Ispire Technology Inc.: Form 10-Q for the period ended Dec 31, 2025
Filed with the SEC on Feb 6, 2026 and accepted by EDGAR at Feb 6, 2026, 16:30 ET.
Management's discussion and analysis
As filed, 30,967 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this report. See “Cautionary Forward-Looking Statements.” Actual results could differ materially from those discussed below.
Overview
We are engaged in the research and development, design, commercialization, sales, marketing and distribution of branded and non-branded vaping hardware products in both the nicotine and cannabis spaces. Vaping refers to the practice of inhaling and exhaling the vapor produced by an electronic vaping device. These products are sold into the global nicotine and cannabis markets in the form of e-cigarettes or cartridges filled with oils by our customers, respectively.
As stated in our corporate mission, we are committed to delivering superior products that challenge industry norms, with the goal of delivering an unmatched customer and adult consumer experience. In achieving this, risk reduction is central to our mission, and we aim to improve the lives of our consumers through cutting-edge research and development. Our technology platforms look to reduce youth access to vaping products, which in turn we believe will facilitate our ability to provide adult consumers with the products they desire.
We sell our e-cigarette (or nicotine) products globally, in markets where we are legally permitted to do so. To date, our nicotine products are marketed under the “Aspire” brand name and are sold primarily through our expansive distribution network. However, we are expanding our international presence via the launch of nicotine products under the Ispire platform. These products have started to be launched under licensing arrangements with the owners of selected partner brands.
We currently sell our cannabis vaping hardware in the United States, Canada, and South Africa. However, we are continuing to develop our sales network across Europe, South America, and other regions in preparation for legalization in these markets. Our cannabis products are sold under the Ispire brand name, primarily on an ODM basis to other cannabis vapor companies including multi and single-state operators, brand owners and co-packers. ODM generally involves the design and customization of the core products to meet each brand’s unique image and needs. Our hardware products are sold by our customers under their own brand names. We do not “touch the cannabis plant” in the production and sale of our hardware products and thus are not subject to the specific cannabis-related regulatory and taxation provisions of the industry (e.g., Internal Revenue Code Section 280E).
Since our initial public offering in April 2023, we have completed three fundraising rounds. The first was executed as part of our initial public offering, from which we raised approximately $18.3 million after underwriting and other offering expenses.
In June 2023, we raised net proceeds of approximately $7.4 million, after placement agent and offering expenses, from the private placement of our Common Stock to three investors.
In March 2024, we raised net proceeds of approximately $10.6 million, after placement agent fees and offering expenses, through a public offering of our Common Stock priced at $6.00 per share. We used the net proceeds from this offering in connection with the establishment and operation of our manufacturing facility in Malaysia, the funding of our joint venture with Touch Point Worldwide Inc. d/b/a/ Berify and Chemular Inc. and for working capital and general corporate purposes, including research and development.
Regulatory Risks
The sale of nicotine and cannabis products is subject to regulations worldwide. Many countries prohibit the sale of any cannabis products, and many countries have regulations relating to nicotine products, with a particular emphasis on underage sales. We work closely with our various global distribution partners to help ensure our nicotine products comply with local regulations (e.g., packaging, ingredient disclosure, health warnings, etc.). Changes in the regulatory environment can be enacted swiftly and may lead to our products becoming non-compliant in one or more international markets. This regulatory scenario may severely disrupt our business in these markets while we resolve the deficiencies (if possible) with the current product offering.
E-cigarette regulation
Regulation regarding e-cigarettes varies across countries, from limited regulation to a total ban. The legal status of e-cigarettes is currently pending in many countries. 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 or regulations in countries and regions that our major customers are in may adversely affect our business. Please see the sections titled “Item 1. Business – Regulation” and “Item 1A. Risk Factors” above for our robust discussion of this topic.
Accounts Receivable
Our business relies on the collection of accounts receivable from our customers in a timely manner to maintain liquidity and support our ongoing operations. The balance of the allowance for credit losses was $20.9 million and $18.0 million at December 31, 2025 and June 30, 2025, respectively.
Our failure or inability to collect accounts receivable when due results from a number of factors, including (i) our customer’s failure to pay as a result of adverse economic conditions affecting the customer’s cash flow; (ii) our failure to implement effective collection efforts; and (iii) disputes over contract terms, product quality or delays in delivery. Due to federal status of cannabis and the uncertainty of adverse economic conditions in cannabis industry, the Company has focused more on nicotine business in the past year. Although we may implement strategies to mitigate these risks, there can be no assurance that such measures will be entirely effective, and we may continue to incur write-offs of accounts receivable, which may impair our ability to operate profitably.
Key Factors that Affect Our Results of Operations
We believe the following key factors may affect our financial condition and results of operations:
- The effect of legislation and regulations affecting non-combustible nicotine products and cannabis vaping products.
- If we elect to market nicotine vaping products in the United States, our ability to obtain regulatory approval to market additional nicotine vaping products in the United States and the significant cost of seeking such approval.
- Our ability to develop and market nicotine and cannabis vaping products to meet the changing tastes of adult consumers.
- The effects of competition.
- The development of an international market for cannabis vaping products, which is presently primarily limited to certain states in the United States.
Results of Operations
The following table sets forth a summary of our unaudited condensed consolidated statements of operations and comprehensive income for the three months ended December 31, 2025 and 2024 (dollars in thousands except per share amounts).
| Three Months Ended December 31, 2025 $% of Revenue | 2024 $% of Revenue | Six Months Ended December 31, 2025 $% of Revenue | 2024 $% of Revenue | |||||
|---|---|---|---|---|---|---|---|---|
| Revenue | $20,287 | 100.0% | $41,828 | 100.0% | $50,637 | 100.0% | $81,166 | 100.0% |
| Cost of revenue | (16,812) | (82.9)% | (34,105) | (81.5)% | (42,016) | (83.0)% | (65,769) | (81.0)% |
| Gross profit | 3,475 | 17.1% | 7,723 | 18.5% | 8,621 | 17.1% | 15,397 | 19.0% |
| Operating expenses | (10,349) | (50.1)% | (15,083) | (36.1)% | (18,191) | (35.9)% | (28,020) | (34.5)% |
| loss from operations | (6,874) | (33.9)% | (7,360) | (17.6)% | (9,570) | (18.9)% | (12,623) | (15.6)% |
| Other income (expense), net | 379 | 1.9% | (179) | (0.4)% | 301 | 0.6% | (54) | (0.1)% |
| Loss before income taxes | (6,495) | (32.0)% | (7,539) | (18.0)% | (9,269) | (18.3)% | (12,677) | (15.6)% |
| Income taxes | (107) | (0.5)% | (460) | (1.1)% | (593) | (1.2)% | (917) | (1.1)% |
| Net loss | (6,602) | (32.5)% | (7,999) | (19.1)% | (9,862) | (19.5)% | (13,594) | (16.7)% |
| Other comprehensive (loss)income | (113) | (0.6)% | 74 | 0.2% | (121) | (0.2)% | (81) | (0.1)% |
| Comprehensive loss | (6,715) | (33.1)% | (7,925) | (18.9)% | (9,983) | (19.7)% | (13,675) | (16.8)% |
| Net loss per share Basic and diluted | (0.12) | (0.14) | (0.17) | (0.24) | ||||
| Weighted shares of common stock outstanding Basic and diluted | 57,258,218 | 56,658,012 | 57,257,938 | 56,629,666 |
Revenue
The following table sets out the breakdown of our revenue percentage by region based on information provided to us by our distributors.
| Three months ended December 31, 2025 | 2024 | Six months ended December 31, 2025 | 2024 | |
|---|---|---|---|---|
| Europe | $14,783,941 | $23,987,678 | $35,482,585 | $45,939,051 |
| North America (the U.S. and Canada) | 1,606,444 | 10,916,260 | 7,075,503 | 20,653,148 |
| Asia Pacific (excluding PRC) | 2,525,694 | 3,613,359 | 4,899,337 | 7,488,743 |
| Others | 1,370,477 | 3,310,563 | 3,180,015 | 7,085,231 |
| Total | $20,286,556 | $41,827,860 | $50,637,440 | $81,166,173 |
25
Our revenue decreased by $21,541,304, or 51.5%, from $41,827,860 for the three months ended December 31, 2024, to $20,286,556 for the three months ended December 31, 2025. The decrease in revenue is the combined effect of (i) decreases in product sales in the United States of $9.3 million from $10.9 million for the three months ended December 31, 2024, to $1.6 million for the three months ended December 31, 2025 largely due to shorter credit terms in the United States with a focus on higher quality customers, and (ii) decreases in sales of vaping products in Europe of $9.2 million from $24.0 million for the three months ended December 31, 2024 to approximately $14.8 million for the three months ended December 31, 2025 largely due to market conditions being competitive, and the timing of distribution continuing to evolve, and (iii) decreases in sales to other regions of $1.9 million from $3.3 million for the three months ended December 31, 2024 to approximately $1.4 million for the three months ended December 31, 2025 and (iv) decreases in sales of vaping products in Asia Pacific of $1.1 million from $3.6 million for the three months ended December 31, 2024 to approximately $2.5 million for the three months ended December 31, 2025.
Our revenue decreased by $30,528,733, or 37.6%, from $81,166,173 for the six months ended December 31, 2024, to $50,637,440 for the six months ended December 31, 2025. The decrease in revenue is the combined effect of (i) decreases in sales of vaping products in North America of $13.6 million from $20.7 million for the six months ended December 31, 2024 to approximately $7.1 million for the six months ended December 31, 2025 largely due to shorter credit terms in the United States with a focus on higher quality customers, and (ii) decreases in product sales in Europe of $10.4 million from $45.9 million for the six months ended December 31, 2024, to $35.5 million for the six months ended December 31, 2025 largely due to market conditions being competitive, and the timing of distribution continuing to evolve, and (iii) decreases in sales in other regions, mainly Africa, of $3.9 million from $7.1 million for the six months ended December 31, 2024, to $3.2 million for the six months ended December 31, 2025, (iv) decreases in sales to Asia Pacific regions of $2.6 million from $7.5 million for the six months ended December 31, 2024 to approximately $4.9 million for the six months ended December 31, 2025.
Cost of Revenue
Cost of revenue mainly consists of cost of purchases of vaping products, that the majority of the purchase are from Shenzhen Yi Jia. Cost of revenue decreased by $17,293,334, or 50.7%, from $34,105,289 for the three months ended December 31, 2024, to $16,811,955 for the three months ended December 31, 2025. The decrease in cost of revenue is in line with decrease in sales. Cost of revenue mainly consists of the cost of purchases of vaping products, the majority of which are from Shenzhen Yi Jia.
Cost of revenue decreased by $23,753,157, or 36.1%, from $65,769,224 for the six months ended December 31, 2024, to $42,016,067 for the six months ended December 31, 2025. The decrease in cost of revenue is in line with decrease in sales.
Gross Profit
The following tables show the revenue, cost of revenue and gross profit of our products (dollars in thousands).
Three Months Ended December 31, 2025
| Revenue | Cost of revenue | Gross profit | Gross profit % |
|---|---|---|---|
| $20,287 | $16,812 | $3,475 | 17.1% |
Three Months Ended December 31, 2024
| Revenue | Cost of revenue | Gross profit | Gross profit % |
|---|---|---|---|
| $41,828 | $34,105 | $7,723 | 18.5% |
Six Months Ended December 31, 2025
| Revenue | Cost of revenue | Gross profit | Gross profit % |
|---|---|---|---|
| $50,637 | $42,016 | $8,621 | 17.0% |
Six Months Ended December 31, 2024
| Revenue | Cost of revenue | Gross profit | Gross profit % |
|---|---|---|---|
| $81,166 | $65,769 | $15,397 | 19.0% |
26
Gross profit decreased by $4,247,970, or 55.0%, from $7,722,571 for the three months ended December 31, 2024, to $3,474,601 for the three months ended December 31, 2025, while our gross margin decreased from 18.5% to 17.1%. The decrease in gross margin was primarily due to changes in product mix with less higher margin products being sold during the three months ended December 31, 2025.
Gross profit decreased by $6,775,576, or 44.0%, from $15,396,949 for the six months ended December 31, 2024, to $8,621,373 for the six months ended December 31, 2025, while our gross margin decreased from 19.0% to 17.0%. The decrease in gross margin was primarily due to changes in product mix with less higher margin products being sold during the six months ended December 31, 2025.
