What changed in this filing

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Item 1. Financial Statements

2023-11-14 compared with 2023-05-15 · 424 added, 382 removed, 284 unchanged (74% of the section changed)

1 – Financial Statements

ITEM 1 – Financial Statements

ISPIRE TECHNOLOGY INC.

UNAUDITED CONDENSED CONSOLIDATED

BALANCE SHEETS

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS

OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended

September 30,

Cost of revenue

Operating expenses:

Sales and marketing expenses

General and administrative expenses

Total operating expenses

Loss from operations

( 1,214,868 )

Other income (expense):

Interest income

Exchange gain (loss), net

Other income (expenses), net

Total other income (expense), net

Loss before income taxes

( 1,734,353 )

Income taxes - current

$ ( 2,001,754 )

$ ( 1,374,615 )

Other comprehensive (loss) income

Foreign currency translation adjustments

Comprehensive loss

( 2,008,630 )

( 1,330,152 )

Net loss per share

Basic and diluted

Weighted average shares outstanding:

Basic and diluted

See notes to unaudited condensed consolidated financial

ISPIRE TECHNOLOGY INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current assets:

1 unchanged sentence

Accounts receivable, net

Held-to-maturity investment

Inventories, net

Prepaid expenses and other current assets

Due from related parties

Held-to-maturity investment

Total current assets

1 unchanged sentence

Property, plant and equipment, net

Rental deposit

Right-of-use assets

Intangible assets

Rental deposit

Right-of-use assets – operating leases

Total other assets

$ 100,735,065

$ 141,964,209

Liabilities and stockholders’ equity

3 unchanged sentences

Contract liabilities

Dividends payable

Accrued liabilities and other payables

Due to related parties

Income tax payable

Lease liabilities

Income tax payable - current

Operating lease liabilities – current portion

Total current liabilities

Other liabilities:

Lease liabilities

Operating lease liabilities – net of current portion

Total liabilities

2 unchanged sentences

140,000,000 shares authorized;

50,000,000 shares issued and outstanding as of June 30 2022 and March 31, 2023

Preferred stock, par value $ 0.0001 per share, 10,000,000 shares authorized, no shares issued at June 30, 2022 and March 31, 2023

Capital contribution

54,222,420 and 54,268,992 shares issued and outstanding as of June 30, 2023 and September 30, 2023

Preferred stock, par value $ 0.0001 per share, 10,000,000 shares authorized, no shares issued at June 30, 2023 and September 30, 2023

Equity reserve

Additional paid-in capital

Accumulated other comprehensive loss

2 unchanged sentences

Total liabilities and stockholders’ equity

$ 100,735,065

$ 141,964,209

See notes to unaudited condensed consolidated financial statements.

See notes to unaudited condensed consolidated financial

ISPIRE TECHNOLOGY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

Three Months Ended

Nine Months Ended

Cost of revenue

Operating expenses:

Sales and marketing expenses

General and administrative expenses

Total Operating Expenses

(Loss)income from operations

( 3,462,061 )

( 5,139,717 )

Other income(expense):

Interest income, net

Exchange gain, net

Other (expense)income, net

Total Other income, net

(Loss) income before income taxes

( 2,868,863 )

( 4,987,777 )

Income taxes - current

( 1,069,999 )

Net (loss)income

$ ( 990,557 )

$ ( 3,106,855 )

$ ( 6,057,776 )

Other comprehensive loss

Foreign currency translation adjustments

Comprehensive (loss)income

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS

OF CHANGES IN STOCKHOLDERS’ EQUITY

Ordinary shares

Preferred shares

Comprehensive

Shareholders’

(Loss)/Income

Balance, July 1, 2022

$ ( 184,664 )

1 unchanged sentence

( 2,001,754 )

Net (loss)income per share

Basic and diluted

Weighted average shares outstanding:

Basic and diluted

See notes to unaudited condensed consolidated financial statements.

ISPIRE TECHNOLOGY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

Preferred Stock

Accumulated Other

Comprehensive

Stockholders’

Balance, June 30, 2021

Foreign currency translation adjustment

Balance, March 31, 2022

Balance, September 30, 2022

$ ( 191,540 )

Balance, June 30, 2022

Balance, July 1, 2023

$ ( 163,768 )

( 1,374,615 )

Transfer of intangible assets

( 1,374,615 )

Stock-based compensation expense

Issuance of common stock for equity incentive awards

Foreign currency translation adjustment

Balance, March 31, 2023

Balance, September 30, 2023

$ ( 119,305 )

See notes to unaudited condensed consolidated financial statements.

See notes to unaudited condensed

consolidated financial statements.

ISPIRE TECHNOLOGY INC.

UNAUDITED CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

Nine Months ended

Net income (loss):

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

Three Months ended

September 30,

$ ( 2,001,754 )

$ ( 1,374,615 )

Adjustments to reconcile net income from operations to net cash provided by operating activities:

2 unchanged sentences

Accounts receivable impairment

Stock-based compensation expenses

Changes in operating assets and liabilities:

Accounts receivable

Accounts receivable, net

( 5,917,620 )

7 unchanged sentences

Income tax payable

Net cash (used in) provided by

operating activities

Net cash provided by (used in) operating activities

$ ( 12,880,245 )

1 unchanged sentence

Purchase of property, plant and equipment

Purchase of short-term investment

( 9,604,418 )

Acquisition of intangible assets

Net cash used in investing activities

2 unchanged sentences

Cash flows from financing activities:

Payment made for dividends

( 3,384,678 )

Advances from related parties

Repayment of advances from related parties

( 1,804,786 )

( 40,512,691 )

Advances to related parties

Principal portion of lease payment

2 unchanged sentences

$ ( 945,504 )

Net decrease in cash and cash equivalents

( 24,900,322 )

Net increase(decrease) in cash and cash equivalents

( 14,614,521 )

1 unchanged sentence

Cash and cash equivalents - end of period

See notes to unaudited condensed consolidated financial statements.

See notes to unaudited condensed consolidated financial

ISPIRE TECHNOLOGY INC.

25 unchanged sentences

On July 29, 2022:

● Aspire Global transferred 100 % of the equity interest in Aspire North America to the Company

● Aspire Holdings transferred 100 % of the equity of Aspire Science to Ispire International.

● Aspire Global transferred 100 %

of the equity interest in Aspire North America to the Company

● Aspire Holdings transferred 100 % of the equity of Aspire

Science to Ispire International.

In September 2023, the Company established a wholly-owned

subsidiary, Ispire Malaysia Sdn Bhd (“Ispire Malaysia”) under the laws of the Federation of Malaysia, in order to establish

manufacturing operations in Southeast Asia.

Ispire Malaysia was formed by Tuanfang Liu, the Company’s Chairman and Co-Chief Executive

Officer on September 1, 2023 and assigned to the Company on September 22, 2023 at a consideration of 100 Malaysian ringgits.

The following table sets forth information concerning

the Company and its subsidiaries as of December 31, 2022 and March 31, 2023:

the Company and its subsidiaries as of September 30, 2023:

Name of Entity

7 unchanged sentences

February 22, 2020

Research and Development,

Sales and Marketing

2 unchanged sentences

Sales and Marketing

Ispire Malaysia

September 1, 2023

Manufacturing

Ispire is a holding company and does not engage

6 unchanged sentences

may be issued pursuant to options or restricted stock grants.

The Plan will be administered by the Compensation Committee.

the Plan may be granted to officers, directors, employees and those consultants who qualify as a consultant or advisor under the instructions

The Plan will be administered by the Compensation Committee of the Board

of Directors.

Awards under the Plan may be granted to officers, directors, employees and those consultants who qualify as a consultant

or advisor under the instructions to Form S-8.

The Compensation Committee has broad discretion in making awards;

provided that any options shall be exercisable at the fair

market value on the date of grant.

No awards have been granted since the Plan was approved.

provided that any options

shall be exercisable at the fair market value on the date of grant.

Awards have been granted during the three months ended September 2023.

Impact of COVID-19

In December 2019, coronavirus disease 2019

(COVID-19) was first reported to have surfaced in Wuhan, China.

In December 2019, coronavirus disease 2019 (COVID-19)

was first reported to have surfaced in Wuhan, China.

During 2020, the disease spread to many parts of the world.

epidemic has resulted in quarantines, travel restrictions, and the temporary closure of stores and facilities in much of the world,

most of which are no longer in effect.

The World Health Organization ended the global emergency status for COVID-19 on May 5, 2023,

and the United States Department of Health and Human Services declared that the public health emergency from COVID-19 expired at the

end of the day on May 11, 2023.

The extent to which COVID-19 impacts our operations on an ongoing basis

is highly uncertain.

Since our products are presently manufactured in China by a related party, any changes in the outbreak in China and

any changes in the Chinese government’s policy may affect our supplier’s operations which could affect its ability to manufacture

and deliver product in a timely manner.

The epidemic has resulted

in quarantines, travel restrictions, and the temporary closure of stores and facilities in much of the world, most of which are no longer

The World Health Organization ended the global emergency status for COVID-19 on May 5, 2023, and the United States Department

of Health and Human Services declared that the public health emergency from COVID-19 expired at the end of the day on May 11, 2023.

The extent to which COVID-19 impacts the Company’s

operations on an ongoing basis is highly uncertain.

Since the Company’s products are presently manufactured in China by a related

party, any changes in the outbreak in China and any changes in the Chinese government’s policy may affect the Company’s supplier’s

operations which could affect its ability to manufacture and deliver product in a timely manner.

Supply Chain Risks

3 unchanged sentences

As the port delays have significantly

decreased, we do not believe that the supply chain issues that affected our operations are currently affecting us.

We cannot assure you

that delays will not affect our business in the future.

In 2021, Shenzhen Yi Jia suffered a chip shortage

resulting in a slowdown in delivery of its products to the Company from April to August 2021.

To secure the supply of chips, Shenzhen

Yi Jia changed the payment terms to chip suppliers from 30 days after delivery in the past to prepayment, and it engaged two new chip

Since September 2021, Shenzhen Yi Jia has obtained a supply of chips to meet its production needs and the chip shortage no

longer affects its production.

In 2022, a slowdown in the delivery of components to Shenzhen Yi Jia resulting from supply chain slowdowns

as a result of the effects of mainland China’s COVID policy resulted in an increase in cost of revenue during the period.

assure you that we will not suffer from a chip shortage or that the effects of China’s COVID policy will not affect Shenzhen Yi

Jia’s ability or the ability of its suppliers to delivery products in a timely manner.

decreased, the Company does not believe that the supply chain issues that affected its operations are currently affecting the Company.

The Company cannot assure you that delays will not affect its business in the future.

In 2021, Shenzhen Yi Jia, the Company’s

principal supplier of products, suffered a chip shortage resulting in a slowdown in delivery of its products to the Company from April

to August 2021.

To secure the supply of chips, Shenzhen Yi Jia changed the payment terms to chip suppliers from 30 days after delivery

in the past to prepayment, and it engaged two new chip suppliers.

Since September 2021, Shenzhen Yi Jia has obtained a supply of chips

to meet its production needs and the chip shortage no longer affects its production.

In 2022, a slowdown in the delivery of components

to Shenzhen Yi Jia resulting from supply chain slowdowns as a result of the effects of mainland China’s COVID policy resulted in

an increase in cost of revenue during the three months period ended September 30, 2022.

The Company cannot assure you that it will not

suffer from a chip shortage or that the effects of China’s COVID policy will not affect Shenzhen Yi Jia’s ability or the ability

of its suppliers to delivery products in a timely manner.

Market and Economic Conditions

5 unchanged sentences

A significant downturn

in economic conditions may affect the market for our products and our supplier’s ability to provide products to us on acceptable

We cannot predict the timing, strength, or duration

of any future economic slowdown or any subsequent recovery generally, or in any industry.

If the conditions in the general economy and

the markets in which we operate worsen from present levels, our business, financial condition, operating results could be adversely affected.

For example, in January 2023, the outstanding national debt of the U.S.

government reached its statutory limit.

Department of

the Treasury has announced that, since then, it has been using extraordinary measures to prevent the U.S.

government’s default on

its payment obligations, and to extend the time that the U.S.

government has to raise its statutory debt limit or otherwise resolve its

funding situation.

The failure by Congress to raise the federal debt ceiling could have severe repercussions within the U.S.

and to global

credit and financial markets.

If Congress does not raise the debt ceiling and if the U.S.

government defaults on its payment obligations

or experiences delays in making payments when due, such payment default or delay by the U.S.

government, as well as continued uncertainty

surrounding the U.S.

debt ceiling or the U.S.

Government’s ability to pay debts, could result in a variety of adverse effects for

financial markets, market participants and U.S.

and global economic conditions.

In addition, U.S.

debt ceiling and budget deficit concerns

have increased the possibility a downgrade in the credit rating of the U.S.

government and could result in economic slowdowns or a recession

in the United States.

Although U.S.

lawmakers have passed legislation to raise the federal debt ceiling on multiple occasions, ratings

agencies have lowered or threatened to lower the long-term sovereign credit rating on the United States as a result of disputes over the

debt ceiling.

The impact of a potential downgrade to the U.S.

government’s sovereign credit rating or its perceived creditworthiness

could adversely affect economic conditions, as well as our business, financial condition and operating results.

in economic conditions may affect the market for the Company’s products and its supplier’s ability to provide products on

acceptable terms.

The Company cannot predict the timing, strength,

or duration of any future economic slowdown or any subsequent recovery generally, or in any industry.

If the conditions in the general

economy and the markets in which the Company operates worsen from present levels, its business, financial condition, operating results

could be adversely affected.

E-cigarette regulation

1 unchanged sentence

countries, from no regulation to a total ban.

The legal status of e-cigarette is currently pending in many countries.

The legal status of e-cigarettes is currently pending in many countries.

But as e-cigarettes

1 unchanged sentence

Changes in existing law and regulations and the imposition of new laws, regulation in countries and regions that our major customers

located in may adversely affect the Company’s business.

are located in may adversely affect the Company’s business.

The Federal Food, Drug, and Cosmetic Act requires

5 unchanged sentences

for ENDS products that were not on the U.S.

August 8, 2016, a premarket authorization issued in response to a PMTA is required for the product to enter the U.S.

Company has submitted a PMTA filing for one ENDS product, and, under apparent FDA policies, the agency will not enforce the premarket

review requirements for that product pending review of its PMTA.

However, even with submission of the PMTA application, the FDA may reject

the Company’s application and may prevent the Company’s ENDS products from being sold in the U.S., which will adversely affect

the Company’s business.

to August 8, 2016, and for which a PMTA was not filed by September 9, 2020, a PMTA a premarket authorization issued in response to

a PMTA is required before the subject product may enter the U.S.

The Company has submitted a PMTA filing for one ENDS product,

and, under apparent FDA policies, the agency will not enforce the premarket review requirements for that product pending review of its

However, even with submission of the PMTA application, the FDA may reject the Company’s application and may prevent the Company’s

ENDS products from being sold in U.S., which will adversely affect the Company’s business.

Amendments to the Prevent All Cigarette Trafficking

(“PACT”) Act, which became law in 2021, extend the PACT Act to include e-cigarette and all vaping products, and the amendments

place significant burdens on sellers of vaping products in the United States which may make it difficult to operate profitably in the

United States.

Because of tighter government regulations, the Company will stop marketing tobacco vaping products in the United States,

as the volume of sales from the one tobacco vaping product which the Company may sell in the United States does not justify the marketing

and regulatory costs involved.

(“PACT”) Act, which became law in 2021, extend the PACT Act to include e-cigarette and all vaping products, and place significant

burdens on sellers of vaping products in the United States which may make it difficult to operate profitably in the United States.

of tighter government regulations, the Company has stopped marketing tobacco vaping products in the United States, as the volume of sales

from the one tobacco vaping product which the Company may sell in the United States does not justify the marketing and regulatory costs

In the United States, cannabis vaping products

6 unchanged sentences

what action states will take or the nature and amount of taxes they may impose.

However, the extent the PACT Act applies to cannabis products

that aerosolize liquids, it may be more difficult to sell our products in states that permit the sale of cannabis.

However, to the extent the PACT Act applies to cannabis

products that aerosolize liquids, it may be more difficult to sell our products in states that permit the sale of cannabis.

However, cannabis and its derivatives containing

19 unchanged sentences

can meet the TPD requirements before they can be released.

The Company has complied with TPD requirement that for all its tobacco vaping

products sold in Europe.

The Company has complied with TPD requirement that for all its tobacco products

sold in Europe.

The sale of cannabis vaping products is illegal

4 unchanged sentences

reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s

consolidated financial position as of March 31, 2023 and the results of operations for the three and nine month periods ended March 31,

2023 and March 31, 2022.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary

in order to make the financial statements not misleading have been included.

All significant intercompany accounts and transactions have

been eliminated in consolidation.

The unaudited interim consolidated financial statements have been prepared pursuant to the rules and

regulations of the Securities and Exchange Commission (the “SEC”) and accordingly do not include all of the disclosures normally

made in the Company’s annual consolidated financial statements.

Accordingly, these unaudited interim consolidated financial statements

should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended June 30, 2022, included

consolidated financial position as of September 30, 2023 and the results of operations for the three months ended September 30, 2022 and

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the

financial statements not misleading have been included.

All significant intercompany accounts and transactions have been eliminated in

consolidation.

The unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the

Securities and Exchange Commission (the “SEC”) and accordingly do not include all of the disclosures normally made in the

Company’s annual consolidated financial statements.

Accordingly, these unaudited interim consolidated financial statements should

be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended June 30, 2023, included

in the Company’s registration statement on Form S-1.

The results of operations for the three and nine

month periods ended March 31, 2023 are not necessarily Indicative of the results of operations that may be expected for any other interim

The results of operations for the three month

periods ended September 30, 2023 are not necessarily indicative of the results of operations that may be expected for any other interim

periods or for the year ending June 30, 2024.

6 unchanged sentences

Significant estimates include allowance for doubtful accounts, the useful lives of property

and equipment and intangible asset, impairment of long-lived assets, and deferred cost.

and equipment, impairment of long-lived assets, and deferred cost.

Actual results could differ from those estimates.

Inventories mainly consist of finished goods purchased

from suppliers.

Inventories are stated at the lower of cost or net realizable value.

The cost of an inventory item is determined using

the weighted average method.

An allowance is established when management determines that certain inventories may not be saleable.

costs exceed net realizable value, the Company will record a reserve for the difference between the cost and the net realizable value.

The net realizable value is determined based on the estimated selling price, in the ordinary course of business, less estimated costs

necessary to make the sale.

Allowance for credit losses

adopted Accounting Standards Update 2016-13 “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses

on Financial Instruments” during the three months ended September 30, 2023.

The Company estimates its allowance for current expected

credit losses based on an expected loss model, compared to prior periods which were estimated using an incurred loss model which did not

require the consideration of forward-looking economic variables and conditions in the reserve calculation across the portfolio.

related to adopting the new standard was not material.

The Company estimates its allowances

for expected credit losses for accounts receivable by considering past events, including any historical default, current economic conditions

and certain forward-looking information, including reasonable and supportable forecasts.

As of July 1, 2023, the methodologies that the

Company uses to estimate the allowance for expected credit losses for accounts receivable are as follows:

The Company reviews all accounts

receivable considered at risk semi-annually and performs an analysis based upon current information available about the customers, such

as financial statements, news reports, published credit ratings as well as collateral net of repossession cost, prior collection history

and current and future expected economic conditions.

Using this information, the Company determines the expected cash flow for the accounts

and other receivables and calculates an estimate of the potential loss and the probability of loss.

For those accounts for which the loss

is probable, the Company records a specific allowance.

The Company considers forward-looking

macroeconomic variables such as gross domestic product when quantifying the impact of economic forecasts on its allowance for credit losses.

Macroeconomic variables may vary based on historical experiences, portfolio composition and current environment.

The Company also considers

the impact of current conditions and economic forecasts relating to client-credit ratings, in addition to performing a qualitative review

of credit risk factors across the portfolio.

Forward-looking estimates require the use of judgment, particularly in times of economic

The Company writes off receivables when all efforts at collection have been exhausted and the receivable is considered uncollectible.

The investment represents a certificate of deposit

that the Company holds in HSBC bank.

The entire balance of the investment presented on the balance sheet as of September 30, 2023 is $ 9,192,746

and it matures on February 8, 2024.

Intangible assets

The Company reviews intangible assets for impairment

when events or changes in circumstances indicate the carrying amount may not be recoverable.

The evaluation is performed at the lowest

level of identifiable cash flows independent of other assets, The Company measure recoverability of these assets by comparing the carrying

amounts to the future undiscounted cash flows that the assets are expected to generate.

If the carrying value of the assets is not recoverable,

the impairment recognized is measured as the amount by which the carrying value exceeds its fair value.

There is no indication of impairment

for the period presented.

Intangible assets with definite lives, such as

patents, are amortized over their estimated useful lives on a straight-line basis generally over ten years .

Held-to-maturity investment

The held-to-maturity investment represents a certificate of deposit that

the Company has the intent and ability to hold to maturity and is reported net of any related amortization.

The Company intends to hold

this investment until maturity and it is not remeasured to fair value on a recurring basis.

The gains and losses on this investment are

recorded in the Statements of Operations and Comprehensive Income under “Investment Gain”

The entire balance of the held-to-maturity investment

presented on the balance sheet as of March 31, 2023 of $ 9,604,418 matures on February 8, 2024 .

Intangible assets refer to capitalized external costs, such as filing

fees and associated attorney fees, incurred to obtain issued patents and patent license rights.

All patents are internally generated.

The Company expenses costs associated with maintaining patents subsequent to their issuance in the period incurred.

Capitalized patent

costs are amortized on a straight-line basis over estimated useful lives of 15 - 20 years, which are based on the length of the license

agreements as the Company expects to receive economic benefits over that time.

The Company assesses the potential impairment to capitalized

patent costs when events or changes in circumstances indicate that the carrying amount of our patent portfolio may not be recoverable.

$ 255,650 of patent fees were capitalized during the three months ended September 30, 2023.

Revenue recognition

27 unchanged sentences

The net sales disaggregated by products for the three months period

ended March 31, 2022 and 2023 and nine months period ended March 31, 2022 and 2023 were as follows:

ended September 30, 2022 and 2023 were as follows:

Three months ended

Nine months ended

Net sales by product

September 30,

Net sales by products

Tobacco vaping products

1 unchanged sentence

Cost of revenue

Cost of revenue for the three months ended March 31,

2022 and 2023 and nine months ended March 31, 2022 and 2023 consisted primarily of the cost of purchasing vaping products, which were

purchased from a related party.

Cost of revenue for the three months ended September 30,

2022 and 2023 consisted primarily of the cost of purchasing vaping products, which were purchased from a related party.

Stock-based compensation

The Company measures and recognizes compensation

expenses for stock-based payment awards, including stock options, and restricted stock units (“RSUs”) granted to directors,

and advisors, based on the grant date fair value of the awards.

The Company engages a third party valuer to determine fair value of stock

options using the binomial option pricing model.

The fair value of RSUs is measured on the grant date based on the closing fair market

value of the Company’s common stock.

The resulting cost is recognized over the period during which an employee is required to provide

service in exchange for the awards, usually the vesting period, which is generally four years for stock options and three years for RSUs.

Stock-based compensation is recognized on a straight-line basis, net of estimated forfeitures, over the period during which services are

provided in exchange for the award.

Stock-based compensation expense is recorded in the general and administrative expense in the consolidated

statements of operations.

Recent accounting pronouncements

3 unchanged sentences

to take advantage of the benefits of this extended transition period.

Accounting pronouncements not yet effective

In June 2016, the Financial Accounting

Standards Boards (“FASB”) amended guidance related to the impairment of financial instruments as part of ASU 2016-13,

Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

The guidance replaces the

incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the

estimate of expected credit loss.

For public business entities that meet the definition of a U.S.

Securities and Exchange Commission

(“SEC”) filer (“SEC filer”), excluding entities eligible to be smaller reporting companies (SRCs) as defined

by the SEC, ASU No.

2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods

within those fiscal years.

For all other entities, including SRCs, ASU No.

2016-13 is effective for fiscal years beginning

after December 15, 2022, including interim periods within those fiscal years.

The Company is in the process of evaluating the

impact that this guidance will have on its consolidated financial statements.

In April 2019, the FASB issued ASU 2019-04,

“Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic

825, Financial Instruments”, which provides narrow-scope amendments to clarify and improve guidance within the standards on credit

losses, hedging, and recognition and measurement of financial instruments.

Apart from the amendments to ASU 2016-13 mentioned above, the

ASU also included subsequent amendments to ASU 2016-01.

The effective date for Topic 815 and 825 was fiscal years beginning after December

15, 2020 and 2019, respectively, and the adoption had no material impact on our financial position, results of operations and cash flows.

The effective date for Topic 326 was delayed by ASU 2019-10 to fiscal years beginning after December 15, 2022.

We do not expect that the

adoption of this guidance will have a material impact on the financial position, results of operations and cash flows.

In October 2018, the FASB issued ASU 2018-17,

Consolidation (Topic 810):

Targeted Improvements to Related Party Guidance for Variable Interest Entities, (“ASU 2018-17”).

ASU 2018-17 requires reporting entities to consider indirect interests held through related parties under common control on a proportional

basis rather than as the equivalent of a direct interest in its entirety for determining whether a decision-making fee is a variable interest.

For entities other than private companies, the standard is effective for fiscal years beginning after December 15, 2019, and interim

periods within those fiscal years.

The ASU is effective for a private company for fiscal years beginning after December 15, 2020, and

interim periods within fiscal years beginning after December 15, 2022.

The Company had reviewed recent accounting pronouncements and determined

that none of the pronouncements not yet effective are expected to have a material impact on the Company’s financial statements.

Accounting pronouncements adopted during the

three months ended September 30, 2023

In June 2016, the FASB issued ASU 2016-13:

Instruments – Credit Losses (Topic 326).

This ASU requires the use of an expected loss model for certain types of financial

instruments and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates.

For trade receivables, loans and held-to-maturity debt securities, an estimate of lifetime expected credit losses is required.

For available-for-sale

debt securities, an allowance for credit losses will be required rather than a reduction to the carrying value of the asset.

2019, the FASB delayed the effective date for this ASU for private companies (including emerging growth companies) and will be effective

for annual reporting periods beginning after December 15, 2022, with early adoption permitted.

As the adoption of this standard on July 1, 2023 was immaterial, the Company did not record a cumulative-effect adjustment to retained

earnings on that date.

On September 29, 2022, FASB issued ASU 2022-04:

Liabilities-Supplier Finance Programs (Topic 405-50):

Disclosure of Supplier Finance Program Obligations.

This update requires that a

buyer in a supplier finance program disclose additional information about the program to allow financial statement users to better understand

the effect of the programs on an entity’s working capital, liquidity, and cash flows.

This update will be effective for the Company

for fiscal years beginning after December 15, 2022, except for the amendment on roll forward information, which is effective for fiscal

years beginning after December 15, 2023.

Early adoption is permitted.

Entities are required to apply the

amendments in ASU 2018-17 retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period

We do not expect that the adoption of this guidance will have a material impact on our financial position, results of operations

and cash flows.

The adoption of this update had no material impact on the Company’s

consolidated financial statements.

Customer Concentration

For the three months ended September 30, 2022 and 2023, the Company’s

major customers, who accounted for more than 10 % of the Company’s consolidated revenue, were as follows:

Three months ended

September 30,

Major Customers

* Represented less than 10 % of consolidated revenue.

CASH AND CASH EQUIVALENTS

Below is a breakdown of the Company’s cash

balances in banks as of June 30, 2022 and March 31, 2023, both by geography and by currencies (translated into U.S.

balances in banks as of June 30, 2023 and September 30, 2023, both by geography and by currencies (translated into U.S.

September 30,

By Geography:

Cash in Malaysia

“HKD” refers to Hong Kong dollars,

“GBP” refers to British pounds, and “EUR” refers to Euros.

“GBP” refers to British pounds, “EUR” refers to Euros and “RM” refers to Malaysia ringgit.

FAIR VALUE MEASUREMENT

As of June 30, 2022 and March 31, 2023,

information about inputs into the fair value measurement of the Company’s assets and liabilities that are measured at fair value

on a recurring basis in periods subsequent to their initial recognition is as follows:

As of June 30, 2023 and September 30,

2023, information about inputs into the fair value measurement of the Company’s assets and liabilities that are measured at fair

value on a recurring basis in periods subsequent to their initial recognition is as follows:

Cash and cash equivalents, accounts receivable,

prepaid expenses, other receivables and due from related parties are financial assets with carrying values that approximate fair value

due to their short-term nature.

Accounts payable, accounts payable – related party, contract liabilities, accrued liabilities and

other payables and due to related parties are financial liabilities with carrying values that approximate fair value due to their short-term

prepaid expenses and other receivables are financial assets with carrying values that approximate fair value due to their short-term nature.

Accounts payable, accounts payable – related party, contract liabilities, accrued liabilities and other payables and due to related

parties are financial liabilities with carrying values that approximate fair value due to their short-term nature.

ACCOUNTS RECEIVABLE, NET

As of June 30, 2022 and March 31, 2023, accounts

receivable consisted of the following:

As of June 30, 2023 and September 30, 2023,

accounts receivable consisted of the following:

September 30,

Accounts receivable – gross

Allowance for doubtful accounts

Allowance for credit losses

( 1,498,806 )

Accounts receivables, net

The Company recorded $ 0 , $ 1,827,265 , $ 0 and $ 2,226,090 bad debt

expense for the three months ended March 31, 2022 and 2023 and nine months ended March 31, 2022 and 2023, respectively.

( 1,095,934 )

Accounts receivable, net

The Company recorded $ 0 and $ 225,487 bad debt expense for the

three months ended September 30, 2022 and 2023, respectively.

For the three months ended September 30, 2022 and 2023, the Company

wrote off accounts receivable against allowance for credit losses of $ 0 and $ 628,359 , respectively.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of June 30, 2023 and September 30, 2023,

prepaid expenses and other current assets consisted of the following:

September 30,

Prepaid inventories

Other receivable

Prepayments primarily consist of prepayment for

raw materials and consulting services provided by suppliers.

PROPERTY, PLANT AND EQUIPMENT, NET

As of June 30, 2022 and March 31, 2023, property,

equipment and leasehold improvement consisted of the following:

As of June 30, 2023 and September 30, 2023, property, plant and

equipment consisted of the following:

September 30,

Leasehold improvement

2 unchanged sentences

accumulated depreciation

For the three months ended March 31, 2022

For the three months ended September 30,

2022 and 2023, depreciation expense amounted to $ 6,556 and $ 29,118 , respectively.

For the nine months ended March 31, 2022 and 2023, depreciation

expense amounted to $ 4,800 and $ 20,887 , respectively.

INTANGIBLE ASSETS

On September 30, 2022, an intellectual property transfer agreement

and an exclusive license agreement was signed such that all patents, trademarks, Know-how and Know-how Documentation related to cannabis

vaping products and tobacco vaping products were transferred from Tuanfang Liu, Aspire Global and Shenzhen Yi Jia to Aspire North America

and Aspire Science.

As the intangible assets were transferred from Tuanfang Liu, the chief executive officer and controlling stockholder,

and the companies controlled by Tuanfang Liu, the transfer was considered as a capital contribution by the stockholder, which is shown

as a transaction on the statements of changes in stockholders’ equity.

The Company engaged a third party firm to perform a valuation

to estimate the fair values of the intangible assets transferred, in accordance with ASC 350.

Information regarding transferred intangible assets

is as follows:

As of March 31, 2023

Definite-lived intangible assets – Patents

Indefinite-lived intangible assets – trademarks

Total intangible assets

Patents have a weighted-average useful life of

9.5 years as of March 31, 2023.

Amortization expense relating to the acquired

intangible assets was $ 0 , $ 0.8 million, $ 0 and $ 1.5 million for the three months ended March 31, 2022 and 2023 and nine months ended March

31 2022 and 2023, respectively.

CONTRACT LIABILITIES

As of June 30, 2022 and March 31, 2023, the Company

had total contract liabilities of $ 1,672,051 and $ 742,247 , respectively.

These liabilities are advance deposits received from customers

after an order has been placed.

As of March 31 2023, the Company expects all of the contract liabilities to be settled in less than one

The decrease in the balance at March 31, 2023 was due to less orders on hand on that date.

As of June 30, 2023 and September 30, 2023, the

Company had total contract liabilities of $ 988,556 and $ 1,290,061 , respectively.

These liabilities are advance deposits received from

customers after an order has been placed.

As of September 30, 2023, the Company expects all of the contract liabilities to be settled

in less than one year.

The increase in the balance at September 30, 2023 was due to more orders on hand on that date.

The Company has operating lease arrangements for

office premises in Hong Kong and California.

These leases typically have terms of two to five years and are expensed on a straight-line

office premises in Hong Kong , California and Malaysia.

These leases typically

have terms of two to five years and are expensed on a straight-line basis.

Leases with an initial term of 12 months or less

4 unchanged sentences

the Company is the lessee are presented as follow:

September 30,

Right-of-use assets

1 unchanged sentence

Lease liabilities – non-current

As of March 31, 2023, the maturities of

our lease liabilities (excluding short-term leases) are as follows:

As of September 30, 2023, the maturities of our

lease liabilities (excluding short-term leases) are as follows:

September 30,

Total future lease payments

1 unchanged sentence

Total lease liabilities

The Company incurred lease costs, which includes

the amortization of the right-of-use assets and the payment of short-term leases, of $ 74,052 , $ 256,676 , $ 215,713 and $ 770,049 on the Company’s

consolidated statements of operations and comprehensive (loss)income for the three months ended March 31, 2022 and 2023 and nine months

ended March 31, 2022 and 2023, respectively.

The Company made payments of $ 77,734 , $ 300,593 ,

$ 226,420 and $ 840,549 under the lease agreements during the three months ended March 31, 2022 and 2023 and nine months ended March 31,

2022 and 2023, respectively.

