Ispire Technology Inc. 10-Q

ITEM 1 - Financial Statements ISPIRE TECHNOLOGY INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In $USD, except share and per share data) March 31, 2025 June 30, 2024 Assets Current assets: Cash $ 23,518,560 $ 35,071,294 Restricted cash 72,594 - Accounts receivable, net 60,425,835 59,734,765 Inventories 7,825,109 6,365,394 Prepaid expenses and other current assets 2,184,559 1,400,152 Total current assets 94,026,657 102,571,605 Non-current assets: Property, plant and equipment, net 2,189,313 2,582,457 Intangible assets, net 2,098,740 1,375,666 Right-of-use assets – operating leases 5,356,384 3,579,140 Other investment 2,000,000 2,000,000 Equity method investment 9,841,020 10,248,048 Other non-current assets 215,612 284,050 Total non-current assets 21,701,069 20,069,361 Total assets $ 115,727,726 $ 122,640,966 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 4,666,784 $ 3,779,723 Accounts payable – related party 77,121,850 67,046,472 Contract liabilities 1,561,842 2,218,166 Accrued liabilities and other payables 10,033,739 11,738,339 Bank loan – current portion 1,124,226 - Operating lease liabilities – current portion 1,667,641 1,207,832 Total current liabilities 96,176,082 85,990,532 Non-current liabilities: Bank loan – net of current portion 1,215,136 - Operating lease liabilities – net of current portion 3,551,386 2,194,094 Total liabilities 100,942,604 88,184,626 Commitments and contingencies Stockholders’ equity: Common stock, par value $ 0.0001 per share; 140,000,000 shares authorized; 57,136,455 and 56,470,636 shares issued and outstanding as of March 31, 2025 and June 30, 2024 5,714 5,647 Preferred stock, par value $ 0.0001 per share, 10,000,000 shares authorized, no shares issued at March 31, 2025 and June 30, 2024 - - Treasury stock, at cost ( 60,488 ) - Additional paid-in capital 48,141,075 43,217,391 Accumulated deficit ( 33,275,195 ) ( 8,825,041 ) Accumulated other comprehensive (loss) income ( 25,984 ) 58,343 Total stockholders’ equity 14,785,122 34,456,340 Total liabilities and stockholders’ equity $ 115,727,726 $ 122,640,966 See notes to unaudited condensed consolidated financial statements. 1 ISPIRE TECHNOLOGY INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In $USD, except share and per share data) Three Months Ended March 31, Nine Months Ended March 31, 2025 2024 2025 2024 Revenue $ 26,190,725 $ 30,015,036 $ 107,356,898 $ 114,565,244 Cost of revenue 21,414,820 23,893,083 87,184,044 95,345,545 Gross profit 4,775,905 6,121,953 20,172,854 19,219,699 Operating expenses: Sales and marketing expenses 1,656,527 1,754,760 6,710,438 4,174,386 General and administrative expenses 13,704,819 10,022,488 36,670,781 25,499,077 Total Operating expenses 15,361,346 11,777,248 43,381,219 29,673,463 Loss from operations ( 10,585,441 ) ( 5,655,295 ) ( 23,208,365 ) ( 10,453,764 ) Other (expense) income: Interest (expense) income, net ( 32,166 ) 27,296 3,138 298,161 Exchange gain (loss), net 24,341 ( 53,904 ) ( 103,247 ) ( 19,387 ) Other (expense) income, net ( 86,239 ) 12,265 ( 47,906 ) 20,078 Total Other (expense) income, net ( 94,064 ) ( 14,343 ) ( 148,015 ) 298,852 Loss before income taxes ( 10,679,505 ) ( 5,669,638 ) ( 23,356,380 ) ( 10,154,912 ) Income taxes ( 176,990 ) ( 255,485 ) ( 1,093,774 ) ( 1,103,710 ) Net loss $ ( 10,856,495 ) $ ( 5,925,123 ) $ ( 24,450,154 ) $ ( 11,258,622 ) Other comprehensive loss Foreign currency translation adjustments ( 2,860 ) 10,788 ( 84,327 ) 169,578 Comprehensive loss $ ( 10,859,355 ) $ ( 5,914,335 ) $ ( 24,534,481 ) $ ( 11,089,044 ) Net loss per share Basic and diluted $ ( 0.19 ) $ ( 0.11 ) $ ( 0.43 ) $ ( 0.21 ) Weighted average shares outstanding: Basic and diluted 57,003,488 54,347,729 56,752,454 54,287,624 See notes to unaudited condensed consolidated financial statements. 2 ISPIRE TECHNOLOGY INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (In $USD, except share and per share data) Common Stock Additional Accumulated Other Total Number of Shares Amount Treasury Stock Paid-in Capital Retained Earnings Comprehensive (Loss)/Income Stockholders’ Equity Balance, January 1, 2025 56,677,982 $ 5,668 $ - $ 46,670,244 $ ( 22,418,700 ) $ ( 23,124 ) $ 24,234,088 Net loss - - - - ( 10,856,495 ) - ( 10,856,495 ) Issuance of common stock for equity incentives 458,473 46 - 126,732 - - 126,778 Stock based compensation expenses - - - 1,344,099 - - 1,344,099 Common stock repurchase - - ( 60,488 ) ( 60,488 ) Foreign currency translation adjustment - - - - - ( 2,860 ) ( 2,860 ) Balance, March 31, 2025 57,136,455 $ 5,714 $ ( 60,488 ) $ 48,141,075 $ ( 33,275,195 ) $ ( 25,984 ) $ 14,785,122 Balance, January 1, 2024 54,279,396 $ 5,428 $ - $ 28,535,949 $ 609,282 $ ( 4,978 ) $ 29,145,681 Net loss - - - - ( 5,925,123 ) - ( 5,925,123 ) Issuance of common stock for a secondary offering 2,050,000 205 - 10,785,701 - - 10,785,906 Stock based compensation expenses - - - 1,841,392 - - 1,841,392 Foreign currency translation adjustment - - - - - 10,788 10,788 Balance, March 31, 2024 56,329,396 $ 5,633 $ - $ 41,163,042 $ ( 5,315,841 ) $ 5,810 $ 35,858,644 Common Stock Additional Accumulated Other Total Number of Shares Amount Treasury Stock Paid-in Capital Retained Earnings Comprehensive (Loss)/Income Stockholders’ Equity Balance, July 1, 2024 56,470,636 $ 5,647 $ - $ 43,217,391 $ ( 8,825,041 ) $ 58,343 $ 34,456,340 Net loss - - - - ( 24,450,154 ) - ( 24,450,154 ) Issuance of common stock for equity incentives 665,819 67 - 1,281,532 - - 1,281,599 Stock based compensation expenses - - - 3,642,152 - - 3,642,152 Common stock repurchase - ( 60,488 ) ( 60,488 ) Foreign currency translation adjustment - - - - - ( 84,327 ) ( 84,327 ) Balance, March 31, 2025 57,136,455 $ 5,714 $ ( 60,488 ) $ 48,141,075 $ ( 33,275,195 ) $ ( 25,984 ) $ 14,785,122 Balance, July 1, 2023 54,222,420 $ 5,422 $ - $ 25,685,475 $ 5,942,781 $ ( 163,768 ) $ 31,469,910 Net loss - - - - ( 11,258,622 ) - ( 11,258,622 ) Issuance of common stock for a secondary offering 2,050,000 205 - 10,785,701 - - 10,785,906 Issuance of common stock for equity incentives 56,976 6 - 539,056 - - 539,062 Stock based compensation expenses - - - 4,152,810 - - 4,152,810 Foreign currency translation adjustment - - - - - 169,578 169,578 Balance, March 31, 2024 56,329,396 $ 5,633 $ - $ 41,163,042 $ ( 5,315,841 ) $ 5,810 $ 35,858,644 See notes to unaudited condensed consolidated financial statements. 3 ISPIRE TECHNOLOGY INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In $USD, except share and per share data) Nine Months ended March 31, 2025 2024 Net loss $ ( 24,450,154 ) $ ( 11,258,622 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 592,280 138,546 Credit loss expenses 13,389,767 3,318,772 Right-of-use assets amortization 1,001,101 899,673 Stock-based compensation expenses 4,923,751 4,691,872 Inventory write-down 73,692 168,585 Loss from equity investment 407,028 - Changes in operating assets and liabilities: Accounts receivable ( 14,080,837 ) ( 26,553,830 ) Inventories ( 1,485,433 ) ( 2,510,259 ) Prepaid expenses and other current assets ( 715,969 ) 1,670,906 Accounts payable and accounts payable – related party 10,962,439 11,904,642 Contract liabilities ( 756,872 ) 350,227 Accrued liabilities and other payables ( 969,068 ) 1,160,487 Income tax payable - ( 63,853 ) Operating lease liabilities ( 961,244 ) ( 795,272 ) Net cash used in operating activities ( 12,069,519 ) ( 16,878,126 ) Cash flows from investing activities: Purchase of property, plant and equipment ( 140,956 ) ( 1,205,716 ) Acquisition of intangible assets ( 781,254 ) ( 979,295 ) Maturity of short term investment - 9,133,707 Payment made for long term investment ( 767,285 ) ( 1,000,000 ) Net cash (used in) provided by investing activities ( 1,689,495 ) 5,948,696 Cash flows from financing activities: Repayments of advances from a related party - ( 703,322 ) Proceeds from a secondary offering - 12,300,000 Costs of a secondary offering - ( 1,514,094 ) Common stock repurchase ( 60,488 ) - Proceeds from long term debt 2,339,362 - Net cash provided by financing activities 2,278,874 10,082,584 Net decrease in cash ( 11,480,140 ) ( 846,846 ) Cash, restricted cash and equivalents - beginning of period 35,071,294 40,300,573 Cash, restricted cash and equivalents - end of period $ 23,591,154 $ 39,453,727 Reconciliation of cash, restricted cash and equivalents Cash and cash equivalents $ 23,518,560 $ 39,453,727 Restricted cash 72,594 - Total cash, restricted cash and equivalents $ 23,591,154 $ 39,453,727 Supplemental non-cash investing and financing activities Leased assets obtained in exchange for operating lease liabilities $ 2,771,082 $ 537,307 Unpaid long term investment in accrued liabilities and other payables $ 8,232,715 $ 1,000,000 Supplemental cash flow disclosure Cash paid for income taxes $ 1,413,533 $ 1,357,265 Cash paid for interest $ 60,183 $ 7,399 See notes to unaudited condensed consolidated financial statements. 4 ISPIRE TECHNOLOGY INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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 Technology Inc. is a holding company and does not engage in any active operations. Its business is mainly 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 nicotine vaping products, and the products are mainly sold in Europe and Asia Pacific (excluding the People’s Republic of China (“PRC”). In July 2024, the Company established a wholly-owned subsidiary, Aspire AME Electronic Cigarettes Trading LLC (“Ispire UAE”) under the laws of the United Arab Emirates (“UAE”), in order to establish sales and marketing in the UAE. In October 2024, the Company established a wholly-owned subsidiary, Magellan Trading LLC (Magellan Trading) incorporated under the laws of the State of California to assist in operations and logistics for the Company. In January 2025, the Company established a wholly-owned subsidiary, Ispire Products UK LTD (Ispire UK) incorporated under the laws of England and Wales to assist in sales and marketing for the Company. The following table sets forth information concerning the Company and its subsidiaries as of March 31, 2025: 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 Aspire AME Electronic Cigarettes Trading LLC July 19, 2024 UAE 100 % Sales and Marketing Magellan Trading LLC October 1, 2024 California 100 % Operations and Logistics Ispire Products UK LTD January 9, 2025 England and Wales 100 % Sales and Marketing 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s consolidated financial position as of March 31, 2025 and the results of operations for the three and nine months ended March 31, 2025 and 2024. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the financial statements not misleading have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the United States Securities and Exchange Commission (“SEC”) and accordingly do not include all of the disclosures normally made in the Company’s annual consolidated financial statements. Accordingly, these unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended June 30, 2024. The unaudited condensed consolidated balance sheet as of June 30, 2024 has been derived from the audited consolidated financial statements at such date. The results of operations for the three and nine months ended March 31, 2025 are not necessarily indicative of the results of operations that may be expected for any other interim periods or for the year ending June 30, 2025. 5 Use of significant estimates The preparation of the unaudited condensed 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, revenue recognition, fair value of equity instruments, inventory reserve, incremental borrowing rate, and determination of the valuation allowances for deferred taxes. Actual results could differ from those estimates. 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. 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. 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 considers 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. 6 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 write-down 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 March 31, 2025 and June 30, 2024, the Company recorded inventory write-down of $ 279,286 and $ 205,594 , respectively. 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 $ 247,702 of patent fees were capitalized during the three months ended March 31, 2025 and 2024 respectively. $ 781,254 and $ 979,295 of patent fees were capitalized during the nine months ended March 31, 2025 and 2024, respectively. The amortization of the intangible assets was $ 21,627 and $ 9,755 for the three months ended March 31, 2025 and 2024, respectively. The amortization of the intangible assets was $ 58,180 and $ 11,262 for the nine months ended March 31, 2025 and 2024, respectively. The amortization expenses were included in the general and administrative expenses. 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. 7 The Company offers different payment terms to different customers. For nicotine 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 three and nine months ended March 31, 2025 and 2024, were as follows: Three months ended March 31, Nine months ended March 31, 2025 2024 2025 2024 Europe $ 13,235,728 $ 13,628,653 $ 59,174,779 $ 49,144,807 North America (the U.S. and Canada) 8,788,476 12,361,240 29,441,624 50,191,212 Asia Pacific (excluding PRC) 2,965,023 3,771,105 10,453,766 14,831,769 Africa 117,975 117,695 5,840,041 261,113 South America 1,083,523 136,343 2,446,688 136,343 Total $ 26,190,725 $ 30,015,036 $ 107,356,898 $ 114,565,244 Cost of revenue Cost of revenue for the three and nine months ended March 31, 2025 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 10. 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 or service provider is required to provide service in exchange for the awards, usually the vesting period. 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. 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. 