and write-offs of aged accounts payable, recognition

of loss on deconsolidation of VIE, a decrease in interest, including amortization of debt discount, on the revolving loan of $73,924 during

the six months ended December 31, 2025 resulted from the termination of the revolving ABL, refund of Employee Retention Tax Credit, change

in fair value of derivative liability, and gain on disposal of vehicle.

Net Income (Loss) Attributable to iPower

Net loss attributable to iPower

for the six months ended December 31, 2025 was $1,726,929 as compared to $1,810,462 for the six months ended December 31, 2024, representing

a decrease in net loss of $83,533, which was primarily due to the combination of increase in loss from operations and the increase in

other income as discussed above.

Comprehensive Loss Attributable to iPower

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loss attributable to iPower Inc.

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

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

The decrease was due to the reasons discussed above,

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

for the six months ended December 31, 2025 was $1,702,365 as compared to $1,709,386 for the six months

ended December 31, 2024, representing a slight decrease in comprehensive loss of $7,021, which was due to the reasons discussed above,

along with a decrease in other comprehensive income of $76,512 as a result of foreign currency translation adjustments resulting from

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

1 unchanged sentence

Sources of Liquidity

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

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

Additionally,

on June 18, 2024, we closed on a registered direct offering of 69,445 shares of common stock (the “Shares”) and a concurrent

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

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

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

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

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

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

JPM revolving line of credit.

the six months ended December 31, 2025, we primarily funded our operations with cash and cash equivalents generated from operations, borrowing

from related party, as well as through borrowings under our credit facility from JPMorgan Chase Bank (“JPM”) and close of

a convertible notes financing on December 23, 2025.

Additionally, on June 18, 2024, we closed on a registered direct offering of 69,445

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

stock (the “Warrants”), which Shares and Warrants were sold for aggregate gross proceeds of $5,000,002.

As of December 31,

2025, we had cash and cash equivalents of $2,011,738, representing a $3,848 increase from $2,007,890 in cash as of June 30, 2025.

cash increase was primarily due to the combined result of cash provided by operating activities, cash used in investing activities and

financing activities resulting from our payments to pay down the JPM revolving line of credit and proceeds from convertible notes.

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

14 unchanged sentences

catalog, which will have a net beneficial impact to our margin profile and ability to generate cash.

Currently, we have approximately

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

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

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

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

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

Working Capital

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

respectively.

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

to fluctuate, resulting in changes in our working capital.

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

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

of December 31, 2025 and June 30, 2025, our working capital was $6.7 million and $4.9 million, respectively.

The historical seasonality

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

in our working capital.

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

capital remaining near this level for the foreseeable future.

Operating Activities

largest source of cash provided by operations is from sales of products.

Our primary uses of cash from operating activities include payments

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

Net cash provided by (used in) operating activities

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

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

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

Our largest source of cash

provided by operations is from sales of products.

Our primary uses of cash from operating activities include payments to suppliers for

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

Net cash provided by (used in) operating activities for the six months

ended December 31, 2025 and 2024 was $763,906 and $(1,387,926), respectively.

The increase in cash provided by operating activities mainly

resulted from an increase in cash received from customers, which was partially offset by an increase in cash paid for cost of revenues

and operating expenses.

Investing Activities

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

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

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

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

Net cash used in investing

activities for the six months ended December 31, 2025 and 2024 was $5,593,628 and $664,366, respectively.

The increase was mainly due

to deconsolidation of VIE cash, payments made for investment in joint venture, purchase of digital assets, and prepayments made for software

developments during the quarter ended December 31, 2025.

Financing Activities

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

months ended September 30, 2025 and 2024.

The decrease in net cash used in financing activities

was primarily due to a decrease in payments on the revolving loan.

Net cash provided by (used

in) in financing activities was $4,822,051 and $(2,558,389), respectively, for the six months ended December 31, 2025 and 2024.

in net cash provided by financing activities was primarily due to a combination of proceeds from a convertible note financing and payments

on the revolving loan.

OFF-BALANCE SHEET ARRANGEMENTS

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

to the rules and regulations of the SEC.

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

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

results could differ from those estimates.

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

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

and pursuant to the rules and regulations of the SEC.

The preparation of consolidated financial statements in conformity with GAAP requires

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

Actual results could differ from those estimates.

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

from period to period.

Accordingly, actual results could differ materially from our estimates.

To the extent that there are material differences between

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

We base our estimates on experience

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

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

While our significant accounting

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

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

consolidated financial statements.

To the extent that there are material differences

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

We base our estimates

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

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

While our significant

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

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

condensed consolidated financial statements.

Revenue recognition

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

criteria are met:

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

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

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

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

Return allowances, which reduce

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

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

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

Generally, when the Company is primarily

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

revenue is recorded at gross.

Payments received prior to

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

periodically provides incentive offers to its customers to encourage purchases.

Such offers include current discount offers, such as percentage

discounts off current purchases and other similar offers.

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

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

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

recognition criteria are met:

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

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

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

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

Return allowances,

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

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

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

Generally, when the Company is

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

the price, revenue is recorded at gross.

Payments received prior

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

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

Such offers include current discount offers, such

as percentage discounts off current purchases and other similar offers.

Current discount offers, when accepted by the Company’s

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

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

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balances each reporting period to determine if an allowance for credit loss is required.

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

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

of accounts receivable.

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conditions and product obsolescence.

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

estimated market value.

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

to its estimated market value.

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

Variable interest entities

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

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

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

the three months ended September 30, 2025 and 2024, the Company performed a qualitative goodwill impairment analysis following the steps

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 September 30, 2025 and June 30, 2025, the goodwill balance amounted

As of December 31, 2025 and June 30, 2025, the goodwill balance amounted

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

Intangible Assets, net

life intangible assets at September 30, 2025 include a covenant not to compete, supplier relationships and software recognized as part

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

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,

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

Intangible Assets,

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

of the acquisition of Anivia.

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Supplier relationship

The Company reviews the recoverability of long-lived

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

be recoverable.

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

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

If these cash flows are less than the

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

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

value determinations.

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

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

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

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

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

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

estimated fair value and carrying value.

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

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

The Company did not record any impairment charge for the six months

ended December 31, 2025 and 2024.

Stock-based Compensation

applies ASC No.

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

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

Company applies ASC No.

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

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

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

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

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

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

The Company accounts for income

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

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

as well as open tax years in such jurisdictions.

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

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

The Company has identified the U.S.

federal jurisdiction, and the states of Nevada and

California, as its “major” tax jurisdictions.

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

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

such attributes are utilized.

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

result in a material change to its financial position.

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

to ASC 740, Income Taxes.

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

record such items as a component of income taxes.

federal jurisdiction, and the states of

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

However, the Company has certain tax attribute carryforwards which

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

year in which such attributes are utilized.

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

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

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

pursuant to ASC 740, Income Taxes.

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

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

Recently issued accounting

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

QUANTITATIVE AND

QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis