Ispire Technology Inc. 10-K

ITEM 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective due to the material weaknesses in internal controls over financial reporting noted below. Management’s Responsibility for Internal Controls over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a -15(f) under the Exchange Act. Our internal control was designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements. Inherent Limitations of Internal Control over Financial Reporting Because of its inherent limitations, internal control over financial reporting may not prevent or detect all errors or misstatements in our financial statements. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Management’s Report of Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2024 under the supervision and participation of our management, including our Chief Executive Officer and Chief Financial Officer. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on that assessment, management concluded that, the Company’s internal control over financial reporting was not effective as of June 30, 2024, due to the material weaknesses described below. 55 Material Weaknesses We identified the following material weaknesses in our internal control over financial reporting as of June 30, 2024. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the issuing company’s annual or interim financial statements will not be prevented or detected on a timely basis. 1). The lack of controls to record assets acquired from a controlling stockholder in accordance with GAAP; 2). The lack of controls needed to enable us to evaluate significant estimates, including (i) the sufficiency of inventory reserve for slow-moving inventories and (ii) the credit loss history and use it to evaluate the sufficiency of credit loss reserve for accounts receivable under the Topic 326; 3). The lack of comprehensive accounting policies and procedures manual in accordance with U.S. GAAP and SEC reporting, including IT general controls, and a financial risk assessment to evaluate controls; 4). The lack of a sufficient complement of personnel with appropriate technical expertise to evaluate complex accounting matters, resulting in the need to restate our unaudited financial statements as of and for the six months ended December 31, 2022 and the nine months ended March 31, 2023; the audited financial statements for the annual period ended June 30, 2023; and the unaudited financial statements for the three months ended September 30, 2023, the six months ended December 31, 2023, and the nine months ended March 31, 2024. Therefore, management determined that we did not maintain effective internal control over financial reporting as of June 30, 2024. Remediation Plan for the Material Weaknesses : We are committed to continually improving our internal controls over financial reporting. Subsequent to June 30, 2023, we appointed a new chief financial officer and a vice president of finance, as part of our program to develop and implement effective internal controls over financial reporting. Additionally, management is currently working on the plan to address the material weaknesses noted above including, but not limited to the following: 1). Engaging an expert third party advisory firm to implement and then assess a formal internal controls framework in accordance with the COSO 2013 Internal Controls Framework and as required by Section 404(a) of the Sarbanes-Oxley Framework. 2). Perform scoping and risk assessment of material financial statement line items and identify key processes and systems including documentation of key processes and internal controls. 3). Implement formal remedial action plans to address the root cause for these material weaknesses noted above. 4). Assess the design and operational effectiveness of the internal controls over financial reporting, including the remedial actions implemented. The material weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period and management has concluded, through testing, that these controls are operating effectively. As we continue to evaluate and work to improve our internal control over financial reporting, we may decide that additional measures are necessary to address these identified control deficiencies. Changes in Internal Control over Financial Reporting During the year ended June 30, 2024, we developed and commenced the implementation of improvements to internal controls over financial reporting, and we are continuing to develop and implement internal controls over financial reporting particularly in view of the material weakness described above. Item 9B. Other Information Not Applicable. Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections Not Applicable. 56 PART III ITEM 10. Directors, Executive Officers and Corporate Governance Listed below are the names of our directors and executive officers, their ages as of the date of this Annual Report, their positions held and the year they commenced service with us. Name Age Position/Title Tuanfang Liu 3 51 Co-Chief Executive Officer and Chairman Michael Wang 61 Co-Chief Executive Officer and President of Aspire North America James Patrick McCormick 57 Chief Financial Officer Tirdad Rouhani 41 President Steven Przybyla 38 Chief Legal Officer and Secretary Jiangyan Zhu 48 Director Christopher Robert Burch 1,2,3 56 Independent Director Brent Cox 1,2 41 Independent Director John Fargis 1,2,3 57 Independent Director 1 Member of the Audit Committee 2 Member of the Compensation Committee 3 Member Nominating and Corporate Governance Committee. Tuanfang Liu has been serving as our chairman of the board of directors and chief executive officer since our organization and co-chief executive officer since August 7, 2023. Mr. Liu has also served as chairman of the board and chief executive officer of Aspire Global, a position he has held since its organization. Mr. Liu also serves as chairman of Shenzhen Yi Jia since he founded the company in June 2010. He is responsible for our daily operations and research and development of the e-cigarette and cannabis vaporizer technology products. Mr. Liu has served as the vice-chairman of the European Union E-cigarette Association since 2019, vice-chairman and founding member of the Canada E-cigarettes Association since 2019, vice chairman of the China Electronics Chamber of Commerce since 2017, and executive vice-chairman and founder of the Shenzhen E-Vapor Industry Association since October 2017. He received “Shenzhen High-level Professionals” award in 2019. Mr. Liu holds doctorate degrees in business management from Victoria University School of Management in Switzerland and EuroPort Business School in the Netherlands, respectively. He has more than 14 years of experience in research and development of the e-cigarette products and quality control management. Mr. Liu is the spouse of Jiangyan Zhu. Michael Wang has been serving as co-chief executive officer since August 7, 2023, having served as our chief financial officer from our organization until August 7, 2023, and he has served as president of Aspire North America since its organization in 2020. Mr. Wang served chief financial officer of Aspire Global from August 2020 until his resignation in September 2022. Mr. Wang is an experienced chief executive officer, chief operating officer and president of various companies with leadership skills in profit and loss management, finance, human resources, products, technology, sales and operations. Mr. Wang has approximately 12 years of internet technology and e-commerce experience. From September 2018 through August 2020, he was the president, chief operating officer and co-chief executive officer of The Pharm/Sunday Goods (located in California and Arizona), a vertically integrated leader in the cannabis cultivation, processing, manufacturing, distribution, wholesale, and retail industry. Mr. Wang managed and transformed the cultivation, manufacturing and wholesale divisions. Mr. Wang was with Onestop Commerce, a leading e-commerce technology and service company, as president and chief operating officer from February 2013 to July 2015 and as chief executive officer from July 2015 to June 2018. Onestop Commerce managed omni-channel-commerce for major lifestyle brands and retailers. From May 2005 through June 2010, he was the chief operating and fulfillment officer and an investor in Zazzle, a leader in online customization and personalization service. He started his career in 1992 at Honeywell and also worked at Technicolor, ESS Technology and Vitec Group. Mr. Wang received bachelor of science and master of science degrees in aerospace engineering in 1983 and 1985 respectively, from the Beijing University of Aeronautics & Astronautics also known as Beihang University. In 1987, he received a master of science degree in systems engineering from Oakland University in Rochester, Michigan. In 1992, Mr. Wang received an MBA in Finance and General Management from the University of Chicago’s Booth School of Business. 57 James (Jim) Patrick McCormick has been our chief financial officer since May 17, 2024. Mr. McCormick began his career in public accounting with KPMG in 1989. His first consumer goods experience came with Mid-America Pepsi-Cola before joining British American Tobacco’s (BAT) associate company Brown & Williamson Tobacco Corporation in 1992. At BAT, Mr. McCormick held multiple international general management and Chief Financial Officer roles spending 13 years living abroad in seven different markets in Europe, South America, South East Asia, Sub-Sahara and Northern Africa before returning to the United States in 2009. Following his return, Mr. McCormick held Chief Financial Officer roles in Federal Flange Inc., a subsea components manufacturer in the oil and gas sector from February 2009 to October 2010, and in Sodexo’s Corporate Service division from October 2011 to February 2013. Mr. McCormick served as Chief Financial Officer from April 2014 to July 2015 at Electronic Cigarettes International Group Ltd. (OTCBB: ECIG), a publicly traded vaping products company with operations in the United States and the United Kingdom. Mr. McCormick served as Chief Operating Officer and Chief Financial Officer of KushCo Holdings Inc. from August 2017 to January 2019 and as President of Ignite International Inc. from January 2019 to December 2019. Since January 2020, Mr. McCormick has served as a management consultant to various firms in the cannabis and nicotine industries. Mr. McCormick graduated from Eastern Illinois University with a Bachelor of Science in Finance and Accounting in 1988 and from Southern Illinois University Edwardsville with Master of Business Administration in 1992. Tirdad Rouhani served as our chief operating officer from July 2022 until his appointment as our president. In the prior four years, Mr. Rouhani has been deeply entrenched in the cannabis industry. He held the role of Chief Operating Officer at Touchstone (one of the largest cannabis extraction lab and co-packing businesses in California) in 2019 prior to taking on the role of Chief Executive Officer for Napalm Brands, a Los Angeles-based cannabis products brand, in March 2020. Prior to entering the cannabis industry through his position at Napalm Brands, Mr. Rouhani co-founded Block Nexus, an incubator of SaaS data aggregator technologies in 2016 and served as a principal until 2019. Between 2008 and 2015, Mr. Rouhani served as a business process consultant at Live Nation (NYSE: LYV), a multinational entertainment company that promotes, operates and manages ticket sales for live entertainment. Prior to joining Live Nation, Mr. Rouhani additionally held positions at Deloitte and Real Estate Income Partners. He received his B.A. and Masters in Accounting from the University of Arizona where he studied business. Steven P. Przybyla has served as our chief legal officer and secretary since September 1, 2023. Mr. Przybyla has 10 years of regulated cannabis industry experience and a half-decade of experience in nicotine/tobacco product regulation. From July 2020 to April 2023, Mr. Przybyla was General Counsel and Corporate Secretary, and then President of Hemp/Cannabis, at 22nd Century Group. Inc., a plant biotechnology company. While at 22nd Century, Mr. Przybyla helped to secure the only Modified Risk Tobacco Product approval for a combustible cigarette authorized by the U.S. Food and Drug Administration to date. Prior to that, he was President of the Medical Division at Jushi, Inc., a multi-state cannabis operator, from 2018 to 2020, General Counsel at Dent Neurologic Group LLP from 2016 to 2018 and General Counsel at Seneca Development Corporation from 2015 to 2016. Early in his career, he worked as an associate at Phillips Lytle LLP. Mr. Przybyla received his undergraduate degree in Economics from Washington & Lee University and his Juris Doctor from Columbia Law School. 58 Jiangyan Zhu has been serving as our director since inception. Ms. Zhu is one of the founders of Aspire Global and is a director of Aspire Global, and, since 2013, she has served as vice president of finance of Shenzhen Yi Jia, where she is responsible for financial management, assisting in human resources management and establishing and improving the automated office system. Ms. Zhu holds a bachelor’s degree in business management from Jiangxi University of Technology. She also holds a Business Management certificate from the College of Continuing Education Graduate School of Shenzhen Tsinghua University. Ms. Zhu is the spouse of Mr. Tuanfang Liu. Christopher Robert Burch has been serving as a director since July 2023. He has worked in the finance and venture capital industries for more than 15 years. Currently, Mr. Burch is consulting for Bioglobal Inc., a biopesticides company. From September 2020 to May 2022, Mr. Burch served as Chief Financial Officer at Braun Bio-Technology (Shan Dong) Co. Ltd. in China where he was responsible for fundraising and corporate strategies. Prior to that, from January 2020 to September 2020, Mr. Burch served as Chief Financial Officer at Waton Corporation Limited where he was responsible for fundraising, financial planning, cash flow management, investor relations, banking relations, securities licensing, and strategy direction. From July 2019 to November 2019, Mr. Burch worked at Zhejiang Panshi Information Technology Co. Ltd. as a Vice President responsible for corporate strategic investment. From March 2017 to July 2019, Mr. Burch served as a Managing Director at Feiyang Group Co. Ltd. in Hong Kong and China where he was responsible for fundraising and providing advisory services to the sector. Prior to joining us, from October 2008 to October 2014 Mr. Burch served on the board of directors of KeenHigh Technologies Limited, listed on Taiwan’s Emerging Stock Market (TW:3651). In 2006, Mr. Burch received a Master of Business Administration with a focus on technology management from Tsinghua University. In 1993, Mr. Burch received a bachelor’s degree in business administration with concentration in decision sciences from Georgia State University. In 1991, Mr. Burch received a bachelor’s degree in business administration with concentration in finance from University of Georgia. We believe that Mr. Burch is well qualified to serve as a member of our board of directors because of his experience in finance, operations of public companies and corporate fundraising and strategy. Brent Cox has been serving as a director since April 2023. He also serves as the co-founder and managing partner of The Inception Companies, a private investment firm, a position he has held since 2016. From September 2008 to April 2016, he served as a principal investor of the Yucaipa Companies, a Los Angeles, California based private equity firm where he was responsible for sourcing, analyzing and executing investment opportunities, structuring financing for investments and monitoring the performance and strategic initiatives of its portfolio companies. From 2006 to 2008, Mr. Cox served as an investment banking analyst in the Leveraged Finance Group of Jefferies & Co. a multinational independent investment bank and financial services company. Mr. Cox received a bachelor of science degree from the University of Southern California. Mr. Cox previously served on the boards of Medmen Enterprises Inc. (OTC: MMNFF), The Pharm, LLC, Pacific Dutch Group, LLC, and has also served as a board observer for Soho House & Co Inc. (NYSE: SHCO), Americold Realty Trust (NYSE: COLD), Versacold International Corp, Stephen Webster Limited, Garrard & Co. Limited, and Eimskipafélag Íslands hf. (IC: EIM). We believe Mr. Cox is well-qualified to serve as a member of our board of directors due to his experience in investment banking and prior corporate governance experience having served on corporate boards of directors. John Fargis has been serving as a director since April 2023. He is the co-founder and principal of BYG Advantage since June 2014, a Beijing-based platform that outsources business development, sales acceleration bridging best in class technology into the Asia Pacific region. Clients include Hashicorp, Trustonic, Tomorrow.io, and EF. Its services include market analysis, market entry, market acceleration, government relations and special vehicle creation across the region. Mr. Fargis founded and runs Dustybrine LLC, a market entry consulting firm in New York State. Mr. Fargis has been serving as the professor of management, strategy, and emerging markets at Hult International Business School since February 2014, where he teaches courses including strategy, management, emerging markets, leadership, operations and big data. Mr. Fargis has been also serving as the Adjunct Professor of Strategy and China History since January 2014 in Shanghai, China. Mr. Fargis has been serving as the principal Asia-Pacific of Hortonworks since 2014. From March 2010 to December 2013, Mr. Fargis served as the executive vice president and general manager at Kaseya where he incorporated, staffed and ran offices for Kaseya in Beijing, Seoul, Tokyo and Hong Kong. The company was purchased by Insight Venture Partners in June 2013. From 2007 to April 2010, Mr. Fargis served as the vice president sales and general manager of Asia of On2 Technologies which was purchased by Google in February 2010. From August 2005 to October 2007, Mr. Fargis served as the general manager Asia Pacific of Global IP Solutions (GIPS), where he oversaw sales and business development strategy for Global IP Sound (GIPS) in Asia. GIPS provides premiere quality speech processing technology for Voice Over IP (VOIP) networks, and its software enables numerous clients including application providers such as Skype, Google, AOL, Tencent, etc. From January 2004 to July 2005, Mr. Fargis served as the chief executive officer of SiMa Systems, where he oversaw funding and alliance strategy and general management for this digital clipboard solutions company. In 1998, Mr. Fargis received his master of arts in law and diplomacy degree in international consulting at The Fletcher School of Law and Diplomacy. In 1992, Mr. Fargis received his master’s degree in special education at Hunter College. In 1988, Mr. Fargis received his bachelor’s degree in medieval studies at Wesleyan University. We believe Mr. Fargis is well-qualified to serve as a member of our board of directors due to his experience in business strategy, emerging markets, and his contacts and relationships. 59 Resignation of Chief Operating Officer On September 24, 2024, David Hessler and the Company agreed to transition his role from our Chief Operating Officer to a consulting role. Mr. Hessler’s wholly owned consulting entity, Synergie Conseils SARL (“Synergie”), and our subsidiary Aspire North America have entered a Consulting Agreement, dated as of September 24, 2024, under which Mr. Hessler, through Synergie, will provide consulting services to the Company for international nicotine related projects (the “Consulting Agreement”). The Consulting Agreement provides for a 10-month term and may be terminated by either party on 3-months’ notice. Synergie will receive a monthly consulting fee of $12,500 and Mr. Hessler will receive the immediate vesting of 25,000 of his non-qualified stock options. Under the Consulting Agreement, Synergie will be paid or reimbursed for Mr. Hessler’s travel time, travel expenses, or any other costs or expenses expressly pre-approved by Aspire North America in writing and supported by documentary evidence. Family Relationships Tuanfang Liu, our chairman and chief executive officer, and Jiangyan Zhu, one of our directors, are married. Other than this relationship, there are no other direct family relationships among any of our directors or executive officers. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors, executive officers and ten percent stockholders to file initial reports of ownership and reports of changes in ownership of our Common Stock with the Commission. Directors, executive officers and ten percent stockholders are also required to furnish us with copies of all Section 16(a) forms that they file. All of our officers, directors and 10% stockholders have filed the required ownership reports. Director Independence The Nasdaq Marketplace Rules require a majority of a listed company’s board of directors to be comprised of independent directors within one year of listing. In addition, the Nasdaq Marketplace Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act. Under Rule 5605(a)(2) of the Nasdaq Marketplace Rules, a director will only qualify as an “independent director” if, in the opinion of our board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3 of the Exchange Act, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. Our board of directors has reviewed the composition of our board of directors and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our board of directors has determined that each of Brent Cox, John Fargis and Christopher Robert Burch is an “independent director” as defined under Rule 5605(a)(2) of the Nasdaq Marketplace Rules. Because we are a controlled corporation, we have included our chief executive officer, who is not an independent director, as a member and chair of the nominating and corporate governance committee. Board Committees Our board of directors has established three standing committees-audit, compensation, and nominating and corporate governance-each of which operates under a charter that has been approved by our board of directors. Copies of each committee’s charter are posted on the Investors section of our website, which is located at https://ispiretechnology.com/pages/investors#corporate-governance. Information contained on our website is not part of this Annual Report. Each committee has the composition and responsibilities described below. Our board of directors may from time to time establish other committees. 60 Audit Committee Our Audit Committee consists of Brent Cox, John Fargis and Christopher Robert Burch, with Mr. Cox as chair. We have determined that each of these three directors satisfies the “independence” requirements of the Nasdaq Listing Rules and meet the independence standards under Rule 10A-3 under the Exchange Act. We have determined that Brent Cox and Christopher Robert Burch qualify as an “audit committee financial expert.” The Audit Committee oversees our accounting and financial reporting processes and the audits of our financial statements. The Audit Committee is responsible for, among other things: ● selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by the independent registered public accounting firm; ● reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response; ● reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; ● discussing the annual audited financial statements with management and the independent registered public accounting firm; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures; ● annually reviewing and reassessing the adequacy of our audit committee charter; ● meeting separately and periodically with management and the independent registered public accounting firm; ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and ● reporting regularly to the board. Our audit committee reviews all proposed related party transactions on an ongoing basis and any such transactions must be approved by the audit committee. The audit committee also approves certain pricing matters pursuant to our supply agreements with Shenzhen Yi Jia. In determining whether to approve a related party transaction, the audit committee considers, among other factors, the following factors to the extent relevant to the related party transaction: ● whether the terms of the related party transaction are fair to the Company and on the same basis as would apply if the transaction did not involve a related party; ● whether there are business reasons for us to enter into the related party transaction; ● whether the related party transaction would impair the independence of an outside director; ● whether the related party transaction or the approval of the related party transaction would present an improper conflict of interest for any director or executive officer, taking into account the size of the transaction, the overall financial position of the director, executive officer or the related party, the direct or indirect nature of the director’s, executive officer’s or the related party’s interest in the transaction and the ongoing nature of any proposed relationship, and any other factors the audit committee deems relevant; and ● any pre-existing contractual obligations. 61 Compensation Committee Our Compensation Committee consists of Christopher Robert Burch, Brent Cox and John Fargis, with Brent Cox as chair. We have determined that each of these directors satisfies the “independence” requirements of the Nasdaq Listing Rules. The Compensation Committee assists the board in reviewing and approving the compensation structure, including all forms of compensation relating to our directors and executive officers. Tuanfang Liu, our co-chief executive officer may not be present at any committee meeting during which his compensation is deliberated upon. The Compensation Committee is responsible for, among other things: ● reviewing and approving, or recommending to the board for its approval, the compensation for our co-chief executive officers and other executive officers; ● reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; ● reviewing periodically and approving any incentive compensation or equity plans, programs or other similar arrangements; and ● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management. Nominating and Corporate Governance Committee Our Nominating and Corporate Governance Committee consists of Tuanfang Liu, Brent Cox and John Fargis, with Tuanfang Liu as chair. We have determined that Mr. Cox and Mr. Fargis satisfy the “independence” requirements of the Nasdaq Listing Rules. Because we are a controlled corporation, we have included Tuanfang Liu, our co-chief executive officer, who is not an independent director, as a member and chair of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee assists the board in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The Nominating and Corporate Governance Committee is responsible for, among other things: ● recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience, expertise, diversity and availability of service to us; ● selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself; ● developing and reviewing the corporate governance principles adopted by the board and advising the board with respect to significant developments in the law and practice of corporate governance and our compliance with such laws and practices; and ● evaluating the performance and effectiveness of the board as a whole. Meetings of the Board and Committees Our independent directors were appointed, and the committees were formed, at the time of our initial public offering in April 2023. During the period from June 30, 2023 until June 30, 2024, our board of directors met telephonically five times and also acted by unanimous written consent. During this period, the audit committee met four times, the nominating and corporate governance committee did not meet and the compensation committee met once meet. Code of Conduct Our board of directors has adopted a written code of conduct that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of the code and all disclosures that are required by law or Nasdaq Marketplace Rules concerning any amendments to, or waivers from, any provision of the code are available on our website at https://ispiretechnology.com/pages/investors#corporate-governance. Information contained on our website is not part of this Annual Report. 62 Insider Trading Policy Our board of directors adopted and amended and restated Insider Trading Policy on August 27, 2024. A copy of our Insider Trading Policy is filed herewith as Exhibit 19.1 and is incorporated herein by reference. Board Leadership Structure Our board of directors has the ability to select the chairman of the board of directors and a chief executive officer in a manner that it considers to be in the best interests of our company at the time of selection. Currently, Tuanfang Liu and Michael Wang serve as our Co-Chief Executive Officers and Mr. Liu serves as chairman of the board of directors. We currently believe that this leadership structure is in our best interests. Additionally, three of our five members of our board of directors have been deemed to be “independent” by the board of directors, which we believe provides sufficient independent oversight of our management. Our board of directors, as a whole and also at the committee level, plays an active role overseeing the overall management of our risks. Our Audit Committee reviews risks related to financial and operational items with our management and our independent registered public accounting firm. Our board of directors is in regular contact with our co-chief executive officers, who report directly to our board of directors and who supervises day-to-day risk management. Role of Board in Risk Oversight Process Our board of directors believes that risk management is an important part of establishing, updating and executing on our business strategy. Our board of directors has oversight responsibility relating to risks that could affect the corporate strategy, business objectives, compliance, operations, and the financial condition and performance of our company. Our board of directors focuses its oversight on the most significant risks facing us and on our processes to identify, prioritize, assess, manage and mitigate those risks. Our board of directors receives regular reports from members of our senior management on areas of material risk to us, including strategic, operational, financial, legal and regulatory risks. While our board of directors has an oversight role, management is principally tasked with direct responsibility for management and assessment of risks and the implementation of processes and controls to mitigate their effects on us. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock and other equity securities. These executive officers, directors, and greater than 10% beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a) forms filed by such reporting persons. Based solely on our review of such forms furnished to us and written representations from certain reporting persons, we believe that during the fiscal year ended June 30, 2024, all reports applicable to our executive officers, directors and greater than 10% beneficial owners were filed in a timely manner in accordance with Section 16(a) of the Exchange Act, except as set forth below: James Patrick McCormick (our Chief Financial Officer) filed a late Form 4. David Hessler (our Chief Operating Officer) filed a late Form 3. Steven Przybyla (our Chief Legal Officer) filed a late Form 3. Amended and Restated Bylaws On September 24, 2024, our Board by unanimous written consent voted to amend our bylaws and to restate our bylaws in their entirety with immediate effect. The amendment to our bylaws amends Section 2.03(a) to vest the power to call a special meeting of stockholders solely with our Board, in line with Section 7.01 of our certificate of incorporation. The full text of our amended and restated bylaws is filed as Exhibit 3.2 to this Annual Report and incorporated herein by reference. 63 ITEM 11. Executive Compensation Summary Compensation Table The following table shows information regarding the compensation of the named executive officers during the fiscal years ended June 30, 2024 and 2023. Summary Compensation Table 5 Name and Principal Fiscal Year Ending, Salary Bonus Stock Awards Option Awards Non-Equity Incentive Plan Compensation Non-Qualified Deferred Compensation Earnings All Other Compensation Totals Position June 30 ($) ($) ($) (4) ($) (4) ($) ($) ($) ($) Tuanfang Liu, Co-CEO (1)(2) 2024 245,568 — — — — — — 245,568 2023 206,720 — — — — — — 206,720 Michael Wang, co-CEO (2) 2024 350,000 — 2,760,001 5,537,903 — — — 8,647,904 2023 393,447 — — — — — — 393,447 Tirdad Rouhani, President (3) 2024 297,500 300,000 1,134,509 1,661,371 — — — 3,393,380 2023 233,493 25,000 — — — — — 258,493 Steven Przybyla, Chief Legal Officer and Secretary 2024 216,039 40,000 — 553,790 — — — 809,829 Daniel Machock (CFO) 2024 234,936 20,000 — — — — — 254,936 James McCormick (CFO 2024 32,500 — — 819,029 — — — 851,529 (1) Mr. Liu’s compensation is paid in Hong Kong dollars, which are converted into U.S. dollars at the average exchange rates during the period, which was 7.8367 Hong Kong dollars to $1.00 for the year ended June 30, 2023 and 7.8186 Hong Kong dollars to $1.00 for the year ended June 30, 2024. (2) Mr. Liu and Mr. Wang are currently co-chief executive officers. (3) Mr. Rouhani was appointed as President on May 20, 2024. (4) Amounts reflect the full grant-date fair value of RSUs and stock options granted during our most recently completed fiscal year computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. (5) Grants represent a one-time grant recognition of the executive’s efforts from 2020 through our initial public offering and is not necessarily reflective of our compensation program going forward. 64 Employment Agreements Tuanfang Liu On January 31, 2023, we entered into an employment agreement with Mr. Liu, our co-chief executive officer. The employment agreement with Mr. Liu has a term of five years and continues on year-to-year basis unless terminated by either us or Mr. Liu on notice given not later than 60 days prior to the expiration of the initial five-year term or any one-year extension. Mr. Liu receives compensation from us at the annual rate of 1,920,000 Hong Kong dollars. Any increase in his annual compensation and any bonus compensation are subject to the discretion of the Compensation Committee and Mr. Liu is also eligible for such options or other equity-based compensation, if any, as may be determined by the Compensation Committee. Mr. Liu will perform his services at such location as he may determine, and we anticipate that he will perform his services in the PRC. The agreement acknowledges that Mr. Liu is also chairman, chief executive officer and a director of Aspire Global and the chief executive officer and 95% owner of Shenzhen Yi Jia. The agreement has customary non-competition and non-solicitation provisions. Mr. Liu has agreed that we have title to all rights to any intellectual property rights which may be developed by Mr. Liu that relate to cannabis or cannabis related vaping or other products during the term of the employment agreement and he will execute such documents as may be necessary to effect our ownership of such intellectual property, including, but not limited to assignment of patents and trademarks. With respect to any intellectual property relating to tobacco vaping and other nicotine products, we shall have an exclusive license in the territory, which is worldwide except for the PRC and Russia, with respect to such intellectual property. We acknowledge the Mr. Liu is also employed as chief executive officer of Aspire Global and Shenzhen Yi Jia. Both Aspire Global and Shenzhen Yi Jia agreed to the provisions of Mr. Liu’s employment agreement relating to intellectual property developed by Mr. Liu. Although Mr. Liu does not receive any compensation from Aspire Global or Shenzhen Yi Jia, for his services as its chief executive officer of Aspire Global, as the 95% owner of Shenzhen Yi Jia, he receives dividends from Shenzhen Yi Jia. Michael Wang On January 31, 2023, we entered into an employment agreement with Mr. Wang, our co-chief executive officer who formerly was our chief financial officer. The employment agreement with Mr. Wang has a term of three years and continues on a quarter-to-quarter basis unless terminated by either us or Mr. Wang on notice given not later than 30 days prior to the expiration of the initial three-year term or any quarterly extension. Mr. Wang receives annual compensation at the rate of $393,447. Any increase in his annual compensation and any bonus compensation are subject to the discretion of the Compensation Committee and Mr. Wang is also eligible for such options or other equity-based compensation, if any, as may be determined by the Compensation Committee. The agreement has customary assignment of invention provisions. In connection with our organization, we issued to Peak Group LLC, a limited liability company owned by Mr. Wang a 2% interest in Aspire Global for services rendered which, when our Common Stock was issued to the holders of the Aspire Global capital stock, resulted in the issuance to Mr. Wang of 1,000,000 shares of Common Stock, which were valued at $473,235. The issuance of these shares is treated as compensation for services rendered by Mr. Wang to Aspire Global, the then parent of Aspire North America and Aspire Science, as its chief financial officer. Tirdad Rouhani On June 25, 2024, we entered into an executive employment agreement with Mr. Rouhani, our President. The employment agreement with Mr. Rouhani has a three-year term and continues on a year-to-year basis unless terminated by either us or Mr. Rouhani on written notice given not later than 180 days prior to the expiration of the initial term or any one-year extension. Mr. Rouhani will receive an annual base salary of $410,000, which may be increased from time to time, but not decreased, during the term of the Rouhani Agreement. Mr. Rouhani is eligible for an annual discretionary bonus with a bonus target of 50% of his annual base salary, subject to the discretion of the Compensation Committee. Mr. Rouhani is eligible for any fringe benefits offered by us on the same terms and conditions as other executives, including group health benefits and a 401k retirement plan. In the event Mr. Rouhani is terminated without Cause or resigns for Good Reason, Mr. Rouhani is entitled to severance in the amount of twelve months’ then-applicable base salary and immediate accelerated vesting of 50% of any unvested Equity Grants (as that term is defined in our 2020 Equity Incentive Plan (the “Plan”)) that Mr. Rouhani has received under the Plan, regardless of the terms of the Plan or any award agreement. The Rouhani Agreement contains customary assignment of invention and confidentiality provisions. James Patrick McCormick On May 9, 2024, we entered into an offer letter with Mr. McCormick. We have agreed to compensate Mr. McCormick, our chief financial officer, an initial annual base salary of $300,000 and an annual discretionary performance bonus target of 50% of base salary. In addition, the Board granted him an option to purchase 200,000 shares of our Common Stock on May 17, 2024. The options will vest over a period of four years. 