Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 19, 2023 (September 18, 2023)

Ispire Technology Inc.

(Exact name of registrant as specified in its charter)

Delaware		001-41680		84-5106049
(State or other jurisdiction of incorporation or organization)		(Commission file number)		(IRS Employer Identification No.)

19700 Magellan Drive

Los Angeles, CA 90502

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (310) 742-9975

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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, par value $0.0001 per share		ISPR		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

Item 2.02. Results of Operations and Financial Condition.

On September 18, 2023, Ispire Technology Inc. issued a press release regarding its financial results for the fiscal year ended June 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.

This information is intended to be furnished under Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.		Description
99.1		Press Release of Ispire Technology Inc. issued on September 18, 2023
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Ispire Technology Inc.

	By:	/s/ Michael Wang
		Name:	Michael Wang
		Title:	Co-Chief Executive Officer

Dated: September 19, 2023

Exhibit 99.1

Ispire Technology Inc. Reports Financial Results for the Fiscal Full Year 2023

Revenue from cannabis vaping products was up 100.4% to $40 Million.

Revenue from tobacco vaping products was up 10.9% to $75.6 Million.

Overall Revenue Increased 31.2% to $115.6 Million

Issues Fiscal Year 2024 Outlook for Cannabis Vaping Products, Representing a Potential Growth between 100% and 125%, Outlook for Tobacco Vaping Products, Representing a Potential Growth between 25% and 40%

Fourth Quarter 2023 Non-GAAP Net Profit of $0.5 Million, as compared to $1.9 Million Net loss of in Fourth Quarter 2022

Fourth Quarter 2023 Net Loss of $1.6 million as compared to $2.2 Million Net Loss for Fourth Quarter 2022

Los Angeles, Calif. September 18, 2023 – Ispire Technology Inc. (“Ispire” or “the Company”) (NASDAQ: ISPR), a leader in vapor technology, providing high-quality, innovative products with first-class performance, announced today financial results for the fiscal year 2023, which ended on June 30, 2023, and filed its annual report on Form 10-K on September 18, 2023.

“The fiscal year 2023 marked a significant milestone for Ispire, with a 100.4% and 10.9% surge in cannabis and tobacco vaping products revenues, respectively from Fiscal year 2022. Overall revenue Increased 31.2%. This growth was predominantly driven by the doubling of the revenues from our cannabis vaping products in the United States and a rise in sales of tobacco vaping products in Europe. Central to this success is our multi-pronged strategy: expanding our e-cigarette vaporizer technology sales and innovating our cannabis vaporizer offerings for both medical and recreational sectors. Our commitment to delivering industry-leading products has positioned Ispire at the forefront, cultivating a reputation for innovation and reliability. The recent introduction of the Ispire ONE^TM technology in July 2023 further exemplifies our commitment to innovation and sets industry standards, particularly around consumer safety and operational efficiency. As part of our ongoing improvements, our California operations are set to launch our first fully automated assembly system by the end of December 2023. Furthermore, we’re actively exploring Southeast Asia as a potential hub for future manufacturing operations, aiming to further optimize our production capabilities. Through these measures, we are not just driving growth but reinforcing our leadership in the industry,” said Michael Wang, the Co-Chief Executive Officer of Ispire.

Daniel Machock, the Chief Financial Officer of Ispire, added, “The fiscal year 2023 showcased a significant 100.4% and 10.9% surge in cannabis and tobacco vaping products revenues respectively, representing a record $40.0 million as compared to $20.0 million of cannabis vaping products revenue for the same period in 2022, and a record $75.6 million, as compared to $68.1 million of tobacco vaping products for the same period in 2022, underscoring the positive impact of our refined business strategy. Additionally, our gross profit jumped by 58.4% due to the deeper discount offered during fiscal year 2022, a favorable product mix, and the realization of economies of scale on higher sales volume in fiscal year 2023. While we navigate a momentary loss amidst our ongoing expansion, we remain confident that our focus on a multi-prong strategy will serve as a catalyst for sustained business development and financial growth. As we forge ahead into the fiscal year 2024, we remain committed to technological advancements, agile adaptation to market shifts, and delivering unwavering shareholder value. As such, we forecast continued growth in our cannabis products revenue, projecting a potential increase between 100% and 125% and continued growth in our tobacco vaping products revenue, projecting a potential increase between 25% and 40% in the fiscal year 2024.”