Operating Expenses
Operating expenses decreased by $4,733,158 or 31.4%, from $15,082,626 for the three months ended December 31, 2024 to $10,349,468 for the three months ended December 31, 2025. Operating expenses decreased by $9,828,324 or 35.1%, from $28,019,873 for the six months ended December 31, 2024 to $18,191,549 for the six months ended December 31, 2025.
Our sales and marketing expenses mainly consist of employee salaries and benefits, marketing expenses, travel expenses, and other miscellaneous expenses.
Sales and marketing expenses decreased by $585,336, or 28.4%, from $2,061,664 for the three months ended December 31, 2024 to $1,476,328 for the three months ended December 31, 2025. The decrease in sales and marketing expenses was primarily due to a (i) decrease in brand marketing activities of $0.2 million comparing the three months ended December 31, 2025 and 2024, (ii) decrease in trade show costs of $0.2 million comparing the three months ended December 31, 2025 and 2024 and (iii) decrease in travelling expense of $0.1 million as a result of less travelling activities during the three months ended December 31, 2025.
Sales and marketing expenses decreased by $2,012,739, or 39.8%, from $5,053,911 for the six months ended December 31, 2024 to $3,041,172 for the six months ended December 31, 2025. The decrease in sales and marketing expenses was primarily due to a decrease in (i) stock-based compensation expense of $0.9 million comparing the six months ended December 31, 2025 and 2024, (ii) decrease in travelling expense of $0.5 million as a result of less travelling activities during the six months ended December 31, 2025, (iii) decrease in brand marketing activities of $0.3 million comparing the six months ended December 31, 2025 and 2024, and (iv) decrease in trade show costs of $0.3 million comparing the six months ended December 31, 2025 and 2024.
Credit loss expenses increased slightly by $25,203, or 0.6%, from $4,183,998 for the three months ended December 31, 2024, to $4,209,201 for the three months ended December 31, 2025.
Credit loss expenses decreased by $1,312,626, or 18.0%, from $7,286,079 for the six months ended December 31, 2024, to $5,973,453 for the six months ended December 31, 2025. The decrease is due to more collection of customer payments from repayment plan negotiated and thus less allowance for credit losses were provided as of December 31, 2025.
Our general and administrative expenses consist of employees’ salaries and benefits, rental expense, professional fees, stock-based compensation expenses and other administrative expenses. General and administrative expenses decreased by $4,173,025, or 47.2%, from $8,836,964 for the three months ended December 31, 2024, to $4,663,939 for the three months ended December 31, 2025. The decrease was primarily due to (i) decrease in payroll of $1.6 million comparing the three months ended December 31, 2025 and 2024 as a result of decrease in headcount of North America, (ii) decrease in stock-based compensation expense of $0.7 million for the three months ended December 31, 2025 as a result of drop in headcount in North America, (iii) decrease in legal and professional fees of $0.5 million for the three months ended December 31, 2025 as a result of cost reduction in North America, (iv) decrease of $1.7 million of miscellaneous administrative expenses from North America as a result of drop in headcount and cost reduction for the three months ended December 31, 2025, offset by $0.3 million increase of general administrative expenses from Ispire Malaysia from growth of operations during the three months ended December 31, 2025.
General and administrative expenses decreased by $6,502,959, or 41.5%, from $15,679,883 for the six months ended December 31, 2024, to $9,176,924 for the six months ended December 31, 2025. The decrease was primarily due to (i) decrease in payroll of $2.8 million comparing the six months ended December 31, 2025 and 2024 as a result of decrease in headcount of North America, (ii) decrease in legal and professional fees of $1.0 million for the six months ended December 31, 2025 as a result of cost reduction in North America, (iii) decrease in stock-based compensation expense of $0.8 million for the six months ended December 31, 2025 as a result of drop in headcount in North America, and (ii) decrease of $1.9 million of miscellaneous administrative expenses from North America as a result of drop in headcount and cost reduction for the six months ended December 31, 2025.
Other income (expense), net
Other income (expense), net includes interest income, interest expense, exchange loss, net and other (expense) income.