8 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 November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, which will require the Company to disclose segment expenses that are significant and regularly provided to the Company’s chief operating decision maker (“CODM”). In addition, ASU 2023-07 will require the Company to disclose the title and position of its CODM and how the CODM uses segment profit or loss information in assessing segment performance and deciding how to allocate resources. The Company will adopt this ASU for our 2025 annual period and 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. In November 2024, the FASB issued ASU 2024-03, Income Statement: Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), to improve the disclosures about an entity’s expenses. Upon adoption, the Company will be required to disclose in the notes to the financial statements a disaggregation of certain expense categories included within the expense captions on the face of the income statement. The standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The standard can be applied either prospectively or retrospectively. The Company is currently assessing adoption timing and the effect that the updated standard will have on our financial statement disclosures. Customer and Supplier Concentration For the three and nine months ended March 31, 2025 and 2024, the Company’s major customers, who accounted for more than 10% of the Company’s consolidated revenue, were as follows: Three months ended March 31, Nine months ended March 31, 2025 2024 2025 2024 Major Customers Customer A 23 % 31 % 24 % 34 % Customer B * 12 % * * * Represented less than 10% of consolidated revenue. For the three and nine months ended March 31, 2025 and 2024, the Company’s suppliers, who accounted for more than 10% of the Company’s total purchases, were as follows: Three months ended March 31, Nine months ended March 31, 2025 2024 2025 2024 Major Suppliers Supplier C 87 % 95 % 93 % 77 % (1) Major Supplier C is Shenzhen Yi Jia, a Chinese company that is 95 % owned by the Company’s co-chief executive officer and principal stockholder. See Note 10. Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and accounts receivable. The Company maintains its cash in financial institutions. Accounts at United States financial institutions are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 . Accounts at Malaysian financial institutions are insured by the Perbadanan Insurans Deposit Malaysia (“PIDM”) up to RM 250,000 . The Hong Kong Deposit Protection Board pays compensation up to a limit of Hong Kong Dollar (“HKD”) 800,000 . The Company may carry cash balances at financial institutions in excess of the insured limits. The amount in excess of the deposit insurance as of March 31, 2025 and June 30, 2024 was $ 23,109,510 and $ 34,698,647 . The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant. 9 As of March 31, 2025 and June 30, 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 March 31, As of June 30, Customers 2025 2024 D 14 % 16 % E 11 % * 3. CASH AND CASH EQUIVALENTS, RESTRICTED CASH Below is a breakdown of the Company’s cash balances in banks as of March 31, 2025 and June 30, 2024, both by geography and by currencies (translated into U.S. dollars): As of March 31, As of June 30, By Geography: 2025 2024 Cash in HK $ 22,818,711 $ 32,667,486 Cash in U.S. 408,395 2,240,874 Cash in Malaysia 291,454 162,934 Total $ 23,518,560 $ 35,071,294 By Currency: USD $ 13,904,857 $ 25,399,331 RM 87,106 88,598 HKD 131,639 121,628 EUR 10,081 13,056 GBP 22,759 22,233 RMB 9,362,118 9,426,448 Total $ 23,518,560 $ 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 Chinese Renminbi. As of March 31, 2025 and June 30, 2024, restricted cash totaled $ 72,594 and $ 0 . The $ 72,594 balance consist of $ 22,594 from Malaysia in RM for a bank guarantee with the customs department in Malaysia for import and export activities, and $ 50,000 from Aspire North America in US for a certificate of deposit related to a bank letter of credit for a shipping bond. 4. ACCOUNTS RECEIVABLE, NET As of March 31, 2025 and June 30, 2024, accounts receivable consisted of the following: As of March 31, As of June 30, 2025 2024 Accounts receivable – gross $ 75,011,075 $ 65,620,003 Allowance for credit losses ( 14,585,240 ) ( 5,885,238 ) Accounts receivable, net $ 60,425,835 $ 59,734,765 10 The Company recorded $ 6,103,688 and $ 1,192,488 credit loss expense for the three months ended March 31, 2025 and 2024, respectively. The Company recorded $ 13,389,767 and $ 3,318,772 credit loss expense for the nine months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025 and 2024, the Company wrote off accounts receivable against allowance for credit losses of $ 2,823,560 and $ 65,801 , respectively. For