Fiscal Year 2023 Highlights

	●	Revenue increased 31.2% to $115.6 million as compared to $88.1 million in the same period of 2022. Tobacco vaping products contributed $75.6 million and cannabis vaping products contributed $40.0 million to revenue during the fiscal year 2023;

	●	Gross profit increased 58.4% to $21.1 million as compared to $13.3 million in the same period of 2022;

	●	Gross margin increased to 18.2% as compared to 15.1% in the same period of 2022.

	●	Total operating expenses increased 79.4% to $25.6 million as compared to $14.3 million in the same period of 2022; and

	●	Net loss of $6.1 million as compared to net loss of $1.9 million in the same period of 2022.

Liquidity and Capital Resources

As of June 30, 2023, Ispire had cash and cash equivalents of $40.3 million and working capital of $28.8 million.

The Company believes that its current cash and cash flows provided by operating activities, and the net proceeds from the initial public offering will be sufficient to meet its working capital needs in the next 12 months.

Restatement

In September 2023, the Company identified certain errors related to the recording of intellectual property rights transferred to the Company by a controlling party. The Company determined that the intangible assets were incorrectly recorded in the unaudited financial statements, and that the unaudited financial statements had to be restated to record the acquired intangible assets at the transferor’s book value, which was nil, rather than $74,259,915, which represents an independent third party evaluation of the assets. As a result of the restatement, the Company’s net loss for the nine months ended March 31, 2023 decreased from $6,057,776, or $0.12 per share (basic and diluted), to $4,512,513, or $0.09 per share (basic and diluted), its net loss for the three months ended March 31, 2023 decreased from $3,106,855, or $0.06 per share, to $2,334,223, or $0.05 per share (basic and diluted), and its stockholders’ equity at March 31, 2023 declined from $79,953,608 to $7,238,957.

Non-GAAP Fourth Quarter Net Income/loss

	FY2023			FY2022

NET (LOSS)/INCOME for Q1-Q3		(4,512,513	)		288,124

NET LOSS for Q4		(1,586,090	)		(2,162,277	)

Add Income tax		175,304			-
Add IPO related expenses that not used to offset proceeds		47,216			226,205
Add Allowance for doubtful accounts		1,103,058			-
Add HK patent legal expense		498,446			-
Add US patent legal fee		238,152			-

NON-GAAP NET INCOME/LOSS – Q4		476,086			(1,936,072	)

The Company believes that the non-GAAP financial information is important to an understanding of the Company business because the add-backs include one-time legal expenses that related to the Company’s acquisition of intellectual property rights from a control party, expenses relating to the Company’s initial public offering that were expensed and not treated as a cost of the offering, taxes and the allowance for doubtful accounts. Because Ispire does not have sufficient experience to establish a policy for establishing a reserve for doubtful accounts, at June 30, 2023 it established a reserve based on the age of the outstanding receivables. Although the Company believes that a significant percentage of these accounts receivable will be collected, and that this allowance is non-recurring; it is possible that a significant percentage of the reserved accounts will be not collected. Accordingly, non-GAAP information relating to the allowance for doubtful account should be viewed with the understanding it may become a recurring expense, and thus part of the Company’s normal operations.

Initial Public Offering

In April 2023, Ispire closed on its initial public offering of 3,105,000 shares of common stock of the Company at a public offering price of $7.00 per share, which included the 405,000 shares issued pursuant to the full exercise by the underwriters of their over-allotment option. The common stock of the Company began trading on the NASDAQ Capital Market on April 4, 2023.

In Ispire initial public offering, Ispire raised net proceeds, after underwriting expenses and other offering expenses, of approximately $18.3 million.

Net proceeds from the initial public offering are being used for:

	●	Approximately 35% to develop manufacturing operations in Southeast Asia and the United States;

	●	Approximately 25% for research and development activities, which include efforts to develop new products and new vaping technology;

	●	Approximately 20% for the marketing and promotion of the Company’s branded products; and

	●	The balance of approximately 20% for general administration and working capital.

Outlook

Ispire is providing the following outlook for the cannabis and tobacco vaping products for the fiscal year of 2024, which ends on June 30, 2024. Revenue from cannabis and tobacco vaping products was $40.0 million and $75.6 Million respectively for the fiscal year 2023. Revenue for cannabis vaping products for the fiscal year 2024 is projected at somewhere between $80 million and $90 million, representing growth between 100% and 125% from fiscal year of 2023. Revenue for tobacco vaping products for the fiscal year of 2024 is projected at somewhere between $95 million and $105 million, representing growth between 25% and 40% from the fiscal year 2023.

