IPW 10-K & 10-Q changes, risk factors and insider trading
iPower Inc. · Nasdaq · Retail-Building Materials, Hardware, Garden Supply · CIK 1830072 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risks Related to Our Digital Asset Treasury Strategy”
New heading “Our DAT Strategy exposes us to various risks, including risks associated with bitcoin.”
New heading “Digital assets can be highly volatile assets, and, in the event we develop significant digital asset holdings, fluctuations in the price are likely to influence our financial results and the market price of our listed securities.”
New heading “Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty.”
New heading “Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our bitcoin holdings.”
New heading “The availability of spot exchange traded products (“ETPs”) for bitcoin and other digital assets may adversely affect the market price of our listed securities.”
New heading “Our DAT Strategy subjects us to enhanced regulatory oversight.”
New heading “Due to the unregulated nature and lack of transparency surrounding the operations of many bitcoin and digital asset trading venues, such trading venues may experience greater fraud, security failures or regulatory or operational problems than trading venues for more established asset classes, which may result in a loss of confidence in bitcoin trading venues and adversely affect the value of our bitcoin.”
New heading “The concentration of our bitcoin holdings enhances the risks inherent in our DAT Strategy.”
New heading “The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of bitcoin and adversely affect our business.”
New heading “When acquired, our bitcoin holdings will be less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.”
New heading “If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our bitcoin, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our bitcoin and our financial condition and results of operations could be materially adversely affected.”
New heading “We face risks relating to the custody of our bitcoin, including the loss or destruction of private keys required to access our bitcoin and cyberattacks or other data loss relating to our bitcoin.”
New heading “Regulatory change reclassifying bitcoin as a security could lead to our classification as an “investment company” under the Investment Company Act of 1940 and could adversely affect the market price of bitcoin and the market price of our listed securities.”
New heading “We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers.”
New heading “Our DAT Strategy exposes us to risk of non-performance by counterparties.”
New heading “Our financial results and the market price of our common stock may be affected by the price of Bitcoin.”
New heading “The price of our common stock has been and may continue to be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our common stock.”
New heading “Our bitcoin holdings are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.”
New heading “We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers.”
New heading “We face other risks related to our DAT Strategy.”
New heading “Our business is dependent, in part, on our ongoing commercial relationship with GPM, and any deterioration of that relationship could materially adversely affect our business.”
Removed heading “Almost all of our sales are carried out through third-party platforms, including Amazon, Temu, Walmart and eBay; any disruption in our selling efforts on such third party platforms could substantially disrupt our business.”
Removed heading “Our China-based subsidiary, Dayourenzi (Shenzhen) Technology Co., Ltd., through which we have historically procured much of our inventory and overseas logistical support, is owned through contractual agreements, as required by the laws of the PRC. As a result, the Chinese government could potentially exercise significant oversight and/or discretion over the business and operations of our China-based subsidiary and could potentially intervene in or influence the operations of those businesses at any time.”
Removed heading “Certain of our products may be purchased for use in the cannabis industry and/or be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions.”
Removed heading “Continued federal intervention in certain segments of the cannabis industry may have a negative impact on us.”
Removed heading “If we are unable to effectively execute our e-commerce business, our reputation and operating results may be harmed.”
Removed heading “A substantial proportion of our sales occur on Amazon and, as such, should our Company experience any negative actions by Amazon, our sales could be significantly affected.”
Removed heading “We have announced that we may adopt a digital treasury strategy which, if adopted and effectuated, would expose us to various risks, including risks associated with holding Bitcoin and other cryptocurrency assets.”
Removed heading “Risks Related to Doing Business with the Cannabis Industry”
Removed heading “While our business includes both the hobbyist gardener, and is not exclusively reliant on the cannabis grower, our growth is nonetheless substantially dependent on the growth and stabilization of the U.S. cannabis market. New California regulations caused licensing shortages and future regulations may create other limitations that decrease the demand for our products. State level regulations adopted in the future may adversely impact our business.”
Removed heading “Legislation and regulations pertaining to the use and cultivation of cannabis are enacted on both the state and federal government level within the United States. As a result, the laws governing the cultivation and use of cannabis may be subject to change. Any new laws and regulations limiting the use or cultivation of cannabis and any enforcement actions by state and federal governments could indirectly reduce demand for our products and may impact our current and planned future operations.”
Removed heading “Certain of our products may be purchased for use in new and emerging industries and/or be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations, future scientific research and public perception.”
Removed heading “Our indirect involvement in the cannabis industry could affect the public’s perception of us and be detrimental to our reputation.”
Removed heading “Businesses involved in the cannabis industry, and investments in such businesses, are subject to a variety of laws and regulations related to money laundering, financial recordkeeping, and proceeds of crimes.”
Removed heading “Our founders, officers and directors may control, and may continue to control, our company for the foreseeable future, including the outcome of matters requiring stockholder approval.”
Largest changes
“Attacks upon systems across a variety of industries, including industries related to bitcoin, are increasing in frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded and organized groups and individuals, including state actors. …”see in full comparison
“If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our bitcoin, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our bitcoin and our financial condition and results of operations could be materially adversely affected.”see in full comparison
“In addition, there has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities, fund criminal or terrorist activities, or circumvent sanctions regimes, including those sanctions imposed in response to the ongoing conflict between Russia and Ukraine. …”see in full comparison
“From time to time, we may hold USDai and sUSDai. Such holdings of USDai and sUSDai would expose us to risks specific to the USD.AI protocol and sUSDai’s yield-bearing and redemption mechanics. In addition to the risks associated with our DAT Strategy and digital asset holdings described above, our holdings of USDai and staked USDai, or sUSDai, will be subject to risks specific to the USD.AI protocol, including risks relating to the protocol’s reserve, staking, share-pricing, lending and redemption mechanics. …”see in full comparison
“Our primary counterparty risk with respect to our bitcoin is custodian performance obligations under the various custody arrangements we have entered into. …”see in full comparison
“Our digital assets are subject to a first priority security interest and are not freely available for our use or for use by our stockholders. Our digital assets, controlled-account cash and related proceeds are subject to a first-priority security interest and are not freely available to us or our common stockholders. Substantially all digital assets, cash and other property held in the applicable controlled accounts, together with related proceeds, are pledged to the Collateral Agent, an affiliate of the Convertible Note Investor, for the benefit of the holders of the Convertible Notes. …”see in full comparison
Full comparison: every changed paragraph (152)
Risks Related to Our Digital Asset Treasury Strategy
Our DAT Strategy exposes us to various risks, including risks associated with bitcoin.
Our DAT Strategy exposes us to various risks, including the following:
Our digital assets are subject to a first priority security interest and are not freely available for our use or for use by our stockholders. Our digital assets, controlled-account cash and related proceeds are subject to a first-priority security interest and are not freely available to us or our common stockholders. Substantially all digital assets, cash and other property held in the applicable controlled accounts, together with related proceeds, are pledged to the Collateral Agent, an affiliate of the Convertible Note Investor, for the benefit of the holders of the Convertible Notes. The Collateral Agent has contractual control over the blocked custodial account. A sale, redemption or conversion of a digital asset into cash within the account does not release the collateral; the resulting cash remains pledged. We may withdraw or use collateral only if the applicable release conditions are satisfied or the required consent is obtained. If an Event of Default occurs, as defined in the Convertible Notes, the Collateral Agent may take control of and dispose of the collateral and apply the proceeds to the secured obligations before any residual value is available to holders of our common stock. Accordingly, the gross value of our controlled-account assets should not be viewed as unrestricted cash or net asset value available to common stockholders.
Bitcoin and other digital assets are highly volatile assets. Bitcoin (or BTC) and Ethereum (or ETH) are highly volatile assets. BTC has traded between approximately $57,725 and $126,279 per bitcoin on the Coinbase exchange (a principal market for bitcoin) during the 12 months preceding the date of this Annual Report. The trading price of bitcoin significantly decreased during prior periods, and such declines may occur again in the future.
Bitcoin does not pay interest or dividends. Bitcoin does not pay interest or other returns and we can only generate cash from our bitcoin holdings if we sell our bitcoin or implement strategies to create income streams or otherwise generate cash by using our bitcoin holdings. Even if we pursue any such strategies, we may be unable to create income streams or otherwise generate cash from our bitcoin holdings, and any such strategies may subject us to additional risks.
While our DAT Strategy is new, our bitcoin holdings could significantly impact our financial results and the market price of our listed securities. Any bitcoin holdings we purchase could significantly affect our financial results. If we continue to invest in bitcoin and increase our overall holdings of bitcoin in the future, they will have an even greater impact on our financial results and the market price of our listed securities.
We intend to purchase bitcoin primarily using proceeds from equity and debt financings. Our ability to achieve the objectives of our DAT Strategy depends in significant part on our ability to obtain equity and debt financing. If we are unable to obtain equity or debt financing on favorable terms or at all, we may not be able to successfully execute on our DAT Strategy.
Our DAT Strategy has not been tested and we cannot be certain it will be successful. As we roll out our new DAT Strategy, we will need to continually examine the risks and rewards of our strategy to acquire and hold BTC and ETH. This strategy has not been tested over an extended period of time or under different market conditions. For example, although we believe BTC, due to its limited supply, has the potential to serve as a hedge against inflation in the long term, the short-term price of BTC declined in recent periods during which the inflation rate increased. If BTC or ETH prices were to decrease or our DAT Strategy otherwise proves unsuccessful, our financial condition, results of operations, and the market price of our listed securities would be materially adversely impacted.
We will be subject to counterparty risks, including in particular risks relating to our custodians. Although we will implement various measures that are designed to mitigate our counterparty risks, including by storing substantially all of the digital assets we own in custody accounts at institutional-grade custodians and negotiating contractual arrangements intended to establish that our property interest in custodially-held bitcoin is not subject to claims of our custodians’ creditors, applicable insolvency law is not fully developed with respect to the holding of digital assets in custodial accounts. If our custodially-held BTC or ETH were nevertheless considered to be the property of our custodians’ estates in the event that any such custodians were to enter bankruptcy, receivership or similar insolvency proceedings, we could be treated as a general unsecured creditor of such custodians, inhibiting our ability to exercise ownership rights with respect to such digital assets, or delaying or hindering our access to our digital asset holdings, and this may ultimately result in the loss of the value related to some or all of such bitcoin, which could have a material adverse effect on our financial condition as well as the market price of our listed securities.
The broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of BTC, ETH or stablecoins. A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry have highlighted the counterparty risks applicable to owning and transacting in digital assets. Although these bankruptcies, closures, liquidations and other events have not resulted in any loss or misappropriation of our bitcoin, nor have such events adversely impacted our access to our BTC or ETH, they have, in the short-term, likely negatively impacted the adoption rate and use of bitcoin. Additional bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry in the future may further negatively impact the adoption rate, price, and use of BTC or ETH, limit the availability to us of financing collateralized by BTC or ETH or create or expose additional counterparty risks.
Changes in the accounting treatment of our bitcoin holdings could have significant accounting impacts, including increasing the volatility of our results. Our digital asset holdings and related transactions may create significant volatility in our reported results and our historical financial statements do not reflect all recent developments. Our financial statements through June 30, 2026 reflected our BTC and ETH acquisitions and related fair-value changes, along with our June 2026 USDai acquisition and subsequent conversion or staking into sUSDai. However, they do not reflect our August 2026 instructions to redeem sUSDai and sell ETH. We adopted ASU 2023-08 on July 1, 2025 and record qualifying digital assets at fair value, with realized and unrealized changes recognized in earnings. As a result, changes in digital asset values and any sale or redemption may materially increase volatility in our reported earnings. The accounting and valuation treatment of sUSDai and related redemption proceeds may involve judgment and may differ from the value displayed by the custodian or protocol dashboard.
The broader digital assets industry, including the technology associated with digital assets, the rate of adoption and development of, and use cases for, digital assets, market perception of digital assets, and the legal, regulatory, and accounting treatment of digital assets are constantly developing and changing, and there may be additional risks in the future that are not possible to predict.
Digital assets can be highly volatile assets, and, in the event we develop significant digital asset holdings, fluctuations in the price are likely to influence our financial results and the market price of our listed securities.
Digital assets can be highly volatile assets, and, in the event we develop significant holdings, fluctuations in the price are likely to influence our financial results and the market price of our listed securities. Our financial results and the market price of our listed securities would be adversely affected, and our business and financial condition would be negatively impacted, if we hold substantial digital assets and the price decreased substantially, including as a result of:
Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty.
Bitcoin and other digital assets are relatively novel and are subject to significant uncertainty, which could adversely impact their price. The application of state and federal securities laws and other laws and regulations to digital assets is evolving, and it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of bitcoin or the ability of individuals or institutions such as us to own or transfer bitcoin.
The U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of bitcoin or the ability of individuals or institutions such as us to own or transfer bitcoin. For example, within the past several years:
It is not possible to predict whether, or when, new laws will be enacted that change the legal framework governing digital assets or provide additional authorities to the SEC or other regulators, or whether, or when, any other federal, state or foreign legislative bodies will take any similar actions. It is also not possible to predict the nature of any such additional laws or authorities, how additional legislation or regulatory oversight might impact the ability of digital asset markets to function, the willingness of financial and other institutions to continue to provide services to the digital assets industry, or how any new laws or regulations, or changes to existing laws or regulations, might impact the value of digital assets generally and bitcoin specifically. The consequences of any new law or regulation relating to digital assets and digital asset activities could adversely affect the market price of bitcoin, as well as our ability to hold or transact in bitcoin, and in turn adversely affect the market price of our listed securities.
Moreover, the risks of engaging in the DAT Strategy are relatively novel and have created, and could continue to create, complications due to the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability insurance or the potential inability to obtain such coverage on acceptable terms in the future.
The growth of the digital assets industry in general, and the use and acceptance of BTC or ETH in particular, may also impact the price of BTC or ETH and is subject to a high degree of uncertainty. The pace of worldwide growth in the adoption and use of BTC, ETH or other cryptocurrency may depend, for instance, on public familiarity with digital assets, ease of buying, accessing or gaining exposure to BTC, ETH or other cryptocurrency, institutional demand for cryptocurrency as an investment asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for BTC or ETH as a store of value or means of payment, and the availability and popularity of alternatives to BTC or ETH. Even if growth in bitcoin adoption occurs in the near or medium-term, there is no assurance that bitcoin usage will continue to grow over the long-term.
Because digital assets have no physical existence beyond the record of transactions on the Bitcoin or other blockchain, a variety of technical factors related to the BTC blockchain could also impact the price of BTC. For example, malicious attacks by miners, inadequate mining fees to incentivize validating of bitcoin transactions, hard “forks” of the Bitcoin blockchain into multiple blockchains, and advances in digital computing, algebraic geometry, and quantum computing could undercut the integrity of the Bitcoin blockchain and negatively affect the price of bitcoin. The liquidity of bitcoin may also be reduced and damage to the public perception of bitcoin may occur, if financial institutions were to deny or limit banking services to businesses that hold bitcoin, provide bitcoin-related services or accept bitcoin as payment, which could also decrease the price of bitcoin. Actions by U.S. banking regulators, such as the issuance in February 2023 by Federal banking agencies of the “Interagency Liquidity Risk Statement,” which cautioned banks on contagion risks posed by providing services to digital assets customers, and similar actions, have in the past resulted in or contributed to reductions in access to banking services for bitcoin-related customers and service providers, or the willingness of traditional financial institution to participate in markets for digital assets. The liquidity of bitcoin may also be impacted to the extent that changes in applicable laws and regulatory requirements negatively impact the ability of exchanges and trading venues to provide services for bitcoin and other digital assets.
From time to time, we may hold USDai and sUSDai. Such holdings of USDai and sUSDai would expose us to risks specific to the USD.AI protocol and sUSDai’s yield-bearing and redemption mechanics. In addition to the risks associated with our DAT Strategy and digital asset holdings described above, our holdings of USDai and staked USDai, or sUSDai, will be subject to risks specific to the USD.AI protocol, including risks relating to the protocol’s reserve, staking, share-pricing, lending and redemption mechanics. Although USDai is intended to function as a fully backed synthetic dollar, it is not cash or an insured bank deposit, and its redeemability depends on the continued availability and operation of the protocol’s supported stablecoin reserves, swap adapters and related processes. sUSDai is a yield-bearing vault/share token rather than a stablecoin, and its value, yield and redemption proceeds depend on the performance, valuation and liquidity of underlying lending positions, unallocated USDai and protocol-administered share-pricing methodology. Redemptions of sUSDai may be asynchronous, queued, subject to timelocks and serviced periodically, and the redemption share price may be lower than the deposit share price or the value reflected in accrued yield, including if underlying loans default, collateral values are impaired, liquidity is unavailable, or the applicable position managers, administrators or governance-controlled processes do not operate as expected. Any inability to redeem USDai or sUSDai when needed, any shortfall between expected and realized redemption value or yield, or any adverse change in the USD.AI protocol, its collateral, loan performance, reserves or redemption process could reduce the value or liquidity of these holdings and adversely affect our liquidity, financial condition and results of operations.
Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our bitcoin holdings.
We only recently commenced our DAT Strategy. As a result, our historical financial statements do not reflect the potential variability in earnings that we may experience in the future from holding or selling significant amounts of bitcoin.
The price of bitcoin has historically been subject to dramatic price fluctuations and is highly volatile. In December 2023, the FASB issued ASU 2023-08, which we adopted effective July 1, 2025. We determine the fair value of our bitcoin based on quoted (unadjusted) prices on the Coinbase exchange (our principal market for bitcoin).
ASU 2023-08 requires us to measure our bitcoin holdings at fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of our digital assets in net income each reporting period. ASU 2023-08 also requires us to provide certain interim and annual disclosures with respect to our digital asset holdings. ASU 2023-08 does not permit retrospective restatement of prior periods. Accordingly, changes in the fair value of our digital assets may significantly affect the carrying value of our digital assets on our balance sheet and our results of operations from period to period.
As a result of our adoption of ASU 2023-08, changes in the fair value of our bitcoin and other digital assets are recognized in net income in each reporting period. Accordingly, due in particular to the volatility in the price of bitcoin and other digital assets, our holdings of digital assets may increase the volatility of our financial results, and our results for periods following our adoption of ASU 2023-08 may not be directly comparable to periods prior to our adoption of the guidance.
Because we may purchase additional bitcoin in future periods and increase our overall holdings of BTC, ETH or other digital assets, we expect that the proportion of our total assets represented by our DAT holdings will increase in the future. As a result, due in particular to the fair value accounting required by ASU 2023-08, volatility in our earnings may be significantly more than what we experienced in prior periods.
The availability of spot exchange traded products (“ETPs”) for bitcoin and other digital assets may adversely affect the market price of our listed securities.
Although bitcoin and other digital assets have experienced a surge of investor attention since bitcoin was invented in 2008, until recently investors in the United States had limited means to gain direct exposure to bitcoin and other digital assets through traditional investment channels, and instead generally were only able to hold bitcoin or other digital assets through “hosted” wallets provided by digital asset service providers or through “unhosted” wallets that expose the investor to risks associated with loss or hacking of their private keys. Given the relative novelty of digital assets, general lack of familiarity with the processes needed to hold bitcoin directly, as well as the potential reluctance of financial planners and advisers to recommend direct bitcoin holdings to their retail customers because of the manner in which such holdings are custodied, some investors have sought exposure to bitcoin through investment vehicles that hold bitcoin and issue shares representing fractional undivided interests in their underlying bitcoin holdings. These vehicles, which were previously offered only to “accredited investors” on a private placement basis, have in the past traded at substantial premiums to net asset value, possibly due to the relative scarcity of traditional investment vehicles providing investment exposure to bitcoin.
On January 10, 2024, the SEC approved the listing and trading of spot bitcoin ETPs, the shares of which can be sold in public offerings and are traded on U.S. national securities exchanges. The approved ETPs commenced trading directly to the public on January 11, 2024, with a trading volume of $4.6 billion on the first trading day. Additionally, on May 23, 2024, the SEC approved rule changes permitting the listing and trading of spot ETPs that invest in ether, the main crypto asset supporting the Ethereum blockchain. The approved spot ETPs commenced trading directly to the public on July 23, 2024. The listing and trading of spot ETPs for ether offers investors another alternative to gain exposure to digital assets, which could result in a decline in the trading price of bitcoin as well as a decline in the value of our common stock relative to the value of our bitcoin.