the nine months ended March 31, 2025 and 2024, the Company wrote off accounts receivable against allowance for credit losses of $ 4,689,765 and $ 771,961 , respectively. Activity in the allowance for credit losses is below: For the nine months ended March 31, 2025 2024 Balance at July 1 $ 5,885,238 $ 1,498,806 Current period provision for expected losses 13,389,767 3,318,772 Write-offs charged against the allowance ( 4,689,765 ) ( 771,961 ) Balance at March 31 14,585,240 4,045,617 5. PROPERTY, PLANT AND EQUIPMENT, NET As of March 31, 2025 and June 30, 2024, property, plant and equipment consisted of the following: As of March 31, As of June 30, 2025 2024 Leasehold improvements $ 1,327,162 $ 1,363,654 Office and other equipment 1,587,647 1,466,840 Furniture and fixtures 345,785 270,983 Construction-in-progress 18,322 36,483 3,278,916 3,137,960 Less: accumulated depreciation ( 1,089,603 ) ( 555,503 ) Property, plant and equipment, net $ 2,189,313 $ 2,582,457 For the three months ended March 31, 2025 and 2024, depreciation expense amounted to $ 177,328 and $ 56,842 , respectively. For the nine months ended March 31, 2025 and 2024, depreciation expense amounted to $ 534,100 and $ 127,387 , respectively. 6. EQUITY METHOD INVESTMENT On April 5, 2024, Aspire North America entered into a capital contribution, subscription, and joint venture agreement with several other parties. Pursuant to joint venture agreement, the parties created a legal entity, IKE Tech LLC (“IKE”), whose business is 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. Ispire contributed $ 1 million to IKE in cash for funding its operating activities and entered into a binding commitment to make an additional capital contribution to IKE in the aggregate amount of up to $ 9 million. In exchange for Ispire’s total investment of $ 10 million, IKE issued to Ispire membership interests in an aggregate amount initially equal to forty percent ( 40 %) of the membership interests in IKE. 11 As of March 31, 2025, the investment in joint venture accounted for under the equity method amounted to $ 9,841,020 . As of March 31, 2025, the Company noticed no indicator of impairment regarding the investment. For the three months ended March 31, 2025, the Company’s share of the joint venture’s net loss was $ 230,360 . For the nine months ended March 31, 2025, the Company’s share of the joint venture’s net loss was $ 407,028 . The loss was included in “other (expense) income, net” in the consolidated statements of operations and comprehensive loss. For the three months ended March 31, 2025 and 2024, the Company recorded $ 33,221 and $ 0 in other income from IKE from charging administrative fees. For the nine months ended March 31, 2025 and 2024, the Company recorded $ 105,293 and $ 0 in other income from IKE from charging administrative fees. As of March 31, 2025 and June 30, 2024, the Company had total accounts receivable of $ 187,547 and $ 17,280 due from IKE. The tables below present the summarized financial information, as provided to the Company by the investee, for the unconsolidated company: Three months ended March 31, Nine months ended March 31, 2025 2025 Net revenue $ - $ - Gross profit - - Loss from operations ( 575,900 ) ( 1,017,570 ) Net loss ( 575,900 ) ( 1,017,570 ) 7. CONTRACT LIABILITIES These liabilities are advance deposits received from customers after an order has been placed. As of March 31, 2025, the Company expects all of the contract liabilities to be settled in less than one year. The decrease in the balance at March 31, 2025 was due to less orders on hand on that date. The amount of revenue recognized in the nine months ended March 31, 2025, that was included in the opening contract liability balance was $ 1,890,511 . Changes in the contract liabilities is below: For the nine months ended March 31, 2025 2024 Balance at July 1 $ 2,218,166 $ 988,556 Contract liabilities recognized related to advanced deposits 28,227,804 23,470,160 Revenue recognized in current period ( 28,884,128 ) ( 23,131,345 ) Balance at March 31 1,561,842 1,327,371 8. 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. 