65 Steven Przybyla On June 25, 2024, we entered into an executive employment agreement with Mr. Przybyla, our Chief Legal Officer and Secretary (the “Przybyla Agreement”). Mr. Przybyla’s employment with us is at will and may be terminated by either Mr. Przybyla or us at any time, for any reason, or no reason. Mr. Przybyla will receive an annual base salary of $400,000, which may be increased from time to time, but not decreased, during the term of his employment. Mr. Przybyla is eligible for an annual discretionary bonus with a bonus target of 50% of his annual base salary, subject to the discretion of the compensation committee of our board. Mr. Pzybyla is eligible for any fringe benefits offered by us on the same terms and conditions as other executives, including group health benefits and a 401k retirement plan. We have agreed to bear the costs associated with Mr. Pzybyla’s maintenance of his professional licenses. In the event Mr. Przybyla is terminated without cause or resigns for good reason, Mr. Przybyla is entitled to severance in the amount of twelve months’ then-applicable base salary and immediate accelerated vesting of 50% of any unvested equity grants (as that term is defined in the Plan) that Mr. Przybyla has received under the Plan, regardless of the terms of the Plan or any award agreement. The Przybyla Agreement contains customary assignment of invention and confidentiality provisions. Employee Benefit Plans 2022 Equity Incentive Plan In October 2022, our directors and stockholders approved the 2022 Equity Incentive Plan. On August 9, 2024, Mr. Liu, as majority shareholder, and the Board, approved an amended and restated 2022 Equity Incentive Plan – which was sent to all shareholders of record as of August 9, 2024 and was filed on Schedule14C with the SEC on August 29, 2024 (the “Plan”). Under the Plan, up to 15,000,000 shares of Common Stock may be issued pursuant to a variety of equity award types. The Plan is administered by the Compensation Committee of the Board. 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. Outstanding Equity Awards On June 30, 2023, there were no outstanding equity awards under the Plan. The following table summarizes information about all outstanding unvested equity awards held by our named executives as of June 30, 2024 Outstanding Awards at June 30, 2024 RSUs Non-qualified stock options Name Grant Date Number of Unvested Shares or Units (#) Market Value of Shares that Have Not Vested ($) Number of Unvested Shares or Units (#) Market Value of Unvested Shares or Units ($) Tuanfang Liu - - - - - Michael Wang 9/4/2023 282,787 $ 2,760,001 1,000,000 $ 5,537,904 Tirdad Rouhani 9/4/2023 84,837 $ 828,009 300,000 $ 1,661,371 Steven Pryzbyla 9/4/2023 - $ - 100,000 $ 553,790 James McCormick 5/17/2024 - $ - 200,000 $ 819,029 66 Option Awards Stock Awards Name Grant Date Number of Securities Underlying Unexercised Options (#) Exercisable (2) Number of Securities Underlying Unexercised Options (#) Unexercsiable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock that Have Not Vested (#) Market Value of Shares or Units of Stock that Have Not Vested ($)(1) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)(1) Tuanfang Liu Michael Wang 9/4/2023(3) 1,000,000 9.76 09/04/2033 282,787 2,262,296 - Tirdad Rouhani 9/4/2023(4) 300,000 9.76 09/04/2033 84,837 678,696 - Steven Pryzbyla 9/4/2023(5) 100,000 9.76 09/04/2033 - James McCormick 5/17/2024(6) 200,000 7.19 05/17/2034 - 1. Amounts are calculated based on multiplying the number of shares shown in the table by the per share closing price of our Common Stock on the Nasdaq Capital Market on June 28, 2024, the last trading day of our last completed fiscal year, which was $8.00. 2. The options shown in this column were fully vested as of the end of the most recently completed fiscal year. 3. The options will vest over a four-year period with twenty-five percent (25%) of the Shares subject to the stock option vesting on the one (1) year anniversary of September 4 th , 2023, and then an additional an additional 1/36th of the remaining unvested Shares subject to the stock option shall vest thereafter on the first day of each calendar month, subject to the executive’s continued service. 4. The options will vest over a four-year period with twenty-five percent (25%) of the Shares subject to the stock option vesting on the one (1) year anniversary of September 4 th , 2023, and then an additional an additional 1/36th of the remaining unvested Shares subject to the stock option shall vest thereafter on the first day of each calendar month, subject to the executive’s continued service. 5. The options will vest over a four-year period with twenty-five percent (25%) of the Shares subject to the stock option vesting on the one (1) year anniversary of September 4 th , 2023, and then an additional an additional 1/36th of the remaining unvested Shares subject to the stock option shall vest thereafter on the first day of each calendar month, subject to the executive’s continued service. 6. The options will vest over a four-year period with twenty-five percent (25%) of the Shares subject to the stock option vesting on the one (1) year anniversary of May 17, 2024 and then an additional an additional 1/36th of the remaining unvested Shares subject to the stock option shall vest thereafter on the first day of each calendar month, subject to the executive’s continued service. 7. Grants represent a one-time grant recognition of the executive’s efforts from 2020 through our initial public offering and is not necessarily reflective of our compensation program going forward. Compensation Recovery Policy On November 27, 2023, our Board of Directors adopted a policy (commonly known as a “clawback” policy) which provides for the recovery of erroneously awarded incentive compensation to certain of our officers in the event that we are required to prepare an accounting restatement due to material noncompliance by us with any financial reporting requirements under the federal securities laws. This policy is designed to comply with Section 10D of the Securities Exchange Act of 1934, as amended, related rules and the listing standards of Nasdaq Stock Market or any other securities exchange on which our shares are listed in the future. The policy is administered by our Board of Directors or, if so designated by the Board of Directors, the Compensation Committee. Any determinations made by the Board shall be final and binding on all affected individuals. 67 Erroneously Awarded Compensation Analysis As discussed below in the notes to our consolidated financial statements under the headings “ Note 2. Restatement of Previously Issued Financial Statements ” and “ Note 20. Quarterly Financial Data (Unaudited and Restated) ”, we are restating our audited financial statements for the year ended June 30, 2023, as well as our unaudited financial statements as of and for the periods ended September 30, 2023, December 31, 2023, and March 31, 2024. Under our Equity Compensation Clawback Policy (the “Clawback Policy”), filed herewith as Exhibit 97.1 and incorporated herein by reference, in the event of an accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, the amount of Incentive-Based Compensation (as defined in the Clawback Policy) subject to recovery from an executive officer is equal to the amount of Incentive-Based Compensation received by an executive officer that exceeds the amount of Incentive-Based Compensation that otherwise would have been received by the executive officer had it been determined based on the restated amounts. The revisions to our previously issued financial statements did not impact any financial metric utilized to determine Incentive-Based Compensation during the relevant periods. Further, no Incentive-Based Compensation was awarded to any of our executive officers during the relevant periods, nor did any equity Incentive-Based Compensation vest as a result of our stock price during the relevant periods. As a result, we determined that there was no Erroneously Awarded Compensation (as defined in the Clawback Policy) to be recovered under our Clawback Policy as a result of the restatements. The individuals covered by this policy (the “Covered Executives”) are any current or former employee who is or was identified as our president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or any other person (including any executive officer of our subsidiaries or affiliates) who performs similar policy-making functions for us. The policy covers our recoupment of “Incentive-Based Compensation” (as defined in the policy) received by a person after beginning service as a Covered Executive and who served as a Covered Executive at any time during the performance period for that Incentive Compensation. In the event we are required to prepare an accounting restatement, the policy requires us to recover, reasonably promptly, any excess incentive compensation (as determined by our Board of Directors or Compensation Committee) received by any Covered Executive during the three completed fiscal years immediately preceding the date on which we are required to prepare such accounting restatement. Limitation of Liability and Indemnification Matters Our certificate of incorporation limits the liability of our directors for monetary damages for breach of their fiduciary duties, except for liability that cannot be eliminated under the Delaware General Corporation Law (the “DGCL”). Consequently, our directors will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except liability for any of the following: ● any breach of their duty of loyalty to us or our stockholders; ● acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; ● unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or ● any transaction from which the director derived an improper personal benefit. Our certificate of incorporation and bylaws also provide that we will indemnify our directors and executive officers and may indemnify our other officers and employees and other agents to the fullest extent permitted by law. Our bylaws also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in this capacity, regardless of whether our bylaws would permit indemnification. We have obtained directors’ and officers’ liability insurance. The above description of the Indemnification provisions of our bylaws and is qualified in its entirety by reference to these documents, each of which is filed as an exhibit to this Annual Report. The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholder’s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. Insofar as indemnification for liabilities under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and may be unenforceable. There is no pending litigation or proceeding naming any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer. 68 Director Compensation The following table shows the compensation paid to our directors who are not Named Executive Officers during the year ended June 30, 2024. Name Fees Earned or Paid in Cash ($) Stock Awards ($) (3) Option Awards ($) Nonequity incentive plan compensation ($) Nonqualified deferred compensation earnings ($) All other compensation ($) Total ($) Jiangyan Zhu (1) $ 92,088 $ 92,088 Christopher Robert Burch 48,000 36,000 84,000 Brent Cox 60,000 60,000 120,000 John Fargis 36,000 48,000 84,000 Joel Paritz (2) - 15,000 15,000 (1) Ms. Zhu’s compensation is paid in Hong Kong dollars, which are converted into U.S. dollars at the average exchange rates during the period, which was 7.8186 Hong Kong dollars to $1.00 for the year ended June 30, 2024. (2) Mr. Paritz resigned as a director on July 1, 2023. (3) As of June 30, 2024: ● Mr. Burch has received 3,631 shares of stock awards ● Mr. Cox has received 6,141 shares of stock awards ● Mr. Fargis has received 4,912 shares of stock awards ● Mr. Paritz has received 1,601 shares of stock awards ● Ms. Zhu has received 0 shares of stock awards ● Mr. Liu has received 0 shares of stock awards We have an agreement with Ms. Zhu pursuant to which we pay her annual compensation of 720,000 Hong Kong dollars. Ms. Zhu is also a director of Aspire Global, and she does not receive compensation from Aspire Global. On August 3, 2023, the board of directors (i) authorized the issuance of a total of 4,483 shares of Common Stock to Brent Cox, John Fargis and Joel Paritz who were our independent directors on the date of our initial public offering as described below, and (ii) adopted the non-employee director compensation policy. Pursuant to the non-employee director compensation policy: ● Each outside director (a director who is not also serving as an employee of us or any of our subsidiaries) shall receive an annual cash retainer of $48,000 for his or her service on the Board, and each outside director who serves as chair of the Audit Committee will be paid an additional annual cash retainer of $12,000. The payment is made in four equal quarterly installments. The retainer is pro rated if the outside director is not an outside director for the entire quarter. ● Each outside director automatically will be granted fully vested shares of the Common Stock equal in value to such outside director’s retainer for the calendar quarter. The number of shares granted shall be equal to: (A) the retainer earned by the outside director for such calendar quarter, divided by (B) the volume-weighted average price, generally known as VWAP, of our common stock on the principal trading market on which our Common Stock trades during each trading day of the preceding calendar quarter, rounded down to the nearest whole share. To be eligible for a quarterly share grant an outside director must be serving as an outside director on the last day of the calendar quarter. The shares shall be granted pursuant to our 2022 Equity Incentive Plan or any successor plan. The compensation policy is effective commencing with the quarter beginning July 1, 2023. In August 2023, we issued, pursuant to the Plan, 1,601 shares of Common Stock to each of Brent Cox, a director, and Joel Paritz, a former director, and 1,281 shares of Common Stock to John Fargis, a director, for service as a director and, in the case of Mr. Cox and Mr. Paritz, for service as audit committee chair. 69 ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters As of September 24, 2024, we had 56,641,041 shares of Common Stock issued and outstanding. Holders of Common Stock are entitled to one vote per share. The following table sets forth information with respect to the beneficial ownership of our Common Stock as of September 24, 2024: ● each person, or group of affiliated persons, who is the beneficial owner of more than 5% of the outstanding Common Stock of the Company; ● each executive officer and director of the Company; and ● all of the Company’s executive officers and directors as a group. Beneficial ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power of that security, including securities that are exercisable or convertible, as the case may be, within 60 days of September 24, 2024. Shares of Common Stock issuable pursuant to such securities are deemed outstanding for computing the percentage of the person holding such securities and the percentage of any group of which the person is a member but are not deemed outstanding for computing the percentage of any other person. Except as indicated by the footnotes below, the combined Company believes, based on the information furnished to it, that the persons named in the table below have sole voting and investment power with respect to all shares of Common Stock shown that they beneficially own, subject to community property laws where applicable. The information does not necessarily indicate beneficial ownership for any other purpose, including for purposes of Section 13(d) and 13(g) of the Securities Act. The percentage of shares beneficially owned is based on 56,641,041 shares of Company Common Stock outstanding as of September 24 2024. Unless otherwise noted below, the address of the persons listed on the table is c/o Ispire Technology Inc., 19700 Magellan Dr., Los Angeles, CA 90502. Beneficial ownership representing less than 1% is denoted with an asterisk (*). Beneficial Ownership Name of Beneficial Owner (1) Shares % Greater than 5% Stockholders: (2)(3)(4) Tuanfang Liu and Jiangyan Zhu (2)(3)(4) 35,750,000 63.1 % Pride Worldwide Investment Limited (2)(3) 33,250,000 58.7 % Current Executive Officers and Directors: Michael Wang 1,425,644 2.5 % Tirdad Rouhani 134,837 * Steven Przybyla 0 * James Patrick McCormick 0 * Christopher Robert Burch 5,425 * Brent Cox 10,814 * John Fargis 10,366 * All current executive officers and directors as a group (ten individuals) 37,337,086 65.9 % (1) The percentage of ownership is based on 56,641,041 shares of Common Stock outstanding on September 24, 2024. (2) The business address of Pride Worldwide Investment Limited is 14 Jian’an Road, Tangwei Fuyong Town, Bao’an District, Shenzhen, Guangdong Province, China. (3) The shares beneficially owned by Tuanfang Liu, our co-chief executive officer, are held by Pride Worldwide Investment Limited. Mr. Liu is the sole stockholder and holds the voting and dispositive power over the Common Stock held by such entity. Mr. Liu disclaims beneficial interest in shares beneficially owned by his wife, Jiangyan Zhu. (4) The shares beneficially owned Jiangyan Zhu, our director and spouse of Tuanfang Liu, are held by Honor Epic International Limited. Ms. Zhu is the sole stockholder and holds the voting and dispositive power over the Common Stock held by such entity. Ms. Zhu disclaims beneficial interest in shares beneficially owned by her husband. (5) The shares beneficially owned by Michael Wang are held by Peak Group LLC. Mr. Wang has sole voting and dispositive powers over the shares of Common Stock owned by Peak Group LLC. * Represents beneficial ownership of less than 1%. 70 ITEM 13. Certain Relationships and Related Transactions, and Director Independence The following are transactions from July 1, 2022 through June 30, 2024 between us, and enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, (a) us, (b) our directors; (c) individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over us, and close members of any such individual’s family; (d) key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling our activities, including senior management of companies and close members of such individuals’ families; and (e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence. The following are forth the major related parties and their relationships with us: Name of related parties and Relationship with the Company - Tuanfang Liu is the Chairman of the Company. - Jiangyan Zhu is the wife of Tuanfang Liu and a director of the Company. - Eigate (Hong Kong) Technology Co., Limited (“Eigate”) is wholly-owned and controlled by the Company’s Chairman. - Aspire Global Inc. (Aspire Global) is a company controlled by the Company’s Chairman. - Aspire International Hong Kong Limited is a wholly-owned subsidiary of Aspire Global. - Shenzhen Yi Jia, a Chinese company that is 95% owned by the Company’s chairman and 5% by the chairman’s cousin. Tuanfang Liu is also Aspire Global’s chief executive officer and a director of both us and Aspire Global, and his wife, Jiangyan Zhu, is also a director of both companies. As of June 30, 2024, Mr. Liu and Ms. Zhu beneficially own 58.9% and 4.4%, respectively, of our outstanding Common Stock. As of June 30, 2024, Mr. Liu and Ms. Zhu beneficially own 66.5% and 5% of the outstanding shares of Aspire Global, respectively. Michael Wang, our chief financial officer, was chief financial officer of Aspire Global from August 2020 until September 2022. In connection with our organization in July 2022, we issued a total 50,000,000 shares to the holders of capital stock of Aspire Global in the same proportion as their share ownership in Aspire Global. Prior to the transfer of Aspire North America and Aspire Science to us, Aspire Global issued a 2% equity interest to an entity owned by Michael Wang, our co-chief executive officer, who was Aspire Global’s and our chief financial officer, and a 1.1% interest in Aspire Global to an entity owned by a consultant, in each case for services rendered to Aspire Global and its subsidiaries. When we issued 50,000,000 shares of Common Stock to the holders of Aspire Global capital stock, these issuances resulted in the entities owned by Mr. Wang and the consultant of 1,000,000 shares and 537,500 shares, respectively. Because the transfer of the equity interest in Aspire North America and Aspire Science from Aspire Global and its wholly-owned subsidiary was made for no consideration to a corporation that had identical stockholders as Aspire Global, these shares are deemed to be outstanding since July 1, 2020. In connection with the restructure of Aspire Global, on July 29, 2022, for no consideration: ● Aspire Global transferred 100% of the equity interest in Aspire North America to us. ● Aspire Holdings transferred 100% of the equity of Aspire Science to our subsidiary, Ispire International. In the year ended June 30, 2020, Aspire Science, declared a dividend of $3,832,272, which is payable to Tuanfang Liu, who, at the date the dividend was declared, was the sole stockholder of Aspire Science. The dividend was declared prior to the transfer of the equity interest in Aspire Science by Mr. Liu to a subsidiary of Aspire Global, which subsequently transferred the equity interest to Ispire International. During the year ended June 30, 2022, Aspire Science paid $469,633 to Mr. Liu, and the balance due to Mr. Liu was $3,362,639 and $3,384,678 at December 31, 2022, which was paid on February 2, 2023. For the years ended June 30, 2023 and 2024, the majority of our tobacco and cannabis vaping products were purchased from Shenzhen Yi Jia. As of June 30, 2023 and 2024, the accounts payable - related party was $51,698,588 and $67,046,472, respectively, which was payable to Shenzhen Yi Jia. For the years ended June 30, 2023 and 2024, the purchases from Shenzhen Yi Jia were $83,060,957 and $91,324,614, respectively. As of June 30, 2022, Aspire Science had a balance due to Eigate of $40,672,768, and as at June 30, 2023 the amount due to related party represents $710,910 due to Shenzhen Yi Jia. The balance was all non-interest bearing, unsecured, have no due date and are repayable on demand. Prior to 2020, both Aspire Science and Eigate were owned by Mr. Liu, and Eigate lent money to Aspire Science for working capital. On February 2, 2023, we made the payments to Mr. Liu and Eigate. Although Aspire Science had the funds to make this payment and the dividend payable to Mr. Liu, payment was delayed because, as a result of the size of the transfer, in order to for Aspire Science to wire the money it was necessary for an authorized person to personally go to the bank to wire the funds. This was not possible because of COVID-19 restrictions which required Mr. Liu, who is based in mainland China, to go to the bank in Hong Kong and be subject to quarantine when he returns to mainland China. Since January 8, 2023, no centralized quarantine or mass PCR testing will be undertaken on travelers entering mainland China. Travelers to mainland China are only required to take PCR test 48 hours prior to their departure and report the PCR test findings on their customs health declaration form. Only those whose test results are positive prior to departure will have to postpone their travel until the PCR results turn negative. As a result of these changes, Mr. Liu was able to travel to Hong Kong to make the payments without being subject to quarantine upon his return. 