DEFA14A: iPower Inc. Seeks Shareholder Approval for Reverse Stock Split to Maintain Nasdaq Listing, Adds New Director

iPower Inc. has filed a proxy statement supplement for its upcoming Annual Meeting, adding a proposal for the election of a new director, Ms. Yi Yang, and seeking shareholder approval for a reverse stock split to ensure continued Nasdaq compliance.

Summary

• iPower Inc. (the Company) filed a definitive proxy statement supplement (DEFA14A) on June 10, 2025, for its 2025 Annual Meeting of Stockholders.
• The supplement adds Proposal No. 5 for the election of Ms. Yi Yang as an additional director to the board, effective June 6, 2025.
• The Annual Meeting is scheduled to be held virtually on June 23, 2025, at 10:00 a.m. (ET).
• Key proposals for the meeting include the election of four directors, ratification of Guangdong Prouden CPAs GP as independent accountants for the fiscal year ending June 30, 2025, and an advisory vote on executive compensation.
• A significant proposal is the approval of an amendment to the Company's Articles of Incorporation to effect a reverse stock split of common stock at a ratio between 1-for-2 and 1-for-200, at the board's discretion, to maintain Nasdaq compliance.
• Stockholders are urged to vote on all matters, including the newly added Proposal No. 5, with the Record Date for voting being May 16, 2025.
• The Company's board of directors consists of Chenlong Tan (Chairman, CEO, President, Director), Bennet Tchaikovsky (Independent Director, Audit Committee Chair), Hanxi Li (Independent Director, Compensation Committee Chair), Yue Guo (Independent Director, Nominating and Governance Committee Chair), and newly appointed Yi Yang (Director).

Sentiment

Score: 4

Explanation: While the addition of a new director and a new joint venture are positive governance and strategic moves, the primary driver for this proxy supplement is the proposal for a reverse stock split, which is a strong negative signal indicating the company's struggle to maintain its Nasdaq listing due to a low share price. The numerous related party transactions also warrant scrutiny.

Positives

• The appointment of Ms. Yi Yang to the board brings extensive experience in packaging, wholesale, and logistics, which is directly relevant to the Company's new joint venture in domestic packaging production.
• The recent appointment of Ms. Yue Guo (May 8, 2025) adds significant expertise in technology and developer marketing, enhancing the board's capabilities.
• The Company maintains a robust corporate governance framework, including independent Audit, Compensation, and Nominating & Governance Committees, along with a Code of Business Conduct and Ethics, Insider Trading Policy, and an Incentive-Based Compensation Recovery (Clawback) Policy.
• The board believes that the combined role of Mr. Chenlong Tan as Chief Executive Officer and Chairman is in the best interest of the Company and its stockholders, ensuring decisive leadership and clear accountability.
• The formation of United Package NV, LLC, a joint venture focused on domestic production of packaging materials, represents a strategic initiative to address growing U.S. demand and reduce reliance on offshore manufacturing.

Negatives

• The proposal for a reverse stock split, with a wide ratio range of 1-for-2 to 1-for-200, indicates that the Company's stock price is currently below Nasdaq's minimum bid price requirement, signaling potential delisting risk and reflecting negatively on market perception and past performance.
• The Compensation Committee and Nominating and Governance Committee held no meetings and took no actions by written consent during the fiscal year ended June 30, 2024, which could suggest a lack of active oversight in these critical governance areas.

Risks

• Risk of delisting from Nasdaq if the Company fails to maintain compliance with listing standards, necessitating a reverse stock split.
• Potential for negative market perception and further stock price decline following the announcement or implementation of a reverse stock split.
• Risks associated with related party transactions, including loans from significant shareholders and business dealings with entities owned by the CEO and a new director, which could raise conflict of interest concerns.
• Operational and financial risks associated with the new joint venture, United Package NV, LLC, including market acceptance, production efficiency, and competition in the domestic packaging industry.

Future Outlook

The Company plans to potentially implement a reverse stock split at a ratio between 1-for-2 and 1-for-200, at the board's discretion, to maintain its Nasdaq listing. Additionally, the newly formed joint venture, United Package NV, LLC, is set to focus on domestic production of packaging materials to meet growing U.S. business demands for reliable, sustainable, and cost-effective supply chain solutions.