12 The balances for the right-of-use assets and lease liabilities where the Company is the lessee are presented as follow: As of March 31, 2025 As of June 30, 2024 Operating lease right-of-use assets $ 5,356,384 $ 3,579,140 Operating lease liabilities – current $ 1,667,641 $ 1,207,832 Operating lease liabilities – non-current 3,551,386 2,194,094 Total $ 5,219,027 $ 3,401,926 As of March 31, 2025, the maturities of our lease liabilities (excluding short-term leases) are as follows: As of March 31, 2025 April 1, 2025 to June 30, 2025 477,512 July 1, 2025 to June 30, 2026 1,995,914 July 1, 2026 to June 30, 2027 1,473,496 July 1, 2027 to June 30, 2028 745,509 July 1, 2027 to June 30, 2029 664,833 July 1, 2027 to June 30, 2030 443,222 Total future lease payments 5,800,486 Less: imputed interest ( 581,459 ) Total lease liabilities 5,219,027 The Company incurred lease costs, which include the payment of short-term leases, of $ 434,935 and $ 413,911 on the Company’s consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025 and 2024, respectively. The Company incurred lease costs, which include the payment of short-term leases, of $ 1,200,668 and $ 1,148,902 on the Company’s consolidated statements of operations and comprehensive loss for the nine months ended March 31, 2025 and 2024, respectively. The Company made payments of $ 440,173 and $ 378,560 under the lease agreements during three months ended March 31, 2025 and 2024, respectively. The Company made payments of $ 1,160,813 and $ 1,089,246 under the lease agreements during nine months ended March 31, 2025 and 2024, respectively. The weighted-average remaining lease term related to the Company’s lease liabilities as of March 31, 2025 and June 30, 2024 was 3.5 years and 2.7 years, respectively. The discount rate related to the Company’s lease liabilities as of March 31, 2025 and June 30, 2024 was 6.5 % and 7.9 %, respectively. 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. 9. ACCRUED LIABILITIES AND OTHER PAYABLES As of March 31, 2025 and June 30, 2024, accrued liabilities and other payables consisted of the following: As of March 31, As of June 30, 2025 2024 Joint venture investment payable $ 8,232,715 $ 9,000,000 Other payables 682,653 575,115 Accrued salaries and related benefits 23,146 432,863 Accrued expenses 682,437 1,012,353 Reserve for product returns 411,838 717,058 Other tax payable 950 950 Total $ 10,033,739 $ 11,738,339 13 10. 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. - IKE Tech LLC, a joint venture that the Company has 40% membership interests in. b) Tuanfang Liu is also Aspire Global’s chief executive officer and a director of both the Company and Aspire Global, and his wife, Jiangyan Zhu, is also a director of both companies. As of March 31, 2025, Mr. Liu and Ms. Zhu beneficially own 66.5 % and 5.0 %, respectively, of the outstanding shares of Aspire Global. As of March 31, 2025, Mr. Liu and Ms. Zhu beneficially own 58.2 % and 4.4 %, respectively, of the outstanding shares of the Company. c) For the three and nine months ended March 31, 2025 and 2024, the majority of the Company’s nicotine and cannabis vaping products were purchased from Shenzhen Yi Jia. As of March 31, 2025 and June 30, 2024, the accounts payable–related party was $ 77,121,850 and $ 67,046,472 , respectively, which was payable to Shenzhen Yi Jia. Pricing for products purchased from Shenzhen Yi Jia is determined by the volume of products ordered and shall be the most favorable market price offered by Shenzhen Yi Jia in negotiations. There are no fixed payment terms regarding these balances and they are classified as current liabilities. The relationship between the related parties, including the payment terms, is reviewed on a quarterly basis. As long as strategic objectives are met, the Company expects the relationship will continue without significant modification. For the three months ended March 31, 2025 and 2024, the purchases from Shenzhen Yi Jia were $ 17,951,993 and $ 24,079,185 , respectively. For the nine months ended March 31, 2025 and 2024, the purchases from Shenzhen Yi Jia were $ 79,510,476 and $ 73,062,398 , respectively. d) As of March 31, 2025 and June 30, 2024, the Company had total accounts receivable of $ 187,547 and $ 17,280 due from IKE. 11. INCOME TAXES For the three and nine months ended March 31, 2025 and 2024 loss before income taxes consists of: Three months ended March 31, Nine months ended March 31, 2025 2024 2025 2024 HK $ 1,083,440 $ 1,503,400 $ 6,616,549 $ 7,194,470 U.S. ( 11,744,739 ) ( 6,754,070 ) ( 28,948,956 ) ( 16,649,722 ) Malaysia ( 18,206 ) ( 418,968 ) ( 1,023,973 ) ( 699,660 ) Total $ ( 10,679,505 ) $ ( 5,669,638 ) $ ( 23,356,380 ) $ ( 10,154,912 ) Income taxes recorded for the three and nine months ended March 31, 2025 and 2024 , were estimated using the discrete method. Income taxes are based on the Company’s financial results through the end of the period, as well as the related change in the valuation allowance on deferred tax assets. The Company is unable to estimate the annual effective tax rate with sufficient precision for purposes of the effective tax rate method, which requires the Company to consider a projection of full-year income and the expected change in the valuation