71 On July 29, 2022, for no consideration: ● Aspire Global transferred 100% of the equity interest in Aspire North America to the Company, and ● Aspire Holdings transferred 100% of the equity of Aspire Science to Ispire International. These transfers were made in connection with a restructure by Aspire Global pursuant to which the equity in Aspire North America and Aspire Science was transferred to us. At the time of the transfer, we had the same stockholders as Aspire Global and the stockholders held the same percentage equity interest in both us and Aspire Global. Pursuant to the Intellectual Property Transfer Agreement, Mr. Liu, Aspire Global and Shenzhen Yi Jia agreed to transfer to Aspire North America all patent and other intellectual property rights, including trademarks, Know-how and Know-how Documentation, as defined in the agreement, relating to the cannabis vaping products, and to transfer to us any new intellectual property developed or acquired by Mr. Liu, Aspire Global and Shenzhen Yi Jia which relates to cannabis vaping products. The patents and patent applications, all of which are United States patents and applications, have been transferred to Aspire North America. Pursuant to the Intellectual Property License Agreement, Mr. Liu, Aspire Global and Shenzhen Yi Jia granted Aspire Science a perpetual royalty free sole and exclusive right and license to use and practice all of the Licensed Technology worldwide except for the PRC and Russia. The Licensed Technology includes all patents, know-how, know-how documentation and trademarks, whether now existing or hereafter developed or acquired by, or for, Mr. Liu, Aspire Global and/or Shenzhen Yi Jia that relate, directly or indirectly, to the tobacco vaping market. Pursuant to the License Agreement, neither Mr. Liu, Aspire Global nor Shenzhen Yi Jia has any right to market or sell or grant distributors the right to market or sell tobacco vaping products in the world other than in the PRC and Russia. In January 2023, Aspire North America and Aspire Science entered into supply agreements with Shenzhen Yi Jia pursuant to which: ● Shenzhen Yi Jia agreed to sell products to us at the most favorable market price that it sells similar products to third parties and such prices must be commercially reasonable in order to enable us to generate a gross margin based on purchase prices or a purchase price structure acceptable to our audit committee. ● Shenzhen Yi Jia is to provide us with quality products and services in a timely manner, to provide to our customers the same warrant that we provide to our customer and to honor the warranty. ● Shenzhen Yi Jia is to give us first priority to the manufacture of our products over any other manufacturing obligations it has. ● We need to provide Shenzhen Yi Jia with periodic forecasts and place orders consistent with the forecasts. ● Any intellectual property developed in connection with the manufacture of the cannabis products will be assigned, and the patents and patent applications have been assigned, to Aspire North America pursuant to the Intellectual Property Transfer Agreement and any intellectual property developed in connection with the manufacture of tobacco products will be licensed to Aspire Science pursuant to the Intellectual Property License Agreement. The agreement has an initial term of ten years, and automatically renews for two-year periods unless terminated by either party on not less than six months’ notice prior to the expiration of the initial term or any two-year extension. 72 ITEM 14. Principal Accounting Fees and Services The following table sets forth (i) the fees billed by our previous independent accountants, MSPC Certified Public Accountants and Advisors, A Professional Corporation (“MSPC”) for the fiscal year ended June 30, 2023 and (ii) the fees billed by our current independent accountants, Marcum LLP (“Marcum”) for the fiscal year ended June 30, 2024. MSPC resigned as our independent registered public accounting firm, effective December 11, 2023. On January 25, 2024, the audit committee of our board engaged Marcum as our independent registered public accounting firm for the fiscal year ended June 30, 2024 to prepare the report on our consolidated financial statement for the year ended June 30, 2024. Year Ended June 30, 2023 2024 Audit fees for MSPC $ 643,235 $ - Audit fees for Marcum $ - $ 851,600 Audit-related fees for MSPC $ - $ 60,010 Audit-related fees for Marcum $ - $ - Tax fees $ - $ - All other fees $ - $ - Audit Fees Audit fees consist of fees for professional services rendered for the audit of our year-end financial statements and services that are normally provided by our independent accountants in connection with regulatory filings. The aggregate fees of MSPC for professional services rendered for the audit of our annual financial statements, review of the financial information include in our Forms 10-Q for the respective periods and other required filings with the SEC for the years ended June 30, 2023 totaled approximately $643,235. The aggregate fees of Marcum for professional services rendered for the audit of our annual financial statements, review of the financial information include in our required filings with the SEC for the year ended June 30, 2024 totaled approximately $851,600. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings. Audit-Related Fees Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards. The aggregate fees of MSPC for professional services rendered for Audit-Related fees was $60,010 for the years ended June 30, 2023. We did not pay Marcum for consultations concerning financial accounting and reporting standards for the years ended June 30, 2024. Tax Fees We did not pay MSPC for tax services, planning or advice for the years ended June 30, 2023. We did not pay Marcum for tax services, planning or advice for the years ended June 30, 2024. All Other Fees We did not pay MSPC for any other services for the years ended June 30, 2023. We did not pay Marcum for any other services for the years ended June 30, 2024. All Other Fees. None. Procedures For Board of Directors Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditor Our audit committee is ultimately responsible for reviewing and approving, in advance, any audit and any permissible non-audit engagement or relationship between us and our independent registered public accounting firm. Our engagement of MSPC and Marcum to conduct all audit and permissible non-audit related activities incurred during fiscal years 2023 and 2024, respectively were approved by our audit committee in accordance with these procedures. 73 PART IV ITEM 15. Exhibits and Financial Statements Schedules 1. Consolidated Financial Statements Our financial statements and the notes thereto, together with the report of our independent registered public accounting firm on those financial statements, are hereby filed as part of this Annual Report beginning on page F-1. 2. Financial Statement Schedules All financial statement schedules have been omitted since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto. 3. Exhibits The following is a complete list of exhibits filed as part of this Form 10-K. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K. Exhibit Number Description 3.1 Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on January 31, 2023). 3.2* Amended and Restated Bylaws 4.1* Description of Capital Stock 4.2 Representative’s Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on April 6, 2023). 4.3 Form of Warrant (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 14, 2024). 10.1 Intellectual Property Transfer Agreement dated September 30, 2022, by and among Aspire Global Inc., Shenzhen Yi Jia, Tuanfang Liu, Aspire North America LLC and Ispire Technology Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on January 31, 2023). 10.2 Intellectual Property License Agreement dated September 30, 2022, by and among Aspire Global Inc., Shenzhen Yi Jia, Tuanfang Liu, Aspire Science and Technology Limited and Ispire Technology Inc. (incorporated by reference to Exhibit 10.2 of the Company’s Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on January 31, 2023). 10.3† Employment agreement dated January 31, 2023, by and between the Company and Tuanfang Liu (incorporated by reference to Exhibit 10.3 of the Company’s Amendment No. 1 to its Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on February 16, 2023). 10.4† Employment agreement dated January 31, 2023, by and between the Company and Michael Wang (incorporated by reference to Exhibit 10.4 of the Company’s Amendment No. 1 to its Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on February 16, 2023). 10.6† Employment agreement dated June 25, 2024, by and between the Company and Tirdad Rouhani (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on June 28, 2024). 10.7† Employment agreement dated June 25, 2024, by and between the Company and Steven Przybyla (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on June 28, 2024). 10.8 Form of Subscription Agreement dated June 26, 2023, by and between the Company and the Purchasers in a Private Placement (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed with the SEC on June 27, 2023). 10.9 Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.13 of the Company’s Post Effective Amendment No. 1 to its Registration Statement on Form S-1 (File No. 333-276804) filed with the SEC on March 25, 2024). 10.10 Form of Placement Agency Agreement (incorporated by reference to Exhibit 1.1 of the Company’s Amendment No. 1 to its Registration Statement on Form S-1 (File No. 333-276804) filed with the SEC on March 18, 2024). 74 10.11† Amended and Restated 2022 Equity Incentive Plan (incorporated by reference to Appendix A of the Company’s Definitive Schedule 14C filed with the SEC on August 29, 2024). 10.12† Form of independent director agreement with Brent Cox (incorporated by reference to Exhibit 10.7 of the Company’s Amendment No. 2 to its Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on February 28, 2023). 10.13† Form of independent director agreement with John Fargis (incorporated by reference to Exhibit 10.8 of the Company’s Amendment No. 2 to its Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on February 28, 2023). 10.14† Form of independent director agreement with Chirstopher Robert Burch (incorporated by reference to Exhibit 10.12 of the Company’s Amendment No. 1 to its Registration Statement on Form S-1 (File No. 333-273904) filed with the SEC on October 11, 2023). 10.15 Distributorship Agreement dated January 1, 2021, between Aspire Science and Technology Limited and Your-Buyer International Limited (incorporated by reference to Exhibit 10.10 of the Company’s Registration Statement on Form S-1(File No. 333-269470) filed with the SEC on January 31, 2023). 10.16 Supply agreement dated January 27, 2023 by and between Aspire North America LLC and Shenzhen Yi Jia.(incorporated by reference to Exhibit 10.11 of the Company’s Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on January 31, 2023). 10.17 Supply agreement dated January 27, 2023 by and between Aspire Science and Technology Limited and Shenzhen Yi Jia (incorporated by reference to Exhibit 10.12 of the Company’s Registration Statement on Form S-1 (File No. 333-269470) filed on January 31, 2023). 10.18 Capital Contribution, Subscription, and Joint Venture Agreement by and between Aspire North America LLC, Ispire Technology Inc., Chemular Inc., Touch Point Worldwide, Inc. d/b/a Berify, and Ike Tech LLC, dated as of April 5, 2024 (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 14, 2024). 16.1 Letter form MSPC Certified Public Accountants and Advisors, P.C., dated December 13, 2023 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on December 15, 2023). 19.1* Insider Trading Policy 21.1* Subsidiaries of the Company. 23.1* Consent of Marcum LLP. 23.2* Consent of MSPC Certified Public Accountants and Advisors. 31.1* Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act. 31.2* Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Sarbanes-Oxley Act. 32.1** Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act. 97.1* Policy Relating to Recovery of Erroneously Awarded Compensation 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document * Filed herewith. ** Furnished and not filed herewith. † Indicates a management contract or compensatory plan, contract or arrangement. ITEM 16. Form 10-K Summary Not applicable 75 SIGNATURES Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 26 th day of September, 2024. ISPIRE TECHNOLOGY INC. By: /s/ Michael Wang Michael Wang Co-Chief Executive Officer (Principal Executive Officer) By: /s/ James Patrick McCormick James Patrick McCormick Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the date indicated: Signature Title Date /s/ Tuanfang Liu Co-Chief Executive Officer and Chairman September 26, 2024 Tuanfang Liu (principal executive officer) /s/ Michael Wang Co-Chief Executive Officer September 26, 2024 Michael Wang (principal executive officer) /s/ James Patrick McCormick Chief Financial Officer September 26, 2024 James Patrick McCormick (principal financial and accounting officer) /s/ Jiangyan Zhu Director September 26, 2024 Jiangyan Zhu /s/ Christopher Robert Burch Director September 26, 2024 Christopher Robert Burch /s/ Brent Cox Director September 26, 2024 Brent Cox /s/ John Fargis Director September 26, 2024 John Fargis 76 ISPIRE TECHNOLOGY INC. Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm PCAOB ID#688 F-2 Report of Independent Registered Public Accounting Firm PCAOB ID# 717 F-3 Consolidated Balance Sheets as of June 30, 2023 and 2024 F-4 Consolidated Statements of Operations and Comprehensive Loss for the Years Ended June 30, 2023 and 2024 F-5 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended June 30, 2023 and 2024 F-6 Consolidated Statements of Cash Flows for the Years Ended June 30, 2023 and 2024 F-7 Notes to Consolidated Financial Statements F-8 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of Ispire Technology Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Ispire Technology Inc. (the “Company”) as of June 30, 2024, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for the year ended June 30, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024, and the results of its operations and its cash flows for the year ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America. Restatement of Previously Audited Financial Statements As discussed in Note 2 to the financial statements, the June 30, 2023 financial statements have been restated to correct misstatements. We also have audited the adjustments to the financial statements as of and for the year ended June 30, 2023 to restate the operating leases and shipping and handling costs as described in Note 2. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the financial statements of the Company as of or for the year ended June 30, 2023 other than with respect to such adjustments and, accordingly, we do not express an opinion or any other form of assurance on the June 30, 2023 financial statements taken as a whole. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Marcum llp Marcum llp We have served as the Company’s auditor since 2024. New York, NY September 26, 2024 F- 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Ispire Technology Inc. and Subsidiaries Opinion on the Consolidated Financial Statements We have audited, before the effects of the adjustments for the correction of the errors described in Note 2 the consolidated balance sheet of Ispire Technology Inc. and Subsidiaries (the Company) as of June 30, 2023 and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, except for the errors described in Note 2 the 2023 consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. We were not engaged to audit, review, or apply any procedures to the adjustments for the correction of the errors described in Note 2 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by Marcum LLP. (The 2023 consolidated financial statements before the effects of the adjustments discussed in Note 2 are not presented herein.) Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ MSPC MSPC Certified Public Accountants and Advisors, A Professional Corporation We served as the Company’s auditor from 2022 to 2023 New York, New York , September 19, 2023 www.mspc.cpa An independent firm associated with 340 North Avenue, Cranford, NJ 07016-2496 908 272-7000 Moore Global Network Limited 546 5 th Avenue, 6 th Floor, New York, NY 10036-5000 212 682-1234 F- 3 ISPIRE TECHNOLOGY INC. CONSOLIDATED BALANCE SHEETS (In $USD, except share and per share data) June 30 2023 2024 (Restated) Assets Current assets: Cash $ 40,300,573 $ 35,071,294 Accounts receivable, net 24,526,262 59,734,765 Inventories, net 7,472,108 6,365,394 Prepaid expenses and other current assets 3,378,617 1,400,152 Investment – other 9,133,707 - Total current assets 84,811,267 102,571,605 Other assets: Property, plant and equipment, net 1,088,131 2,582,457 Intangible assets, net - 1,375,666 Right-of-use assets – operating leases 4,253,732 3,579,140 Other investment - 2,000,000 Equity method investment - 10,248,048 Other non-current assets 242,614 284,050 Total other assets 5,584,477 20,069,361 Total assets $ 90,395,744 $ 122,640,966 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 1,274,391 $ 3,779,723 Accounts payable – related party 51,698,588 67,046,472 Contract liabilities 988,556 2,218,166 Accrued liabilities and other payables 281,361 11,738,339 Due to a related party 710,910 - Income tax payable 63,853 - Operating lease liabilities – current portion 837,100 1,207,832 Total current liabilities 55,854,759 85,990,532 Other liabilities: Operating lease liabilities – net of current portion 3,071,075 2,194,094 Total liabilities 58,925,834 88,184,626 Commitments and contingencies Stockholders’ equity: Common stock, par value $ 0.0001 per share; 140,000,000 shares authorized; 54,222,420 and 56,470,636 shares issued and outstanding as of June 30, 2023 and June 30, 2024 5,422 5,647 Preferred stock, par value $ 0.0001 per share, 10,000,000 shares authorized, no shares issued at June 30, 2023 and June 30, 2024 - - Additional paid-in capital 25,685,475 43,217,391 Retained earnings (accumulated deficit) 5,942,781 ( 8,825,041 ) Accumulated other comprehensive (loss) income ( 163,768 ) 58,343 Total stockholders’ equity 31,469,910 34,456,340 Total liabilities and stockholders’ equity $ 90,395,744 $ 122,640,966 See notes to consolidated financial statements. F- 4 ISPIRE TECHNOLOGY INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In $USD, except share and per share data) Years ended June 30, 2023 2024 (Restated) Revenue $ 115,605,536 $ 151,908,691 Cost of revenue 94,828,472 122,126,245 Gross profit 20,777,064 29,782,446 Operating expenses: Sales and marketing expenses 4,416,220 6,608,724 General and administrative expenses 20,835,001 37,067,861 Total operating expenses 25,251,221 43,676,585 Loss from operations ( 4,474,157 ) ( 13,894,139 ) Other income (expense): Interest income, net 195,209 365,251 Exchange loss, net ( 324,225 ) ( 70,293 ) Other (expense) income, net ( 155,150 ) 113,405 Total other (expense) income, net ( 284,166 ) 408,363 Loss before income taxes ( 4,758,323 ) ( 13,485,776 ) Income taxes – current ( 1,245,303 ) ( 1,282,046 ) Net loss $ ( 6,003,626 ) $ ( 14,767,822 ) Other comprehensive loss Foreign currency translation adjustments 20,896 222,111 Comprehensive loss ( 5,982,730 ) ( 14,545,711 ) Net loss per share Basic and diluted $ ( 0.12 ) $ ( 0.27 ) Weighted average shares outstanding: Basic and diluted 50,725,814 54,812,900 See notes to consolidated financial statements. F- 5 ISPIRE TECHNOLOGY INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (In $USD, except share and per share data) Common stock Additional Retained Earnings/ Accumulated Other Total Number Paid-in (Accumulated Comprehensive Shareholders’ of Shares Amount Capital deficit) (Loss)/Income Equity Balance, July 1, 2023 50,000,000 $ 5,000 $ - $ 11,946,407 $ ( 184,664 ) $ 11,766,743 Net loss (restated) - - - ( 6,003,626 ) - ( 6,003,626 ) Issuance of common stock 4,222,420 422 25,685,475 - - 25,685,897 Foreign currency translation adjustment - - - - 20,896 20,896 Balance, June 30, 2023 (restated) 54,222,420 $ 5,422 $ 25,685,475 $ 5,942,781 $ ( 163,768 ) $ 31,469,910 Net loss - - - ( 14,767,822 ) - ( 14,767,822 ) Issuance of common stock for a secondary offering, net of insurance cost 2,050,000 205 10,785,701 - - 10,785,906 Issuance of common stock for equity incentives 198,216 20 1,183,976 - - 1,183,996 Share based compensation expenses - - 5,196,286 - - 5,196,286 Issuance of warrants - - 365,953 - - 365,953 Foreign currency translation adjustment - - - - 222,111 222,111 Balance, June 30, 2024 56,470,636 $ 5,647 $ 43,217,391 $ ( 8,825,041 ) $ 58,343 $ 34,456,340 See notes to consolidated financial statements. F- 6 ISPIRE TECHNOLOGY INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In $USD, except share and per share data) Years ended June 30, 2023 2024 (Restated) Net loss $ ( 6,003,626 ) $ ( 14,767,822 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 46,662 505,653 Credit loss expenses 3,332,825 6,015,752 Right-of-use assets amortization 1,030,104 1,211,899 Stock-based compensation expenses — 6,380,282 Inventory impairment — 205,594 Loss from equity method investment — 117,905 Changes in operating assets and liabilities: Accounts receivable ( 19,579,339 ) ( 41,299,642 ) Inventories 7,108,449 901,120 Prepaid expenses and other current assets ( 2,598,746 ) 1,937,029 Accounts payable and accounts payable – related party 10,574,989 17,891,667 Contract liabilities ( 690,637 ) 1,248,687 Accrued liabilities and other payables 168,179 2,456,979 Operating lease liabilities ( 1,427,398 ) ( 1,043,556 ) Income tax payable ( 417,260 ) ( 63,853 ) Net cash used in operating activities ( 8,455,798 ) ( 18,302,306 ) Cash flows from investing activities: Purchase of property, plant and equipment ( 1,020,768 ) ( 1,969,961 ) Acquisition of intangible assets — ( 1,173,302 ) Purchase of short term investment ( 9,133,707 ) — Maturity of short term investment — 9,133,707 Acquisition of other investment ( 2,000,000 ) Acquisition of equity method investment — ( 1,000,000 ) Net cash (used in) provided by investing activities ( 10,154,475 ) 2,990,444 Cash flows from financing activities: Net proceeds from initial public offering 21,735,000 — Payment of initial public offering costs ( 3,475,172 ) — Proceeds from equity offerings 7,969,221 12,300,000 Issuance costs of equity offerings ( 543,153 ) ( 1,514,094 ) Payment made for dividends ( 3,362,639 ) — Repayments of advances from a related party ( 37,893,062 ) ( 703,323 ) Net cash (used in) provided by financing activities ( 15,569,805 ) 10,082,583 Net decrease in cash ( 34,180,078 ) ( 5,229,279 ) Cash – beginning of period 74,480,651 40,300,573 Cash – end of period $ 40,300,573 $ 35,071,294 Supplemental non-cash investing and financing activities Leased assets obtained in exchange for operating lease liabilities $ 4,988,032 $ 537,307 Unpaid equity method investment in accrued liabilities and other payables $ — $ 9,000,000 Warrants issued in connection with equity method investment $ — $ 365,953 Unpaid intangible assets in accrued liabilities and other payables $ — $ 232,382 Supplemental disclosures Cash paid for income taxes $ 1,663,240 $ 1,355,110 Cash paid for interest $ 587 $ 15,229 See notes to consolidated financial statements. F- 7 ISPIRE TECHNOLOGY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. ORGANIZATION AND PRINCIPAL ACTIVITIES Ispire Technology Inc. (the “Company” or “Ispire”) was incorporated under the laws of the State of Delaware on June 13, 2022 . Through its subsidiaries, the Company is engaged in the research and development, design, commercialization, sales, marketing and distribution of branded e-cigarettes and cannabis vaping products. Ispire owns a 100 % equity interest in Ispire International Limited, a business company incorporated under the laws of the British Virgin Islands (“BVI”) (“Ispire International”) on July 6, 2022. Prior to July 29, 2022, all of the equity of Aspire North America LLC, a California limited liability company (“Aspire North America”), was owned by Aspire Global Inc. (“Aspire Global”), and all of the equity of Aspire Science and Technology Limited, a Hong Kong corporation (“Aspire Science”), was owned by Aspire Global Holdings Limited (“Aspire Holdings”), a wholly-owned subsidiary of Aspire Global. Aspire Global and the Company are related parties since the same individual is the chief executive officer of both companies. As of June 30, 2024, the chief executive officer and his wife, being directors of both companies, owned 66.5 % and 5.0 % of the equity of Aspire Global, respectively. As of June 30, 2024, they owned 58.9 % and 4.4 % of the equity of the Company, respectively. On July 29, 2022, Aspire Global transferred 100 % of the equity interest in Aspire North America to the Company. On the same day, Aspire Holdings transferred 100 % of the equity of Aspire Science to Ispire International. At the time of transfer of the equity in Aspire North America and Aspire Science, the Company had the same stockholders as Aspire Global, and the Company’s stockholders held the same percentage interest in the Company as they had in Aspire Global. Because the transfer of the equity in Aspire North America and Aspire Science is a transfer between related parties, the historical financial information of the subsidiaries is carried forward as the historical financial information of the Company and the 50,000,000 shares that were issued at or about the time of the Company’s organization are treated as being outstanding on July 1, 2020. 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 August 2, 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 June 30, 2024: Name of Entity Date of Organization Place of Organization % of Ownership Principal Activities Ispire Technology Inc. June 13, 2022 Delaware Parent Company Holding Company Ispire International July 6, 2022 BVI 100 % Holding Company Aspire North America February 22, 2020 California 100 % Research and Development, Sales and Marketing Aspire Science December 9, 2016 Hong Kong 100 % Sales and Marketing Ispire Malaysia August 2, 2023 Malaysia 100 % Manufacturing, Sales and Marketing Ispire Global Products LLC January 19, 2024 Delaware 100 % Sales and Marketing Ispire is a holding company and does not engage in any active operations. Its business is conducted by its two operating subsidiaries, Aspire North America, which is engaged in the development, marketing and sales of cannabis vapor products, which were introduced in mid-2020, and Aspire Science, which is engaged in the marketing and sales of tobacco vaping products, and the products are mainly sold in Europe and Asia Pacific (excluding People’s the Republic of China (“PRC”). F- 8 NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS Restatement of Consolidated Financial Statements for the year ended June 30, 2023 During the quarters ended December 31, 2023, and March 31, 2024, the Company identified certain errors with the classification and presentation of information in the consolidated statement of cash flows and classification errors in the consolidated statement of operations and comprehensive loss. Additionally, the Company identified errors in its initial recognition and measurement of right-of-use assets and lease liabilities related to its operating leases, as well as the subsequent recognition and measurement of such operating leases. The Company and the Audit Committee determined that the Company’s previously issued financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2023, and the Quarterly Report on Form 10-Q for the periods ended September 30, 2023, December 31, 2023 and March 31, 2024, should no longer be relied upon. The identified errors impacting the previously referred to financial statements include: ● The incorrect presentation of cash payments on operating leases under financing activities instead of operating activities. As a result of correcting this error, the Company’s principal portion of lease payments totaling $ 874,039 in the consolidated statements of cash flows for the year ended June 30, 2023, and totaling $ 242,182 in the consolidated statements of cash flows for the three months ended September 30, 2023, needs to be corrected from financing activities to operating activities; ● The omission of disclosing non-cash investing and financing activities related to the acquisition of “right of use” (ROU) assets in exchange for operating lease liabilities. As a result of the correction of this error, the Company needs to add disclosure of $ 4,988,032 of leased assets obtained in exchange for operating lease liabilities as a non-cash financing item in the consolidated statement of cash flows for the year ended June 30, 2023, and $ 537,307 for the three months ended September 30, 2023, six months ended December 31, 2023, and nine months ended March 31, 2024; ● The incorrect recognition of shipping and handling costs as sales and marketing expenses (operating expenses) instead of being recognized as cost of revenue. As a result of the restatement, the Company’s shipping and handling costs of $ 298,703 needs to be adjusted from selling expenses to cost of revenue for the year ended June 30, 2023, $ 43,444 for the three months ended September 30, 2023, and $ 123,308 and $ 166,752 for the three and six months ended December 31, 2023, respectively; and ● The incorrect initial measurement and recognition of right of use assets and lease liabilities associated with the Company’s operating leases, and the incorrect subsequent measurement and recognition of expense associated with such operating leases. As a result of the restatement, (1) the Company’s right of use assets increased by $ 192,115 as of June 30, 2023, which includes the correction of $ 489,720 originally recorded as prepaid rent to be recorded as a component of the right-of-use asset, (2) the Company’s lease liabilities decreased by $ 392,582 as of June 30, 2023, as a result of the correction of measurement of present value of future lease payments, and (3) rent expense recognized for the year ended June 30, 2023 decreased by $ 94,977 , based on changes in the calculation of monthly rental expense. On an interim basis, the Company notes the following as a result of the restatement: ● As of September 30, 2023, right of use assets increased by $ 218,378 , including the correction to record $ 489,720 of prepaid rent as a component of the right of use asset; lease liabilities decreased by $ 399,347 ; and retained earnings increased by $ 128,005 . For the three months ended September 30, 2023, rent expense decreased by $ 33,028 . For the three months ended September 30, 2023, net cash used in operating activities increased by $ 242,182 , net cash used in financing activities decreased by $ 242,182 . ● As of December 31, 2023, right of use assets increased by $ 239,403 , including the correction to record $ 428,505 of prepaid rent as a component of the right of use asset; lease liabilities decreased by $ 347,520 ; and retained earnings increased by $ 158,418 . For the three and six months ended December 31, 2023, rent expense decreased by $ 30,412 and $ 63,440 , respectively. For the six months ended December 31, 2023, net cash used in operating activities was unchanged. ● As of March 31, 2024, right of use assets increased by $ 255,264 , including the correction to record $ 428,505 of prepaid rent as a component of the right of use asset; lease liabilities decreased by $ 356,286 ; and accumulated deficit decreased by $ 183,045 . For the three and nine months ended March 31, 2024, rent expense decreased by $ 24,628 and $ 88,068 , respectively. For the nine months ended March 31, 2024, net cash used in operating activities was unchanged. F- 9 Additionally, the Company has provided Note 20 – Quarterly Financial Data (unaudited and restated) to present the impact of the above restatements on the unaudited quarterly financial information for the quarterly periods ended September 30, 2023, December 31, 2023, and March 31, 2024. The Company’s restatements for the classification and disclosure errors described above do not have any effect on the Company’s previously reported balance sheets, net loss or net changes in cash. The following tables summarize the effect of the restatement on each financial statement line item as of the dates indicated: Consolidated Balance Sheet as of June 30, 2023 As Reported Adjustment As Restated Other non-current assets $ 732,334 $ ( 489,720 ) $ 242,614 Right-of-use assets – operating leases 4,061,617 192,115 4,253,732 Total other assets 5,882,082 ( 297,605 ) 5,584,477 Total assets 90,693,349 ( 297,605 ) 90,395,744 Operating lease liability - current 944,525 ( 107,425 ) 837,100 Total current liabilities 55,962,184 ( 107,425 ) 55,854,759 Operating lease liability – net of current portion 3,356,232 ( 285,157 ) 3,071,075 Total liabilities 59,318,416 ( 392,582 ) 58,925,834 Retained earnings 5,847,804 94,977 5,942,781 Total stockholders’ equity 31,374,933 94,977 31,469,910 Total liabilities and stockholders’ equity 90,693,349 ( 297,605 ) 90,395,744 Consolidated Statement of Operations and Comprehensive Loss for the year ended June 30, 2023 As Reported Adjustment As Restated Cost of revenue $ 94,529,769 $ 298,703 $ 94,828,472 Gross profit 21,075,767 ( 298,703 ) 20,777,064 Sales and marketing expenses 4,714,923 ( 298,703 ) 4,416,220 General and administrative expenses 20,929,978 ( 94,977 ) 20,835,001 Total operating expenses 25,644,901 ( 393,680 ) 25,251,221 Loss from operations ( 4,569,134 ) 94,977 ( 4,474,157 ) Loss before income taxes ( 4,853,300 ) 94,977 ( 4,758,323 ) Income taxes ( 1,245,303 ) - ( 1,245,303 ) Net loss ( 6,098,603 ) 94,977 ( 6,003,626 ) Comprehensive loss ( 6,077,707 ) 94,977 ( 5,982,730 ) Consolidated Statement of Cash Flows for the year ended June 30, 2023 As Reported Adjustment As Restated Net loss $ ( 6,098,603 ) $ 94,977 $ ( 6,003,626 ) Right-of-use assets amortization 1,061,442 ( 31,338 ) 1,030,104 Prepaid expenses and other current assets ( 3,088,466 ) 489,720 ( 2,598,746 ) Operating lease liabilities — ( 1,427,398 ) ( 1,427,398 ) Net cash used in operating activities ( 7,581,759 ) ( 874,039 ) ( 8,455,798 ) Principal portion of lease payment ( 874,039 ) 874,039 — Net cash used in financing activities ( 16,443,844 ) 874,039 ( 15,569,805 ) Supplemental non-cash investing and financing activities: Leased assets obtained in exchange for operating lease liabilities — 4,988,032 4,988,032 F- 10 NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Certain items for June 30, 2023 have been reclassified to conform to the June 30, 2024 presentation. Emerging growth company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Basis of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries. All inter-company transactions and balances have been eliminated upon consolidation. Use of estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include allowance for credit losses and revenue recognition. Actual results could differ from those estimates. Cash and cash equivalents Cash includes currency on hand, deposits held by banks that can be added or withdrawn without limitation and highly liquid investments with maturities of three months or less when purchased. Fair value measurement The Company applies ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value, and expands financial statement disclosure requirements for fair value measurements. F- 11 ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. ASC Topic 820 specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows: ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. ● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. Unobservable inputs are valuation technique inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The carrying value of certain of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other receivables, accounts payable, accounts payable related party, contract liabilities, accrued liabilities and other payables and due to related parties, approximates their fair value because of their short-term maturity. Accounts receivable Accounts receivable are recognized and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. An estimate for doubtful accounts is made based on historical data and receivable review in accordance with ASU 2016-13. Past due accounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted and the potential for recovery is considered remote. The Company have different payment terms for different businesses. For tobacco vaping business, the Company requires a deposit of 30 % of sales amount upon placing order, and the payment of remaining 70 % to be made before shipment. For cannabis vaping business, tailored payment term are designed for each customer, based on business relationship, order size and other considerations. Allowance for credit losses The Company adopted Accounting Standards Update 2016-13 “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” on July 1, 2023, under the modified retrospective method of adoption. 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. The impact related to adopting the new standard was not material. Based on the current expected credit loss model, the Company consider many factors, including age of balance, past events, any historical default, current information available about the customers, current economic conditions and certain forward-looking information, including reasonable and supportable forecasts. Inventories 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. When management determines that certain inventories may not be saleable, or there is an indicator that certain inventory costs may exceed expected market value, the Company will record the difference between the cost and the net realizable value as a write down of inventories. 