Ispire Technology Inc. operates in the global vaping hardware industry, engaged in the research and development, design, commercialization, sales, marketing and distribution of branded and non-branded vaping hardware products in both the nicotine and cannabis spaces, as well as the assembly of nicotine pouch products and other next-generation nicotine products. The worldwide market for e-cigarette products is highly competitive, with more than 50 companies selling products which compete with our products, and by far the largest worldwide producer of tobacco vapor products is Smoore International Holdings Limited. The market for cannabis vapor products is a developing market and at present is mainly limited to the United States, although there is a developing market in Canada, and we believe that a market is developing in Europe. The industry is subject to evolving regulations, with the FDA regulating e-liquids, e-cigarettes, and other vaping products as tobacco products, and the European Commission's Tobacco Products Directive regulating e-cigarettes on five main aspects. The vaping market has seen a change in consumer preference as closed systems are overtaking open systems in market share.

The company's competitive positioning is built on its proprietary technologies, including the patented DuCore™ (Dual Coil) technology for cannabis vaporizers, the BDC (bottom dual coil) coil technology, the BVC (bottom vertical coil) coil technology, and the Cleito tank design. The company believes its dual-coil technology enhances flavor performance and that its BVC coil represents a significant technological breakthrough. The company also holds or licenses more than 200 patents relating to various aspects of its operations, with the earliest patents filed in 2012 and the last patents set to expire in 2045. The company's chief executive officer, Tuanfang Liu, has received more than 200 patents in China, the United States, the European Union and other countries. The company competes with other major producers such as JUUL Labs, Inc. and British American Tobacco Plc, which are better known and have greater resources. The company's cannabis products compete based on technology and the ability to work with customers to develop a product they can successfully market.

The company generates revenue through the sale of branded and non-branded vaping hardware products, with a mix of branded sales and OEM/ODM business. For e-cigarette products, the company sells primarily through a global network of more than 100 distributors, with most revenue coming from sales to distributors. For cannabis products, the company sells primarily on an ODM basis to other cannabis vapor companies, including multi and single-state operators, brand owners and co-packers. The company also generates revenue from OEM and ODM sales of e-cigarette products, which accounted for approximately $36.4 million and $35.6 million, or 40.2% and 44.5%, of total revenue of e-cigarette products in the years ended June 30, 2025 and 2026, respectively. The company's hardware products are sold by customers under their own brand names, and the company does not touch the cannabis plant in the production and sale of its hardware products.

The company's e-cigarette products include both open system and closed system vaping devices. Open system devices, sold under brands including Nautilus and Zestquest, allow end consumers to refill tanks with their own liquid. Closed system devices, which include rechargeable and disposable vaping devices, consist of cartridges and batteries, and the company markets a line of closed systems through its licensed brands under the brand name BRKFST. The company's vaping components include cartridges, lithium batteries, metal parts such as coils, plastic parts, circuit boards and liquid cartridges. The company's cannabis products, introduced in December 2020 under the Ispire line, use the patented DuCore™ technology and are designed for customers to fill with their own cannabis or hemp oil. In June 2023, the company introduced its proprietary Ispire ONE™ technology, designed to eliminate capping issues, increase consistency and quality, eliminate leaking, spitting, or overheating, and improve consumer safety. The company has recently begun development and early commercialization efforts of its new patented G-Mesh technology, marketed under a Silica Series trademark, which uses a 1-millimeter-thick sheet of porous glass.

During the fiscal year, the company made significant operational developments. In October 2024, the company established a wholly-owned subsidiary, Magellan Trading LLC, to assist in operations and logistics. In January 2025, the company established Ispire Products UK LTD, which was dissolved in October 2025. In May 2025, the company established Ispire Holdings LLC, and in June 2025, Ispire Ike Holdings LLC. On March 17, 2026, Ispire Malaysia received full and final licensure from the Ministry of Investment, Trade and Industry of Malaysia to manufacture nicotine vapor products, replacing its interim license issued in May 2025. The company is currently operating with 6 production lines at the Malaysia factory and plans to add up to 70 new lines at a second factory located nearby, with expansion expected over the next 12 months. The company's IKE joint venture submitted a PMTA application for its age-gating system as a component PMTA in April 2025, which the FDA accepted in May 2025. On May 5, 2026, the FDA authorized the marketing of four Glas ENDS product PMTAs, which contained a point-of-use age-gating system DAR, marking the FDA's first authorization of non-tobacco and non-menthol ENDS products.

