Ryan Allway May 16th, 2023 News, Top News Revenue Increased 26.9% to $24.1 Million; Gross Profit Increased 51.9% to $4.5 Million; Net Loss of... Ispire Technology Inc. Reports Financial Results for the Third Quarter 2023

Ryan Allway

May 16th, 2023

News, Top News


Revenue Increased 26.9% to $24.1 Million; Gross Profit Increased 51.9% to $4.5 Million; Net Loss of $3.3 Million for the Quarter, up from a $1.0 Million Net Loss in the Third Quarter 2022

Issues Fourth Quarter 2023 Outlook for Cannabis Vaping Products, Representing Growth of 58% to 98%

LOS ANGELES, May 16, 2023 (GLOBE NEWSWIRE) — Ispire Technology Inc. (NASDAQ: ISPR) (“Ispire” or the “Company”), a leader in vapor technology, providing high-quality, innovative products with first-class performance, today reported financial results for the third quarter of 2023, which ended on March 31, 2023, and filed its quarterly report on Form 10-Q on May 15, 2023. The Company’s fiscal year is the year ending on June 30, 2023.

“We are very pleased with our financial results during our third quarter. Revenue growth was a robust 26.9% while gross profit grew 51.9% due to a favorable product mix and the realization of economies of scale on higher sales volume. We look forward to a strong finish to the fiscal year with a projected sequential revenue increase for cannabis vaping products of between 58% and 98% during our fourth quarter,” said Michael Wang, CFO of Ispire.

He added, “As we begin our journey as a public company, we are focused on a multi-prong strategy directed at increasing sales of our e-cigarette vaporizer technology products and developing our cannabis vaporizer technology products with a focus on both medical and recreational usages. We firmly believe that Ispire offers the very best products in the marketplace and has rightfully earned an enviable reputation among its customers. We continue to seek to remain at the forefront of technology so that we can adapt to emerging trends and thereby enhance value for all of our shareholders.”

Third Quarter 2023 Highlights

  • Revenue increased 26.9% to $24.1 million as compared to $19.0 million in the same period of 2022. Tobacco vaping products contributed $16.5 million and cannabis vaping products contributed $7.6 million to revenue during the third quarter 2023;
  • Gross profit increased 51.9% to $4.5 million as compared to $3.0 million in the same period of 2022;
  • Gross margin increased to 18.7% as compared to 15.7% in the same period of 2022.
  • Total operating expenses increased 106.2% to $8.0 million as compared to $3.9 million in the same period of 2022; and
  • Net loss of $3.1 million as compared to net loss of $1.0 million in the same period of 2022.

Liquidity and Capital Resources

As of March 31, 2023, and prior to the closing of its initial public offering, Ispire had cash and cash equivalents of $24.0 million and working capital of $5.2 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.

Initial Public Offering

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

Including proceeds from the sale of the additional shares, the aggregate gross proceeds from the offering were approximately $21.7 million, less underwriting discounts and non-accountable expense allowance of approximately $1.7 million, and other expenses of approximately $1.5 million, resulting in net proceeds of $18.5 million.

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

  • Approximately 35% to develop manufacturing operations in Vietnam 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 vaping products for the fourth quarter 2023, which ends on June 30, 2023. Ispire commenced marketing cannabis vaping products in mid 2020, and revenue from cannabis vaping products was $7.6 million for the third quarter of 2023. Revenue for cannabis vaping products for the fourth quarter is projected at $12 million to $15 million, representing growth of 58% to 98% from the third quarter 2023.

About Ispire Technology Inc.

Ispire is engaged in the R&D, design, commercialization, sales, marketing and distribution of branded e-cigarettes and cannabis vaping products. The Company has or licenses from a related party more than 200 invention/design patents received or filed globally. Ispire’s tobacco vaping products are marketed under the Aspire brand name and are sold worldwide (except in the People’s Republic of China and Russia) primarily through its distribution network. Ispire’s cannabis vaping 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 contains “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. The words “expect,” “believe,” “estimate,” “intend,” “plan,” “anticipate,” “may,” “should,” “strategy,” “future,” “will,” “project,” “potential” and similar expressions indicate forward-looking statements. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. These risks and uncertainties include, but are not limited to Ispire’s ability to generate the forecast revenue; Ispire’s ability to develop and market new products; the effects of regulations relating to the marketing and sale of vaping products in the United States and other countries; the expected growth of, and trends in, the markets for our products and services in the markets in which jurisdictions that we sell our products;; Ispire’s ability to establish and operate manufacturing facilities in Vietnam and Los Angeles;; 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 and in Management’s Discussion of Financial Condition and Results of Operations in Ispire’s Form 10-Q quarterly report for the quarter ended March 31, 2023.

You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements made in the prospectus relate only to events or information as of the date on which the statements are made in the prospectus. 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:

Raphael Gross
203.682.8253
ir@ispiretechnology.com

ISPIRE TECHNOLOGY INC.  
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS  
    June 30,     March 31,  
    2022     2023  
Assets            
Current assets:            
Cash and cash equivalents   $ 74,480,651     $ 24,035,608  
Accounts receivable, net     8,260,574       15,412,769  
Held-to-maturity investment           9,604,418  
Inventories, net     14,580,557       14,237,162  
Prepaid expenses and other current assets     192,499       290,616  
Due from related parties     1,934,855        
Total current assets     99,449,136       63,580,573  
Other assets:                
Property, plant and equipment, net     114,025       588,213  
Rental deposit     876,100       721,497  
Right-of-use assets     295,804       4,359,274  
Intangible assets           72,714,652  
Total other assets     1,285,929       78,383,636  
Total assets   $ 100,735,065     $ 141,964,209  
Liabilities and stockholders’ equity                
Current liabilities                
Accounts payable   $ 290,541     $ 178,140  
Accounts payable – related party     41,982,373       56,044,267  
Contract liabilities     1,672,051       742,247  
Dividends payable     3,362,639        
Accrued liabilities and other payables     159,296       520,057  
Due to related parties     40,672,768        
Income tax payable     481,113        
Lease liabilities     347,541       917,310  
Total current liabilities     88,968,322       58,402,021  
                 