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. The Company records an allowance for slow moving and potentially obsolete inventory based upon recent sales history, the quantity of inventory on-hand, and an estimate of expected sellable life of the inventory. The Company periodically reviews inventory to identify slow moving inventories and compares the forecast sales with the quantities and expected sellable life of inventory. Any inventories identified during this process are reserved for at rates based upon management’s judgment and historical rates. The quantity thresholds and reserve rates are based on management’s judgment and knowledge of current and projected demand. The reserve estimates may, therefore, be revised if there are changes in the overall market for the Company’s products or market changes that in management’s judgment, impact its ability to sell potentially obsolete inventory. As of June 30, 2023 and 2024, the Company recorded inventory reserves of $ 0 and $ 205,594 , respectively. F- 12 Property, plant and equipment, net Property, plant and equipment are stated at cost less accumulated depreciation and depreciated on a straight-line basis over the estimated useful lives of the assets from the time the assets are placed in service. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income/loss in the year of disposition. Estimated useful lives are as follows: Estimated Useful Life Office and other equipment 3 - 5 years Furniture and fixtures 7 years Leasehold improvements Shorter of the term of the lease or the estimated useful life of the assets Other investment Other investments consist of equity investments in a privately held company that the Company does not have control or significant influence over it. These equity investments do not have readily determinable fair values and are primarily accounted for under the measurement alternative. Under the measurement alternative, the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The Company also makes qualitative assessment at each reporting period and if the assessment indicates that the fair value of the investment is less than the carrying value, the investment in equity securities will be written down to its fair value, with the difference between the fair value and carrying amount of the investment as an impairment loss recorded in the consolidated statements of operations and comprehensive loss. Equity method investment The Company applies the equity method to account for equity investment in common stock or in-substance common stock, according to ASC 323, Investments – Equity Method and Joint Ventures, over which it has significant influence but does not own a controlling financial interest, unless the fair value option is elected for an investment. As further discussed in Note 9, the Company invested in an entity with two unrelated parties, whereby a new legal entity was formed for the purpose of licensing, owning, operating and developing an industry-standard age-verification solution for vapor (e-cigarette) devices in the U.S. market. Under the equity method, the Company’s share of the post-investment profits or losses of the equity method investee is recognized in the consolidated statement of operations. When the Company’s share of losses of the equity method investee equals or exceeds its interest in the equity method investee, the Company does not recognize further losses, unless the Company has incurred obligations or made payments or guarantees on behalf of the equity method investee. The Company continually reviews its investments in equity method investees to determine whether a decline in fair value below the carrying value is other-than-temporary. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the investment in the equity method investee is written down to its fair value. Investment -- other 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 June 30, 2023 was $ 9,133,707 and it matured on February 8, 2024 . Intangible assets Intangible assets refer to capitalized external costs, such as filing fees and associated attorney fees, incurred to obtain issued patents and patent license rights. 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. $ 0 and $ 1,405,684 of patent fees were capitalized during the year ended June 30, 2023 and 2024. The amortization of the intangible assets was $ 0 and $ 30,018 for the year ended June 30, 2023 and 2024 respectively. The amortization expenses were included in the general and administrative expenses. F- 13 Accounts payable Accounts payable represents payables to suppliers. The Company’s major supplier is a related party to the Company. See Note 13. Contract liabilities Contract liabilities represent advanced deposits received from customers after an order has been placed but before a product has been shipped. The Company’s policy is to require a minimum customer deposit in the range of 25 % to 30 % of the purchase price upon placement of a sales order. Contract liabilities are realized as revenue when the conditions to revenue recognition are met, primarily when control of goods has transferred to customers. Leases The Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Company’s use by the lessor. The Company’s assessment of the lease term reflects any rent-free periods. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated statements of operations over the lease term. For leases with a term exceeding 12 months, an operating lease liability is recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of its remaining fixed minimum payment obligations over the lease term. A corresponding operating lease right-of-use asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Company’s incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease. For the Company’s operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term. For leases with a term of 12 months or less, any fixed lease payments are recognized on a straight-line basis over the lease term and are not recognized on the Company’s consolidated balance sheet as an accounting policy election. Leases qualifying for the short-term lease exception were insignificant. Impairment of long-lived assets In accordance with ASC Topic 360-10, Impairment and Disposal of Long-Lived Assets, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record any impairment charge for the years ended June 30, 2023 and 2024. Revenue recognition The Company sells its vaping products to customers and recognizes revenue in accordance with the guidance of ASC 606, Revenue from Contracts with Customers. Many customers are distributors that resell the Company’s products in various geographic regions. The performance obligations are for the Company to transfer the title and control of the goods to a customer for a determined price. Each order is considered a separate contract with a single performance obligation. Revenue is recognized when control of goods has transferred to customers. For the majority of the Company’s customer arrangements, control transfers to customers at a point-in-time when goods have been delivered to the pickup location specified by the customer or a forwarder appointed by the customer, as that is generally when legal title, physical possession and risks and rewards of goods transfer to the customer. Revenue is recognized at the transaction price based on the purchase order as adjusted for the anticipated rebates, discounts and other sales incentives. When determining the transaction price, management estimates variable consideration applying the portfolio approach practical expedient under ASC 606. The main sources of variable consideration for the Company are trade promotion funds and cash discounts. These sales incentives are recorded as a reduction of revenue at the time of the initial sale using the most-likely amount estimation method. The most-likely amount method is based on the single most likely outcome from a range of possible consideration outcomes. F- 14 The Company offers different payment terms to different customers. For tobacco vaping products, the general payment term is a deposit of 30 % of sales amount upon placing order, and the payment of the remaining 70 % to be made before shipment. For cannabis vaping products, a tailored payment term is designed for each customer, based on the business relationship, order size and other considerations. All contract liabilities at the beginning of the period were recognized as revenues in the reporting period. The Company offers a thirty-day warranty. The warranty is an assurance-type warranty, and it offers replacement of products in case the products sold do not function as expected. In certain sales contracts, a right of return is offered. With a right of return, a customer is given the right to return the products if they are not satisfied with the product, and a credit would be given. The Company has a very low rate of return in history and a return reserve is accrued based on historical return rate and the management’s judgement. The Company has minimal incremental costs of obtaining a contract and are expensed when incurred. Sales taxes, which are sales and use or other similar taxes collected from the customer and remitted to the applicable taxing authority by the Company in accordance with applicable law, are excluded from revenue. Disaggregated Revenue The Company has taken into consideration the nature, amount, timing, and uncertainty of revenue and cash flows, and has determined to disaggregate its net sales by region. The net sales disaggregated by region for the years ended June 30, 2023 and 2024, were as follows: For the year ended June 30, 2023 2024 Europe $ 58,764,022 $ 65,260,478 North America (the U.S. and Canada) 41,608,122 63,079,961 Asia Pacific (excluding PRC) 14,918,441 17,588,597 Others 314,951 5,979,655 Total 115,605,536 151,908,691 Cost of revenue Cost of revenue for the years ended June 30, 2023 and 2024, consisted primarily of the cost of purchasing vaping products, freight-in cost and inventory impairment, which were mostly purchased from a related party. See Note 13. Research and development expenses Research and development expenses represent staff costs for development personnels, and expenses incurred for the testing of new products. For the years ended June 30, 2023 and 2024, the research and development expenses were $ 146,149 and $ 779,174 , respectively. They are included in the general and administrative expenses. Stock-based compensation The Company measures and recognizes compensation expenses for stock-based payment awards, including stock options, restricted stock granted to directors and advisors, and restricted stock units (“RSUs”) granted to employees, based on the grant date fair value of the awards. The Company engages a third-party valuer to assist in determining the fair value of stock options using the binomial option pricing model, with significant assumption of exercise multiple, expected volatility, risk-free interest rate and expected dividend yield. The fair value of RSUs is measured on the grant date based on the closing market price of the Company’s common stock. The stock-based payment awards typically include time-based vesting conditions, however, certain of the Company’s stock-based payment awards may include performance-based vesting conditions. For stock-based payment awards with time-based vesting conditions, 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 expense is recognized on a straight-line basis over the period during which services are provided in exchange for the award. For stock-based payment awards with performance-based vesting conditions, the Company will estimate the probability that the performance condition will be met at each reporting date. Stock-based compensation expense is only recognized for stock-based payment awards that are probable of vesting. Ultimately, the cumulative stock-based compensation expense recognized by the Company is the grant date fair value of the awards where the performance conditions have been met and the awards have vested. Stock-based compensation expense is recorded in the general and administrative expense in the consolidated statements of operations. The Company recognizes forfeitures of stock-based payment awards upon occurrence. Interest income For the years ended June 30, 2023 and 2024, interest income related to interest on bank deposits. Income taxes The Company accounts for income taxes under ASC 740, Income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. F- 15 Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provisions of ASC 740-10 prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company classifies the interest and penalties, if any, as a component of income tax expense. For the years ended June 30, 2023 and 2024, the Company did not incur any interest or penalties related to an uncertain tax position. The Company does not believe that there were any uncertain tax positions as of June 30, 2023 and 2024. Earnings per share The Company computes earnings per share (“EPS”) in accordance with ASC 260, Earnings per Share. ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net loss divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (for example, convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potentially dilutive shares could dilute basic EPS in the future that were not included in the computation of diluted EPS because to do so would have been antidilutive for the year ended June 30, 2023 and 2024. Potentially dilutive shares were as follows: As of June 30, As of June 30, Dilutive securities: 2023 2024 Share options - $ 3,255,000 Unvested restricted stock units - 483,606 Warrants - 173,211 Total - $ 3,911,817 Comprehensive loss Comprehensive loss consists of two components, net loss and other comprehensive (loss) income. The foreign currency translation gain or loss resulting from translation of the financial statements expressed in USD is reported in other comprehensive (loss) income in the consolidated statements of operations and comprehensive loss. Commitments and contingencies In the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. If the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, is disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. F- 16 Segment reporting The Company uses the management approach to determine operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources, and assessing performance. The Company’s CODM has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing the performance of the Company. The Company’s CODM reviews the consolidated financial results when making decisions about allocating resources and assessing the performance of the Company as a whole and has determined that the Company has only one reportable segment. Notwithstanding that the Company has customers located around the world and the Company’s Hong Kong subsidiary serves as one of the sales and marketing centers, the Company’s long-lived assets and management are located substantially in the U.S. and management operates its business as a single segment. Related parties Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, immediate family members of principal owners of the Company and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all significant related party transactions in Note 13. Recent accounting pronouncements As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company intends to take advantage of the benefits of this extended transition period for all accounting standards described below, if applicable. In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements. The amendments in this update modify the disclosure or presentation requirements of a variety of topics in the codification. Certain of the amendments represent clarifications to or technical corrections of the current requirements. The adoption of the amendment will occur on a prospective basis. The amendments in this ASU will be effective for public business entities on the effective date of the SEC’s removal of the related disclosures from Regulation S-X or Regulation S-K. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, the amendments will not become effective for any entity. The Company is currently evaluating the impacts of the provisions of ASU 2023-06. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures. The new guidance requires enhanced disclosures about significant segment expenses. ASU 2023-07 will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on our segment disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The guidance is effective for public business entities for annual periods beginning after December 15, 2024, and for private entities for annual periods beginning after December 15, 2025, on a prospective basis. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements. Concentration and risks Risks and Uncertainties The Company’s business, financial condition and results of operations may be negatively impacted by risks related to government regulations, natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Company’s operations. E-cigarette regulation Regulation regarding e-cigarettes varies across countries, from no regulation to a total ban. The legal status of e-cigarettes is currently pending in many countries. But as e-cigarettes have become more and more popular recently, many countries are considering imposing more stringent law and regulations to regulate this market. Changes in existing law and regulations and the imposition of new laws and regulations in countries and regions that our major customers are located in may adversely affect the Company’s business. F- 17 The Federal Food, Drug, and Cosmetic Act requires all Electronic Nicotine Delivery Systems (“ENDS”) product manufacturers that market products in the United States to submit Premarket Tobacco Product Applications (“PMTAs”) to the Food and Drug Administration (“FDA”). For ENDS products that were on the U.S. market on or before August 8, 2016, a PMTA was required to be submitted to the FDA before September 9, 2020; for ENDS products that were not on the U.S. market prior to August 8, 2016, and for which a PMTA was not filed before September 9, 2020, a PMTA premarket authorization issued by FDA is required before the subject product may enter the U.S. market. The Company has submitted a PMTA filing for one ENDS product, and, under apparent FDA policies, FDA 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 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 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 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 involved. In the United States, cannabis vaping products are governed by state laws, which vary from state to state. Most states do not permit the adult recreational use of cannabis, and no states permit the sale of recreational cannabis products to minors. As a result of the reduced revenue to states resulting from the effects of the COVID 19 pandemic, states may seek to raise revenue by permitting and taxing the use of cannabis products. The Company cannot predict what action states will take or the nature and amount of taxes they may impose. 