The company's financial performance for the fiscal year ended June 30, 2026 showed a decline in revenue and an improvement in net loss. Total revenue was $96.015 million for the year ended June 30, 2026, compared to $127.494 million for the year ended June 30, 2025. Gross profit was $12.298 million in 2026, down from $22.649 million in 2025, with gross margin declining to 12.8% from 17.8%. The company reported a net loss of $33.204 million for 2026, compared to a net loss of $39.241 million for 2025. Net loss per share (basic and diluted) was $0.58 for 2026, compared to $0.69 for 2025. The company sustained losses primarily because of increased operating expenses for both periods. The company's allowance for credit losses was $26.1 million as of June 30, 2026, compared to $18.0 million as of June 30, 2025.

The company is evaluating the submission of several premarket tobacco product applications (PMTAs) for a pod-based e-cigarette system with a variety of flavors, which includes the IKE point-of-use age-gating technology, over the next 6 to 12 months. The company believes that, when equipped with IKE's age-gating technology, there is a path to getting approval for ENDS products with characterizing flavors other than tobacco and menthol, as they will have strong technological barriers to prevent youth usage. The FDA's May 5, 2026 authorization of the Glas ENDS product PMTAs, which contained a point-of-use age-gating system DAR, shows a clear pathway between age-gating technology and the ability to receive PMTA authorization for ENDS products with characterizing flavors. The company is also evaluating plans, including costs, timelines and products, to submit several PMTA applications for ENDS devices with characterizing flavors when it receives positive news from, or approval of, the IKE age-gating technology from the FDA.

The company plans to increase sales of its e-cigarette vaporizer technology and nicotine pouch products by increasing the number of distributors and regions where its products are sold. The company plans to increase sales of its cannabis products by increasing sales to existing customers, increasing its customer base in the United States and seeking to penetrate the Canadian and European markets as they develop. The company closely follows the legalization of cannabis globally and plans to enter markets when opportunities arise. The company is expanding its cannabis and e-cigarette OEM and ODM business, believing that OEM and ODM for e-cigarette products will represent a key growth area for the future. The company is also actively pursuing various technological innovations to prevent youth usage of e-cigarettes, including work on age-gated e-cigarettes with characterizing flavors in the U.S. using the IKE age-gating technology, as well as pod systems in the UK and European markets which will have age-gating functionality.

The company's margin and cost outlook is influenced by its manufacturing operations and supply chain. The company is currently operating with 6 production lines at its Malaysia factory and plans to continue expanding production capabilities, including adding up to 70 new lines at a second factory. The company's gross margin declined to 12.8% in fiscal 2026 from 17.8% in fiscal 2025. The company's cost of revenue was $83.717 million in 2026, compared to $104.845 million in 2025. The company's operating expenses were $44.891 million in 2026, compared to $60.499 million in 2025. The company's ability to manage manufacturing costs, capacity and demand planning issues, workforce and labor pricing, and local labor laws could negatively impact the costs of production and thus its gross margins.

The company's operational outlook includes the continued operation and expansion of its manufacturing facility in Malaysia. The facility is operational, with current manufacturing operations focused on the assembly of components purchased from other companies. The company received full and final licensure from the Ministry of Investment, Trade and Industry of Malaysia on March 17, 2026, to manufacture nicotine vapor products. The company plans to add up to 70 new lines at a second factory located nearby its first Malaysian operating facility, with expansion expected over the next 12 months. The company is also leasing approximately 162,320 square feet for its manufacturing facility in Malaysia. The company's headquarters are located at 19700 Magellan Dr, Los Angeles, CA 90502, and it leases an aggregate of approximately 201,270 square feet of real property.

The company's capital allocation strategy includes research and development, capital expenditures, and share repurchases. The company's research and development efforts are headed by its chairman, Tuanfang Liu, and have eleven members primarily based in Los Angeles. The company has not declared or paid any cash dividends on its capital stock and does not anticipate paying cash dividends in the foreseeable future, intending to retain all available funds and any future earnings to support operations and finance growth. The company's board of directors approved a share repurchase program on January 20, 2025, authorizing the repurchase of up to $10 million of the company's common stock over a 24-month period. As of June 30, 2026, the company had approximately $9,894,511 remaining available for repurchase under the program.

The company faces headwinds from regulatory changes and market dynamics. The recent implementation of regulations relating to e-cigarettes has resulted in the company's decision not to market nicotine products in the United States until it secures PMTA approvals on its ENDS devices. In June 2025, disposable (closed-system) e-cigarette products were banned in the United Kingdom, which caused the discontinuation of certain product lines and contributed to slightly lower sales in 2026 compared to 2025. The company's primary sales in the UK are currently open-system, non-disposable products. The company also faces headwinds from tariffs, with the U.S. tariff rate on all goods imported from China at 35% and the tariff rate on all goods imported from Malaysia at 19% as of the date of the Annual Report. These tariffs have had and will continue to have an adverse effect on the company's results of operations and profit margins.

The company faces execution risks related to its manufacturing operations and supply chain. The company purchases a majority of its current e-cigarette and cannabis vaping products from Shenzhen Yi Jia, a related party, and there is a risk in relying on any third-party supplier. The company is devoting efforts to establishing its own production facilities with no assurance that it can successfully operate its new and to-be developed manufacturing facilities. The company may encounter unexpected timing issues or operational and regulatory challenges which could impact its ability to be fully operational on its expected time schedule. The company's joint ventures, IKE and Jin Wu, are currently pre-revenue, and the value of the IKE investment depends in part on FDA acceptance of its age-gating PMTA, which is not assured.

Management's message emphasizes a commitment to delivering superior products that challenge industry norms, with risk reduction central to the mission and a focus on improving the lives of consumers through cutting-edge research and development. The company's technology platforms look to reduce youth access to vaping products, which in turn will facilitate the ability to provide adult consumers with the products they desire. Management highlights the company's multi-prong growth strategy directed at increasing sales of e-cigarette and cannabis vaporizer technology products, including increasing the number of distributors and regions, increasing sales to existing customers, and seeking to penetrate Canadian and European markets as they develop. Research and development is at the core of the business, and management plans to continue to innovate via its own research and development efforts. Management also emphasizes the importance of the IKE joint venture, which is a global leader in point-of-use age-gating technology for electronic nicotine delivery systems, and the company is pursuing various product launches using the IKE age-gating technology. The company is evaluating the submission of several PMTAs for a pod-based e-cigarette system with a variety of flavors, which includes the IKE point-of-use age-gating technology, over the next 6 to 12 months.

Total revenue for the fiscal year ended June 30, 2026 was $96.015 million , compared to $127.494 million for the fiscal year ended June 30, 2025. Net loss was $33.204 million for 2026, compared to a net loss of $39.241 million for 2025. Net loss per share (basic and diluted) was $0.58 for 2026, compared to $0.69 for 2025. Gross profit was $12.298 million ⁷ in 2026, down from $22.649 million ⁸ in 2025, with gross margin declining to 12.8% ⁹ from 17.8% ¹⁰. Loss from operations was $32.593 million ¹¹ in 2026, compared to $37.850 million ¹² in 2025. The company's allowance for credit losses was $26.1 million ¹³ as of June 30, 2026, compared to $18.0 million ¹⁴ as of June 30, 2025. The company had an aggregate of $8,611,823 ¹⁵ invested in advances to IKE as of June 30, 2026. The company's revenue by region for the year ended June 30, 2026 was Europe $61.430 million ¹⁶, North America $15.128 million ¹⁷, Asia Pacific (excluding PRC) $10.919 million ¹⁸, and Others $8.538 million ¹⁹. For the year ended June 30, 2025, revenue by region was Europe $74.107 million ²⁰, North America $32.568 million ²¹, Asia Pacific (excluding PRC) $12.274 million ²², and Others $8.545 million ²³. The company's largest distributor accounted for revenue of approximately $26.2 million ²⁴, or 27.3% ²⁵ of revenue for the year ended June 30, 2026, and approximately $32.7 million ²⁶, or 25.7% ²⁷ of revenue for the year ended June 30, 2025. The second largest distributor accounted for revenue of approximately $24.4 million ²⁸, or 25.5% ²⁹ of revenue for 2026, and approximately $17.5 million ³⁰, or 13.7% ³¹ of revenue for 2025. Sales returns for the years ended June 30, 2025 and 2026 were $2,551,966 ³² and $3,778,854 ³³, respectively.

The company's business is subject to significant regulatory risk, particularly in the United States, where the company has decided not to market nicotine products until it secures PMTA approvals on its ENDS devices, and the PMTA process could potentially cost $1.0 million or more per application ¹. The company also faces concentration risk, with its largest distributor accounting for approximately 27.3% ² of revenue in fiscal 2026 and its second largest distributor accounting for approximately 25.5% ³ of revenue, and the loss of either could have a material adverse effect. The company's reliance on a related party supplier, Shenzhen Yi Jia, which is 95% owned by its chief executive officer, creates a conflict of interest, and any interruption of its operations could materially affect the business. The company has historically had negative cash flows, sustaining losses of approximately $33.2 million ⁴ for the year ended June 30, 2026, and may not achieve positive cash flows on its current timeline. The company's joint ventures, IKE and Jin Wu, are currently pre-revenue, and the value of the IKE investment depends in part on FDA acceptance of its age-gating PMTA, which is not assured. The company also faces tariff risk, with the U.S. tariff rate on all goods imported from China at 35% ⁵ and on goods imported from Malaysia at 19% ⁶, which could increase cost of revenue.