Interest income increased by $45,167, from $59,755 for the three months ended December 31, 2024, to $104,922 for the three months ended December 31, 2025. Interest income increased by $140,553, from $59,841 for the six months ended December 31, 2024, to $200,394 for the six months ended December 31, 2025. The increase in interest income is mainly due to charging late fees from customers.
Interest expense increased by $87,118, from $13,073 for the three months ended December 31, 2024, to $100,191 for the three months ended December 31, 2025. Interest expense increased by $187,830, from $24,537 for the six months ended December 31, 2024, to $212,367 for the six months ended December 31, 2025. The increase in interest expense is mainly due to borrowing engaged in February 2025.
Other income, net mainly consists of loss on equity method investment, credits from company credit card and other miscellaneous expenses. Other income, net changed by $63,640, or 319.3%, from net income of $19,934 for the three months ended December 31, 2024 to net income of $83,574 for the three months ended December 31, 2025. Other income, net changed by $25,342, or 66.1%, from net income of $38,333 for the six months ended December 31, 2024 to net income of $12,991 for the six months ended December 31, 2025.
Exchange gain, net changes by $535,410, or 218.4%, from net exchange loss $245,173 for three months ended December 31, 2024, to net exchange gain of $290,237 for three months ended December 31, 2025. Exchange gain, net changes by $427,627, or 335.2%, from net exchange loss $127,588 for six months ended December 31, 2024, to net exchange gain of $300,039 for six months ended December 31, 2025.
As a result of these factors, total other income (expense), net increased by $557,099, from other expense, net of $178,557 for three months ended December 31, 2024, to other income, net of $378,542 for three months ended December 31, 2025. Total other income (expense), net increased by $355,008, from other expense, net of $53,951 for six months ended December 31, 2024, to other income, net of $301,057 for six months ended December 31, 2025.
Income Taxes
Income taxes decreased by $353,445 or 76.8%, from $460,031 for three months ended December 31, 2024, to $106,586 for three months ended December 31, 2025. Income taxes decreased by $324,129 or 35.4%, from $916,784 for six months ended December 31, 2024, to $592,655 for six months ended December 31, 2025. We had a consolidated net loss for both three and six months ended December 31, 2025 and 2024, which was the combined effect of a profit by Aspire Science, a loss by Aspire North America and Ispire Malaysia. The profit from Aspire Science resulted in a current tax expense. The increase in valuation allowance reflects our view that the taxable income in the future will not be sufficient to utilize the carryforward loss.
Net Loss
As a result of the foregoing, net loss decreased by $1,395,732, from net loss of $7,998,643, or $(0.14) per share, for the three months ended December 31, 2024, to a net loss of $6,602,911, or $(0.12) per share, for the three months ended December 31, 2025. Net loss decreased by $3,731,885, from net loss of $13,593,659, or $(0.24) per share, for the six months ended December 31, 2024, to a net loss of $9,861,774, or $(0.17) per share, for the six months ended December 31, 2025.
Liquidity and Capital Resources
The following table summarizes our changes in working capital from June 30, 2025 to December 31, 2025 (dollars in thousands).
| December 31, 2025 | June 30, 2025 | Change | % Change | |
|---|---|---|---|---|
| Current Assets | $63,652 | $72,908 | $(9,256) | (12.7)% |
| Current Liabilities | 60,190 | 72,540 | (12,350) | (17.0)% |
| Working Capital | 3,462 | 368 | 3,094 | 840.8% |
The following table sets forth information as to consolidated cash flow information for the six months ended December 31, 2025 and 2024 (dollars in thousands).
| Consolidated cash flow data: | Six Months Ended December 31, 2025 | 2024 | Increase (Decrease) |
|---|---|---|---|
| Net cash (used in) provided by operating activities | $(5,150) | $428 | $(5,578) |
| Net cash used in investing activities | (903) | (1,104) | 201 |
| Net cash used in financing activities | (683) | - | (683) |
| Net decrease in cash | $(6,736) | $(676) | $(6,060) |
Net cash flow used in operating activities for the six months ended December 31, 2025, of $5.2 million, reflected our net loss of $9.9 million, adjusted primarily as follows: add back of impairment of account receivable of $6.0 million, add back of share-based compensation expense of $1.8 million, add back of inventory impairment expense of $1.5 million, a decrease in accounts receivable of $3.2 million, offset by a decrease in accounts payable and accounts payable – related party of $7.0 million and an increase in prepaid expenses and other current assets of $1.0 million.
Net cash flow provided by operating activities for the six months ended December 31, 2024 of $0.4 million, reflected our net loss of $13.6 million, adjusted primarily as follows: an add-back of credit loss expenses of $7.3 million, an add-back of stock based compensation expense of $3.5 million, an added-back of right-of-use assets amortization of $0.6 million and increase in accounts payable – related party of $20.7 million, offset by an increase in accounts receivable of $15.3 million, an increase in inventories, net of $1.7 million, and an increase in prepaid expenses and other current assets of $0.9 million.
Net cash flow used in investing activities for the six months ended December 31, 2025, of $0.9 million reflected primarily investment in joint venture of $0.5 million and capitalized costs of patents of $0.3 million.
Net cash flow used in investing activities for the six months ended December 31, 2024, of $1.1 million reflected primarily purchase of property, plant and equipment of $0.3 million and capitalized costs of patents of $0.8 million.
Net cash flow generated from financing activities for the six months ended December 31, 2025, of $0.7 million reflected primarily repayment of borrowing of $0.6 million.
To date, we have financed our operations primarily through cash flow from operations and working capital accounts payable from our major stockholders, who are our co-chief executive officer and his wife, when necessary. We plan to support our future operations primarily from cash generated from our operations and cash on hand. As of the date of this Quarterly Report, we believe that our current cash and cash flows provided by operating activities, and the net proceeds from our equity offerings and borrowing will be sufficient to meet our working capital needs in the next 12 months. If we experience an adverse operating environment or incur unanticipated capital expenditure requirements, or if we decide to accelerate our growth, then additional financing may be required. We cannot give any assurance that additional financing will not be required or, if required, would be available on favorable terms if at all. Such financing may include the use of additional debt or the sale of additional equity securities. Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in dilution to our stockholders, which may be substantial.
The cash held at a bank by our Hong Kong operating subsidiary can be freely transferred within our corporate structure without restriction. If our Hong Kong operating subsidiary were to incur additional debt on its own behalf in the future, the instruments governing the debt may restrict the ability of our operating subsidiaries to transfer cash to our U.S. investors.
Contractual Obligations
As of December 31, 2025 and June 30, 2025, we had contract liabilities of $4,971,135 and $4,861,250, respectively. These liabilities are advance deposits received from customers after an order has been placed. We expect all of the contract liabilities to be settled in less than one year.
We have operating lease arrangements for office and factory premises for Hong Kong, California and Malaysia, which are treated as right-of-use assets. 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 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 we are the lessee are presented as follows:
| As of December 31, 2025 | As of June 30, 2025 | |
|---|---|---|
| Operating lease right-of-use assets | $4,335,355 | $5,030,005 |
| Operating lease liabilities – current | $1,659,698 | $1,838,815 |
| Operating lease liabilities – non-current | 2,642,156 | 3,267,522 |
| Total | $4,301,854 | $5,106,337 |
The Company had no impairment of operating lease right-of-use assets during the three and six months ended December 31, 2025 and 2024.
As of December 31, 2025, the maturities of our lease liabilities (excluding short-term leases) are as follows:
| As of December 31, 2025 | |
|---|---|
| January 1, 2026 to June 30, 2026 | $1,071,457 |
| July 1, 2026 to June 30, 2027 | 1,610,545 |
| July 1, 2027 to June 30, 2028 | 805,712 |
| July 1, 2028 to June 30, 2029 | 725,036 |
| July 1, 2029 to June 30, 2030 | 483,357 |
| Total future lease payments | 4,696,107 |
| Less: imputed interest | (394,253) |
| Total lease liabilities | $4,301,854 |
30
As of December 31, 2025, we have a borrowing balance of $1,378,744 outstanding. The maturities of our borrowing are as follows:
| As of December 31, 2025 | |
|---|---|
| January 1, 2026 to December 31, 2026 | 1,146,766 |
| January 1, 2026 to December 31, 2027 | 231,978 |
| Total borrowing | 1,378,744 |
As of December 31, 2025, we recorded an unpaid $5.3 million consideration in accrued liabilities and other payables on the unaudited condensed consolidated balance sheet for a committed investment of $9 million into a joint venture investment named IKE Tech LLC.