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 more than 0.3 % delta-9 tetrahydrocannabinol on a dry weight basis remain Schedule I controlled substances under U.S. federal law, meaning that federal law generally prohibits their manufacture and distribution. United States federal law also deems it unlawful to sell, offer for sale, transport in interstate commerce, import, or export “drug paraphernalia,” which includes “any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance” the possession of which federal law prohibits, including Schedule I “marijuana.” Limited exemptions exist, most notably when state or local law authorizes these items’ manufacture, possession, or distribution. The European Commission issued the Tobacco Products Directive (the “TPD”), which became effective on May 19, 2014, and became applicable in the European Union member states on May 20, 2016. The TPD regulates e-cigarettes on the packaging, labelling and ingredients of the products on the European Union market, the creation of smoke-free environments, tax measures and activities against illegal trade and anti-smoke campaigns. Member states of the European Union are required to ensure that advertisements for any tobacco related product are prohibited, and no promotion shall be made as to those devices with an intention to promote e-cigarettes. For the e-cigarettes released after May 20, 2016, TPD requires e-cigarette manufacturers to submit product sales applications to the regulatory market six months in advance, and ensure their products can meet the TPD requirements before they can be released. The Company has complied with TPD requirement for products sold in Europe. The sale of cannabis vaping products is illegal in the European Union and the United Kingdom. Customer and Supplier Concentration (a) Customers For the year ended June 30, 2023 and 2024, the Company’s major customers, who accounted for more than 10% of the Company’s consolidated revenue, were as follows: Year Ended June 30, 2023 2024 Major Customers A 32 % 30 % F- 18 (b) Suppliers For the year ended June 30, 2023 and 2024, the Company’s suppliers, who accounted for more than 10% of the Company’s total purchases, were as follows: Year Ended June 30, 2023 2024 Major Suppliers B (1) 92 % 78 % (1) Major supplier B is Shenzhen Yi Jia, a Chinese company that is 95 % owned by the Company’s co-chief executive officer and principal stockholder. See Note 13. Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, accounts receivable and investment – other. The Company maintains its cash in financial institutions. To the extent that such deposits exceed the maximum insurance levels, they are uninsured. As of June 30, 2023 and 2024, the Company’s customers, whose accounts receivable balances accounted for more than 10% of the Company’s total accounts receivable, were as follows: As of June 30, As of June 30, Customers 2023 2024 C 11 % * D 11 % * E * 16 % * Represents the percentage was below 10%. NOTE 4. CASH Below is a breakdown of the Company’s cash balances in banks as of June 30, 2023 and 2024, both by geography and by currencies (translated into U.S. dollars): As of June 30, As of June 30, By Geography: 2023 2024 Cash in HK $ 25,841,880 $ 32,667,486 Cash in U.S. 14,458,693 2,240,874 Cash in Malaysia - 162,934 Total $ 40,300,573 $ 35,071,294 By Currency: USD $ 39,835,636 $ 25,399,331 RM - 88,598 HKD 363,416 121,628 EUR 59,702 13,056 GBP 22,143 22,233 RMB 19,676 9,426,448 Total $ 40,300,573 $ 35,071,294 “HKD” refers to Hong Kong dollars, “GBP” refers to British pounds, “EUR” refers to Euros, “RM” refers to Malaysia ringgit, and “RMB” refers to Renminbi. F- 19 NOTE 5. ACCOUNTS RECEIVABLE, NET As of June 30, 2023 and 2024, accounts receivable consisted of the following: As of June 30, As of June 30, 2023 2024 Accounts receivable – gross $ 26,025,068 $ 65,620,003 Allowance for credit losses ( 1,498,806 ) ( 5,885,238 ) Accounts receivable, net $ 24,526,262 $ 59,734,765 The Company recorded $ 3,332,825 and $ 6,015,752 credit loss expenses for the year ended June 30, 2023 and 2024, respectively. For the years ended June 30, 2023 and 2024, the Company wrote off accounts receivable against allowance for credit losses of $ 0 and $ 1,629,320 , respectively. Activity in the allowance for credit losses is below: Year ended June 30, 2024 Balance at July 1, 2023 $ 1,498,806 Current period provision for expected losses 6,015,752 Write-offs charged against the allowance ( 1,629,320 ) Balance at June 30, 2024 $ 5,885,238 NOTE 6. PREPAID EXPENSES AND OTHER CURRENT ASSETS As of June 30, 2023 and 2024, prepaid expenses and other current assets consisted of the following: As of June 30, As of June 30, 2023 2024 Prepayment for inventory purchases $ 3,209,413 $ 206,480 Prepayments 26,974 696,960 Other receivable 142,230 488,104 Prepaid provisional tax - 8,608 Total $ 3,378,617 $ 1,400,152 F- 20 NOTE 7. PROPERTY, PLANT AND EQUIPMENT, NET As of June 30, 2023 and 2024, property, plant and equipment consisted of the following: As of June 30, As of June 30, 2023 2024 Leasehold improvements $ 518,854 $ 817,329 Office and other equipment 339,155 1,466,840 Furniture and fixtures 309,990 817,308 Construction-in-progress - 36,483 1,167,999 3,137,960 Less: accumulated depreciation ( 79,868 ) ( 555,503 ) Total $ 1,088,131 $ 2,582,457 For the years ended June 30, 2023 and 2024, depreciation expense amounted to $ 46,629 and $ 479,066 , respectively. NOTE 8. OTHER INVESTMENT On February 13, 2024, the Company acquired shares of preferred equity investment in Touch Point Worldwide, Inc. d/b/a/ Berify, a Delaware corporation (“Berify”). The Company purchased 908,464 shares of Berify Series Seed Preferred equity for $ 1 million, yielding a 2.3 % ownership in Berify. On April 5, 2024, the Company invested an additional of $ 1 million into Berify’s preferred equity for 908,464 shares, giving the Company a total of 1,816,928 shares equal to a 4.5 % interest in Berify. As of June 30, 2024, the investment in Berify amounted to $ 2,000,000 . The Series Seed Preferred Shares are convertible at any time into Berify common stock on a one-to-one basis, subject to certain specified adjustment provisions, and are mandatorily convertible upon an initial public offering or upon the election of the holders of a majority of the outstanding shares of Berify preferred stock. The Series Seed Preferred Shares will be paid in preference to the holders of common stock upon any voluntary or involuntary liquidation, dissolution or winding up of the entity, or upon a deemed liquidation event (consisting of (a) a merger or consolidation, or (b) the sale, lease, transfer of all or substantially all of the entity’s assets), based on the original issue price plus declared but unpaid dividends. The Series Seed Preferred Shares do not provide the Company with the ability to require repurchase of the shares at any specified time or upon any specified event. The Series Seed Preferred equity comes with a variety of protective rights for Series Seed Preferred shareholders, including the ability to approve the creation of new classes of capital stock, redemptions of capital stock, declare dividends on capital stock and effecting a deemed liquidation event or liquidation, dissolution or winding up of the entity. The holders of Berify Series Seed Preferred Shares vote with holders of common stock on an as-converted basis. The Company accounts for the investment in Berify Series Seed Preferred Shares as equity securities under ASC 321. The Company initially recognized the investment based on its transaction price, reflective of the fair value of the investment. As the investment does not have a readily determinable fair value, the Company applies the measurement alternative, and measures at cost less any impairment on a subsequent measurement basis, until there are any observable price changes that can be applied to the measurement of the investment. F- 21 NOTE 9. EQUITY METHOD INVESTMENT On April 5, 2024 (the “Closing Date”), Aspire North America entered into a capital contribution, subscription, and joint venture agreement (the “JV Agreement”) with several other parties, including Chemular Inc., a Michigan corporation (“Chemular”), Touch Point Worldwide, Inc. d/b/a/ Berify, a Delaware corporation (“TPW” or “Berify”), and IKE Tech LLC, a Delaware limited liability company (the “Joint Venture”, and together with Chemular, Berify, and the Company, each a “Party” and collectively, the “Parties”) pursuant to which the Parties agreed to participate in the Joint Venture. Pursuant to the JV Agreement, the parties created a legal entity, IKE Tek LLC (“IKE”), whose business will be licensing, owning, operating and developing an industry-standard age-verification solution for vapor (e-cigarette) devices in the U.S. market as the related planned submission of PMTA applications that seek FDA marketing orders for cutting-edge technologies across the U.S. e-cigarette market, including, without limitation, (a) next-generation e-cigarette hardware with a user-friendly point-of-use age-verification and geo fencing capability that eliminates the use of hardware in certain designated areas such as schools and sensitive areas; (b) e-cigarettes with end-to-end range of dynamic features such as authentication, direct to consumer engagements and exclusive offerings built on the foundations of blockchain technology; and (c) a real-time biometric identity platform for user access controls, creating added security and reliability that deters counterfeiting in connection with vapor devices. On the Closing Date, Ispire (i) contributed $ 1 million to IKE in cash for funding its operating activities, and (ii) entered into a binding commitment to make an additional capital contribution to IKE in the aggregate amount of up to $ 9 million. Upon written request of IKE, Ispire shall make additional capital contributions in cash to IKE in the aggregate amount of up to $ 9 million as necessary for research and development purchase as provided for in IKE’s board-approved budget for the preparation and submission of the PMTAs, as well as IKE’s commercialization work, including staffing, software development, office space and the purchase of raw materials (the “Ispire Contribution Commitment”). The Company’s capital account as of the Closing Date reflects a balance including the Ispire Contribution Commitment. In exchange for Ispire’s total investment of $ 10 million, which includes the Ispire Contribution Commitment, IKE issued to Ispire membership interests in an aggregate amount initially equal to forty percent ( 40 %) of the membership interests in IKE on the Closing Date. The Company evaluates the interests in Variable Interest Entities (“VIEs”) and will consolidate any VIE in which it has a controlling financial interest and are deemed to be the primary beneficiary. A controlling financial interest has both of the following characteristics: (1) the power to direct the activities of the VIE that most significantly impact its economic performance; and (2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could be significant to the VIE. If both of the characteristics are met, we are considered to be the primary beneficiary and therefore will consolidate that VIE into our consolidated financial statements. The Company determined that IKE is a variable interest entity (“VIE”), as IKE does not have sufficient equity at risk to continue operations without additional financial support. However, the Company is not the primary beneficiary of IKE, given that the Company does not have the power to direct the operating activities that most significantly impact IKE’s economic performance. The Company accounts for its investment under the equity method of accounting, given that it exerts significant influence over IKE. Under the equity method, the investment is initially recorded at cost and is subsequently increased for our proportionate share of income of the investee and reduced to reflect our proportionate share of losses of the investee, dividends received and other-than-temporary impairments. At June 30, 2024, the Company assessed its equity method investment for any impairment and concluded that there were no indicators of impairment. As of June 30, 2024, the investment in joint venture accounted for under the equity method amounted to $ 10,248,048 . For the years ended June 30, 2024, the Company’s share of the joint venture’s net loss was $ 117,905 , which was included in “other (expense) income, net” in the consolidated statements of operations and comprehensive loss. The tables below present the summarized financial information, as provided to the Company by the investee, for the unconsolidated company: As of June 30, 2024 Current assets $ 24,249,101 Noncurrent assets 576,789 Current liabilities 120,654 Equity 24,705,236 Year ended June 30, 2024 Net revenue $ - Gross profit (loss) - Loss from operations 294,763 Net loss 294,763 F- 22 NOTE 10. CONTRACT LIABILITIES As of June 30, 2023 and 2024, the Company had total contract liabilities of $ 988,556 and $ 2,218,166 , respectively. These liabilities are advance deposits received from customers after an order has been placed. As of June 30, 2024, the Company expects all of the contract liabilities to be settled in less than one year. The increase in the balance at June 30, 2024 was due to more orders on hand on that date. Changes in the contract liabilities is below: Year ended June 30, 2024 Balance at July 1, 2023 $ 988,556 Contract liabilities recognized related to advanced deposits 26,880,112 Revenue recognized in current period ( 25,650,502 ) Balance at June 30, 2024 $ 2,218,166 NOTE 11. LEASES The Company has operating lease arrangements for office premises in Hong Kong, California and Malaysia. These leases typically have terms of two to five years . Leases with an initial term of 12 months or less are not presented as right-of-use assets on the consolidated balance sheet and are expensed over the lease term. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. The balances for the right-of-use assets and lease liabilities where the Company is the lessee are presented as follow: As of June 30, As of 2023 (Restated) June 30, 2024 Operating lease right-of-use assets $ 4,253,732 $ 3,579,140 Operating lease liabilities – current $ 837,100 $ 1,207,832 Operating lease liabilities – non-current 3,071,075 2,194,094 Total $ 3,908,175 $ 3,401,926 As of June 30, 2024, the maturities of our lease liabilities (excluding short-term leases) are as follows: As of June 30, 2024 July 1, 2024 to June 30, 2025 $ 1,432,330 July 1, 2025 to June 30, 2026 1,395,767 July 1, 2026 to June 30, 2027 857,144 July 1, 2027 to June 30, 2028 80,676 Total future lease payments 3,765,917 Less: imputed interest ( 363,991 ) Total lease liabilities $ 3,401,926 The Company incurred lease costs, which include the payment of short-term leases, of $ 1,237,868 and $ 1,522,974 on the Company’s consolidated statements of operations and comprehensive loss for the years ended June 30, 2023 and 2024, respectively. The Company made payments of $ 1,141,142 and $ 1,342,709 under the lease agreements during the year ended June 30, 2023 and 2024, respectively. The weighted-average remaining lease term related to the Company’s lease liabilities as of June 30, 2023 and 2024 was 4 years and 2.7 years, respectively. The discount rate related to the Company’s lease liabilities as of June 30, 2023 and 2024 was 8.1 % and 7.9 %. 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. F- 23 NOTE 12. ACCRUED LIABILITIES AND OTHER PAYABLES As of June 30, 2023 and 2024, accrued liabilities and other payables consisted of the following: As of June 30, As of June 30, 2023 2024 Joint venture investment payable $ - $ 9,000,000 Other payables 148,197 575,115 Accrued salaries and related benefits 97,314 432,863 Accrued expenses 35,850 1,012,353 Reserve for product returns - 717,058 Other tax payable - 950 Total $ 281,361 $ 11,738,339 NOTE 13. RELATED PARTY TRANSACTIONS 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 - Tuanfang Liu is the Co-Chief Executive Officer and Chairman of the Company. - Jiangyan Zhu is the wife of Tuanfang Liu and a director of the Company. - Eigate (Hong Kong) Technology Co., Limited (“Eigate”) is a wholly-owned and controlled by the Company’s Chairman. - Aspire Global is a company controlled by the Chairman of the Company. - Aspire International Hong Kong Limited is a wholly-owned subsidiary of Aspire Global. - 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 June 30, 2024, Mr. Liu and Ms. Zhu beneficially own 66.5 % and 5.0 %, respectively, of the outstanding shares of Aspire Global. As of June 30, 2024, Mr. Liu and Ms. Zhu beneficially own 58.9 % and 4.4 %, respectively, of the outstanding shares of the Company. c) The balances due to related parties at June 30, 2023 and 2024 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 year ended June 30, 2023 and 2024, the majority of the Company’s tobacco and cannabis vaping products were purchased from Shenzhen Yi Jia. As of June 30, 2023 and 2024, the accounts payable–- related party was $ 51,698,588 and $ 67,046,472 , respectively, which was payable to Shenzhen Yi Jia. There are no fixed payment terms regarding these balances and they are classified as current liabilities. For the year ended June 30, 2023 and 2024, the purchases from Shenzhen Yi Jia were $ 83,060,957 and $ 91,324,614 , respectively. NOTE 14. INCOME TAXES British Virgin Islands (“BVI”) Under the current laws of the BVI, the Company’s BVI subsidiary, Ispire International, is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholding tax in the BVI. Hong Kong Under the two-tiered profits tax rates regime for Hong Kong, the first 2 million HKD of profits of the qualifying entity will be taxed at 8.25 %, and profits above HKD 2 million will be taxed at 16.5 %. F- 24 United States The Company and Aspire North America LLC are each subject to the federal income tax rate of 21 % if in a taxable position. For the year ended June 30, 2023 and 2024 income (loss) before income taxes by major taxing jurisdiction consists of: Years ended June 30, 2023 2024 HK $ 7,444,203 $ 8,150,770 U.S. ( 12,202,526 ) ( 20,623,262 ) Malaysia - ( 1,013,284 ) Total $ ( 4,758,323 ) $ ( 13,485,776 ) The reconciliation of the actual income taxes to the amount of tax computed by applying the aforementioned statutory tax rate to pre-tax income is as follows: Years ended June 30, 2023 2024 Federal statutory income tax rate $ ( 999,248 ) $ ( 2,832,013 ) State income taxes, net of federal benefit and valuation allowance - - Permanent Differences 40,311 77,429 Foreign Rate Differential ( 370,425 ) ( 460,014 ) Change in valuation allowance 2,574,665 4,427,175 Others - 69,469 Income tax expense $ 1,245,303 $ 1,282,046 The Company’s effective tax rate for the years ended June 30, 2023 and 2024, was different from the United States statutory income tax rate due primarily to the U.S. and Malaysia subsidiaries being in a loss position and the Hong Kong subsidiary being in an income position. No tax benefit has been recognized for this current losses and the related carryforward losses of these subsidiary, as a full valuation allowance has been established against the deferred tax asset arising from the losses. As at June 30, 2024, there were unrecognized deferred tax assets of $ 13,029,870 , out of which $ 7,006,420 were federal, state, and foreign net operating loss carryforwards that may result in future income tax benefits, resulting from net operating losses of $ 24,310,876 , $ 23,740,602 , and $ 1,013,283 , respectfully. Pursuant to the Tax Cuts and Jobs Act enacted by the U.S. federal government in December 2017. For federal income tax purposes, NOL carryovers generated for tax years beginning January 1, 2018 can be carried forward indefinitely but will be subject to a taxable income limitation. State NOLs will begin expiring in 2043 and foreign NOLs will begin expiring in 2034. The amount of the valuation allowance as of June 30, 2024 was $ 11,850,516 , resulting from an addition of $ 7,350,072 to the valuation allowance of $ 4,500,444 as of June 30, 2023. Valuation allowances provided against the deferred tax assets are related to the net operating loss carryforwards, as the Company’s management does not believe that sufficient positive evidence exists to conclude that the benefits of such deferred tax assets are more likely than not to be realized in full. F- 25 Deferred tax assets and liabilities represent the future effects on income taxes that result from temporary differences and carryforwards that exist at the balance sheet date, and are measured using enacted rates and provisions of the tax law. Deferred tax assets are recognized for deductible temporary differences as well as tax attributes. Significant components of the Company’s deferred tax liabilities and assets as of June 30, 2023 and 2024 are as follows: Years ended June 30, 2023 2024 Deferred tax assets: Net operating loss carryforward $ 3,062,787 $ 7,006,420 Foreign payables 981,956 1,310,900 Accounts receivable impairment 508,980 1,541,584 Share based compensation - 1,529,346 Lease liabilities - 939,195 Others - 702,425 Total deferred tax assets 4,553,723 13,029,870 Less: Valuation allowance ( 4,500,444 ) ( 11,850,516 ) Net deferred assets 53,279 1,179,354 Deferred tax liabilities: Property, plant and equipment ( 53,279 ) ( 347,779 ) Right of use assets - ( 831,575 ) Net deferred tax liabilities ( 53,279 ) ( 1,179,354 ) Net deferred tax asset $ - $ - Movement of valuation allowance: Years ended June 30, 2023 2024 At the beginning of the year $ 1,925,780 $ 4,500,444 Current year addition 2,574,664 7,350,072 At the end of the year $ 4,500,444 $ 11,850,516 The Company is subject to income taxes in the U.S. federal, state, and various foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. All of the Company’s tax years will remain open for examination by the US federal and state tax authorities from the date the returns are filed or are due, whichever is later. The Company does not have any tax audits or other issues pending. NOTE 15. WARRANTS The following table summarizes information with respect to outstanding warrants to purchase common stock during the years ended June 30, 2023 and 2024: Name Warrants Outstanding Warrants Exercisable Weighted average exercise price Weighted average remaining life in months Aggregate intrinsic value Outstanding at June 30, 2023 62,100 62,100 8.75 46 - Granted 111,111 111,111 9.00 119 - Exercised - - - - - Expired - - - - - Outstanding at June 30, 2024 173,211 173,211 8.91 93 - F- 26 On April 3, 2023, the Company issued representative of the underwriters 62,100 warrants. Each warrant entitles the holder to purchase one share of common stock at an exercise price of $ 8.75 , during the period commencing April 3, 2023, and expiring on April 3, 2028. None of the warrants have been exercised yet. On April 5, 2024, the Company issued a warrant to purchase 111,111 shares of its Common Stock to Berify in a private placement concurrent with the closing of investment in Ike Tech LLC, the joint venture. See Note 9. The Warrant has an exercise price of $ 9.00 per share, is exercisable immediately, and will expire ten years from the date of issuance, or April 5, 2034. The warrants are equity-classified and recorded at fair value. A third party valuation specialist was engaged to assist management with the fair value estimation and the Black-Scholes option pricing model was adopted to estimate the fair value of the warrants. Key assumptions used in determining fair value were as below: Year ended June 30, 2023 Time to expiry 10 years Expected volatility 50 % Risk-free interest rate 4.40 % Expected dividend yield 0 % NOTE 16. STOCK-BASED COMPENSATION In October 2022, the directors and stockholders of the Company approved the 2022 Equity Incentive Plan (the “Plan”) pursuant to which up to 15,000,000 shares of common stock may be issued pursuant to options, restricted stock or RSUs grants. The Plan is 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 the Company’s Form S-8 (File No. 333-273458) filed with U.S. Securities and Exchange Commission on July 26, 2023. 