The Company incurred lease costs, which include

the amortization of the right-of-use assets and the payment of short-term leases, of $ 274,951 and $ 278,441 on the Company’s consolidated

statements of operations and comprehensive loss for the three months ended September 30, 2022 and 2023, respectively.

The Company made payments of $ 239,429 and $ 309,252

under the lease agreements during the three months ended September 30, 2022 and 2023, respectively.

The weighted-average remaining lease term related

to the Company’s lease liabilities as of June 30, 2022 and March 31, 2023 was 2 years and 4 years, respectively.

to the Company’s lease liabilities as of June 30, 2023 and September 30, 2023 was 4 years and 3 years, respectively.

The discount rate related to the Company’s

lease liabilities as of both June 30, 2022 and March 31, 2023 was 6 % and 8 %.

The discount rates are generally based on estimates of the

Company’s incremental borrowing rate, as the discount rates implicit in the Company’s leases cannot be readily determined.

lease liabilities as of both June 30, 2023 and September 30, 2023 was 8 % and 8 %.

The discount rates are generally based on estimates of

the Company’s incremental borrowing rate, as the discount rates implicit in the Company’s leases cannot be readily determined.

ACCRUED LIABILITIES AND OTHER PAYABLES

As of June 30, 2022 and March 31, 2023,

As of June 30, 2023 and September 30,

2023, accrued liabilities and other payables consisted of the following:

Accrued salaries and related benefits

September 30,

Other payables

Accrued salaries and related benefits

Accrued expenses

Freight payable

Dividends payable represent a dividend declared

by the Company’s HK subsidiary, Aspire Science, in the year ended June 30, 2020, which was payable to Aspire Science’s then

sole stockholder, who is the Company’s chief executive officer.

The dividend was declared prior to the transfer of the equity interest

in Aspire Science to Aspire Holdings, which subsequently transferred the equity interest to Ispire International.

Set forth below is the

information relating to the dividend payable at June 30, 2022 and March 31, 2023.

As of June 30, 2022

Dividends declared

Dividends paid

( 3,362,639 )

As of March 31, 2023

Other tax payable

RELATED PARTY TRANSACTIONS

a) The table below sets forth the major related

parties and their relationships with the Company:

a) The table below sets forth the major related parties and

their relationships with the Company:

Name of related parties and Relationship with the Company

4 unchanged sentences

-Shenzhen Yi Jia, a Chinese company that is 95% owned by the Company’s chairman and 5% by the chairman’s cousin.

b) Tuanfang Liu is also Aspire Global’s

chief executive officer and a director of both the Company and Aspire Global, and his wife, Jiangyan Zhu, is also a director of both companies.

As of March 31, 2023, Mr.

Zhu beneficially own 66.5 % and 5.0 %, respectively, of the outstanding shares of both Aspire Global

and the Company.

c) The Company had the following balances due from related parties:

Shenzhen Yi Jia

The balances represent payment on behalf of these related parties,

such as freight and tariff charges and others.

These balances as of June 30, 2022 were all non-interest bearing, unsecured, had no due

date and were repayable on demand and the balances were fully settled in November 2022.

d) The balances in due to related parties at June 30, 2022 and March

31, 2023 represent amounts due to Eigate of $ 40,672,768 and $ 0 , respectively.

The balances are all non-interest bearing, unsecured, have

no due date and are repayable on demand.

e) For both three months ended March 31, 2022

and 2023, substantially all of the Company’s tobacco and cannabis vaping products were purchased from Shenzhen Yi Jia.

30, 2022 and March 31, 2023, the accounts payable–- related party was $ 41,982,373 and $ 56,044,267 , respectively, which was payable

b) Tuanfang Liu is also Aspire Global’s co-chief executive

officer and a director of both the Company and Aspire Global, and his wife, Jiangyan Zhu, is also a director of both companies.

September 30, 2023, Mr.

Zhu beneficially own 66.5 % and 5.0 %, respectively, of the outstanding shares of Aspire Global.

of September 30, 2023, Mr.

Zhu beneficially own 61.3 % and 4.6 %, respectively, of the outstanding shares of the Company.

c) The balances in due to related parties at June 30, 2023 and

September 30, 2023 represent amounts due to Shenzhen Yi Jia of $ 710,910 and $0 , respectively.

The balances are all non-interest bearing,

unsecured, have no due date and are repayable on demand.

d) For both three month periods ended September 30, 2022 and

2023, substantially all of the Company’s tobacco and cannabis vaping products were purchased from Shenzhen Yi Jia.

As of June 30,

2023 and September 30, 2023, the accounts payable–- related party was $ 51,698,588 and $ 50,504,883 , respectively, which was payable

to Shenzhen Yi Jia.

For the three months ended March 31, 2022 and 2023 and nine months ended March 31, 2022 and 2023, the purchases

from Shenzhen Yi Jia were $ 16,485,000 , $ 16,961,308 , $ 61,318,089 and $ 67,762,917 , respectively.

For the three months ended March 31, 2022

and 2023 and nine months ended March 31, 2022 and 2023, income(loss) before income taxes consists of:

For the three months ended September 30, 2022 and 2023, the purchases from Shenzhen Yi Jia were $ 22,304,556

and $ 23,518,413 , respectively.

For the three months ended September 30,

2022 and 2023 income(loss) before income taxes consists of :

Three months ended

Nine months ended

( 1,866,511 )

( 4,972,501 )

( 4,313,238 )

September 30,

( 2,944,680 )

2 unchanged sentences

$ ( 878,570 )

The Company’s effective tax rate for the three months ended March

31, 2022 and 2023 and nine months ended March 31, 2022 and 2023 was different from the Hong Kong statutory income tax rate due primarily

subsidiary being in a loss position.

