10-K: iPower Reports Steep Losses, Nasdaq Delisting Risk Looms

iPower Inc. reported a significant increase in net loss and a substantial revenue decline for fiscal year 2025, alongside a Nasdaq delisting warning and internal control weaknesses.

Summary

• Total revenues for the fiscal year ended June 30, 2025, decreased by 23.15% to $66.1 million, down from $86.1 million in fiscal year 2024.
• Net loss attributable to iPower Inc. surged by 222.12% to $(4.97) million in fiscal year 2025, compared to $(1.53) million in fiscal year 2024.
• Loss from operations increased by 509.18% to $(5.87) million in fiscal year 2025, from $(0.96) million in the prior year.
• Cash and cash equivalents decreased by $5.37 million, from $7.38 million at June 30, 2024, to $2.01 million at June 30, 2025.
• Operating activities used $(579,187) in cash in fiscal year 2025, a significant reversal from $6.16 million provided in fiscal year 2024.
• The company was in default of its Asset-Based Revolving Loan (ABL) facility covenants as of June 30, 2025.
• iPower received a Nasdaq delisting warning for failing to maintain a minimum bid price of $1.00 per share and was granted an extension until December 29, 2025, to regain compliance.
• Management identified material weaknesses in internal control over financial reporting, specifically related to the financial statements closing process.
• The company reduced its total debt by 41% to $3.7 million as of June 30, 2025, from $6.3 million in the prior year.
• A near-complete shift from a China import-based supply chain to a predominantly U.S.-based inventory model was achieved, aiming to reduce exposure to tariff and freight risks.
• A domestic joint-venture manufacturing line, United Package NV LLC, was launched for packaging materials, with iPower owning approximately 44% equity interest.
• The contractual relationship with Daheshou (Shenzhen) Information Technology Co., Ltd. (DHS), a China-based variable interest entity, was terminated on August 4, 2025, to streamline operations.

Sentiment

Score: 2

Explanation: The company's financial performance for fiscal year 2025 shows significant deterioration with substantial increases in net loss and operating loss, coupled with a sharp decline in revenue and cash. The Nasdaq delisting warning, ABL covenant default, and identified material weaknesses in internal controls indicate severe operational and financial challenges. While strategic shifts are underway, their positive impact is not yet reflected in the financials, and the Digital Treasury Strategy introduces additional, untested risks. This points to a highly negative immediate outlook.

Positives

• Total debt was reduced by 41% to $3.7 million as of June 30, 2025, strengthening liquidity and balance-sheet flexibility.
• Gross margin remained relatively stable at 43.84% in fiscal year 2025, despite revenue pressures, demonstrating resilient unit economics.
• Executed targeted inventory optimization, leading to improved working-capital efficiency and supporting future margin expansion opportunities.
• Achieved a near-complete transition from a China import-based supply chain to primarily U.S.-based inventory, materially reducing exposure to tariff and freight policy changes.
• Launched a domestic joint-venture manufacturing line through United Package NV LLC to further localize production and enhance cost control.
• Expanded the SuperSuite supply-chain platform and added new brand partnerships, including TCL, to diversify the product mix.
• Other expenses decreased by 55.87% to $366,273, mainly due to lower non-operating losses and reduced interest expense on the revolving loan.

Negatives

• Total revenues decreased by 23.15% to $66.1 million in fiscal year 2025, primarily due to decreased sales volume from fewer promotions and significant reduction in Amazon orders due to tariff uncertainty.
• Net loss attributable to iPower Inc. increased by 222.12% to $(4.97) million in fiscal year 2025.
• Loss from operations increased by 509.18% to $(5.87) million in fiscal year 2025.
• Cash and cash equivalents decreased by $5.37 million to $2.01 million at June 30, 2025.
• Net cash used in operating activities was $(579,187) in fiscal year 2025, a significant decline from cash provided by operating activities of $6.16 million in fiscal year 2024.
• The company was in default as a result of covenant violations under its ABL facility as of June 30, 2025.
• Received a Nasdaq delisting warning for failing to maintain the minimum bid price requirement of $1.00 per share.
• Identified material weaknesses in internal control over financial reporting related to the financial statements closing process.
• Working capital decreased from $11.2 million in 2024 to $4.9 million in 2025.
• Allowance for credit losses on accounts receivable significantly increased to $1.92 million in 2025 from $0.36 million in 2024.