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. Restricted stock During the year ended June 30, 2024, 148,216 shares of common stock were issued to the Company’s board of directors in settlement of restricted stock granted under the Plan. Restricted stock granted to directors vests over three to six months and was fully vested as of June 30, 2024. The Company recognized share-based compensation expense totaling $ 826,996 related to the restricted stock issued to the Company’s board of directors, based the grant date fair value of the awards. There is no unrecognized compensation expenses related to these restricted stock awards as of June 30, 2024. During the year ended June 30, 2024, the Company entered into consulting agreements with two consultants which provide for the issuance of up to 150,000 shares of common stock to each consultant (a total of 300,000 shares of common stock). Under the terms of the consulting agreements, (a) 25,000 shares of common stock vested upon execution of the consulting agreements (a total of 50,000 shares of common stock), (b) 100,000 shares of common stock will vest upon the attainment of five separate sales-based targets, in 20,000 share increments (a total of 200,000 shares of common stock), and (c) 25,000 shares of common stock will vest on October 1, 2027, if the consulting agreements have not been terminated (a total of 50,000 shares of common stock). Upon execution of the consulting agreements, the Company issued a total of 50,000 shares of common stock and recognized stock-based compensation expense totaling $ 357,000 , and estimated the grant date fair value of the restricted stock to be $ 7.14 per share. The shares of common stock that vest upon the attainment of the sales-based targets include performance-based vesting conditions, which the Company has determined were not probable of being achieved at June 30, 2024. As such, the Company has not recognized any compensation expense as of June 30, 2024, related to the restricted common stock with performance-based vesting conditions. The shares of common stock that vest on October 1, 2027, include time-based vesting criteria. For these shares, the Company recognizes stock-based compensation expense based on the grant date fair value on a straight-line basis over the required service period. For the year ended June 30, 2024, the stock-based compensation expense related to the restricted common stock with time-based vesting conditions was not material. F- 27 During the year ended June 30, 2024, 3,750,000 stock options and 637,235 RSUs were granted to the Company’s employees under the Plan. See below for details. Stock Options The following is a summary of stock option activity transactions as of and for the year ended June 30, 2023 and June 30, 2024: Number Of options Weighted average exercise price Weighted average fair value per option Weighted average remaining contractual life in years Outstanding at June 30, 2023 - $ - $ - - Granted 3,750,000 $ 9.19 $ 5.19 9.1 Exercised - $ - $ - - Expired - $ - $ - - Forfeiture ( 495,000 ) $ 9.81 $ 5.58 9.2 Outstanding at June 30, 2024 3,255,000 $ 9.10 $ 5.13 9.1 Exercisable at June 30, 2024 200,000 $ 8.66 $ 4.08 5.0 The aggregate intrinsic value of options outstanding with an exercise price less than the closing price of the Company’s common stock as of June 30, 2024 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. Total expense of options vested for the year ended June 30, 2023 and 2024, was $ 0 and $ 3,607,816 , respectively. The options granted during year ended June 30, 2024 were valued using the binomial option pricing model based on the following range of assumptions: Year ended June 30, 2023 Exercise multiple 2.8 Expected volatility 50 % - 55 % Risk-free interest rate 4.049 % - 4.812 % Expected dividend yield 0 % RSUs RSUs granted to employees vest cumulatively as to one-third of the restricted stock units on each of the first three anniversaries of the date of grant based on continues service. Each vested RSU entitles holder to receive one share of common stock upon exercise. 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. Shares Weighted average grant date fair value Unvested, June 30, 2023 - $ - Granted 637,235 9.46 Vested ( 70,000 ) 7.02 Canceled and forfeited ( 83,629 ) 9.76 Unvested, June 30, 2024 483,606 $ 9.76 Total expense for the RSUs during the year ended June 30, 2023 and 2024 was nil and $ 1,588,470 . F- 28 The following table summarizes the allocation of stock-based compensation in the accompanying consolidated statements of operations and comprehensive loss: Years ended June 30, 2023 2024 General and administrative expenses $ - $ 5,885,192 Sales and marketing expenses - 495,090 Total $ - $ 6,380,282 As of June 30, 2024, the Company had approximately $ 17,517,993 in unrecognized compensation expenses related to all non-vested options and RSUs that will be recognized over the weighted-average period of 2.9 years. NOTE 17. STOCKHOLDERS’ EQUITY The Company has authorized the issuance of 140,000,000 shares of common stock, with a par value of $ 0.0001 per share. On April 6, 2023, the Company completed the public offering of 2,700,000 shares of common stock at a public offering price of $ 7.00 per share, par value $ 0.0001 per share, with option for underwriters to purchase up to an additional 405,000 at the initial public offering price as over-allotment. On April 25, 2023, the underwriters fully exercised their over-allotment option, and 405,000 shares were issued at public offering price of $ 7.00 per share, par value $ 0.0001 per share. These two transactions altogether generated proceeds of $ 21,735,000 , offset by offering costs of $ 3,475,171 , which contributed an increase of share capital of $ 311 and additional paid in capital of $ 18,259,518 . On June 26, 2023, pursuant to purchase agreements dated June 26, 2023, the Company sold to three investors in a private placement an aggregate of 1,117,420 shares of common stock, at a purchase price of $ 7.1318 per share. This private replacement generated proceeds of $ 7,969,221 , offset by offering cost of $ 543,153 , which contributed an increase of share capital of $ 111 and additional paid in capital of $ 7,425,957 . On March 22, 2024, pursuant to a securities purchase agreement with certain purchasers, the Company sold, in a secondary offering, an aggregate of 2,050,000 shares of common stock, with par value $ 0.0001 per share, at a public offering price of $ 6.00 per share. This offering generated proceeds of $ 12,300,000 , offset by offering cost of $ 1,514,094 , which contributed an increase of share capital of $ 205 and additional paid in capital of $ 10,785,701 . The Company has authorized the issuance of 10,000,000 shares of preferred stock, with a par value of $ 0.0001 per share. As of and for the years ended June 30, 2024 and 2023, there were no shares of preferred stock issued or outstanding. NOTE 18. LOSS PER SHARE The following table presents a reconciliation of basic net loss per share: Years ended June 30, 2023 (Restated) 2024 Net loss $ ( 6,003,626 ) $ ( 14,767,822 ) Weighted average basic and diluted ordinary shares outstanding 50,725,814 54,812,900 Net loss per basic and diluted share of common stock $ ( 0.12 ) $ ( 0.27 ) NOTE 19. COMMITMENTS AND CONTINGENCIES From time to time, the Company may be subject to legal or regulatory proceedings, investigations and claims incidental to the conduct of its business. The Company is not a party to, nor is the Company aware of, any legal or regulatory proceedings, investigations or claims which, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition or results of operations. Concurrently with the JV Agreement (see Note 9), Ispire entered into an exclusive supply agreement with Berify, whereby Ispire is obligated to purchase all Bluetooth enabled integrated circuits to be used on vape type devices to control the activation of the device that are to be sold to IKE at cost plus a 20 % mark-up. In addition, IKE entered into an exclusive supply agreement with Ispire, whereby IKE is obligated to purchase at cost plus a 5 % mark-up all products to be sold by IKE in the nicotine field. F- 29 NOTE 20. QUARTERLY FINANCIAL DATA (UNAUDITED AND RESTATED) The Company is providing restated quarterly unaudited consolidated financial information as of and for the periods ended September 30, 2023, December 31, 2023 and March 31, 2024 in the table below. See Note 2, Restatement of Consolidated Financial Statements for the Year Ended June 30, 2023, for further background concerning the events preceding the restatement of financial information in this Form 10-K. The restated unaudited condensed consolidated balance sheet items for periods ended September 30, 2023, December 31, 2023, and March 31, 2024, are as follows: Consolidated Balance Sheet as of September 30, 2023 As Reported Adjustment As Restated Other non-current assets $ 660,282 $ ( 489,720 ) $ 170,562 Right-of-use assets – operating leases 4,285,182 218,378 4,503,560 Total other assets 6,793,206 ( 271,342 ) 6,521,864 Total assets 88,406,605 ( 271,342 ) 88,135,263 Operating lease liability - current 1,207,234 ( 98,668 ) 1,108,566 Total current liabilities 54,006,421 ( 98,668 ) 53,907,753 Operating lease liability – net of current portion 3,387,844 ( 300,679 ) 3,087,165 Total liabilities 57,394,265 ( 399,347 ) 56,994,918 Retained earnings 4,473,189 128,005 4,601,194 Total stockholders’ equity 31,012,340 128,005 31,140,345 Total liabilities and stockholders’ equity 88,406,605 ( 271,342 ) 88,135,263 Consolidated Balance Sheet as of December 31, 2023 As Reported Adjustment As Restated Other non-current assets $ 727,766 $ ( 428,505 ) $ 299,261 Right-of-use assets – operating leases 3,969,437 239,403 4,208,840 Total other assets 7,572,387 ( 189,102 ) 7,383,285 Total assets 90,580,155 ( 189,102 ) 90,391,053 Operating lease liability - current 1,244,565 ( 100,621 ) 1,143,944 Total current liabilities 58,524,982 ( 100,621 ) 58,424,361 Operating lease liability – net of current portion 3,067,909 ( 246,899 ) 2,821,010 Total liabilities 61,592,891 ( 347,520 ) 61,245,371 Retained earnings 450,865 158,418 609,283 Total stockholders’ equity 28,987,264 158,418 29,145,682 Total liabilities and stockholders’ equity 90,580,155 ( 189,102 ) 90,391,053 Consolidated Balance Sheet as of March 31, 2024 As Reported Adjustment As Restated Other non-current assets $ 725,979 $ ( 428,505 ) $ 297,474 Right-of-use assets – operating leases 3,636,104 255,264 3,891,368 Total other assets 9,496,679 ( 173,241 ) 9,323,438 Total assets 108,149,216 ( 173,241 ) 107,975,975 Operating lease liability - current 1,275,923 ( 102,577 ) 1,173,346 Total current liabilities 69,743,043 ( 102,577 ) 69,640,466 Operating lease liability – net of current portion 2,730,574 ( 253,709 ) 2,476,865 Total liabilities 72,473,617 ( 356,286 ) 72,117,331 Retained earnings (accumulated deficit) ( 5,498,886 ) 183,045 ( 5,315,841 ) Total stockholders’ equity 35,675,599 183,045 35,858,644 Total liabilities and stockholders’ equity 108,149,216 ( 173,241 ) 107,975,975 F- 30 The restated unaudited condensed consolidated statement of operations and comprehensive loss items for the three months ended September 30, 2023, and the three and six months ended December 31, 2023, and the three and nine months ended March 31, 2024, are as follows: Consolidated Statement of Operations and Comprehensive Loss for the three months ended September 30, 2023 As Reported Adjustment As Restated Cost of revenue $ 35,976,355 $ 43,444 $ 36,019,799 Gross profit 6,888,292 ( 43,444 ) 6,844,848 Sales and marketing expenses 1,068,663 ( 43,444 ) 1,025,219 General and administrative expenses 6,730,902 ( 33,028 ) 6,697,874 Total operating expenses 7,799,565 ( 76,472 ) 7,723,093 Loss from operations ( 911,273 ) 33,028 ( 878,245 ) Loss before income taxes ( 878,570 ) 33,028 ( 845,542 ) Income taxes ( 496,045 ) - ( 496,045 ) Net loss ( 1,374,615 ) 33,028 ( 1,341,587 ) Comprehensive loss ( 1,330,152 ) 33,028 ( 1,297,124 ) Net loss per share: Basic and diluted $ ( 0.03 ) $ ( 0.01 ) $ ( 0.02 ) Consolidated Statement of Operations and Comprehensive Loss for the three months ended December 31, 2023 As Reported Adjustment As Restated Cost of revenue $ 35,309,355 $ 123,308 $ 35,432,663 Gross profit 6,376,206 ( 123,308 ) 6,252,898 Sales and marketing expenses 1,517,715 ( 123,308 ) 1,394,407 General and administrative expenses 8,809,127 ( 30,412 ) 8,778,715 Total operating expenses 10,326,842 ( 153,720 ) 10,173,122 Loss from operations ( 3,950,636 ) 30,412 ( 3,920,224 ) Loss before income taxes ( 3,670,144 ) 30,412 ( 3,639,732 ) Income taxes ( 352,180 ) - ( 352,180 ) Net loss ( 4,022,324 ) 30,412 ( 3,991,912 ) Comprehensive loss ( 3,907,997 ) 30,412 ( 3,877,585 ) Consolidated Statement of Operations and Comprehensive Loss for the six months ended December 31, 2023 As Reported Adjustment As Restated Cost of revenue $ 71,285,710 $ 166,752 $ 71,452,462 Gross profit 13,264,498 ( 166,752 ) 13,097,746 Sales and marketing expenses 2,586,378 ( 166,752 ) 2,419,626 General and administrative expenses 15,540,029 ( 63,440 ) 15,476,589 Total operating expenses 18,126,407 ( 230,192 ) 17,896,215 Loss from operations ( 4,861,909 ) 63,440 ( 4,798,469 ) Loss before income taxes ( 4,548,714 ) 63,440 ( 4,485,274 ) Income taxes ( 848,225 ) - ( 848,225 ) Net loss ( 5,396,939 ) 63,440 ( 5,333,499 ) Comprehensive loss ( 5,238,149 ) 63,440 ( 5,174,709 ) Consolidated Statement of Operations and Comprehensive Loss for the three months ended March 31, 2024 As Reported Adjustment As Restated General and administrative expenses 10,047,116 ( 24,628 ) 10,022,488 Total operating expenses 11,801,876 ( 24,628 ) 11,777,248 Loss from operations ( 5,679,923 ) 24,628 ( 5,655,295 ) Loss before income taxes ( 5,694,266 ) 24,628 ( 5,669,638 ) Income taxes ( 255,485 ) - ( 255,485 ) Net loss ( 5,949,751 ) 24,628 ( 5,925,123 ) Comprehensive loss ( 5,938,963 ) 24,628 ( 5,914,335 ) F- 31 Consolidated Statement of Operations and Comprehensive Loss for the nine months ended March 31, 2024 As Reported Adjustment As Restated Cost of Revenue 95,178,793 166,752 95,345,545 Gross Profit 19,386,451 ( 166,752 ) 19,219,699 Sales and marketing expenses 4,341,138 ( 166,752 ) 4,174,386 General and administrative expenses 25,587,145 ( 88,068 ) 25,499,077 Total operating expenses 29,928,283 ( 254,820 ) 29,673,463 Loss from operations ( 10,541,832 ) 88,068 ( 10,453,764 ) Loss before income taxes ( 10,242,980 ) 88,068 ( 10,154,912 ) Income taxes ( 1,103,710 ) - ( 1,103,710 ) Net loss ( 11,346,690 ) 88,068 ( 11,258,622 ) Comprehensive loss ( 11,177,112 ) 88,068 ( 11,089,044 ) The restated unaudited condensed consolidated statement of cash flows items for the three months ended September 30, 2023, the six months ended December 31, 2023, and the nine months ended March 31, 2024, are as follows: Consolidated Statement of Cash Flows for the three months ended September 30, 2023 As Reported Adjustment As Restated Net loss $ ( 1,374,615 ) $ 33,028 $ ( 1,341,587 ) Right-of-use assets amortization 312,938 ( 25,458 ) 287,480 Operating lease liabilities — ( 249,932 ) ( 249,932 ) Net cash used in operating activities ( 12,880,245 ) ( 242,182 ) ( 13,122,607 ) Principal portion of lease payment ( 242,182 ) 242,182 — Net cash used in financing activities ( 945,504 ) 242,182 ( 703,322 ) Supplemental non-cash investing and financing activities: Leased assets obtained in exchange for operating lease liabilities — 537,307 537,307 Consolidated Statement of Cash Flows for the six months ended December 31, 2023 As Reported Adjustment As Restated Net loss $ ( 5,396,939 ) $ 63,440 $ ( 5,333,499 ) Right-of-use assets amortization — 582,201 582,201 Prepaid expenses and other current assets 199,970 ( 61,215 ) 138,755 Operating lease liabilities 103,897 ( 584,426 ) ( 480,529 ) Net cash used in operating activities ( 20,232,049 ) — ( 20,232,049 ) Supplemental non-cash investing and financing activities: Leased assets obtained in exchange for operating lease liabilities 507,292 30,015 537,307 Consolidated Statement of Cash Flows for the nine months ended March 31, 2024 As Reported Adjustment As Restated Net loss $ ( 11,346,690 ) $ 88,068 $ ( 11,258,622 ) Right-of-use assets amortization — 899,672 899,672 Prepaid expenses and other current assets 1,732,122 ( 61,215 ) 1,670,907 Operating lease liabilities 131,253 ( 926,525 ) ( 795,272 ) Net cash used in operating activities ( 16,878,126 ) — ( 16,878,126 ) Supplemental non-cash investing and financing activities: Leased assets obtained in exchange for operating lease liabilities 495,739 41,568 537,307 NOTE 21. SUBSEQUENT EVENT On September 24, 2024, David Hessler and the Company agreed to transition his role from our Chief Operating Officer to a consulting role. Mr. Hessler’s wholly owned consulting entity, Synergie Conseils SARL (“Synergie”), and our subsidiary Aspire North America have entered a Consulting Agreement, dated as of September 24, 2024, under which Mr. Hessler, through Synergie, will provide consulting services to the Company for international nicotine related projects (the “Consulting Agreement”). The Consulting Agreement provides for a 10-month term and may be terminated by either party on 3-months’ notice. Synergie will receive a monthly consulting fee of $ 12,500 and Mr. Hessler will receive the immediate vesting of 25,000 of his non-qualified stock options. Under the Consulting Agreement, Synergie will be paid or reimbursed for Mr. Hessler’s travel time, travel expenses, or any other costs or expenses expressly pre-approved by Aspire North America in writing and supported by documentary evidence. F-32