iPower Inc. 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number 001-40391

iPower Inc.

(Exact name of registrant as specified in its charter)

Nevada		82-5144171
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

8798 9^th Street

Rancho Cucamonga, CA 91730

(Address of principal executive offices) (Zip Code)

(626) 863-7344

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		IPW		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock on May 14, 2024 was 29,818,232.

iPower Inc.

TABLE OF CONTENTS

		Page No.

	PART I. Financial Information

Item 1.	Unaudited Condensed Consolidated Financial Statements	3

	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2024 and June 30, 2023	3

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended March 31, 2024 and 2023	4

	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended March 31, 2024 and 2023	5

	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2024 and 2023	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51

Item 4.	Controls and Procedures	51

	PART II. Other Information

Item 1.	Legal Proceedings	52

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	52

Item 3.	Defaults Upon Senior Securities	52

Item 4.	Mine Safety Disclosures	53

Item 5.	Other Information	53

Item 6.	Exhibits	53

	Signatures	54

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

iPower Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

As of March 31, 2024 and June 30, 2023


	March 31,			June 30,
	2024			2023
		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	2,714,724		$	3,735,642
Accounts receivable, net		16,843,692			14,071,543
Inventories, net		11,872,286			20,593,889
Prepayments and other current assets		1,632,113			2,858,196
Total current assets		33,062,815			41,259,270

Non-current assets
Right of use - non-current		6,632,349			7,837,345
Property and equipment, net		405,621			536,418
Deferred tax assets, net		2,756,420			2,155,250
Non-current prepayments		320,190			531,456
Goodwill		3,034,110			3,034,110
Investment in joint venture		30,495			33,113
Intangible assets, net		3,793,042			4,280,071
Other non-current assets		381,631			427,254
Total non-current assets		17,353,858			18,835,017

Total assets	$	50,416,673		$	60,094,287

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	14,199,052		$	13,244,957
Credit cards payable		236,000			366,781
Customer deposit		339,968			350,595
Other payables and accrued liabilities		3,242,002			4,831,067
Advance from shareholders		85,581			85,200
Lease liability - current		2,106,867			2,159,173
Long-term promissory note payable - current portion		–			2,017,852
Revolving loan payable		6,011,860			–
Income taxes payable		277,921			276,683
Total current liabilities		26,499,251			23,332,308

Non-current liabilities
Long-term revolving loan payable, net		–			9,791,191
Lease liability - non-current		4,949,802			6,106,047
Total non-current liabilities		4,949,802			15,897,238

Total liabilities		31,449,053			39,229,546

Commitments and contingencies		–			–

Stockholders' Equity
Preferred stock, $0.001 par value; 20,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2024 and June 30, 2023		–			–
Common stock, $0.001 par value; 180,000,000 shares authorized; 29,818,232 and 29,710,939 shares issued and outstanding at March 31, 2024 and June 30, 2023		29,819			29,712
Additional paid in capital		30,013,997			29,624,520
Accumulated deficits		(10,887,703	)		(8,702,442	)
Non-controlling interest		(34,519	)		(24,915	)
Accumulated other comprehensive loss		(153,974	)		(62,134	)
Total stockholders’ equity		18,967,620			20,864,741

Total liabilities and stockholders’ equity	$	50,416,673		$	60,094,287

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

iPower Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

For the Three and Nine Months Ended March 31, 2024 and 2023


	For the Three Months Ended March 31,						For the Nine Months Ended March 31,
	2024			2023			2024			2023
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

REVENUES	$	23,308,508		$	20,225,619		$	66,617,004		$	65,502,882

TOTAL REVENUES		23,308,508			20,225,619			66,617,004			65,502,882

COST OF REVENUES		12,360,170			12,433,898			36,591,581			39,755,919

GROSS PROFIT		10,948,338			7,791,721			30,025,423			25,746,963

OPERATING EXPENSES:
Selling and fulfillment		6,025,878			6,537,124			23,026,329			24,294,673
General and administrative		3,321,184			3,065,795			9,218,842			8,879,326
Impairment loss - goodwill		–			–			–			3,060,034
Total operating expenses		9,347,062			9,602,919			32,245,171			36,234,033