No tax benefit has been recognized for this current loss and the related carryforward

losses of this subsidiary, as a full valuation allowance has been established against the deferred tax asset arising from the losses.

The Company’s effective tax rate for the

three months ended September 30, 2022 and 2023 was different from the Hong Kong statutory income tax rate due primarily to the U.S.

being in a loss position.

No tax benefit has been recognized for this current loss and the related carryforward losses of this subsidiary,

as a full valuation allowance has been established against the deferred tax asset arising from the losses.

As at September 30, 2023, income tax payable of $ 496,045 was from income

generated during the three months ended September 30, 2023, and $ 63,946 was from income generated prior to that date.

As at June 30, 2023,

income tax payable of $ 63,853 was from income generated during the year ended June 30, 2023.

All income tax payables arose solely from

Hong Kong operation.

As at September 30, 2023, there were unrecognized deferred tax assets

of $ 4,593,466 , out of which $ 3,822,280 were net operating loss carryforwards that may result in future income tax benefits, resulting

from net operating losses of $ 18,201,331 arose from Aspire North America LLC.

The amount of the valuation allowance as of September 30,

2023 was $ 4,593,466 , resulting from an addition of $ 93,022 to the valuation allowance of $ 4,500,444 as of June 30, 2023.

STOCK-BASED COMPENSATION

Stock Options

On September 4, 2023, the Board, as administrator

of the Plan, granted pursuant to the Plan non-qualified stock options to its executive officers, and other employees to purchase an aggregate

of 2,455,000 shares of common stock, at exercise price of $ 9.76 per share, being the fair market value on the date of grant.

50,000 options that vested upon grant, the remaining options shall vest over four years with the initial 25 % of the awarded options vesting

on the one-year anniversary of September 4, 2023, with the remaining 75 % of the award vesting monthly on a 1/36 th pro-rata

basis for the following 36 months thereafter for each employee.

The following is a summary of stock option activity

transactions as of and for the period ended June 30, 2023 and September 30, 2023:

Outstanding and exercisable at June 30, 2023

Outstanding and exercisable at September 30, 2023

The aggregate intrinsic value of options exercised

for each of the three months ended September 30, 2022 and 2023 was $ 0 .

Aggregate intrinsic value represents the value of the Company’s

closing stock price on the last trading day of the period in excess of the weighted-average exercise price multiplied by the number of

options outstanding or exercisable.

The total fair value of shares vested for the

three months ended September 30 2022 and 2023 was $ 0 and $ 505,979 , respectively, using the binomial option pricing model based on the

following assumptions:

Three months ended

September 30, 2023

Risk-free interest rate

Expected life

Expected volatility

Expected dividend yield

Details of the options outstanding and exercisable

as of September 30, 2023 are as follows:

Vesting period

Exercisable period

life in years

Vest in September 2023

September 4, 2023 to September 4, 2033

Vest in September 2024

September 4, 2024 to September 4, 2033

Vest in September 2025

September 4, 2025 to September 4, 2033

Vest in September 2026

September 4, 2026 to September 4, 2033

Vest in September 2027

September 4, 2027 to September 4, 2033

A total of 50,000 stock options are exercisable

as of September 30, 2023.

RSUs granted to directors and employees vest cumulatively

as to one-third of the restricted stock units on each of the first three anniversaries of the date of grant.

RSUs granted to consultants

vest over the respective service periods.

RSUs are accounted for as equity using the fair value method, which requires measurement and

recognition of compensation expense for all awards granted to employees, directors and consultants based upon the grant-date fair value.

Weighted average

Unvested, June 30, 2023

Canceled and forfeited

Unvested, September 30, 2023

The aggregate grant date fair value for the RSUs

during the three months period ended September 30, 2023 was $ 461,580 .

A total of $ 967,559 stock-based compensation expenses

were recognized in general and administrative expenses in the consolidated statements of operations for three months ended September 30,

As of September 30, 2023, the Company had approximately $ 18,787,853 in unrecognized compensation expenses related to all non-vested

options and RSUs that will be recognized over the weighted-average period of 2.3 years.

EARNINGS PER SHARE

The following table presents a reconciliation

of basic net income per share:

of basic net loss per share:

Three months ended

Nine months ended

Net (loss)income

$ ( 990,557 )

September 30,

$ ( 2,001,754 )

$ ( 1,374,615 )

Weighted average basic and diluted share of common stock outstanding

Net (loss) income per basic and diluted share of common stock

SUBSEQUENT EVENT

In April 2023, the Company completed the public

offering of 3,105,000 shares of common stock at a public offering price of $ 7.00 per share, which includes 405,000 shares issued upon

the exercise by the underwriters of their over-allotment option.

Weighted average basic and diluted ordinary shares outstanding

Net loss per basic and diluted share of common stock

SUBSEQUENT EVENTS

On October 9, 2023, the Board, as administrator

of the 2022 Equity Incentive plan, granted pursuant to the Plan non-qualified stock options to its employees from Ispire Malaysia to purchase

an aggregate of 330,000 shares of common stock, at an exercise price of $ 9.19 per share, being the closing price as of October 6, 2023.

These options shall vest over four years with the initial vesting of 25 % of the awarded options vesting on the one-year anniversary date

hereof, with the remaining 75 % of the award vesting pro-rata on a monthly basis for the following 36 months thereafter.

On November 3, 2023, the Board, as administrator

of the 2022 Equity Incentive plan, granted pursuant to the Plan non-qualified stock options to one of its employee to purchase an aggregate

of 150,000 shares of common stock, par value $ 0.0001 , and such options shall be exercised for a purchase price equal to the closing price

of the Company’s common stock on grant date.

A number of 37,500 options shall be granted on November 3, 2023, December 13, 2023,

March 13 2024, and June 13, 2024 respectively, totaling 150,000 options.

These options shall vest immediately upon grant and shall be

exercisable for four years from the date of grant.

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