Although we are an operating company, and we believe we offer a different value proposition than a bitcoin investment vehicle such as a spot bitcoin ETP, investors may nevertheless view our common stock as an alternative to an investment in an ETP, and choose to purchase shares of a spot bitcoin ETP instead of our common stock. They may do so for a variety of reasons, including if they believe that ETPs offer a “pure play” exposure to bitcoin that is generally not subject to federal income tax at the entity level as we are, or the other risk factors applicable to an operating business, such as ours. Additionally, unlike spot bitcoin ETPs, we (i) do not seek for our shares of common stock to track the value of the underlying bitcoin or other digital asset we hold before payment of expenses and liabilities, (ii) do not benefit from various exemptions and relief under the Securities Exchange Act of 1934, as amended, including Regulation M, and other securities laws, which enable ETPs to continuously align the value of their shares to the price of the underlying assets they hold through share creation and redemption, (iii) are a Nevada corporation rather than a statutory trust, and do not operate pursuant to a trust agreement that would require us to pursue one or more stated investment objectives, and (iv) are not required to provide daily transparency as to our bitcoin holdings or our daily net asset value. Furthermore, recommendations by broker-dealers to buy, hold, or sell complex products and non-traditional ETPs, or an investment strategy involving such products, may be subject to additional or heightened scrutiny that would not be applicable to broker-dealers making recommendations with respect to our common stock. Based on how we are viewed in the market relative to ETPs, and other vehicles which offer economic exposure to bitcoin, such as bitcoin futures exchange-traded funds (“ETFs”), leveraged bitcoin futures ETFs, and similar vehicles offered on international exchanges, any premium or discount in our common stock relative to the value of our bitcoin holdings may increase or decrease in different market conditions.
As a result of the foregoing factors, availability of spot ETPs for bitcoin and other digital assets could have a material adverse effect on the market price of our listed securities.
Our DAT Strategy subjects us to enhanced regulatory oversight.
As noted above, several spot bitcoin ETPs have received approval from the SEC to list their shares on a U.S. national securities exchange with continuous share creation and redemption at net asset value. Even though we are not, and do not function in the manner of, a spot bitcoin ETP, it is possible that we nevertheless could face regulatory scrutiny from the SEC or other federal or state agencies due to our bitcoin holdings.
In addition, there has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities, fund criminal or terrorist activities, or circumvent sanctions regimes, including those sanctions imposed in response to the ongoing conflict between Russia and Ukraine. While we have implemented and maintain policies and procedures reasonably designed to promote compliance with applicable anti-money laundering and sanctions laws and regulations and take care to only acquire our bitcoin through entities subject to anti-money laundering regulation and related compliance rules in the United States, if we are found to have purchased any of our bitcoin from bad actors that have used bitcoin to launder money or persons subject to sanctions, we may be subject to regulatory proceedings and any further transactions or dealings in bitcoin by us may be restricted or prohibited.
Our bitcoin holdings will serve as collateral securing our outstanding indebtedness to the Investors. In addition, we may incur indebtedness or enter into other financial instruments in the future that may be collateralized by our bitcoin or other digital asset holdings. We may also consider pursuing strategies to create income streams or otherwise generate funds using our digital asset holdings. These types of bitcoin- and cryptocurrency-related transactions are the subject of enhanced regulatory oversight. These and any other bitcoin- or cryptocurrency-related transactions we may enter into, beyond simply acquiring and holding BTC or ETH, may subject us to additional regulatory compliance requirements and scrutiny, including under federal and state money services regulations, money transmitter licensing requirements and various commodity and securities laws and regulations.
Additional laws, guidance and policies may be issued by domestic and foreign regulators following the filing for Chapter 11 bankruptcy protection by FTX, one of the world’s largest cryptocurrency exchanges, in November 2022, which brought increased regulatory scrutiny to the digital asset industry. Increased enforcement activity and changes in the regulatory environment, including changing interpretations and the implementation of new or varying regulatory requirements by the government or any new legislation affecting bitcoin, as well as enforcement actions involving or impacting our trading venues, counterparties and custodians, may impose significant costs or significantly limit our ability to hold and transact in bitcoin or other digital assets.
In addition, private actors that are wary of bitcoin, other digital assets, or the regulatory concerns associated with digital assets in general have in the past taken and may in the future take further actions that may have an adverse effect on our business or the market price of our listed securities.
Due to the unregulated nature and lack of transparency surrounding the operations of many bitcoin and digital asset trading venues, such trading venues may experience greater fraud, security failures or regulatory or operational problems than trading venues for more established asset classes, which may result in a loss of confidence in bitcoin trading venues and adversely affect the value of our bitcoin.
Bitcoin and other digital asset trading venues are relatively new and, in many cases, unregulated. Furthermore, there are many digital asset trading venues which do not provide the public with significant information regarding their ownership structure, management teams, corporate practices and regulatory compliance. As a result, the marketplace may lose confidence in BTC, ETH or other digital asset trading venues, including prominent exchanges that handle a significant volume of digital asset trading and/or are subject to regulatory oversight, in the event one or more bitcoin trading venues cease or pause for a prolonged period the trading of bitcoin or other digital assets, or experience fraud, significant volumes of withdrawal, security failures or operational problems.
In 2019 there were reports claiming that 80-95% of bitcoin trading volume on trading venues was false or non-economic in nature, with specific focus on unregulated exchanges located outside of the United States. The SEC also alleged as part of its June 5, 2023 complaint against Binance Holdings Ltd. that Binance committed strategic and targeted “wash trading” through its affiliates to artificially inflate the volume of certain digital assets traded on its exchange. The SEC has also brought recent actions against individuals and digital asset market participants alleging that such persons artificially increased trading volumes in certain digital assets through wash trades, or repeated buying and selling of the same assets in fictitious transactions to manipulate their underlying trading price. Such reports and allegations may indicate that the bitcoin market is significantly smaller than expected and that the United States makes up a significantly larger percentage of the bitcoin market than is commonly understood. Any actual or perceived wash trading in the bitcoin market, and any other fraudulent or manipulative acts and practices, could adversely affect the value of our bitcoin. Negative perception, a lack of stability in the broader bitcoin markets and the closure, temporary shutdown or operational disruption of bitcoin trading venues, lending institutions, institutional investors, institutional miners, custodians, or other major participants in the bitcoin ecosystem, due to fraud, business failure, cybersecurity events, government-mandated regulation, bankruptcy, or for any other reason, may result in a decline in confidence in bitcoin and the broader bitcoin ecosystem and greater volatility in the price of bitcoin. For example, in 2022, each of Celsius Network, Voyager Digital, Three Arrows Capital, FTX, and BlockFi filed for bankruptcy, after which the market prices of bitcoin and other digital assets significantly declined. In addition, in June 2023, the SEC announced enforcement actions against Coinbase, Inc., and Binance Holdings Ltd., two providers of large trading venues for digital assets, which similarly was followed by a decrease in the market price of bitcoin and other digital assets. These were followed in November 2023, by an SEC enforcement action against Payward Inc. and Payward Ventures Inc., together known as Kraken, another large trading venue for digital assets. As the price of our listed securities is affected by the value of our bitcoin holdings, the failure of a major participant in the bitcoin ecosystem could have a material adverse effect on the market price of our listed securities.
The concentration of our bitcoin holdings enhances the risks inherent in our DAT Strategy.
While we only just recently began our acquisition of bitcoin, we anticipate that the concentration of our bitcoin holdings will limit the risk mitigation that we could achieve if we were to purchase a more diversified portfolio of treasury assets, and the absence of diversification enhances the risks inherent in our DAT Strategy. Any future significant declines in the price of bitcoin would have a pronounced impact on our financial condition than if we used our cash to purchase a more diverse portfolio of assets.
The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of bitcoin and adversely affect our business.
As a result of our DAT Strategy, our digital assets have been concentrated in BTC and ETH holdings. Accordingly, the emergence or growth of digital assets other than BTC or ETH may have a material adverse effect on our financial condition. However, there are numerous alternative digital assets and many entities, including consortiums and financial institutions, are researching and investing resources into private or permissioned blockchain platforms or digital assets that do not use proof-of-work mining like the Bitcoin network. For example, in late 2022, the Ethereum network transitioned to a “proof-of-stake” mechanism for validating transactions that requires significantly less computing power than proof-of-work mining. The Ethereum network has completed another major upgrade since then and may undertake additional upgrades in the future. If the mechanisms for validating transactions in Ethereum and other alternative digital assets are perceived as superior to proof-of-work mining, those digital assets could gain market share relative to bitcoin.
Other alternative digital assets that compete with bitcoin in certain ways include “stablecoins,” which are designed to maintain a constant price because of, for instance, their issuers’ promise to hold high-quality liquid assets (such as U.S. dollar deposits and short-term U.S. treasury securities) equal to the total value of stablecoins in circulation. Stablecoins have grown rapidly as an alternative to bitcoin and other digital assets as a medium of exchange and store of value, particularly on digital asset trading platforms.
Additionally, central banks in some countries have started to introduce digital forms of legal tender. For example, China’s CBDC project was made available to consumers in January 2022, and governments including the United States, the United Kingdom, the European Union, and Israel have been discussing the potential creation of new CBDCs. Whether or not they incorporate blockchain or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could also compete with, or replace, bitcoin and other digital assets as a medium of exchange or store of value. As a result, the emergence or growth of these or other digital assets could cause the market price of bitcoin to decrease, which could have a material adverse effect on our business, prospects, financial condition, and operating results.
When acquired, our bitcoin holdings will be less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.
Historically, the bitcoin market has been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our bitcoin at favorable prices or at all. For example, a number of bitcoin trading venues temporarily halted deposits and withdrawals in 2022. As a result, our bitcoin holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. Further, bitcoin we hold with our custodians and transact with our trade execution partners does not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. Additionally, we may be unable to enter into term loans or other capital raising transactions collateralized by our unencumbered bitcoin or otherwise generate funds using our bitcoin holdings, including in particular during times of market instability or when the price of bitcoin has declined significantly. If we are unable to sell our bitcoin, enter into additional capital raising transactions, including capital raising transactions using bitcoin as collateral, or otherwise generate funds using our bitcoin holdings, or if we are forced to sell our bitcoin at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.
If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our bitcoin, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our bitcoin and our financial condition and results of operations could be materially adversely affected.
Substantially all of the bitcoin we own is held in custody accounts at institutional-grade digital asset custodians. Security breaches and cyberattacks are of particular concern with respect to our bitcoin. Bitcoin and other blockchain-based cryptocurrencies and the entities that provide services to participants in the bitcoin ecosystem have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities. For example, in October 2021 it was reported that hackers exploited a flaw in the account recovery process and stole from the accounts of at least 6,000 customers of the Coinbase exchange, although the flaw was subsequently fixed and Coinbase reimbursed affected customers. Similarly, in November 2022, hackers exploited weaknesses in the security architecture of the FTX Trading digital asset exchange and reportedly stole over $400 million in digital assets from customers. A successful security breach or cyberattack could result in:
Further, any actual or perceived data security breach or cybersecurity attack directed at other companies with digital assets or companies that operate digital asset networks, regardless of whether we are directly impacted, could lead to a general loss of confidence in the broader Bitcoin blockchain ecosystem or in the use of the Bitcoin network to conduct financial transactions, which could negatively impact us.
Attacks upon systems across a variety of industries, including industries related to bitcoin, are increasing in frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded and organized groups and individuals, including state actors. The techniques used to obtain unauthorized, improper or illegal access to systems and information (including personal data and digital assets), disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target. These attacks may occur on our systems or those of our third-party service providers or partners. We may experience breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities or other irregularities. Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. In addition, certain types of attacks could harm us even if our systems are left undisturbed. For example, certain threats are designed to remain dormant or undetectable, sometimes for extended periods of time, or until launched against a target and we may not be able to implement adequate preventative measures. Further, there has been an increase in such activities due to the increase in work-from-home arrangements since the onset of the COVID-19 pandemic. The risk of cyberattacks could also be increased by cyberwarfare in connection with the ongoing Russia-Ukraine and Israel-Hamas conflicts, or other future conflicts, including potential proliferation of malware into systems unrelated to such conflicts. Any future breach of our operations or those of others in the bitcoin industry, including third-party services on which we rely, could materially and adversely affect our business.
We face risks relating to the custody of our bitcoin, including the loss or destruction of private keys required to access our bitcoin and cyberattacks or other data loss relating to our bitcoin.
We hold, or will hold, our bitcoin with regulated custodians that have duties to safeguard our private keys. Our custodial services contracts do not restrict our ability to reallocate our bitcoin among our custodians, and our bitcoin holdings may be concentrated with a single custodian from time to time. In light of the significant amount of bitcoin we hold, we continually seek to engage additional custodians to achieve a greater degree of diversification in the custody of our bitcoin as the extent of potential risk of loss is dependent, in part, on the degree of diversification. If there is a decrease in the availability of digital asset custodians that we believe can safely custody our bitcoin, for example, due to regulatory developments or enforcement actions that cause custodians to discontinue or limit their services in the United States, we may need to enter into agreements that are less favorable than our current agreements or take other measures to custody our bitcoin, and our ability to seek a greater degree of diversification in the use of custodial services would be materially adversely affected.
The insurance that covers losses of our bitcoin holdings covers only a small fraction of the value of the entirety of our bitcoin holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial services we have or that such coverage will cover losses with respect to our bitcoin. Moreover, our use of custodians exposes us to the risk that the bitcoin our custodians hold on our behalf could be subject to insolvency proceedings and we could be treated as a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such bitcoin. Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our bitcoin.
Bitcoin is controllable only by the possessor of both the unique public key and private key(s) relating to the local or online digital wallet in which the bitcoin is held. While the Bitcoin blockchain ledger requires a public key relating to a digital wallet to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the bitcoin held in such wallet. To the extent the private key(s) for a digital wallet are lost, destroyed, or otherwise compromised and no backup of the private key(s) is accessible, neither we nor our custodians will be able to access the bitcoin held in the related digital wallet. Furthermore, we cannot provide assurance that our digital wallets, nor the digital wallets of our custodians held on our behalf, will not be compromised as a result of a cyberattack. The bitcoin and blockchain ledger, as well as other digital assets and blockchain technologies, have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities.
Regulatory change reclassifying bitcoin as a security could lead to our classification as an “investment company” under the Investment Company Act of 1940 and could adversely affect the market price of bitcoin and the market price of our listed securities.
Management's Discussion & Analysis (MD&A)
Removed heading “Trends and Expectations”
Removed heading “Product and Brand Development”
Removed heading “Global Economic Disruption”
Removed heading “Regulatory Environment”
Removed heading “Adoption of Digital Treasury Strategy”
Removed heading “Variable interest entities”
Removed heading “Promissory note payable”
Removed heading “Emerging Growth Company”
Largest changes
“On November 11, 2022, the Company and JPM entered into a default waiver and consent agreement (the “Waiver Letter”) pursuant to which the parties recognized that the Company was in default on its failure to satisfy the minimum Excess Availability requirement of $7,500,000, as defined in the Credit Agreement, and deliver a certificate to JPM accurately reflecting the Excess Availability (together, the “Existing Defaults”). Under the terms of the Waiver Letter, JPM agreed to waive the right to enforce an event of default based on the aforementioned Existing Defaults. …”see in full comparison
“While at present the majority of our products are sourced either in the United States or China, the military conflict between Russia and Ukraine may nonetheless increase the likelihood of supply chain interruptions and hinder our ability to find the materials we need to make our products. …”see in full comparison
“On February 1, 2026, the Company entered into a Software Asset Transfer Agreement with its then-wholly owned subsidiary, Global Product Marketing, Inc., a Nevada corporation, pursuant to which GPM assigned, transferred and conveyed to the Company all of GPM’s right, title and interest in its Software Assets (as defined in the agreement), and iPower assumed all outstanding vendor payables related to the Software Assets. …”see in full comparison
“Goodwill is not amortized but is reviewed for potential impairment on an annual basis, or if events or circumstances indicate a potential impairment, at the reporting unit level. The Company’s review for impairment includes an assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill. …”see in full comparison
“On July 6, 2026, and September 15, 2026, the Company and Investor consummated Additional Optional Closings. At the Additional Optional Closings, the Company received $4,700,000, excluding fees and expenses, in exchange for issuing a total of $5,000,000 aggregate principal amount of Series A Notes to the Investor after satisfaction of all applicable closing conditions, including the effectiveness of the resale registration statement and the absence of any Event of Default. …”see in full comparison
“In assessing our liquidity requirements for the twelve months following the issuance of these consolidated financial statements, management considered the Company’s expected cash flows from operations, available financing sources, and significant contractual obligations. The Company has approximately $4.7 million of financing proceeds raised subsequent to June 30, 2026, as well as approximately $15.0 million of remaining optional financing capacity under its existing financing arrangement, subject to the investors’ election and the satisfaction or waiver of applicable closing conditions. …”see in full comparison
Full comparison: every changed paragraph (95)
Overview iPower is a technology- and data-driven infrastructure company with a foundation in supply chain services, real-world commerce, and partner-based logistics and fulfillment capabilities. The Company leverages its internal software, data, and operational experience, together with a network of procurement, logistics, fulfillment, warehousing, and commerce partners, to support supply chain services, commerce infrastructure, and related business opportunities.
Building on our supply chain, software and operating foundation, iPower is pursuing AI infrastructure acquisition, financing, equipment leasing and related opportunities as a current strategic focus. The Company also maintains a limited DAT position that we began implementing through digital asset purchases beginning in December 2025. Management is currently reducing certain digital asset exposure and prioritizing direct AI infrastructure and related operating opportunities, subject to the restrictions applicable to assets held in the Company’s controlled collateral account.
Digital Asset Treasury and Capital Allocation Strategy iPower adopted an initial Digital Asset Treasury strategy in June 2025 and began implementing the DAT strategy through purchases beginning in December 2025. The DAT strategy was initially intended to provide limited balance-sheet exposure to potential appreciation in digital assets and to diversify a portion of our treasury assets. This overall strategy serves to govern our corporate treasury and capital-allocation activity. The strategy, which is overseen by Company management within board-approved policies, is intended to be flexible while helping us manage our capital allocation. Our purpose is not to operate a digital asset investment fund, exchange, broker-dealer, investment advisory business or customer custody business. We do not presently engage an external investment manager to oversee or advise on our investments. Our DAT assets are held with BitGo Trust Company, Inc., a South Dakota chartered trust company, which is a full service digital asset infrastructure company.
In December 2025, we acquired approximately 15.1 Bitcoin for approximately $1.325 million and approximately 301.1 Ethereum for approximately $0.884 million. In June 2026, we acquired approximately $1.0 million of USDai and subsequently converted or staked the USDai into sUSDai, a yield-bearing vault/share token associated with the USD.AI protocol, in order to obtain exposure to potential returns associated with AI infrastructure financing. We sold all sUSDai for approximately $1,002,381 and all Ethereum for approximately $563,391 on August 14, 2026.
Overview
Driven by tech and data, iPower
Inc. is an online supplier of consumer goods, including hydroponics equipment, general gardening supplies, and consumer home goods. Through
the operations of our e-commerce platforms and channel partners, our 99,347 square foot fulfillment centers in Rancho Cucamonga, California,
we believe we are one of the leading marketers, distributors and retailers in the consumer gardening and home goods categories, based
on management’s estimates. Our core strategy continues to focus on expanding our geographic reach across the United States and internationally
through organic growth, both in terms of expanding customer base as well as brand and product development. iPower has developed a set
of methodologies driven by proprietary data formulas to effectively bring products to market and sales.
We are actively developing
our in-house branded products and through supply chain partners, which to date include the iPower and Simple Deluxe
brands and more, some of which have been designated as Amazon best seller product leaders and Amazon Choice products, among others.
Trends and Expectations
Product and Brand Development
We plan to increase investments
in product and brand development. We actively evaluate potential acquisition opportunities of companies and product brand names that can
complement our product catalog and improve on existing products and supply chain efficiencies.
Global Economic Disruption
While at present the majority
of our products are sourced either in the United States or China, the military conflict between Russia and Ukraine may nonetheless increase
the likelihood of supply chain interruptions and hinder our ability to find the materials we need to make our products. Thus far, as a
result of the general global economic disruption, we have experienced a decrease in the speed with which we are able to purchase new inventory,
as well as an increase in costs due to delays in shipping, resulting increase in time with which products remain in our warehouse facilities,
thus resulting in reduced profits. In addition, supply chain disruptions may make it harder for us to find favorable pricing and reliable
sources for the materials we need, putting upward pressure on our costs and increasing the risk that we may be unable to acquire the materials
and services we need to continue to make certain products.
Regulatory Environment
We sell hydroponic gardening
products to end users that may use such products in new and emerging industries or segments, including the growing of cannabis. The demand
for hydroponic gardening products depends on the uncertain growth of these industries or segments due to varying, inconsistent, and rapidly
changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions. For
example, certain countries and a total of 46 U.S. states plus the District of Columbia have adopted frameworks that authorize, regulate
and tax the cultivation, processing, sale and use of cannabis for medicinal and/or non-medicinal use, including legalization of hemp and
CBD, while the U.S. Controlled Substances Act and the laws of U.S. states prohibit growing cannabis. Demand for our products could be
impacted by changes in the regulatory environment with respect to such industries and segments.
Effective October 27, 2025, the Company effectuated the 1-for-30 reverse stock split of its common stock (the “2025 Reverse Split”), under which every 30 issued and outstanding pre-split shares were automatically reclassified into one post-split share with no change in par value, resulting in a proportionate adjustment to outstanding equity awards, warrants and exercise prices.