Conference Call

The Company will conduct a conference call at 8:00 a.m. Eastern time on Tuesday, September 19, 2023, to discuss the results.

Ispire management will host the conference call, followed by a question-and-answer period.

Date: Tuesday, September 19, 2023

Time: 8:00 a.m. Eastern time

Toll-free dial-in number:

United States: 1-888-346-8982

Mainland China: 4001-201203

Hong Kong: 800-905945

International: 1-412-902-4272

Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=3huXMPJI

Please call the conference call dial-in 5-10 minutes prior to the start time, and ask for the “Ispire Technology Call.” An operator will register your name and organization.

About Ispire Technology Inc.

Ispire is engaged in the research and development, design, commercialization, sales, marketing, and distribution of branded e-cigarettes and cannabis vaping products. The Company’s operating subsidiaries own or license from a related party more than 200 patents received or filed globally. Ispire’s tobacco products are marketed under the Aspire brand name and are sold worldwide (except in the United States, People’s Republic of China, and Russia) primarily through its distribution network. Ispire’s cannabis products are marketed under the Ispire brand name primarily on an original design manufacturer (ODM) basis to other cannabis vapor companies. Ispire currently sells its cannabis vaping hardware only in the United States, and it recently commenced marketing activities in Canada and Europe, primarily in the European Union.

Please visit www.ispiretechnology.com and follow us on Facebook, Twitter, Instagram, Linkedin, Pinterest, and YouTube. Any information contained on, or that can be accessed through, the Company’s website, any other website or any social media, is not a part of this press release.

Forward Looking Statements

This press release and the conference call described in this press release contains and will contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”) as well as Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended, that are intended to be covered by the safe harbor created by those sections. Forward-looking statements, which are based on certain assumptions and describe the Company’s future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “would,” “could,” “seek,” “intend,” “plan,” “goal,” “project,” “estimate,” “anticipate,” “strategy,” “future,” “likely” or other comparable terms, although not all forward-looking statements contain these identifying words. All statements other than statements of historical facts included in this press release regarding the Company’s strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Important factors that could cause the Company’s actual results and financial condition to differ materially from those indicated in the forward-looking statements. Such forward-looking statements include, but are not limited to, risks and uncertainties including those regarding: the Company’s ability to collect its accounts receivables in a timely manner, the Company’s business strategies, the ability of the Company to market to the Ispire ONE^TM, Ispire ONE^TM’s success if meeting its goals, the ability of its customers to derive the anticipated benefits of the Ispire ONE^TM and the success of their products on the markets; the Ispire ONE^TM proving to be safe, and the risk and uncertainties described in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Special Note Regarding Forward-Looking Statements” and the additional risk described in Ispire’s prospectus dated April 3, 2023 filed pursuant to Rule 424(b)(1) under Securities Act (File Number: 333-269470) and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, and the Form 8-K filed on September 15, 2023. You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements made in the press release relate only to events or information as of the date on which the statements are made in the press release. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events except as required by law. You should read this press release with the understanding that our actual future results may be materially different from what we expect.

Investor Relations Contact:

Sherry Zheng/ David Tian

718.213.7386/ 732.208.4091

ir@ispiretechnology.com

ISPIRE TECHNOLOGY INC.

CONSOLIDATED BALANCE SHEETS

	June 30,
	2022			2023
Assets
Current assets:
Cash and cash equivalents	$	74,480,651		$	40,300,573
Accounts receivable, net		8,260,574			24,526,262
Inventories, net		14,580,557			7,472,108
Prepaid expenses and other current assets		192,499			3,378,617
Due from related parties		1,934,855			-
Held-to-maturity investment		-			9,133,707
Total current assets		99,449,136			84,811,267
Other assets:
Property, plant and equipment, net		114,025			1,088,131
Rental deposit		876,100			732,334
Right-of-use assets – operating leases		295,804			4,061,617
Total other assets		1,285,929			5,882,082
Total assets	$	100,735,065		$	90,693,349
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	290,541		$	1,274,391
Accounts payable – related party		41,982,373			51,698,588
Contract liabilities		1,672,051			988,556
Dividends payable		3,362,639			-
Accrued liabilities and other payables		159,296			281,361
Due to related parties		40,672,768			710,910
Income tax payable - current		481,113			63,853
Operating lease liabilities – current portion		347,541			944,525
Total current liabilities		88,968,322			55,962,184