INCOME (LOSS) FROM OPERATIONS		1,601,276			(1,811,198	)		(2,219,748	)		(10,487,070	)

OTHER INCOME (EXPENSE)
Interest expenses		(181,199	)		(238,623	)		(592,176	)		(800,783	)
Loss on equity method investment		(792	)		(1,297	)		(2,618	)		(8,625	)
Other non-operating income (expense)		(29,669	)		(72,235	)		32,003			199,125
Total other expenses, net		(211,660	)		(312,155	)		(562,791	)		(610,283	)

INCOME (LOSS) BEFORE INCOME TAXES		1,389,616			(2,123,353	)		(2,782,539	)		(11,097,353	)

PROVISION FOR INCOME TAX EXPENSE (BENEFIT)		377,147			(589,581	)		(587,674	)		(2,085,126	)
NET INCOME (LOSS)		1,012,469			(1,533,772	)		(2,194,865	)		(9,012,227	)

Non-controlling interest		(3,613	)		(3,238	)		(9,604	)		(8,878	)

NET INCOME (LOSS) ATTRIBUTABLE TO IPOWER INC.	$	1,016,082		$	(1,530,534	)	$	(2,185,261	)	$	(9,003,349	)

OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustments		69,122			17,604			(91,840	)		(46,722	)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO IPOWER INC.	$	1,085,204		$	(1,512,930	)	$	(2,277,101	)	$	(9,050,071	)

WEIGHTED AVERAGE NUMBER OF COMMON STOCK
Basic		29,821,811			29,730,914			29,791,990			29,702,014

Diluted		29,821,811			29,730,914			29,791,990			29,702,014

EARNINGS (LOSSES) PER SHARE
Basic	$	0.03		$	(0.05	)	$	(0.07	)	$	(0.30	)

Diluted	$	0.03		$	(0.05	)	$	(0.07	)	$	(0.30	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

iPower Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity

For the Three and Nine Months Ended March 31, 2024 and 2023


	Common Stock				Additional Paid in			Retained Earnings (Accumulated			Non-controlling			Accumulated Other Comprehensive Income
	Shares		Amount		Capital			Deficit)			Interest			(loss)			Total
Balance, June 30, 2023		29,710,939	$	29,712	$	29,624,520		$	(8,702,442	)	$	(24,915	)	$	(62,134	)	$	20,864,741
Net loss		–		–		–			(1,286,515	)		(2,836	)		–			(1,289,351	)
Stock-based compensation		–		–		117,882			–			–			–			117,882
Foreign currency translation adjustments		–		–		–			–			–			(707	)		(707	)
Balance, September 30, 2023, unaudited		29,710,939	$	29,712	$	29,742,402		$	(9,988,957	)	$	(27,751	)	$	(62,841	)	$	19,692,565
Net loss		–		–					(1,914,828	)		(3,155	)		–			(1,917,983	)
Stock-based compensation		–		–		141,245			–			–			–			141,245
Foreign currency translation adjustments		–		–		–			–			–			(160,255	)		(160,255	)
Balance, December 31, 2023, unaudited		29,710,939	$	29,712	$	29,883,647		$	(11,903,785	)	$	(30,906	)	$	(223,096	)		17,755,572
Net income		–		–		–			1,016,082			(3,613	)		–			1,012,469
Stock-based compensation		–		–		130,457			–			–			–			130,457
Restricted shares issued for vested RSUs		107,293		107		(107	)		–			–			–			–
Foreign currency translation adjustments		–		–		–			–			–			69,122			69,122
Balance, March 31, 2024, unaudited		29,818,232	$	29,819	$	30,013,997		$	(10,887,703	)	$	(34,519	)	$	(153,974	)	$	18,967,620
																		–
Balance, June 30, 2022		29,572,382	$	29,573	$	29,111,863		$	3,262,948		$	(13,232	)	$	5,678		$	32,396,830
Net loss		–		–		–			(4,182,376	)		(2,805	)		–			(4,185,181	)
Stock-based compensation		–		–		137,882			–			–			–			137,882
Foreign currency translation adjustments		–		–		–			–			–			(111,475	)		(111,475	)
Balance, September 30, 2022, unaudited		29,572,382	$	29,573	$	29,249,745		$	(

SEC Form 10-Q filed by iPower Inc.