Risks

• Reliance on proprietary and third-party brand offerings exposes the company to risks related to intellectual property protection, product recalls, marketing investments, and potential claims.
• Intense competition from national and regional vendors, in-house brands, and new market entrants could reduce market share and profit margins.
• Inability to successfully develop new products or improve existing ones, or to effectively reach consumers through evolving communication vehicles, could adversely affect market share.
• The availability and cost of transportation, including freight costs, are vital to success, and disruptions or increases could unfavorably impact business and financial results.
• Ongoing conflicts (e.g., Russia-Ukraine, Middle East) may cause supply chain disruptions, increase commodity prices, and heighten cybersecurity risks.
• Epidemics or pandemics (e.g., COVID-19) and mitigation efforts could adversely affect business, liquidity, operations, and financial condition.
• The company has a limited operating history and its new Digital Treasury Strategy is unproven, making business prospects difficult to predict.
• Almost all sales occur through third-party platforms (Amazon, Temu, Walmart, eBay); any disruption or unfavorable ranking on these platforms could substantially disrupt business.
• Poor economic conditions, heightened inflation, increased interest rates, potential recession, and credit market disruptions could negatively impact customer demand and financing costs.
• Deterioration of U.S.-China trade relations, ongoing trade wars, and increased tariffs could disrupt the supply chain and increase costs, as approximately 96% of products are sourced from China.
• The Chinese government could exercise significant oversight and discretion over the business and operations of China-based subsidiaries, potentially intervening at any time.
• Need for additional capital to fund expansion may not be available on favorable terms, limiting growth prospects.
• Dependence on the continuing efforts of executive officers, particularly Chenlong Tan, means loss of their services could severely disrupt business.
• Difficulty attracting and retaining highly qualified personnel could hinder the successful implementation of business strategy.
• Challenges in managing organizational growth as the company expands its sales and marketing infrastructure.
• Products may be purchased for use in the cannabis industry, which is subject to varying, inconsistent, and rapidly changing laws, regulations, and public perceptions, potentially reducing demand.
• Continued federal intervention in certain segments of the cannabis industry may negatively impact the company.
• Acquisitions, strategic alliances, and investments could result in operating difficulties, dilution, unanticipated liabilities, and other harmful consequences.
• Ongoing investment in and development of new in-house branded product lines is inherently risky and could disrupt existing businesses.
• Inability to effectively execute the e-commerce business could harm reputation and operating results.
• Substantial reliance on Amazon for sales (82% of total revenues in FY2025) means any negative actions by Amazon could significantly affect sales.
• Reliance on third-party manufacturers and a limited base of suppliers for certain products could lead to production delays, interruptions, inferior quality, or supply chain disruptions.
• Significant interruption in the operation of company or supplier facilities could impact capacity, revenues, and earnings.
• Inability of suppliers to source raw materials in sufficient quantities, on a timely basis, and at acceptable costs could harm product sales.
• Disruptions in availability or increases in prices of raw materials sourced by suppliers could adversely affect results of operations.
• Suppliers selling directly to the retail market could cease or decrease sales through the company, harming product offerings and business.
• Information technology system failures, data breaches, or cyber-attacks could impair operations, lead to loss of proprietary information, and result in legal proceedings.
• Collection, processing, storage, use, and sharing of customer information subjects the company to legislative and regulatory burdens, potential liability, and reputational harm.
• Inability to adequately protect intellectual property and other proprietary rights material to the business.
• Failure to develop, license, or acquire new products, enhance existing products, or manage transitions to new offerings could materially adversely affect business.
• Identified material weaknesses in internal control over financial reporting may lead to inaccurate financial reporting and adversely affect investor confidence.
• Changes in U.S. and international trade policies, particularly with China, could materially and adversely impact business and results of operations.
• Adoption of a digital treasury strategy, if effectuated, would expose the company to risks associated with highly volatile cryptocurrency assets, lack of interest/dividends, impact on financial results, funding via equity/debt, counterparty risks, and accounting treatment changes.
• Litigation and product liability lawsuits could result in substantial liabilities, costs, diversion of resources, and damage to reputation.
• Inability to obtain insurance coverage adequate to cover all significant risk exposures.
• Unanticipated changes in tax provisions, new tax legislation, or exposure to additional tax liabilities could affect profitability and cash flows.
• Seasonality of certain products results in fluctuations in cash flow, inventory, and accounts payable.
• Inability to accurately forecast customer demand and manage inventory could materially harm results of operations.
• Failure of third parties to meet contractual, regulatory, and other obligations could adversely affect business.
• Estimates of total addressable markets for current and future products may be smaller than anticipated, impairing sales growth.
• Failure to comply with Nasdaq's continued listing requirements (e.g., minimum bid price) could result in delisting, adversely affecting market price and liquidity.
• Founders, officers, and directors collectively own approximately 51% of outstanding common stock, potentially controlling matters requiring stockholder approval.
• Future sales of common stock in the public market, including from the Registered Direct Offering, could cause the market price to decline.
• Stock market volatility is an inherent risk in owning common stock.
• No intention to pay dividends for the foreseeable future, making investment return dependent on stock price appreciation.
• Requirement for additional capital to support business growth may not be available on acceptable terms, leading to dilution or increased debt.
• Increased costs and management time associated with maintaining SEC and Nasdaq reporting requirements as a public company.
• Stockholders will experience further dilution if additional equity or equity-linked securities are issued in the future.
• If securities or industry analysts do not publish research or adversely change recommendations, market price and trading volume could decline.
• The market price of common stock may be volatile.
• In the event of liquidation or dissolution, stockholders may not recoup all or any portion of their investment.

