iPower Inc. — FY2026 Form 10-K
Reporting period: Fiscal year ended June 30, 2026. The filing was signed October 2, 2026. Unless stated otherwise, amounts are U.S. dollars.
Business context and strategic changes
iPower has historically sold consumer home, garden and related products and provided services through e-commerce and partner-based logistics channels. It describes a strategic focus on AI infrastructure acquisition, financing, equipment leasing and related operating opportunities, alongside its supply-chain capabilities. Management says it is reducing passive digital-asset exposure and prioritizing AI opportunities.
On February 1, 2026, iPower sold Global Product Marketing, Inc. (GPM) and its underlying entities for a seven-year, non-interest-bearing $2.3 million promissory note. The company retained a supplier relationship with GPM; a June 30 supplement transferred approximately $2.0 million of inventory to GPM in exchange for its assumption of an equal amount of supplier payables and ended exclusive sourcing and distribution obligations. GPM contributed approximately 37% of FY2026 revenue.
Financial performance and liquidity
| Metric | FY2026 | FY2025 | Change or context |
|---|---|---|---|
| Total revenue | $19.96 million | $63.22 million | Down 68.4% |
| Product sales | $18.42 million | $58.60 million | Down 68.6% |
| Service income | $1.53 million | $4.62 million | Down 66.8% |
| Gross profit | $4.04 million | $27.37 million | Down 85.2% |
| Gross margin | 20.2% | 43.3% | Product margin was 20.8% vs. 45.6% |
| Operating expenses | $18.47 million | $33.70 million | Down 45.2%; includes $3.03 million goodwill impairment |
| Operating loss | $(14.43) million | $(6.33) million | Loss widened |
| Net loss attributable to iPower | $(11.62) million | $(4.97) million | Loss widened by $6.65 million |
| Operating cash flow | $(0.16) million | $(0.58) million | Cash used in both years |
Management attributes the revenue decline principally to reduced Amazon orders, uncertainty over tariffs, product-supply disruption and the subsidiary sale. Gross margin also fell, reflecting lower logistics-service income, higher product costs and changes following the divestiture. Operating expenses declined with lower sales-related costs and cost reductions, but the company still reported a substantial operating loss.
Other expense was $2.06 million, including a $2.32 million loss on extinguishment of convertible notes, $0.85 million unrealized digital-asset loss and $0.85 million interest expense; offsets included a $0.68 million derivative-liability fair-value gain and $0.80 million in Employee Retention Credit refunds. Discontinued operations, including a $1.61 million gain on the GPM disposition, contributed $1.79 million after tax.
At June 30, 2026, cash and cash equivalents were $478,042, restricted cash was $3.25 million, working capital was approximately $3.4 million, total assets were $28.99 million and total liabilities were $12.04 million. The $3.25 million restricted cash and substantially all digital assets and related collateral-account property are pledged to the convertible-note collateral agent; they are not freely available operating cash. Investing cash use was $4.68 million, mainly for digital assets, joint-venture investment, software development and deconsolidation-related items. The cash-flow statement reports $6.50 million of financing cash provided, while MD&A reports $6.54 million, an inconsistency in the filing text.
The balance sheet shows convertible notes at a net carrying amount of $2.74 million and a separate $606,700 derivative liability. The notes disclose $3.99 million remaining principal at June 30; management’s liquidity discussion cites approximately $5.8 million of notes outstanding, apparently reflecting a different measurement or subsequent activity, which should be reconciled. Notes bear 10% annual interest, payable monthly, and are senior secured, with conversion and redemption features and subsidiary guarantees. The former JPMorgan revolving credit facility was repaid and terminated in December 2025.
Management says it expects sufficient liquidity for at least twelve months, considering operating cash flows, cost reductions, $4.7 million of financing proceeds received after year-end and up to $15 million of remaining optional facility capacity, subject to investor election and closing conditions. It also cites approximately $0.8 million of net lease payments expected in FY2027. This outlook depends on financial performance and access to financing; operating cash flow was negative in FY2026.
Material changes, outlook and risks
- Digital assets: FY2026 purchases included approximately $1.33 million of Bitcoin, $0.88 million of Ethereum and $1.00 million of USDai subsequently converted or staked as sUSDai. The company recorded an $0.85 million unrealized loss. On August 14, 2026, it sold all sUSDai for approximately $1.00 million and all Ethereum for approximately $0.56 million. As of October 1, it reported 15.115 BTC valued at approximately $1.28 million and $4.82 million cash in the controlled account; those assets remained pledged collateral.
- Financing and dilution: The convertible-note facility has a stated aggregate capacity of $30 million, amended in July 2026 to add $2 million of original principal availability and permit general corporate uses for additional proceeds. After the July and September closings, iPower reported $4.7 million net proceeds for $5.0 million principal issued, with $15 million of additional Series A notes still available. By October 2, the investor had converted $9.36 million of Series A notes into 849,697 shares at an average post-split conversion price of $11.02. Further conversions or equity financing could dilute shareholders.
- Concentration and supply chain: Amazon accounted for 38% of FY2026 revenue (82% in FY2025); GPM accounted for about 37%. One supplier represented 60.8% of FY2026 purchases. The company reports China sourcing exposure, tariff uncertainty and shipping delays that have affected inventory replenishment and costs.
- Other unusual items: The company recorded a full $3.03 million goodwill impairment, deconsolidated its China VIE in August 2025, and completed reverse stock splits of 1-for-30, 1-for-8 and 1-for-9. The sale-related promissory note had a $1.69 million carrying value at year-end after discounting; collection depends on the buyer’s repayment. The company also reported significant related-party fulfillment services from an entity affiliated with director Yi Yang.
- Controls and governance: Management concluded disclosure controls and internal control over financial reporting were ineffective at June 30, 2026 because of a material weakness in the financial-statement closing process. Remediation includes additional accounting personnel and consultants and new procedures. The independent auditor gave an unqualified opinion on the financial statements but did not audit or opine on internal-control effectiveness.
- Principal risks: Continued losses and low unrestricted cash; dependence on financing and potentially dilutive convertible notes; pledged collateral and default remedies; digital-asset price, custody, protocol and regulatory risks; reliance on Amazon, GPM and concentrated suppliers; China-related tariffs and sourcing disruption; Nasdaq listing compliance; and the unresolved material weakness in controls. The filing reports no material pending legal proceeding and no cybersecurity incident identified as materially affecting the business as of June 30, 2026.
The filing provides no quantified revenue or earnings guidance. Management’s stated outlook is based on its current operating plan and expected cost reductions, financing and cash flows; actual results remain subject to the risks described above.
Important facts for investors to verify
- Reconcile the reported $6.50 million versus $6.54 million of FY2026 financing cash flow, and the $3.99 million year-end note principal versus management’s approximately $5.8 million liquidity figure.
- Confirm the availability, closing conditions, net proceeds, interest and conversion terms of remaining convertible-note capacity, and the resulting share dilution.
- Verify how much cash and collateral are unrestricted and accessible, given the first-priority security interest and collateral-agent control.
- Track GPM’s purchases and payment performance, the collectability of the promissory note, Amazon concentration and alternative customer channels.
- Assess whether control remediation is completed and effective, and whether additional financing or Nasdaq compliance issues arise.
- Review post-year-end digital-asset transactions and valuations, including the remaining Bitcoin position and the treatment of pledged proceeds.