Other liabilities:
Operating lease liabilities – net of current portion		-			3,356,232
Total liabilities	$	88,968,322		$	59,318,416
Stockholders’ equity:
Common stock, par value $0.0001 per share; 140,000,000 shares authorized; 50,000,000 and 54,222,420 shares issued and outstanding as of June 30, 2022 and June 30, 2023		5,000			5,422
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized, no shares issued at June 30, 2022 and 2023		-			-
Additional paid-in capital		-			25,685,475
Accumulated other comprehensive loss		(184,664	)		(163,768	)
Retained earnings		11,946,407			5,847,804
Total stockholders’ equity		11,766,743			31,374,933
Total liabilities and stockholders’ equity	$	100,735,065		$	90,693,349

ISPIRE TECHNOLOGY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	Years ended June 30,
	2022			2023
Revenue	$	88,095,418		$	115,605,536
Cost of revenue		74,789,378			94,529,769
Gross profit		13,306,040			21,075,767
Operating expenses:
Sales and marketing expenses		5,503,630			4,714,923
General and administrative expenses		8,791,081			20,929,978
Total operating expenses		14,294,711			25,644,901
Loss from operations		(988,671	)		(4,569,134	)
Other income (expense):
Interest income		5,078			195,209
Exchange gain(loss), net		58,143			(324,225	)
Other income(expense), net		122,394			(155,150	)
Total other income(expense), net		185,615			(284,166	)
Loss before income taxes		(803,056	)		(4,853,300	)
Income taxes - current		(1,071,097	)		(1,245,303	)
Net loss	$	(1,874,153	)	$	(6,098,603	)
Other comprehensive loss
Foreign currency translation adjustments		(117,085	)		20,896
Comprehensive loss		(1,991,238	)		(6,077,707	)
Net loss per share
Basic and diluted	$	(0.04	)	$	(0.12	)
Weighted average shares outstanding:
Basic and diluted		50,000,000			50,725,814

ISPIRE TECHNOLOGY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years ended June 30,
	2022			2023
Cash flows from operating activities:
Net loss:	$	(1,874,153	)	$	(6,098,603	)
Adjustments to reconcile net loss from operations to net cash provided by operating activities:
Depreciation and amortization		10,402			46,662
Depreciation of right-of-use assets		135,141			1,061,442
Accounts receivable impairment		-			3,332,825
Changes in operating assets and liabilities:
Accounts receivable		(3,950,508	)		(19,579,339	)
Inventories		(11,525,561	)		7,108,449
Prepaid expenses and other current assets		29,007			(3,088,466	)
Accounts payable		8,875,590			10,574,989
Contract liabilities		543,890			(690,637	)
Accrued liabilities and other payables		(282,487	)		168,179
Income tax payable		481,113			(417,260	)
Net cash used in operating activities	$	(7,557,566	)	$	(7,581,759	)

Cash flows from investing activities:
Purchase of property, plant and equipment		(121,516	)		(1,020,768	)
Purchase of short term investment		-			(9,133,707	)
Net cash used in investing activities	$	(121,516	)	$	(10,154,475	)

Cash flows from financing activities:
Net proceeds from initial public offering		-			21,735,000
Payment of initial public offering costs		-			(3,475,171	)
Proceeds from private placement		-			7,969,221
Payment of private placement costs		-			(543,153	)
Payment of dividends of subsidiary		(469,633	)		(3,362,639	)
Repayment to related parties		(2,498,689	)		(37,893,063	)
Principal portion of lease payment		(120,942	)		(874,039	)
Net cash used in financing activities	$	(3,089,264	)	$	(16,443,844	)

Net decrease in cash and cash equivalents		(10,768,346	)		(34,180,078	)
Cash and cash equivalents – beginning of year		85,248,997			74,480,651
Cash and cash equivalents – end of year	$	74,480,651		$	40,300,573

Supplemental disclosure of cash flow information:
Cash (refund) paid for income taxes	$	(69,647	)	$	1,663,240
Cash paid for interest	$	-		$	-

Cover	Sep. 18, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Sep. 18, 2023
Entity File Number	001-41680
Entity Registrant Name	Ispire Technology Inc.
Entity Central Index Key	0001948455
Entity Tax Identification Number	84-5106049
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	19700 Magellan Drive
Entity Address, City or Town	Los Angeles
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90502
City Area Code	310
Local Phone Number	742-9975
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	ISPR
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false