Future Outlook

Management plans to increase investments in product and brand development, actively evaluate potential acquisition opportunities, and expand the SuperSuite partner network. The company intends to continue building out its domestic manufacturing infrastructure to enhance supply chain agility and support long-term scalability. A Digital Treasury Strategy, involving holding various cryptocurrency assets, is planned but not yet effectuated, with its success and long-term continuation uncertain. The company believes its existing cash and cash equivalents and cash flows from operations will be sufficient for the next 12 months, with anticipated improvements as supply chain operations normalize and new suppliers transition to more favorable credit terms.

Management Comments

• "Fiscal 2025 was a pivotal year for iPower as we realigned our operations to support long-term growth and profitability."
• "Amid challenging tariff-related disruptions in 2025, we maintained stable gross margins, significantly reduced debt, and took decisive actions to streamline operations and optimize inventory."
• "A key achievement was our near-complete shift from a China import-based supply chain to a predominantly U.S.-based inventory model, which enhances logistical control and mitigates future exposure to tariff and freight policy risks."
• "In parallel, we launched a domestic joint-venture manufacturing line to anchor our U.S. supply chain strategy and support future margin stability."
• "While this transition required difficult decisions—including exiting certain partnerships that no longer met our profitability thresholds—our disciplined execution preserved the balance sheet and positioned us to build a more resilient operational foundation."
• "Looking ahead, we have a leaner inventory position, reduced debt, and positive operational momentum, including new partnerships with leading brands like TCL."
• "We intend to further expand our SuperSuite partner network and continue building out our domestic manufacturing infrastructure to enhance supply chain agility and support long-term scalability."
• "These efforts reflect our ongoing focus on operational optimization, diversification, and creating long-term value for our stakeholders."

Industry Context

iPower operates in the highly competitive and fragmented consumer goods retail and distribution industry, specifically in home, pet, hydroponics, gardening, outdoor, and consumer electronics. The company's strategy to localize its supply chain and expand domestic manufacturing aligns with broader industry trends seeking resilience against geopolitical risks and supply chain disruptions, particularly given past U.S.-China trade tensions and tariff impacts. The expansion of its SuperSuite platform and new brand partnerships like TCL indicate a move towards diversification and leveraging e-commerce service capabilities in a rapidly evolving online retail landscape. The company's indirect involvement in the cannabis industry, through hydroponic product sales, places it within an emerging market segment subject to inconsistent and changing regulations, which could impact demand.

Comparison to Industry Standards

• The company's heavy reliance on Amazon (82% of total revenues) is a common characteristic for many e-commerce focused retailers, but also exposes it to significant platform-specific risks, similar to other third-party marketplace sellers.
• The shift from a China-centric supply chain to a U.S.-based inventory model, including a domestic joint venture for packaging materials (United Package NV LLC), is a strategic move to de-risk and improve cost control, a trend observed across various industries seeking supply chain resilience post-pandemic and amidst trade tensions.
• The company's gross margin of 43.84% is relatively stable, suggesting effective pricing or cost management within its product categories, which include both proprietary and third-party brands, potentially comparable to other specialized online retailers in home and garden sectors.
• The significant increase in net loss and negative cash flow from operations contrasts sharply with growth or profitability benchmarks typically expected in a healthy retail sector, indicating company-specific operational challenges rather than broad industry downturns, although general economic conditions are cited as a factor.