Management Comments

• "Your vote is important to us and we encourage you to cast your vote on all matters described in this Amendment to the Proxy Statement. We are thankful to our stockholders and encourage everyone to vote on this additional matter." Chenlong Tan, Chief Executive Officer.
• "The board of directors believes that Mr. Tans services as both Chief Executive Officer and Chairman of the board of directors is in the best interest of the Company and its stockholders." Board of Directors.
• "The independent directors can call and plan their executive sessions collaboratively and, between meetings of the board of directors, communicate with management and one another directly. Under these circumstances, the directors believe designating a lead director to take on responsibility for functions in which they all currently participate might detract from rather than enhance performance of their responsibilities as directors." Board of Directors.

Industry Context

The Company's proposal for a reverse stock split highlights the ongoing challenge for smaller public companies to maintain compliance with exchange listing standards, particularly minimum bid price requirements, in volatile market conditions. The formation of United Package NV, LLC, a joint venture focused on domestic packaging production, aligns with broader industry trends towards supply chain localization and resilience, driven by geopolitical factors and a desire for greater control over manufacturing processes and costs, reducing reliance on offshore production.

Management Changes

Corporate Governance

Legal Proceedings

• A $1.3 million settlement with Boustead Securities, LLC related to the Company's initial public offering was satisfied on June 18, 2024, by Mr. Chenlong Tan and Mr. Allan Huang returning 541,667 shares to the Company's treasury.
• To the Company's knowledge, during the past ten years, none of its directors, executive officers, promoters, control persons, or nominees have been involved in significant bankruptcy petitions, criminal proceedings, or certain civil/regulatory actions.

Related Party Transactions

• On June 18, 2024, Chenlong Tan (CEO) and Allan Huang (co-founder, majority stockholder) returned 541,667 shares to the Company's treasury to reimburse a $1.3 million settlement with Boustead Securities, LLC.
• The Company subleased 50,000 square feet of warehouse space to Box Harmony, LLC (a 40% owned joint venture) from March 1, 2022, until January 1, 2023, generating sublease fees of $359,373 in FY2023 and $330,000 in FY2022.
• The Company assumed $92,246 of advance payments from shareholders of Daheshou (Shenzhen) Information Technology Co., Ltd. (DHS) on February 15, 2022, as a result of the Anivia Limited acquisition; the balance was $0 as of June 30, 2024.
• The Company borrowed $2,000,000 from White Cherry Limited (a >5% beneficial owner and former owner of a subsidiary) on July 16, 2023, under an on-demand, unsecured, and subordinated loan agreement, which was fully repaid by January 31, 2024, incurring $32,911 in interest for FY2024.
• During FY2024, the Company sold $95,376 worth of products through MII Strategy Inc., a company owned by CEO Chenlong Tan, with $56,406 due from MII as of June 30, 2024.
• On April 1, 2024, the Company borrowed a $350,000 short-term, interest-free loan from an entity owned by Allan Huang (majority stockholder), with the full balance outstanding as of June 30, 2024.
• On June 3, 2025, the Company entered into a Limited Liability Company Operating Agreement for United Package NV, LLC (a joint venture) with Custom Cup Factory, Inc. (CCF) and Ms. Yi Yang (new director); Ms. Yang is the Founder and CEO of CCF.
• Ms. Yi Yang's entity, Pacelor Inc., manages a warehouse for the Company and receives a monthly service fee of approximately $240,000.

Stakeholder Impact

• Shareholders: Will be directly impacted by the outcome of the reverse stock split vote, which could affect share price and Nasdaq listing status. Their voting participation is crucial for these significant corporate actions.
• Employees: No direct impact mentioned, but corporate governance policies and the overall financial health of the company, influenced by the reverse stock split and new ventures, indirectly affect job security and opportunities.
• Customers: The new joint venture in domestic packaging production aims to provide more reliable, sustainable, and cost-effective supply chain solutions, potentially benefiting U.S. business customers.
• Creditors: The repayment of the White Cherry loan and the outstanding loan from Allan Huang's entity are relevant to the Company's debt profile and ability to manage its obligations.

Next Steps

• Stockholders are encouraged to vote on all proposals, including the election of Ms. Yi Yang and the reverse stock split, by the Annual Meeting on June 23, 2025.
• If approved, the board of directors will determine the exact ratio and timing for the implementation of the reverse stock split.
• The newly formed joint venture, United Package NV, LLC, will commence operations focusing on domestic production of packaging materials.

Key Dates

Recommendation

Keywords

iPower Inc., IPW, SEC filing, DEFA14A, proxy statement, annual meeting, reverse stock split, Nasdaq compliance, corporate governance, board of directors, director election, executive compensation, related party transactions, packaging materials, joint venture