allowance. The estimated annual effective tax rate method was not reliable due to its sensitivity to small changes to forecasted annual pre-tax earnings and the effect of the valuation allowance, which create results with significant variations in the customary relationship between income tax expense and pre-tax income for the interim periods. As a result, the Company determined that using the discrete method is more appropriate than using the annual effective tax rate method. The Company’s effective tax rate from operations was ( 1.66 %) and ( 4.51 %) for the three months ended March 31, 2025 and 2024, respectively. The Company’s effective tax rate from operations was ( 4.68 %) and ( 10.87 %) for the nine months ended March 31, 2025 and 2024, respectively. The Company’s effective tax rate differs from the federal statutory rate of 21 % in each period primarily due to the Company’s net loss position, nondeductible expenses, and valuation allowance. As of March 31, 2025, income tax expense of $ 176,990 and $ 1,093,774 was from income generated during the three and nine months ended March 31, 2025, respectively. At March 31, 2024, income tax expense of $ 255,485 and $ 1,103,710 was from income generated during the three and nine months ended March 31, 2024, respectively. All income tax expenses arose solely from Hong Kong operation. 14 12. STOCK-BASED COMPENSATION In October 2022, the board of directors and stockholders of the Company approved the 2022 Equity Incentive Plan (as amended, 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) initially filed with U.S. Securities and Exchange Commission on July 26, 2023, and amended on November 15, 2024. 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 three and nine months ended March 31, 2025, 458,473 and 665,819 shares of common stock were issued to the Company’s board of directors, employees and service providers in settlement of restricted stock granted under the Plan, respectively. Restricted stock granted to directors vests over three months and was fully vested as of March 31, 2025. The Company recognized stock-based compensation expense totaling $ 126,778 during the three months ended March 31, 2025, which were related to the restricted stock issued to the Company’s board of directors and a service provider, based on the grant date fair value of the awards. There are $ 51,218 unrecognized compensation expenses related to the restricted stock awards granted to one service provider as of March 31, 2025. The Company entered into consulting agreements with two consultants in June 2024, 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, issued during the year ended June 30, 2024), (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). The Company estimated the grant date fair value of the shares issuable under the consulting agreements to be $ 7.14 per share. In July 2024, the Company entered into consulting agreements with two consultants, which provide for the issuance of up to 140,000 shares of common stock to each consultant (a total of 280,000 shares of common stock). Under the terms of the consulting agreements, these 140,000 shares of common stock will vest upon the attainment of six separate sales-based targets, in 20,000 share increments, if the consulting agreements have not been terminated. In July 2024, the Company entered into consulting agreements with two consultants, which provide for the issuance of up to 400,000 shares of common stock to each consultant (a total of 800,000 shares of common stock). Under the terms of the consulting agreements, (a) 75,000 shares of common stock vested upon execution of the consulting agreements (a total of 150,000 shares of common stock issued during the three months ended September 30, 2024), (b) 300,000 shares of common stock will vest upon the attainment of three separate sales-based targets, in 100,000 share increments (a total of 300,000 shares of common stock), and (c) 25,000 shares of common stock will vest upon the attainment of one separate sales-based target, if the consulting agreements have not been terminated. These consultant agreements were cancelled during three months ended March 31, 2025. Upon cancellation, 150,000 shares from the consultant agreements had been vested and issued, and there were 650,000 unissued and unvested shares being cancelled. 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 March 31, 2025. As such, the Company has not recognized any compensation expense as of March 31, 2025, 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 quarter ended March 31, 2025, the stock-based compensation expense related to the restricted common stock with time-based vesting conditions was not material. 15 Stock Options The following is a summary of stock option activity transactions as of and for the nine months ended March 31, 2025: Number Of options Weighted average exercise price Weighted average fair value per option Weighted average remaining contractual life in years Outstanding at June 30, 2024 3,255,000 $ 9.10 $ 5.13 9.1 Granted 465,000 $ 6.06 $ 3.69 9.6 Exercised - $ - $ - - Expired - $ - $ - - Forfeiture ( 1,417,219 ) $ 9.69 $ 5.50 8.5 Outstanding at March 31, 2025 2,302,709 $ 8.12 $ 4.61 7.8 Exercisable at March 31, 2025 798,751 $ 9.07 $ 4.96 7.4 The aggregate intrinsic value of options outstanding with an exercise price less than the closing price of the Company’s common stock as of March 31, 2025 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 three months ended March 31, 2025 and 2024, was $ 564,680 and $ 1,078,235 , respectively. Total expense of options vested for the nine months ended March 31, 2025 and 2024, was $ 189,884 and $ 2,785,328 , respectively. The options granted during the nine months ended March 31, 2025 and 2024 were valued using the binomial option pricing model based on the following range of assumptions: Nine months ended March 31, 2025 Nine months ended March 31, 2024 Exercise multiple 2.8 2.8 Expected volatility 60 % 50 % - 55 % Risk-free interest rate 3.650 % - 4.540 % 4.062 % - 4.812 % Expected dividend yield 0 % 0 % RSUs RSUs granted to employees typically 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, 2024 483,606 $ 9.76 Granted 1,215,346 6.15 Vested ( 593,608 ) 7.12 Canceled and forfeited ( 435,351 ) 8.02 Unvested, March 31, 2025 669,993 $ 6.68 Total expense for the RSUs during the three months ended March 31, 2025 and 2024 was $ 779,419 and $ 722,709 , respectively. Total expense for the RSUs during the nine months ended March 31, 2025 and 2024 was $ 3,452,268 and $ 1,341,179 , respectively. 16 The following table summarizes the allocation of stock-based compensation in the accompanying consolidated statements of operations and comprehensive loss: Three months ended March 31, Nine months ended March 31, 2025 2024 2025 2024 General and administrative expenses $ 1,385,087 $ 1,809,204 $ 3,701,071 $ 4,611,237 Sales and marketing expenses 85,790 32,188 1,222,680 80,635 Total $ 1,470,877 $ 1,841,392 $ 4,923,751 $ 4,691,872 As of March 31, 2025, the Company had approximately $ 10,051,112 in unrecognized compensation expenses related to all non-vested options and RSUs that will be recognized over the weighted-average period of 2.5 years. 13. LOSS PER SHARE The following table presents a reconciliation of basic net loss per share: Three months ended March 31, Nine months ended March 31, 2025 2024 2025 2024 Net loss $ ( 10,856,495 ) $ ( 5,925,123 ) $ ( 24,450,154 ) $ ( 11,258,622 ) Weighted average basic and diluted share of common stock outstanding 57,003,488 54,347,729 56,752,454 54,287,624 Net loss per basic and diluted share of common stock $ ( 0.19 ) $ ( 0.11 ) $ ( 0.43 ) $ ( 0.21 ) 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 stocks outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common stocks (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 nine months ended March 31, 2025 and 2024. Potentially dilutive shares were as follows: For the nine months ended March 31, 2025 2024 Share options 2,302,709 2,907,500 Unvested restricted stock units 669,993 593,402 Warrants 173,211 62,100 Total 3,145,913 3,563,002 14. 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 joint venture agreement (see Note 6), 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. 15. SUBSEQUENT EVENT On April 24, 2025, Ispire Malaysia SDN BDH (“Ispire Malaysia”) entered into a Preference Shares Subscription Agreement (the “Agreement”) with Greenpeak Resources SDN BDH (“Greenpeak”). Greenpeak is Ispire Malaysia’s government affairs and lobbying firm in Malaysia. Under the Agreement Ispire Malaysia issued one preference share to Greenpeak in exchange for (a) a subscription price of 1.00 Ringgit Malaysia, (b) procurement of certain licenses related to the manufacture, import and export of nicotine products in Malaysia (the “Licenses”) on or before May 15, 2025 (or such other date or extended date as may be mutually agreed upon in writing by the parties), and (c) an obligation to maintain and renew the Licenses for Ispire Malaysia throughout the term of the Agreement. The agreement is in effect from April 24, 2025 until it is terminated by either party after a default. The preference share entitles its holder to an annual dividend at the rate of five percent ( 5 %) of the Ispire Malaysia’s total net profit after tax (NPAT) for the relevant financial year. 17