Ispire Technology Inc.

Hello everyone, and welcome to today's conference call to discuss IASPIRE's financial results for its fiscal second quarter 2024, ended December 31st, 2023. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. We will be facilitating a question and answer session following the prepared remarks from the company. Joining us today are Mr. Michael Wang, the company's co-CEO, and Mr. Daniel J. Mashok, the company's CFO. First, Mr. Rang will brief you on the company's key highlights, and then Mr. Mashok will review the company's financial results. Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in its announcement are forward-looking statements. Forward-looking statements are based on estimates and assumptions made by the company in terms of its experience and its perception of historical trends, current conditions, and expected future developments, as well as other factors that the company believes are relevant. These forward-looking statements involve known and unknown risks and uncertainties, and many factors could cause the company's actual results or performance to differ materially from those expressed or implied by the forward-looking statements. Further information regarding this and other risk factors are included in the company's filings with the SEC. The company undertakes no obligation to update forward-looking statements to reflect subsequent or current events or circumstances or to changes in its expectation, except as may be required by law. I would now like to turn the call over to Mr. Wang. Mr. Wang, please go ahead.

Thank you, operator, and thank you all for joining us this morning. This quarter, we were pleased to accomplish many key operational and business milestones. Overall sales reached $41.7 million, an increase of 30.7% over the same three-month period last year. The quarter also saw cannabis hardware revenue increase by 149% to $19.5 million compared to the same three-month period last year. Our strategy for delivering best-in-class precision dosing technology and the white-glove customer service in these sectors has led to the increase in demand for our products and increased brand recognition. This increase in demand has been showcased by the rapid increase in cannabis hardware sales that we have been seeing quarter after quarter. Another highlight is the recent launch of our breakfast-branded high-tech wafer products in collaboration with Nigerian Applebee's star, Burner Boys. The five-year exclusive global manufacturing and distribution agreement marks our second celebrity brand collaboration. Snoop Dogg's Dog Pounds being the first such deal. It strengthened our portfolio of partnerships and our global brand presence. We will launch breakfast products in Africa in Q1 this year, in Europe and the UK this summer, and in the Middle East later in the year. Additionally, we were able to achieve ISO and GMP certifications for our new Malaysian manufacturing facility, which opened on February 5th of this year. Attaining such certifications is a sign of our commitment to best practices at our plant. We believe that this facility will prove instrumental in enhancing our operational efficiency, and ultimately leading to improved gross margin and profitability. We expect to start seeing a meaningful impact from this facility on our financial performance as early as next quarter. Our Malaysian operations provide the opportunity to streamline our supply chain. Based on our experience with related priority factories, we believe that we can achieve our goal of more than 40% gross margin on products manufactured at the Malaysian operation. This operational initiative, in contrast to our previous arrangement involving third-party factories, represents a forward-thinking approach that aims to enhance our financial performance and drive sustained growth for the company. In tandem with our strategic growth internationally, we have begun pursuing multiple PMTA, that is pre-market tobacco product applications with the FDA in order to build our domestic market e-cig presence and distribute our innovative e-cig products within the U.S. market. Receiving PMTA approval will give iSpire the opportunity to sell into the $80 billion U.S. nicotine market, diversify our product lines, and leverage our growing brand recognition in the U.S., the largest nicotine market in the whole world. We plan to announce further details on this development in the coming months. Our brand continues to build upon our long-lasting recognition and visibility as iSpar solidifies itself as a leading, innovative, and premier precision dosing technology company. The positive reception and the customer loyalty we have garnered are reflective of the value associated with our ongoing innovations. Each quarter, we have witnessed tangible results reflecting our dedication to customer focused innovations also subsequent to quarter end we announced that we recently formed a joint venture with the verify a pioneering platform leveraging the power of blockchain to redesign product authentication consumer engagement user identification and access control. This joint venture will leverage Verify's multi-patented technology and iSpar hardware expertise to introduce an innovative age verification solution for cannabis and e-cigarette vapor devices, as well as the submission of PMTA applications that incorporate cutting-edge technologies such as Next generation e-cigarette hardware with point-of-use age verification and age-gating technology that is both secure and user-friendly. E-cigarettes with an end-to-end range of dynamic features, such as authentication, direct-to-consumer engagement, and exclusive offering, all built on the foundations of blockchain technology. A real-time biometric identity platform for user access controls, creating added security and reliability that deters counterfeiting. We are very excited about the joint venture and the future potential it holds as we aim to grow our footprint as a leading precision dosing technology company. Looking ahead to the remainder of fiscal year 2024, we are focused and committed to this steady trajectory of growth. Our strategic partnerships and innovation will position us to eventually enter the $80 billion US nicotine market and strengthen our celebrity partnership portfolio worldwide. Our own manufacturing capabilities We'll expand our gross margin and profitability as we transition more of our production to the Malaysian operation. With that, I will turn the call over to our CFO, Dan Machok, who will review and comment on our financial results.