On December 22, 2025, the Company entered into the Purchase Agreement with the Investor providing for the purchase by the Investor of a 6% original issue discount (OID) convertible note facility in the aggregate original principal amount of $30,000,000, in which the Investor agreed to initially purchase (i) a Series A Convertible Note in the aggregate original principal amount of $5,184,024, and shares of common stock issuable pursuant to the terms of the Series A Convertible Notes in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D as promulgated thereunder, and (ii) $1,815,976 aggregate principal amount of a Series B Convertible Note, and shares of common stock issuable pursuant to the terms of the Series B Convertible Notes in a registered direct offering pursuant to a currently effective shelf registration statement on Form S-3 (File No. 333-274665), which was declared effective by the SEC on September 29, 2023. In addition, pursuant to the Purchase Agreement, the parties closed on an additional $5,000,000 of Series A Convertible Notes upon effectiveness of a resale registration statement. On July 6, 2026, the Company and the Investor entered into an amendment to the Purchase Agreement for purposes of (i) increasing funds available under the facility by an additional original principal amount of $2,000,000 and (ii) removing restrictions on the use of proceeds for any additional funds obtained through the facility.
On July 6, 2026, and September 15, 2026, the Company and Investor consummated Additional Optional Closings. At the Additional Optional Closings, the Company received $4,700,000, excluding fees and expenses, in exchange for issuing a total of $5,000,000 aggregate principal amount of Series A Notes to the Investor after satisfaction of all applicable closing conditions, including the effectiveness of the resale registration statement and the absence of any Event of Default. The Series A Notes issued at the Additional Optional Closings were issued pursuant to an exemption from registration in accordance with Regulation D of the Securities Act.
To date, in addition to the Series B convertible note sold in December 2025, the Company has sold a total of $15,184,024 in Series A convertible notes, with an additional $15,000,000 in Additional Series A Notes remaining available for issuance under the Convertible Note Facility. Digital Offering LLC has acted as placement agent and receives a 6% cash commission for each closing consummated under the Convertible Note Facility. As of October 2, 2026, the Investor has converted a total of $9,359,580 of the Series A Notes, resulting in the conversion of a total of 849,697 shares at an average conversion price per share of $11.02 on a post-reverse stock split basis (accounting for a 1-for-8 reverse stock split effectuated May 22, 2026 and a 1-for-9 reverse stock split effectuated August 7, 2026).
Pursuant to the Purchase Agreement and the Series A Notes, certain subsidiaries of the Company are required to enter into a guaranty in favor of the Investor. One such subsidiary, iPower Smart LLC, entered into a guaranty in favor of the Investor dated December 23, 2025 (the “Guaranty”). In connection with the Company’s recent formation of iPower AI LLC, the Company has joined iPower AI LLC to the Guaranty pursuant to a Joinder to Guaranty dated July 21, 2026.
On February 1, 2026, the Company entered into a Software Asset Transfer Agreement with its then-wholly owned subsidiary, Global Product Marketing, Inc., a Nevada corporation, pursuant to which GPM assigned, transferred and conveyed to the Company all of GPM’s right, title and interest in its Software Assets (as defined in the agreement), and iPower assumed all outstanding vendor payables related to the Software Assets. In addition, the Software Asset Transfer Agreement granted GPM a non-exclusive worldwide, perpetual, irrevocable and royalty free license to use, reproduce and modify the licensed software, thus allowing iPower and GPM to collaborate in the software development on a going forward basis. Further, in the event GPM resells the Original Software code (as defined in the agreement), GPM shall pay iPower 50% of the proceeds received in relation to such sale. Thereafter, on February 1, 2026, the Company entered into a stock purchase agreement with ETTS AI Investment LLC, a Nevada limited liability company (“ETTS AI”), pursuant to which the Company sold all of its equity interest in GPM and its underlying entities to ETTS AI in exchange for a $2.3 million promissory note (the “Promissory Note”). The Promissory Note is repayable in full in seven years, may be prepaid at any time, and repayment may be credited from time to time by purchase orders (as described below) made under a Supply and Distribution Agreement, dated February 1, 2026, between the Company, GPM and ETTS AI.
Under the Supply and Distribution Agreement, the Company and GPM agreed that the Company would act as exclusive supplier in the United States, Canada and Mexico for all existing SKUs that have historically been distributed from iPower to GPM, thus allowing iPower to continue in its role of supplier to GPM while divesting of the cost center associated with GPM’s sales function. As supplier, iPower will charge GPM, as distributor, a price mutually agreed on for each product and has the right to add up to 15% margin on top of the net cost. In addition, GPM will charge iPower a cooperative marketing fee, which will be defined in a subsequent agreement between the parties. Under the Supply and Distribution Agreement, payment on all purchaser orders are due within seven days of GPM’s receipt of payment from its customers and amounts identified as “Margin” (i.e., the Company’s cost x margin on the SKUs purchased by GPM) may be applied on a dollar-for-dollar as a credit/offset against the outstanding amounts owed under the Promissory Note. The Supply and Distribution Agreement has a term of five years and automatically renews thereafter for subsequent two year terms, unless 90 days’ notice is provided prior to the expiration of such term. In addition, the Supply and Distribution Agreement contains standard limitation on liability, indemnification and other provisions standard for an agreement of this nature.
On June 30, 2026, the Company, GPM and ETTS AI entered into a supplement to the Supply and Distribution Agreement pursuant to which GPM assumed $2,007,366.86 of accounts payable owed to the Company’s suppliers in exchange for acquiring an equal amount of the Company’s existing inventory. Additionally, the Supplement releases the Company and GPM from exclusive sourcing and distribution obligations owed to one another under the Supply and Distribution Agreement.
Effective May 22, 2026, the Company implemented a 1-for-8 reverse stock split of its common stock, under which every eight issued and outstanding pre-split shares were automatically reclassified into one post-split share with no change in par value, resulting in a proportionate adjustment to outstanding equity awards, warrants, and exercise prices.
Effective August 7, 2026, the Company implemented a 1-for-9 reverse split of its common stock, under which every nine issued and outstanding pre-split shares were automatically reclassified into one post-split share with no change in par value, resulting in a proportionate adjustment to outstanding equity awards, warrants and exercise prices (the “August Reverse Split,” with the August Reverse Split, the May Reverse Split, and the 2025 Reverse Split together referred to as the “Reverse Splits).
Adoption of Digital Treasury Strategy
On June 17, 2025, the Company
adopted a digital asset reserve, allocation and development strategy (the “Digital Treasury Strategy”) with the plan of creating
a Digital Treasury Strategy business. To date, we have not effectuated the Digital Treasury Strategy business and do not know if it will
be effectuated. As this Digital Treasury Strategy is a new planned addition to our business model, we cannot predict its success or know
whether we will continue with this strategy for the long term. The Company will provide additional updates to shareholders when and if
we do effectuate such strategy.
The following table presents certain
certain consolidated statementstatements of operations information and presentation of that data as a percentage of change from period to period.
Revenues
for the year ended
June 30, 20252026 decreased 23.15%68.4% to $66,142,779$19,956,938 as compared to $86,071,485$63,224,807 for the year ended June 30, 2024.2025. While pricing
remained stable,
the decrease was mainly due to the combination of decreased revenue mainly resultedorders from aAmazon decreaseand indisruption salesof volumeproduct supply during
the year ended June 30, 20252026. as the Company offered less
promotions due to lower inventory level as compared to the year ended June 30, 2024. In addition, theThe Company also experienced a significant
decrease in amazonAmazon orders due to uncertainty over tariffs during
the secondyear half of the fiscal year
ended June 30, 2025.2026. In addition, The Company completed a sale of its subsidiaries on February 1, 2026.
Costs of goods soldrevenues for the year
year ended June 30, 20252026 decreased 22.53%55.6% to $37,149,085$15,917,641 as compared to $47,950,117$35,854,912 for the year ended June 30, 2024.2025. The
decrease was primarily
due to a combination of the costs related to the logistics service income and the decrease in product sales,sales freight
costs,as anddiscussed lowered product costs resulted from management’s efforts on supply chain management.above.
Gross profit was $28,993,694$4,039,297 for
for the year ended June 30, 20252026 as compared to $38,121,368$27,369,895 for the year ended June 30, 2024.2025. TheWhile the overall gross profit ratio of the
total sales revenues decreased to 43.84%
for the year ended June 30, 2025 from 44.29%20.2% for the year ended June 30, 2024.2026 Thefrom decrease43.3% in the
gross profit ratio was mainly driven by the combination of the increase in the logistics service costs and decrease in costs of goods
sold duringfor the year ended June 30, 2025, the gross profit
ratio of product sales revenue for the year ended June 30, 2026 and 2025 was 20.8% and 45.6%, respectively. The decrease in the gross
profit ratio was primarily driven by the decrease in the logistics service income, increase in product costs and the changes in the Company’s
business strategy resulting from the sale of the Company’s subsidiaries, as discussed above.
Operating expenses for the
year ended June 30, 20252026 decreased 10.81%45.2% to $34,859,456$18,467,579 as compared to $39,084,260$33,699,897 for the year ended June 30, 2024.2025. The decrease was
mainly due to the combination of (i)a decrease in selling and fulfillment expenses of $4.8$12.5 million as a result of decreased sales and
costs related
to advertising, merchant fees, rental expenses and delivery fees, and(ii) ana increasedecrease in general and administrative expenses
of $0.5$5.7 million,
which included payroll expenses, stock-based compensation expense, insurance expenses, allowance for credit losses, travel
expenses and
other operating expenses.expenses, and partially offset by $3.0 million of goodwill impairment loss recorded during the year. The increase
decrease in general and administrative expenses was mainlyprimarily dueattributable to the implementation of cost-cutting measures during the current
period, compared to the prior-year period, which included expenses related to the expansion of ourthe Company’s vendor networknetwork, anddevelopment
development of the SuperSuite platform and an increasedplatform, allowance for credit losses and inventory reservesreserves. In addition, the decrease was attributable to changes
in the Company’s business strategy resulting from the sale of $1.2the million.Company’s subsidiaries, as discussed above.
Loss from operations was $5,865,762$14,428,282
for the year ended June 30, 20252026 as compared to $962,892$6,330,002 for the year ended June 30, 2024.2025. The decreaseincrease in loss was primary due to the
combination of decrease in operating
expensessales and inoperating gross profitexpenses as discussed above.
