Ispire Technology Inc

Item 1A. Risk Factors

As a smaller reporting company as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. Our current risk factors are set forth in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, filed with the SEC on September 15, 2025.

Except as set forth below, there have been no material changes to the risk factors previously disclosed in the 2025 Form 10-K.

We have historically reported negative cash flows and we may not achieve positive cash flows in the future.

Our company has historically experienced negative cash flows. While we currently believe that we will be able to achieve positive cash flows in the first half of our fiscal year 2027, the timing and extent of our achieving positive cash flows remain subject to a number of factors, including, but not limited to, factors outside of our control such as the impact of new policies and regulations in China regarding Chinese nicotine vapor manufacturers and the export of their products, global trade policy, our ability to successfully establish local supply chain partnerships in Malaysia, general market conditions, and many others. If we are unable to achieve positive cash flows on our current timeline, the trading price of our common stock could decrease, negatively impacting our ability to raise capital when needed, which could have a material adverse effect on our business and financial condition.

We currently have invested in joint ventures with independent third parties in which we have less than a controlling interest. Our interest in the joint ventures could be further diluted through future financings.

We currently hold a 40% ownership interest in IKE and a 49% ownership interest in Jin Wu, with independent third parties holding the remaining 60% and 51%, respectively. As of March 31, 2026, we had an aggregate of $8,839,130 invested in advances to IKE.

Our joint ventures are currently pre-revenue and, to the extent that our joint ventures cash from operations remains insufficient to fund capital expenditures or continue to develop their respective products, IKE or Jin Wu may be required to incur borrowings or raise capital through public or private debt or equity offerings. Each of our joint ventures ability to obtain bank financing or to access the capital markets may be limited by its financial condition at the time of any such financing or offering, as well as by general economic and capital market conditions and contingencies and uncertainties that are beyond our or our joint ventures control. Even if our joint ventures are successful in obtaining the necessary funds, the terms of such financings could limit their ability to pay distributions to their respective equity holders, including us. In addition, incurring debt may cause our joint ventures to incur interest expense and increase their respective financial leverage, and the issuance by either IKE or Jin Wu of additional equity interests may result in significant dilution to existing equity holders of IKE or Jin Wu, including us, which could materially diminish our ownership and economic interests in the applicable joint venture.

Property Ownership Through IKE or Jin Wu Could Limit Our Control of Those Investments and Reduce Our Expected Return.

Joint venture investments may involve risks not otherwise present for investments made solely by us, including the possibility that our co-venturer might become bankrupt, that our co-venturer might at any time have different interests or goals than us and that our co-venturer may take action contrary to our instructions, requests, policies or objectives. In addition, our co-venturer could have different investment criteria that would impact the assets held by the joint venture or its interest in the joint venture, which may also reduce the carrying value of its equity investments if a loss in the carrying value of the investment is realized. These situations could have an impact on our revenues from IKE and/or Jin Wu. Other risks of our investments in IKE and Jin Wu include impasse on decisions, such as the decision to sell or finance a property or leasing decisions with anchor tenants, because neither our co-venturers nor us would have full control over the joint venture. These factors could limit the return that we receive from such investment, cause our cash flows to be lower than our estimates or lead to business conflicts or litigation. There is no limitation under our Certificate of Incorporation, or our Amended and Restated Bylaws, as to the amount of funds that we may invest in IKE or Jin Wu. In addition, our co-venturers may not have access to sufficient capital to satisfy their funding obligations to the joint venture, if any. Furthermore, if credit conditions in the capital markets deteriorate, we could be required to reduce the carrying value of our equity method investments if a loss in the carrying value of the investment is realized or considered an other than temporary decline. As of March 31, 2026, we had $8,839,130 of investment in and advances to IKE.

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Our ability to receive cash from our joint ventures depends entirely on their respective governing bodys discretion, and there is no assurance our joint ventures will ever distribute cash to their equity holders.

Payments to us by our joint ventures, if any, will be contingent upon their respective earnings and financial condition. The board of managers of IKE or the board of directors of Jin Wu may never determine the financial condition of IKE or Jin Wu, as applicable, allows for the issuance of, or would have it be otherwise advisable to issue, a dividend or make any other distribution. In addition, should any dividend be issued or other distribution be made, the equity interests of other equity holders in our joint ventures in any dividend or other distribution made by a joint venture would need to be satisfied on a proportionate basis with us. Our joint ventures may also be subject to restrictions, in their financing or other agreements, on their ability to distribute cash to us, and, as a result, we may not be able to access its cash flow, which could materially impact the value of our investment.

If our joint ventures business plans are unsuccessful, we may lose our entire investment.

Should our joint ventures be unable to achieve profitable operations or secure sufficient capital to sustain its business, it may ultimately be required to cease operations and dissolve the company. In the event of dissolution, the amount of remaining assets available for distribution to shareholders may be minimal or nonexistent. Accordingly, there is a substantial risk that we may not recover any portion of their original investment.

If the IKEs PMTA or other FDA regulatory submissions are not successful, the value of our investment in IKE could be materially adversely affected.

We believe that, when equipped with the IKE age-gating technology, there is a path to gaining approval for ENDS products with characterizing flavors other than tobacco and menthol, as they will have strong technological barriers to prevent youth usage. The FDA has repeatedly indicated that the only way it will approve characterizing flavors in ENDS devices is if they are equipped with technology to prevent youth usage. We believe the technology we have access to will be desirable to the FDA. IKE met with the FDA on November 13, 2024, and submitted a component PMTA on this technology in April of 2025; however, there can be no guarantee that the FDA will approve our PMTA or any other PMTA submitted that contains the IKE age-gating technology.

If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the 1940 Act), including as a result of our ownership of the Operating Company, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an investment company for purposes of the 1940 Act if (1) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities, or (2) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis (the 40% Test). We do not believe that we are an investment company, as such term is defined in either of those sections of the 1940 Act. We intend to conduct our operations so that we will not be deemed an investment company. However, our ownership interest in our joint ventures could be considered an investment security for purposes of the 1940 Act, and if the value of our interest in our joint ventures were to violate the 40% Test, we may inadvertently be deemed an investment company and be forced to divest some of our ownership in our joint ventures. If it were established that we were an unregistered investment company, we could be subject to monetary penalties and injunctive relief in an action brought by the SEC, we could be unable to enforce contracts with third parties and third parties could seek to obtain rescission of transactions undertaken during the period it was established that we were an unregistered investment company. If we were required to register as an investment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.