Management Changes

Corporate Governance

Legal Proceedings

• The dispute with Boustead Securities, LLC, regarding the company's initial public offering, was settled for $1.3 million. The settlement amount has been fully paid off, and all complaints have been formally withdrawn with prejudice as of the date of this report.
• No other material legal proceedings, investigations, or claims are currently pending or threatened against the company that are believed to have a material adverse effect on its business, financial condition, or operating results.

Related Party Transactions

• The $350,000 short-term loan (RP Loan) from an entity owned by Mr. Allan Huang (majority shareholder) was fully paid off as of June 30, 2025.
• The total amount due from MII Strategy Inc., a company owned by CEO Mr. Chenlong Tan, was $0 as of June 30, 2025 (down from $56,406 in 2024).
• The $2,000,000 on-demand loan from White Cherry Limited (former owner of DHS) was fully paid off as of June 30, 2025.
• Ms. Yi Yang's entity, Pacelor Inc., provides warehouse and fulfillment services to the company, with $202,922 in service fees received after June 6, 2025, and $78,831 in accounts payable as of June 30, 2025.
• Ms. Yi Yang's other entity, Pacelor NV Inc., provides marketing services for the company, with $315,019 in outstanding accounts payable as of June 30, 2025.

Stakeholder Impact

• **Shareholders:** Will experience significant dilution if additional equity is issued to fund growth or the Digital Treasury Strategy. The Nasdaq delisting warning and substantial financial losses pose a direct threat to stock value and liquidity. Founders, officers, and directors maintain significant control over the company.
• **Employees:** The company plans to expand its employee base for managerial, operational, sales, marketing, financial, human resources, and other areas, indicating potential job growth. However, the lack of health care or retirement benefits compared to competitors could impact retention.
• **Customers:** The shift to a U.S.-based inventory model and domestic manufacturing aims to enhance logistical control and potentially improve product availability and cost stability. Expansion of product catalog and SuperSuite platform could offer more diverse offerings.
• **Suppliers:** The company's efforts in supply chain management and diversification, including reducing reliance on a limited base of suppliers, could impact existing supplier relationships. The termination of the DHS VIE structure streamlines procurement.
• **Creditors:** The company was in default of its ABL facility covenants as of June 30, 2025, which could raise concerns for creditors, although the debt was reduced and the ABL maturity extended. The increase in allowance for credit losses suggests potential challenges in customer payments.

Next Steps

• Monitor the closing bid price of common stock and consider available options, including a reverse stock split, to regain compliance with Nasdaq's minimum bid price requirement by December 29, 2025.
• Implement remediation plans to address identified material weaknesses in internal control over financial reporting, including hiring additional accountants and consultants.
• Increase investments in product and brand development.
• Actively evaluate potential acquisition opportunities of companies and product brand names.
• Further expand the SuperSuite partner network and continue building out domestic manufacturing infrastructure.
• Potentially launch the Digital Treasury Strategy, acquiring major digital currencies as a primary treasury reserve asset, though the timing and success are uncertain.

Key Dates

Recommendation

iPower Inc.'s fiscal year 2025 results are deeply concerning, marked by a 23.15% revenue decline, a 222.12% increase in net loss, and a 509.18% surge in operating loss. Cash and cash equivalents have plummeted, and operating activities are now a cash drain. The company is in default of its ABL covenants and faces a Nasdaq delisting warning, indicating severe financial distress and governance issues. Furthermore, identified material weaknesses in internal controls raise questions about financial reporting reliability. While strategic shifts towards supply chain localization and new partnerships are noted, their positive impact is not yet evident in the financials, and the proposed Digital Treasury Strategy introduces significant, untested risks. Given the profound financial deterioration, regulatory non-compliance, and operational challenges, the stock presents a high-risk profile with a strong likelihood of further value erosion.

Keywords

e-commerce, online retail, hydroponics, gardening supplies, home goods, consumer electronics, supply chain, Nasdaq, 10-K, financial results, net loss, revenue decline, debt reduction, internal controls, delisting risk, digital treasury strategy, cryptocurrency, China trade, tariffs, joint venture, management changes