Other expenses consists of interest expense and other non-operating income (expenses). Other expenses for the year ended June 30, 2026 was $2,060,571 as compared to $367,439 for the year ended June 30, 2025. The increase was primarily attributable to an approximately $2.3 million loss on extinguishment of debt associated with conversions of convertible notes, an approximately $0.9 million unrealized loss on digital assets, and an approximately $0.4 million increase in interest expense, partially offset by an approximately $0.4 million increase in other non-operating income, $0.8 million of refunds for Employee Retention Credits, and an approximately $0.7 million gain from the change in fair value of derivative liabilities.
Other expenses consist of interest
expense and other non-operating income (expenses). Other expenses for the year ended June 30, 2025 were $366,273 as compared to $829,921
for the year ended June 30, 2024. The decrease in other expenses was mainly due to decrease in other non-operating loss of $120,258, and
in interest, including amortization of debt discount, on the revolving loan of $352,224 during the year ended June 30, 2024 as a result
of the decreasing balance on the revolving loan.
Net loss attributable to iPower
Inc. for the year ended June 30, 20252026 was $4,968,288$11,622,242 as compared to $1,528,159$4,968,288 for the year ended June 30, 2024,2025, representing an increase
ofin net loss of $3,440,129.$6,653,954, The increasewhich was primarily due to the decreasecombination of increase in grossloss profitfrom operations, the increase in other expenses,
and operatingpartially expensesoffset by the gain from discontinued operations resulting from the sale of the Company’s subsidiaries, as discussed
above.
Comprehensive loss attributable
to iPower Inc. for the year ended June 30, 20252026 was $4,717,775$11,624,028 as compared to $1,676,431$4,717,775 for the year ended June 30, 2024,2025, representing
an increase ofin comprehensive loss of $3,041,344.$6,906,253, The increasewhich was due to the reasons discussed above, along with a decrease in other comprehensive
income income
of $250,513$252,299 as a result of foreign currency translation adjustments resulting from the translation of RMB, the functional currency
of of
our subsidiary and VIE in the PRC, to USD, the reporting currency of the Company.
During the fiscal year ended
June 30, 20252026 we primarily funded our operations with cash and cash equivalents generated from operations, as well as through borrowingthe convertible
under our creditnote facility fromestablished JPMorganin ChaseDecember Bank (“JPM”). Additionally, on June 18, 2024, we closed on the Registered Direct
offering of 2,083,334 Shares and a concurrent Private Placement of Warrants to purchase 2,083,334 Warrant Shares, which were sold for
gross aggregate proceeds of $5,000,002.2025. We had cash and cash equivalents of $2,007,890$478,042 as of June 30, 2025,2026, representing a $5,369,947$1,199,837
decrease from $7,377,837$1,677,879 in cash as of June 30, 2024.2025. The cash decrease was primarily due to the combined result of cash provided by operating
activities, cash used in operating activities,
investing activities and financing activities resulting from our payments to offering cost settlement, pay down the short-term loans -
related party and part ofoff the JPM revolving line of
credit credit.and proceeds from convertible notes.
In assessing our liquidity requirements for the twelve months following the issuance of these consolidated financial statements, management considered the Company’s expected cash flows from operations, available financing sources, and significant contractual obligations. The Company has approximately $4.7 million of financing proceeds raised subsequent to June 30, 2026, as well as approximately $15.0 million of remaining optional financing capacity under its existing financing arrangement, subject to the investors’ election and the satisfaction or waiver of applicable closing conditions. The Company’s significant cash requirements include approximately $5.8 million of convertible notes outstanding, which do not mature until December 2027 through September 2028, although the notes require monthly interest payments and may be converted into common stock in accordance with their terms, and approximately $0.8 million of net lease payments expected during fiscal 2027. Although the Company incurred a net loss of approximately $11.6 million and negative operating cash flows during the year ended June 30, 2026, management expects its future cash requirements to be reduced as a result of the cost reductions and other completed restructuring actions.
Based on ourthe Company’s
current operating
plan, we believe that our existing cash and cash equivalentsequivalents, andexpected cash flows from operationsoperations, financing proceeds received subsequent to year-end,
and expected cash requirements, management believes that the Company will behave sufficient liquidity to financemeet ourits obligations and fund
its operations
during for at least the next 12twelve months. However, ourthe Company’s liquidity and our ability to meet ourits obligations and fund our
its capital requirements are dependent
on ourits future financial performance, which is subject to general economic, financial and other
factors that are beyond ourits control, such
as risingincluding inflation and a potential recession,recession. andThe ourCompany’s anticipated funding requirements could
increase increase.as a result of such factors. See the “Risk Factors”
section in this Annual Report.
Our cash requirements consist
primarily of day-to-day operating expenses and obligations with respect to warehouse leases. We lease all our office and warehouse facilities.
We expect to make future payments on existing leases from cash generated from operations. We have credit terms in place with our major
suppliers, however as we bring on new suppliers, we are often required to prepay our inventory purchases from them. This is consistent
with our historical operating model which allowed us to operate using only cash generated by the business. Beyond the next 12 months we
believe that our cash flow from operations should improve as supply chain operations normalize and new suppliers we are bringing online
transition to credit terms more favorable to us. In addition, we plan to increase the size of our in-house product catalog, which will
have a net beneficial impact to our margin profile and ability to generate cash. Currently, we have approximately $1.8 million in unused
credit under the revolving line with JPM.
Given our current working
capital position and available funding from our revolving credit line and proceeds from our June Registered Direct offering,position, we believe
we will be able to manage through the current challenges by managing payment terms with customers and vendors.
As of June 30, 20252026 and 2024,2025,
our working capital was $4.9$3.4 million and $11.2$4.9 million, respectively. The historical seasonality in our business during the year can cause
cash and cash equivalents, inventory and accounts payable to fluctuate, resulting in changes in our working capital. We anticipate that
past historical trends towill remain in place through the balance of the fiscal year with working capital remaining near this level for
the the
foreseeable future.
Our largest source of cash
provided by operations is from salesthe sale of products. Our primary uses of cash from operating activities include payments to suppliers
for for
products, payments to employees for compensation, and other general expenses. Net cash (used in) provided by operating activities for the years
ended June 30, 20252026 and 20242025 was $(579,187)$163,466 and $6,164,076,$579,187, respectively. The decrease in cash providedused byin operating activities mainly resulted
resulted from a combination of an increase in non-cash adjustments to net loss ,and acash decreasepaid for cost of revenues and operating expenses, which was partially offset
by an increase in cash received from customers and an increase in cash paid for cost
of revenues and operating expenses.customers.
For the years ended June 30,
20252026 and 2024,2025, net cash used in investing activities was $2,042,250$4,681,625 and $0,$2,042,250, respectively. The increase was mainly due to thedeconsolidation
of prepayments
our VIE and subsidiaries cash, payments made for software developments and investment in a joint ventureventure, purchase of digital assets, and prepayments made for
software developments during the year ended June 30, 20252026.
Net cash provided by (used in) in financing activities was $6,543,407 and ($2,999,362), respectively, for the years ended June 30, 2026 and 2025. The increase in net cash provided by financing activities was primarily due to a combination of proceeds from the Company’s convertible note financing and payments made on the revolving loan.
Net cash used in financing
activities was $2,999,362 and $2,397,801 for the years ended June 30, 2025 and 2024, respectively. The increase in net cash outflows was
primarily attributable to lower financing inflows in fiscal 2025 as compared to fiscal 2024. Financing activities during fiscal 2024 included
significant sources of cash that did not recur in fiscal 2025, including $4.5 million in net proceeds from the issuance of common stock
and $2.4 million in proceeds from related party borrowings. These inflows were partially offset in fiscal 2024 by net repayments of $5.1
million on revolving loans and $3.75 million on short-term borrowings.
Accounts receivable, netreceivable
Inventory, net
Inventory consists of finished
goods ready for sale and is stated at the lower of cost or market. The Company values its inventory using the weighted average costing
method. The Company’s policy is to include as a part of inventory and cost of goods sold any freight incurred to ship the product
from its vendors to warehouses. Outbound freight costs related to shipping costs to customers are considered period costs and reflected
in selling and fulfillment expenses. The Company regularly review inventory and consider forecasts of future demand, market conditions
and product obsolescence.
If the estimated realizable
value of the inventory is less than cost, the Company makes provisions in order to reduce its carrying value to its estimated market value.
The Company also reviews inventory for slow moving and obsolescence and records allowance for obsolescence.
Variable interest entities
On February 15, 2022, the
Company acquired 100% of the ordinary shares of Anivia and its subsidiaries, including Daheshou (Shenzhen) Information Technology Co.,
Ltd., a company organized under the Laws of the PRC (“DHS”). Pursuant to the terms of the agreements, the Company does not
have direct ownership in DHS but is actively involved in DHS’s operations as the sole manager to direct the activities and significantly
impact DHS’s economic performance. DHS’s operational funding is provided by the Company after February 15, 2022. During the
term of the agreements, which run for a term of 10 years from February 2022 to February 2032, the Company bears all the risk of loss and
has the right to receive all of the benefits from DHS. As such, based on the determination that the Company is the primary beneficiary
of DHS, in accordance with ASC 810-10-25-38A through 25-38J, DHS is considered a variable interest entity (“VIE”) of the Company
and the financial statements of DHS have been consolidated from the date such control existed, February 15, 2022. See Note 4 for details
on acquisition.
Goodwill
Goodwill represents the excess
of the purchase price over the fair value of assets acquired and liabilities assumed. The Company accounts for goodwill under ASC Topic
350, Intangibles-Goodwill and Other.
Goodwill is not amortized
but is reviewed for potential impairment on an annual basis, or if events or circumstances indicate a potential impairment, at the reporting
unit level. The Company’s review for impairment includes an assessment of qualitative factors to determine whether it is more likely
than not that the fair value of a reporting unit is less than its carrying value, including goodwill. If it is determined that it is more
likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill, a quantitative goodwill impairment
test is performed, which compares the fair value of the reporting unit with its carrying amounts, including goodwill. If the fair value
of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. However, if the carrying
amount of the reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited
to the total amount of goodwill allocated to that reporting unit. The Company engaged an independent third-party valuation firm in August
2022 to conduct an evaluation of goodwill impairment for the Company as a whole at the consolidated reporting unit level as of June 30,
2022, which evaluation was conducted prior to the Company’s filing of its Annual Report on Form 10-K for the period ended June 30,
2022. Due to the decrease in the Company’s share price subsequent to the filing of the June 30, 2022 Form 10-K and the net loss
incurred during the quarter ended September 30, 2022, the Company engaged the same valuation firm to review goodwill for impairment. Based
on this review, the Company concluded an impairment loss of $3,060,034 as of September 30, 2022 was required. The impairment amount was
determined based on the discounted cash flows with the revised projections reflecting the increase in freight and storage costs in the
current interim quarter. The Company also considered the Market Capital Method, which is an alternative market approach, suggested the
Company’s goodwill is partially impaired.
