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., Sept. 18, 2023 /PRNewswire/ — 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 ONETM 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 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 of 2024 is projected at somewhere between $80 million and $90 million, representing growth between 100% and 125% from fiscal year 2023. Revenue for tobacco vaping products for the fiscal year 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 ONETM, Ispire ONETM‘s success if meeting its goals, the ability of its customers to derive the anticipated benefits of the Ispire ONETM and the success of their products on the markets; the Ispire ONETM 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 | $ | – | $ | – | ||||