Thank you, Michael, and thanks to everyone for being on the call. Let's take a deeper dive into our financials. I will summarize some key financial results for the fiscal second quarter 2024. In my comments on the quarterly results, I will refer to the fiscal second quarter 2024 as the three months ended on December 31st, 2023. All comparisons are to the prior year's three months ended December 31st, 2022 unless otherwise stated. As Michael mentioned, we achieved remarkable growth for the fiscal second quarter of 2024. including an all-time high for U.S. cannabis vaping hardware sales, increasing by 149% to $19.5 million. Sales of tobacco vaping products were $22.1 million in the fiscal second quarter of 2024 versus $24.0 million for the same period the previous fiscal year. Overall, our total revenue for the 2024 fiscal second quarter increased by 30% to 41.7 million year over year. For the six month period ended December 31st, 2023 revenue increased to 84.5 million or 43% compared to the same period last year. Gross profit for the fiscal second quarter in 2024 rose to 6.3 million representing a 24.1% increase compared to the same period of the previous fiscal year. We experienced a slight downtick in gross margin to 15.3% from 16.1% in the same period last year. The gross margin for tobacco vaping products was 15.3% for the fiscal second quarter of 2024 as compared to the 14.5% for the same period in the previous fiscal year. During the six-month period ended this quarter, gross profit increased to $13.3 million or by 33.6% year-over-year. Tobacco vaping products was 15.6% for the six-month period ending the quarter as compared to 15.2% for the same period in the previous fiscal year. We are poised to improve our margins as we ramp up sales of the new model product throughout fiscal 2024. The total operating expenses for the fiscal second quarter of 2024 increased by 114% to 10.3 million compared to 4.8 million for the same period the previous year. Operating expenses for the six-month period increased by 67% to 18.1 million. The increase in expenses was due primarily to an increase in reserving for accounts receivable. This was due to us adopting a new accounting policy, ASU 2016-13 BECL, which was effective July 1st of 2023. It is our belief that customers are all collectible, but we have taken a conservative approach to our accounts receivable reserve. This increase in operating expenses was also due to marketing expenses, trade shows, and working capital-relating expenses. to maintaining our manufacturing plant in Malaysia and increased professional fees for expenses incurred being a public company. As a result of the foregoing, our net loss was 4.0 million for the fiscal second quarter 2024 as compared to 0.1 million for the fiscal second quarter 2023. This increase is indicative of our increased investment in our operational efficiency this quarter and our strategic financial growth path. Net loss for the six month period ending December 31st, 2023 was 5.4 million as compared to 2.1 million for the same period in the previous year. Turning to the balance sheet and liquidity. As of December 31st, 2023 and June 30th, 2023, we had working capital of 24.8 million and $28.8 million, respectively. We believe that our current cash and cash flow generated from our operations will be sufficient to meet our working capital needs for the next 12 months. Net cash used in operating activities was $20.2 million for the six-month period ended December 31, 2023, compared to the net cash provided by operating activities of $8.4 million for the same period last year. Net cash used in investing activities was $1.9 million compared to $0.5 million for the same period last year. Net cash used in financing activities was $0.7 million compared to $1.9 million provided by financing activities for the same period last year. This concludes our fiscal second quarter 2024 financial results review. I will now turn it back over to Michael. Michael?