Subsequent to the quarter
ended September 30, 2022, during the period ended June 30, 2023, the Company performed a qualitative and quantitative goodwill impairment
analysis following the steps laid out in ASC 350-20-35-3C and noted no goodwill impairment. As of June 30, 2025 and 2024, the goodwill
balance amounted to $3,034,110 and $3,034,110, respectively.
IntangibleDigital Assets, netAssets
The Company accounts for its digital assets, which, as of the date of this report, are comprised of Bitcoin (“BTC”) only, as indefinite-lived intangible assets in accordance with Accounting Standards Codification (“ASC”) Topic 350-60, “Intangibles—Goodwill and Other—Crypto Assets.” The Company has ownership of and control over its digital assets and may use third-party custodial services to secure it. The Company’s digital assets are initially recorded at cost and are subsequently remeasured on the balance sheet at fair value.
The Company determines the fair value of its digital assets on a recurring basis in accordance with ASC Topic 820, “Fair Value Measurement,” based on quoted prices on the active exchange that the Company has determined is its principal market for such digital assets (Level 1 inputs). The Company determines the cost basis of digital assets using the specific identification of each unit received. Realized and unrealized gains and losses from changes in the fair value of digital assets are recognized in the statement of operations.
Embedded derivative liability
What changed in the latest 10-Q
Risk Factors
We refer to Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended June 30, 2025 for a detailed description of our significant risk factors. As of March 31, 2026, there have been no material changes from those risk factors disclosed in our Annual Report on Form 10-K for the year ended June 30, 2025.
Full comparison: every changed paragraph (1)
We
refer to Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended June 30, 2025 for a detailed description
of our significant risk factors. As of DecemberMarch 31, 2025,2026, there have been no material changes from those risk factors disclosed in our Annual
Annual Report on Form 10-K for the year ended June 30, 2025.
Management's Discussion & Analysis (MD&A)
New heading “Loss from Operations”
New heading “Comprehensive Loss Attributable to iPower Inc.”
Removed heading “Income (Loss) from Operations”
Removed heading “Other Income (Expense)”
Removed heading “Net Income (Loss) Attributable to iPower Inc.”
Largest changes
Othersee in full comparisonincome (expense)consists ofofinterest expense and other non-operating income (expense). Otherincome (expense)for thesixnine months endedDecemberMarch 31,20252026 was$1,122,135$3,291,599 as compared to$(269,627)$317,788 for thesixnine months endedDecemberMarch 31,2024.2025. The increase in otherincomeexpenses was mainly due to combination of the increase in other non-operating income of$1,219,713$1,236,219 resulted from discounted settlement and write-offs of aged accounts payable, recognition of loss on deconsolidation ofVIE,VIEaanddecreasesubsidiaries, unrealized loss on digital assets, loss on extinguishment of debt resulted from conversion of convertible note payable, and goodwill impairment loss, an increase ininterest,interest expense, including amortization of debtdiscount,discount onthe revolving loan of $73,924 duringthesixconvertiblemonths ended December 31, 2025 resulted from the termination of the revolving ABL,notes, refund of Employee Retention Tax Credit, change in fair value of derivative liability, and gain on disposal of vehicle,vehicle.during the nine months ended March 31, 2026
“Other expense consists of interest expense and other non-operating income (expense). Other expense for the three months ended March 31, 2026 was $4,463,615 as compared to $47,713 for the three months ended March 31, 2025. The increase in other expenses was mainly due to the increase in interest expenses, unrealized loss on digital assets, loss on extinguishment of debt resulted from conversion of convertible note payable, and goodwill impairment loss during the quarter ended March 31, 2026.”see in full comparison
“Revenues for the three months ended December 31, 2025 decreased 62.6% to $7,133,602 as compared to $19,072,571 for the three months ended December 31, 2024. While pricing remained stable, the decrease was mainly due to the combination of decreased orders from Amazon, disruption of product supply, and decreased logistic service income, during the quarter ended December 31, 2025. In addition, the Company also experienced a significant decrease in Amazon orders as a result of the negative impact from uncertainty over tariffs during quarter ended December 31, 2025.”see in full comparison
Full comparison: every changed paragraph (43)
The Company filed a preliminary
information statement on Schedule 14C (the “Schedule 14C”) with the SEC on January 7, 2026. Following any SEC review, the
Company will then finalize2026 and maila thedefinitive information statement
on Schedule 14C toon stockholdersJanuary as21, of the December 22, 2025 record date.2026.
For the three months ended DecemberMarch 31, 2026
2025 and 20242025
Revenues for the three months ended March 31, 2026 decreased 78.2% to $3,498,681 as compared to $16,041,672 for the three months ended March 31, 2025. The decrease was mainly due to the sale of the Company’s subsidiaries on February 1, 2026.
Revenues
for the three months ended December 31, 2025 decreased 62.6% to $7,133,602 as compared to $19,072,571 for the three months ended December
31, 2024. While pricing remained stable, the decrease was mainly due to the combination of decreased orders from Amazon, disruption of
product supply, and decreased logistic service income, during the quarter ended December 31, 2025. In addition, the Company also experienced
a significant decrease in Amazon orders as a result of the negative impact from uncertainty over tariffs during quarter ended December
31, 2025.
Costs of revenues for the
three months ended DecemberMarch 31, 20252026 decreased 62.6%70.1% to $3,994,680$2,743,132 as compared to $10,682,685$9,186,212 for the three months ended DecemberMarch 31,
2024. 2025. The
decrease was primarily due to thedecreased decreasesales inas sales.discussed above.
Gross profit was $3,138,922$755,549
for the three months ended DecemberMarch 31, 20252026 as compared to $8,389,886$6,855,460 for the three months ended DecemberMarch 31, 2024.2025. While the gross profit
ratio of the product sales revenues decreased to 44%21.6% for the three months ended DecemberMarch 31, 20252026 from 46.3%44.7% for the three months ended
DecemberMarch 31, 2024,2025, the overall gross profit ratio of the total sales revenues for the three months ended DecemberMarch 31, 20252026 and 20242025 was 21.6%
44%.and 42.7%. The decrease in the gross profit ratio of the product sales revenues was primarilydue drivento bythe increaseschanges in productthe costs.Company’s business
strategy resulting from the sale of the Company’s subsidiaries, as discussed above.
Operating expenses for the
three months ended December 31, 2025 decreased 27.6% to $5,576,899 as compared to $7,706,279 for the three months ended December 31, 2024.
The decrease was mainly due to the combination of a decrease in selling and fulfillment expenses of $1.6 million as a result of decrease
in sales and a decrease in general and administrative expenses of $0.6 million, which included payroll expenses, stock-based compensation
expense, insurance expenses, allowance for credit losses, travel expenses and other operating expenses. The decrease in general and administrative
expenses was primarily attributable to the implementation of a cost-cutting plan during the current quarter, as compared to the prior-year
period which included expenses related to the expansion of our vendor network, the development of the SuperSuite platform, and an increase
in the allowance for credit losses and inventory reserves totaling $1.76 million for the quarter ended December 31, 2024.
Income (Loss) from Operations
Income
(loss) from operations was $(2,437,977) for the three months ended December 31, 2025 as compared to $683,607 of income from operations
for the three months ended December 31, 2024. The decrease in income was primary due to the combination of decrease in sales and operating
expenses as discussed above.
Other Income (Expense)
Other income (expense) consists
of interest expense and other non-operating income (expense). Other income (expense) for the three months ended December 31, 2025 was
$424,188 as compared to $(347,432) for the three months ended December 31, 2024. The increase in other income was mainly due to combination
of the increase in other non-operating income of $639,109 resulted from refund of Employee Retention Tax Credit, change in fair value
of derivative liability, and gain on disposal of vehicle.
Net Income (Loss) Attributable to iPower
Inc.
NetOperating incomeexpenses (loss)for attributablethe
three months ended March 31, 2026 decreased 73.6% to iPower$1,899,810 Inc.as compared to $7,189,964 for the three months ended DecemberMarch 31, 20252025. The
decrease was $(1,193,281) as compared to $218,819 for the three months ended December
31, 2024, representing an increase in net loss of $1,412,100, which was primarilymainly due to athe combinationchanges in the Company’s business strategy resulting from the sale of the increaseCompany’s in loss from operationssubsidiaries,
and the increase in other income as discussed above.
Loss from Operations
Loss from operations was $1,144,261 for the three months ended March 31, 2026 as compared to $334,504 of loss from operations for the three months ended March 31, 2025. The increase in loss was primary due to the changes in business strategies resulted from the sale of the Company’s subsidiaries as discussed above.
Other Expense
Other expense consists of interest expense and other non-operating income (expense). Other expense for the three months ended March 31, 2026 was $4,463,615 as compared to $47,713 for the three months ended March 31, 2025. The increase in other expenses was mainly due to the increase in interest expenses, unrealized loss on digital assets, loss on extinguishment of debt resulted from conversion of convertible note payable, and goodwill impairment loss during the quarter ended March 31, 2026.
ComprehensiveNet Income (Loss) Attributable
to iPower Inc.
Net loss attributable to iPower Inc. for the three months ended March 31, 2026 was $3,454,878 as compared to $339,599 for the three months ended March 31, 2025, representing an increase in net loss of $3,115,279, which was primarily due to the combination of increase in other expenses and gain from discontinued operations resulted from the sale of the Company’s subsidiaries, as discussed above.
Comprehensive Loss Attributable to iPower Inc.
Comprehensive
income (loss) attributable to iPower Inc. for the three months ended DecemberMarch 31, 20252026 was $(1,193,660)$3,470,621 as compared to $374,949$437,155 for the
three months
ended DecemberMarch 31, 2024,2025, representing an increase in comprehensive loss of $1,568,609.$3,033,466. The increase was due to the reasons
discussed above,
along with a decrease in other comprehensive incomeloss of $156,509$81,813 due to reduced foreign currency translation adjustments
resulting from the
translation of RMB, the functional currency of our subsidiary and VIE in the PRC, to USD, the reporting currency of
the Company.
For the sixnine months ended DecemberMarch 31, 20252026
and 20242025
Revenues
for the sixnine months ended DecemberMarch 31, 20252026 decreased 49.7%64.8% to $19,151,069$18,523,681 as compared to $38,081,092$52,645,059 for the sixnine months ended DecemberMarch 31,
31, 2024.2025. While pricing remained stable, the decrease was mainly due to the combination of decreased orders from Amazon and disruption of
of product supply during the sixnine months ended DecemberMarch 31, 2025.2026. In addition, theThe Company also experienced a significant decrease in Amazon
orders due to
uncertainty over tariffs during the sixnine months ended DecemberMarch 31, 2025.2026. In addition, The Company completed a sale of its subsidiaries on
February 1, 2026.
Costs of revenues for the
sixnine months ended DecemberMarch 31, 20252026 decreased 47.2%60.7% to $11,205,623$11,686,197 as compared to $21,203,309$29,748,154 for the sixnine months ended DecemberMarch 31, 2024.2025. The
The decrease was primarily due to a combination of the costs related to the logistics service income and the decrease in sales.product sales as
discussed above.
Gross profit was $7,945,446$6,837,484
for the sixnine months ended DecemberMarch 31, 20252026 as compared to $16,877,783$22,896,905 for the sixnine months ended DecemberMarch 31, 2024.2025. While the overall gross
profit ratio of the total sales revenues decreased to 41.5%36.9% for the sixnine months ended DecemberMarch 31, 20252026 from 44.3%43.5% for the sixnine months ended
DecemberMarch 31, 2024,2025, the gross profit ratio of product sales revenue for the sixnine months ended DecemberMarch 31, 20252026 and 20242025 was 44.0%39.1% and 46.0%,45.3%,
respectively. The decrease in the gross profit ratio was primarily driven by the decrease in the logistics service incomeincome, and secondarily
by increasesincrease in freight
product costs and productthe costs.changes in the Company’s business strategy resulting from the sale of the Company’s subsidiaries, as
discussed above.
Operating expenses for the
sixnine months ended DecemberMarch 31, 20252026 decreased 36.2%53.4% to $12,078,602$11,978,080 as compared to $18,940,610$25,720,971 for the sixnine months ended DecemberMarch 31, 2024.2025. The
The decrease was mainly due to the combination of a decrease in selling and fulfillment expenses of $2.3$8.3 million as a result of decreased
sales and costs related to advertising, merchant fees, rental expenses and delivery fees, and a decrease in general and administrative
expenses of $4.6$5.4 million, which included payroll expenses, stock-based compensation expense, insurance expenses, allowance for credit
losses, travel expenses and other operating expenses. The decrease in general and administrative expenses was primarily attributable to
the implementation of a cost-cutting planmeasures during the current period, as compared to the prior-year periodperiod, which included expenses related
to the expansion of ourthe Company’s vendor network, the development of the SuperSuite platform, and an increaseincreases in the allowance for credit
losses losses
and inventory reserves totaling $1.8approximately $1.9 million for the sixnine months ended DecemberMarch 31, 2024.2025. In addition, the decrease
was attributable to changes in the Company’s business strategy resulting from the sale of the Company’s subsidiaries, as discussed
above.
Loss from operations was $4,133,156$5,140,596
for the sixnine months ended DecemberMarch 31, 20252026 as compared to $2,062,827$2,824,066 for the sixnine months ended DecemberMarch 31, 2024.2025. The increase in loss was
was primary due to the combination of decrease in sales and operating expenses as discussed above.
Other Income (expense)Expenses
Other income (expense) consists of
of interest expense and other non-operating income (expense). Other income (expense) for the sixnine months ended DecemberMarch 31, 20252026 was $1,122,135
$3,291,599 as compared
to $(269,627)$317,788 for the sixnine months ended DecemberMarch 31, 2024.2025. The increase in other incomeexpenses was mainly due to combination of the
increase in
other non-operating income of $1,219,713$1,236,219 resulted from discounted settlement and write-offs of aged accounts payable, recognition
of loss
on deconsolidation of VIE,VIE aand decreasesubsidiaries, unrealized loss on digital assets, loss on extinguishment of debt resulted from conversion
of convertible note payable, and goodwill impairment loss, an increase in interest,interest expense, including amortization of debt discount,discount on the revolving loan of $73,924 during
the sixconvertible months ended December 31, 2025 resulted from the termination of the revolving ABL,notes, refund of Employee Retention Tax Credit, change
in fair value of derivative liability, and gain on disposal of
vehicle, vehicle.during the nine months ended March 31, 2026
Net Income (Loss) Attributable to iPower
Inc.
Net loss attributable to iPower
Inc. for the sixnine months ended DecemberMarch 31, 20252026 was $1,726,929$5,181,807 as compared to $1,810,462$2,150,061 for the sixnine months ended DecemberMarch 31, 2024,2025, representing
aan decreaseincrease in net loss of $83,533,$3,031,746, which was primarily due to the combination of increase in loss from operations andoperations, the increase in
other incomeexpenses, and the gain from discontinued operations resulted from the sale of the Company’s subsidiaries, as discussed above.
Comprehensive
loss attributable to iPower Inc. for the sixnine months ended DecemberMarch 31, 20252026 was $1,702,365$5,172,986 as compared to $1,709,386$2,146,541 for the sixnine months
ended DecemberMarch 31, 2024,2025, representing aan slight decreaseincrease in comprehensive loss of $7,021,$3,026,445, which was due to the reasons discussed above, along
along with aan decreaseincrease in other comprehensive income of $76,512$5,301 as a result of foreign currency translation adjustments resulting from
the translation
of RMB, the functional currency of our subsidiary and VIE in the PRC, to USD, the reporting currency of the Company.
During
the sixnine months ended DecemberMarch 31, 2025,2026, we primarily funded our operations with cash and cash equivalents generated from operations, borrowing
from related party, as well as through borrowings under our credit facility from JPMorgan Chase Bank (“JPM”) and close of
a convertible notes financing on December 23, 2025. Additionally, on June 18, 2024, we closed on a registered direct offering of 69,445
shares of common stock (the “Shares”) and a concurrent private placement of warrants to purchase up to 69,445 shares of common
stock (the “Warrants”), which Shares and Warrants were sold for aggregate gross proceeds of $5,000,002. As of DecemberMarch 31, 2026,
2025, we had cash and cash equivalents of $2,011,738,$713,685, representing a $3,848$1,294,205 increasedecrease from $2,007,890 in cash as of June 30, 2025. The cash
cash increasedecrease was primarily due to the combined result of cash provided by operating activities, cash used in investing activities and financing
financing activities resulting from our payments to pay down the JPM revolving line of credit and proceeds from convertible notes.
As
of DecemberMarch 31, 20252026 and June 30, 2025, our working capital was $6.7$7.9 million and $4.9 million, respectively. The historical seasonality
in our business during the year can cause cash and cash equivalents, inventory and accounts payable to fluctuate, resulting in changes
in our working capital. We anticipate that past historical trends to remain in place through the balance of the fiscal year with working
capital remaining near this level for the foreseeable future.
Our largest source of cash
provided by operations is from sales of products. Our primary uses of cash from operating activities include payments to suppliers for
products, to employees for compensation, and other general expenses. Net cash provided by (used in) operating activities for the sixnine
months months
ended DecemberMarch 31, 20252026 and 20242025 was $763,906$430,399 and $(1,387,926500,214), respectively. The increase in cash provided by operating activities
mainly mainly
resulted from an increase in cash received from customers, which was partially offset by an increase in cash paid for cost of revenues
and operating expenses.
Net cash used in investing
activities for the sixnine months ended DecemberMarch 31, 20252026 and 20242025 was $5,593,628$5,671,074 and $664,366,$1,519,928, respectively. The increase was mainly due
to deconsolidation of VIE and subsidiaries cash, payments made for investment in joint venture, purchase of digital assets, and prepayments
made for software
developments during the quarter ended DecemberMarch 31, 2025.2026.
Net cash provided by (used
in) in financing activities was $4,822,051$3,937,784 and $(2,558,389),$3,168,925, respectively, for the sixnine months ended DecemberMarch 31, 20252026 and 2024.2025. The increase
in net cash provided by financing activities was primarily due to a combination of proceeds from a convertible note financing and payments
on the revolving loan.
The Company accounts for its
digital assets, which currently are comprised solely of Bitcoin (“BTC”) and Ethereum (“ETH”), as indefinite-lived
intangible assets in accordance with Accounting Standards Codification (“ASC”) Topic 350-60, “Intangibles—GoodwillIntangibles-Goodwill and
and Other—CryptoOther-Crypto Assets.” The Company has ownership of and control over its digital assets and may use third-party custodial services
services to secure it. The Company’s digital assets are initially recorded at cost and are subsequently remeasured on the balance
sheet at
fair value.
On August 4, 2025, the Company
entered into a Variable Interest Entity (“VIE”) Contract Termination Agreement with the VIE, pursuant to which all VIE agreements
were terminated. As a result, the Company no longer has a controlling financial interest in the VIE. In accordance with ASC 810-10-40,
Consolidation —- Deconsolidation of a Subsidiary or Derecognition of a Group of Assets, the Company deconsolidated the VIE
as of
the termination date.
During
the sixnine months ended December
March 31, 2025 and 2024,2026, the Company performed a qualitative goodwill impairment analysis following the steps
laid out in ASC 350-20-35-3C350 and noted no goodwill impairment.impairment
due to the decrease in the Company’s share price. As of DecemberMarch 31, 20252026 and June 30, 2025, the goodwill balance amounted
to $3,034,110$0 and
$3,034,110, respectively.
The following table provides
a roll-forward of changes for financial instruments measured at fair value on a recurring basis for the sixnine months ended DecemberMarch 31,
2025 2026:
Finite
life intangible assets at DecemberMarch 31, 20252026 include a covenant not to compete, supplier relationships and software recognized as part of
of the acquisition of Anivia. Intangible assets are recorded at the estimated fair value of these items at the date of acquisition, February
15, 2022. Intangible assets are amortized on a straight-line basis over their estimated useful life as follows:
The
Company reviews the recoverability of long-lived assets, including intangible assets, when events or changes in circumstances occur that
indicate the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the ability to recover
the carrying value of the asset from the expected future pretax cash flows (undiscounted and without interest charges) of the related
operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between
estimated fair value and carrying value. The measurement of impairment requires management to make estimates of these cash flows related
to long-lived assets, as well as other fair value determinations. The Company did not record any impairment charge for the sixnine months
ended DecemberMarch 31, 20252026 and 2024.2025.
IPW insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 17,944 shares, about $37.3K) and open-market sales in 1 filing (1 insider, 1 trade date, 12,940 shares, about $23.0K). Net open-market shares: 5,004 (purchases minus sales); net value about $14.3K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-07-07 | Hrt Financial Lp |
Open-market sale | 12,940 | $1.78 | $23.0K |
| 2026-07-06 | Hrt Financial Lp |
Open-market purchase | 17,944 | $2.08 | $37.3K |
Well-known investors holding IPW (13F)
None of the 59 investors we track reported a position in their latest 13F.