Trend Information
Other than as disclosed elsewhere in this Quarterly Report, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.
Seasonality
Seasonality does not materially affect our business or the results of our operations.
Off-Balance Sheet Arrangements
We do not have off-balance sheet arrangements.
As a company with less than $1.235 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. We have elected to take advantage of such exemptions. We could lose Emerging Growth Company status if we become a “Large Accelerated Filer.” This would occur if we had a public float of $700 million or more, as of the last business day of our most recently completed second fiscal quarter.
Market risk
As filed, 139 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
Controls and procedures
As filed, 3,172 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
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 Exchange Act. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of December 31, 2025, due to (1) 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 of it to evaluate the sufficiency of credit loss reserve for accounts receivable under the Topic 326; (2) the lack of sufficient personnel with appropriate levels of accounting knowledge and experience to address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP, which resulted in restatements of certain unaudited/audited financial statements prior to the fiscal year ended June 30, 2025; and (3) the lack of IT general controls regarding cyber security governance, logical access security and service organization management.
Changes in Internal Control over Financial Reporting
During the three months ended December 31, 2025, we have continued to develop and implement internal controls over financial reporting particularly in view of the material weakness described above.
Inherent Limitations of Controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. Controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Risk factors
As filed, 295 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. Our current risk factors are set forth in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, filed with the SEC on September 15, 2025.
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2025-12-31. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Revenue | 3 months2025-10-01 to 2025-12-31 | $20.3m | us-gaap:Revenues |
| Revenue | 6 months2025-07-01 to 2025-12-31 | $50.6m | us-gaap:Revenues |
| Cost of revenue | 3 months2025-10-01 to 2025-12-31 | $16.8m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months2025-07-01 to 2025-12-31 | $42.0m | us-gaap:CostOfRevenue |
| Gross profit | 3 months2025-10-01 to 2025-12-31 | $3.5m | us-gaap:GrossProfit |
| Gross profit | 6 months2025-07-01 to 2025-12-31 | $8.6m | us-gaap:GrossProfit |
| Operating income | 3 months2025-10-01 to 2025-12-31 | −$6.9m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months2025-07-01 to 2025-12-31 | −$9.6m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months2025-10-01 to 2025-12-31 | $100.2k | us-gaap:InterestExpenseNonoperating |
| Interest expense | 6 months2025-07-01 to 2025-12-31 | $212.4k | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months2025-10-01 to 2025-12-31 | $106.6k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months2025-07-01 to 2025-12-31 | $592.7k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months2025-10-01 to 2025-12-31 | −$6.6m | us-gaap:NetIncomeLoss |
| Net income | 6 months2025-07-01 to 2025-12-31 | −$9.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months2025-10-01 to 2025-12-31 | −$0.12 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months2025-07-01 to 2025-12-31 | −$0.17 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months2025-10-01 to 2025-12-31 | −$0.12 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months2025-07-01 to 2025-12-31 | −$0.17 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months2025-10-01 to 2025-12-31 | 57,258,218 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months2025-07-01 to 2025-12-31 | 57,257,938 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months2025-07-01 to 2025-12-31 | −$5.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months2025-07-01 to 2025-12-31 | $76.9k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 6 months2025-07-01 to 2025-12-31 | $45.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | At period end2025-12-31 | $17.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | At period end2025-12-31 | $63.7m | us-gaap:AssetsCurrent |
| Total assets | At period end2025-12-31 | $84.4m | us-gaap:Assets |
| Current liabilities | At period end2025-12-31 | $60.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | At period end2025-12-31 | $92.1m | us-gaap:Liabilities |
| Shareholders' equity | At period end2025-12-31 | −$7.7m | us-gaap:StockholdersEquity |
Source: SEC EDGAR, the filing index for accession 0001213900-26-013305. Last ingested by Listed: Nov 10, 2026, 03:07 ET. Listed shows no prices and gives no investment advice.