Other liabilities:                
Lease liabilities           3,608,580  
Total liabilities   $ 88,968,322     $ 62,010,601  
Stockholders’ equity:                
Common stock, par value $0.0001 per share; 140,000,000 shares authorized; 50,000,000 shares issued and outstanding as of June 30 2022 and March 31, 2023     5,000       5,000  
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized, no shares issued at June 30, 2022 and March 31, 2023            
Capital contribution           74,259,915  
Accumulated other comprehensive loss     (184,664 )     (199,938 )
Retained earnings     11,946,407       5,888,631  
Total stockholders’ equity     11,766,743       79,953,608  
Total liabilities and stockholders’ equity   $ 100,735,065     $ 141,964,209  
ISPIRE TECHNOLOGY INC.  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME  
   
    Three Months Ended
March 31,
    Nine Months Ended
March 31,
 
    2022     2023     2022     2023  
                         
Revenue   $ 19,014,149     $ 24,136,297     $ 66,247,507     $ 82,976,746  
                                 
Cost of revenue     16,038,425       19,616,098       55,959,959       68,525,866  
                                 
Gross profit     2,975,724       4,520,199       10,287,548       14,450,880  
                                 
Operating expenses:                                
Sales and marketing expenses     1,325,024       948,302       3,781,183       3,355,830  
General and administrative expenses     2,546,379       7,033,958       5,618,260       16,234,767  
                                 
Total Operating Expenses     3,871,403       7,982,260       9,399,443       19,590,597  
                                 
(Loss)income from operations     (895,679 )     (3,462,061 )     888,105       (5,139,717 )
                                 
Other income(expense):                                
Interest income, net     1,016       391       2,083       77,202  
Exchange gain, net     68,420       660,760       136,902       183,178  
Other (expense)income, net     (5,559 )     (67,953 )     49,382       (108,440 )
                                 
Total Other income, net     63,877       593,198       188,367       151,940  
                                 
(Loss) income before income taxes     (831,802 )     (2,868,863 )     1,076,472       (4,987,777 )
                                 
Income taxes – current     (158,755 )     (237,992 )     (788,348 )     (1,069,999 )
                                 
Net (loss)income   $ (990,557 )   $ (3,106,855 )   $ 288,124     $ (6,057,776 )
                                 
Other comprehensive loss                                
Foreign currency translation adjustments     (71,687 )     (157,704 )     (80,765 )     (15,274 )
Comprehensive (loss)income   $ (1,062,244 )   $ (3,264,559 )   $ 207,359     $ (6,073,050 )
                                 
Net (loss)income per share                                
Basic and diluted   $ (0.02 )   $ (0.06 )   $ 0.01     $ (0.12 )
                                 
Weighted average shares outstanding:                                
Basic and diluted     50,000,000       50,000,000       50,000,000       50,000,000  
ISPIRE TECHNOLOGY INC.  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
   
    Nine Months ended
March 31,
 
    2022     2023  
             
Net income (loss):   $ 288,124     $ (6,057,776 )
Adjustments to reconcile net income from operations to net cash provided by operating activities:                
Depreciation and amortization     3,907       1,566,141  
Depreciation of right-of-use assets     215,690       763,641  
Accounts receivable impairment           2,226,090  
Changes in operating assets and liabilities:                
Accounts receivable     (5,398,432 )     (9,323,279 )
Inventories     (6,869,171 )     343,395  
Prepaid expenses and other current assets     77,987       56,486  
Accounts payable     (13,320,148 )     13,737,398  
Contract liabilities     471,745       (940,014 )
Accrued liabilities and other payables     323,866       360,761 )
Income tax payable     202,759       (481,113 )
Net cash (used in)provided by operating activities   $ (24,003,673 )   $ 2,251,730  
                 
Cash flows from investing activities:                
Purchase of property, plant and equipment     (120,948 )     (495,065 )
Purchase of short-term investment           (9,604,418 )
Net cash used in investing activities   $ (120,948 )   $ (10,099,483 )
                 
Cash flows from financing activities:                
Payment made for dividends     (449,026 )     (3,384,678 )
Advances from related parties     1,681,723       1,934,855  
Repayment of advances from related parties     (1,804,786 )     (40,512,691 )
Principal portion of lease payment     (203,612 )     (634,776 )
Net cash used in financing activities   $ (775,701 )   $ (42,597,290 )
                 
Net decrease in cash and cash equivalents     (24,900,322 )     (50,445,043 )
Cash and cash equivalents – beginning of period     85,248,997       74,480,651  
Cash and cash equivalents – end of period   $ 60,348,675     $ 24,035,608  

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.


MJ Shareholders avatar

MJ Shareholders

MJShareholders.com is the largest dedicated financial network and leading corporate communications firm serving the legal cannabis industry. Our network aims to connect public marijuana companies with these focused cannabis audiences across the US and Canada that are critical for growth: Short and long term cannabis investors Active funding sources Mainstream media Business leaders Cannabis consumers

( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )