Basis of Presentation and Summary of significant accounting policies (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of presentation | Basis of presentation
The accompanying financial statements have been prepared in accordance with the generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The Company’s fiscal year end date is June 30.
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| Principles of Consolidation | Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries, GSM, Smart LLC, Nexus, and Anivia Limited. All inter-company balances and transactions have been eliminated.
Smaller Reporting Company Status
The Company is a “smaller reporting company,” as defined in Rule 12b-2 under the Exchange Act. As such, the Company is eligible to use certain reduced disclosure requirements applicable to smaller reporting companies. As a smaller reporting company, the Company may take advantage of certain scaled disclosure requirements, including reduced disclosure obligations regarding executive compensation and the ability to provide only two years of audited financial statements. In addition, the Company may elect to use some or all of these accommodations for so long as it remains eligible to do so. The Company’s reliance on these accommodations may make it more difficult for investors to compare our disclosures with those of companies that do not qualify as smaller reporting companies.
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| Use of estimates and assumptions | Use of estimates and assumptions
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
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| Foreign currency translation and transactions | Foreign currency translation and transactions
The reporting and functional currency of iPower and its subsidiaries is the U.S. dollar (USD). iPower’s WFOE and VIE in China each uses the local currency, Renminbi (“RMB”), as its functional currency. Assets and liabilities of the VIE are translated at the current exchange rate as quoted by the People’s Bank of China (the “PBOC”) at the end of the period. Income and expense accounts are translated at the average translation rates and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income (loss) in the statement of changes in stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.
The balance sheet amounts of the WFOE, with the exception of equity, on June 30, 2026, were translated at 6.7940 RMB to $1.00. The equity accounts were stated at their historical rates. The average translation rates applied to statements of operations and comprehensive income (loss) accounts for the year ended June 30, 2026 was 6.9951 RMB to $1.00. Cash flows were also translated at average translation rates for the period and, therefore, amounts reported on the statement of cash flows would not necessarily agree with changes in the corresponding balances on the consolidated balance sheet.
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| Going Concern | Going Concern
The Company evaluates its ability to continue as a going concern in accordance with ASC 205-40, Presentation of Financial Statements—Going Concern. Management evaluates whether conditions and events, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued.
In performing this evaluation, management considers, among other factors, the Company’s current financial condition, liquidity and available sources of financing, obligations due or anticipated within the assessment period, historical and expected operating results and cash flows, and other relevant conditions and events. When substantial doubt is raised, management evaluates whether its plans that are intended to mitigate those conditions and events, when implemented, will alleviate the substantial doubt. Such plans are considered only to the extent that it is probable that they will be effectively implemented and, if implemented, will mitigate the conditions and events giving rise to substantial doubt.
As of June 30, 2026, the Company had cash and cash equivalents of $478,042 and a working capital of $3.4 million. In assessing the Company’s liquidity requirements for the twelve months following the issuance of these consolidated financial statements, management considered the Company’s expected cash flows from operations, available financing sources, and significant contractual obligations. The Company has approximately $4.7 million of financing proceeds raised subsequent to June 30, 2026, as well as approximately $15.0 million of remaining optional financing capacity under its existing financing arrangement, subject to the investors’ election and the satisfaction or waiver of applicable closing conditions. The Company’s significant cash requirements include approximately $5.8 million of convertible notes outstanding, which do not mature until December 2027 through September 2028, although the notes require monthly interest payments and may be converted into common stock in accordance with their terms, and approximately $0.8 million of net lease payments expected during fiscal 2027. Although the Company incurred a net loss of approximately $ million and negative operating cash flows during the year ended June 30, 2026, management expects its future cash requirements to be reduced as a result of the cost reductions and other completed restructuring actions.
Based on the Company’s current operating plan, cash and cash equivalents, expected cash flows from operations, financing proceeds received subsequent to year-end, and expected cash requirements, management believes that the Company will have sufficient liquidity to meet its obligations and fund its operations for at least the next twelve months. However, the Company’s liquidity and ability to meet its obligations and fund its capital requirements are dependent on its future financial performance, which is subject to general economic, financial and other factors beyond its control, including inflation and a potential recession.
Given the Company’s current working capital position, management believes it will be able to manage through the current challenges by managing payment terms with customers and vendors.
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| Cash and cash equivalents | Cash and cash equivalents
Cash and cash equivalents consist of amounts held as cash on hand and financial institution and financial service company deposits.
From time to time, the Company may maintain cash balances at financial institutions in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit of $250,000 per depositor, per insured bank, for each account ownership category. The Company has not experienced any losses with respect to such accounts. Management believes the Company is not exposed to any significant credit risk with respect to its cash deposits. |
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| Restricted Cash | Restricted Cash
Restricted cash consists of cash that is subject to contractual restrictions on withdrawal or use. The Company’s restricted cash primarily represents cash held in a controlled account and pledged as collateral pursuant to the Company’s financing arrangements. Such amounts are restricted as to withdrawal and use in accordance with the terms of the applicable agreements.
For purposes of the consolidated statements of cash flows, the Company includes restricted cash together with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts. Transfers between cash and cash equivalents and restricted cash are not presented as operating, investing, or financing activities in the consolidated statements of cash flows.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheet that sums to the total of such amounts shown in the Consolidated Statement of Cash Flows:
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| Accounts receivable | Accounts receivable
During the ordinary course of business, the Company extends unsecured credit to its customers. Accounts receivable are stated at the amount the Company expects to collect from customers, which includes the amount withheld by sales channel partners and refundable to the Company. Based on historical and expected loss rate and status of negotiations with the sales channel partner, management reviews its accounts receivable balances each reporting period to determine if an allowance for credit loss is required.
The Company evaluates the creditworthiness of all of its customers individually before accepting them and continuously monitors the recoverability of accounts receivable. If there are any indicators that a customer may not make payment, the Company may consider making provision for non-collectability for that particular customer. At the same time, the Company may cease further sales or services to such customer. The following are some of the factors that the Company develops allowance for credit losses:
Accounts receivable are recognized and carried at carrying amount less an allowance for credit losses, if any. The Company maintains an allowance for credit losses resulting from the inability of its customers to make required payments based on contractual terms. The Company reviews the collectability of its receivables on a regular and ongoing basis. The Company has also included in calculation of allowance for credit losses the potential impact of the overall economic conditions on our customers’ industry and businesses and their ability to pay our accounts receivable. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. The Company also considers external factors to the specific customer, including current conditions and forecasts of economic conditions, including the potential impact of the recent tariff policy. In the event we recover amounts previously written off, we will reduce the specific allowance for credit losses.
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| Equity method investment | Equity method investment
The Company accounts for its ownership interest in Box Harmony, a 40% owned joint venture, and United Package NV LLC, a 44% owned joint venture, following the equity method of accounting, in accordance with ASC 323, Investments — Equity Method and Joint Ventures. Under this method, the carrying cost is initially recorded at cost and then increased or decreased by recording its percentage of gain or loss in the joint ventures’ statement of operations and a corresponding charge or credit to the carrying value of the asset.
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| Digital Assets | Digital Assets
The Company accounts for its digital assets, which, as of June 30, 2026, consisted of Bitcoin (“BTC”), Ethereum (“ETH”), and sUSDai, in accordance with Accounting Standards Codification (“ASC”) Topic 350-60, “Intangibles—Goodwill and Other—Crypto Assets.” The Company has ownership of and control over its digital assets and may use third-party custodial services to secure them. Digital assets are initially recognized at cost and subsequently measured at fair value at each reporting date, with changes in fair value recognized in net income.
The Company determines the fair value of its digital assets on a recurring basis in accordance with ASC Topic 820, “Fair Value Measurement,” based on quoted prices on the active exchange that the Company has determined is its principal market for such digital assets (Level 1 inputs). The Company determines the cost basis of digital assets using the specific identification of each unit received. Realized and unrealized gains and losses from changes in the fair value of digital assets are recognized in the statement of operations.
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| Variable interest entities | Variable interest entities
On February 15, 2022, the Company acquired 100% of the ordinary shares of Anivia and its subsidiaries, including DHS. Pursuant to the terms of the Agreements, the Company does not have direct ownership in DHS but is actively involved in DHS’s operations as the sole manager to direct the activities and significantly impact DHS’s economic performance. DHS’s operational funding has been provided by the Company following the February 15, 2022 acquisition. During the term of the Agreements, the Company bears all the risk of loss and has the right to receive all of the benefits from DHS. As such, based on the determination that the Company is the primary beneficiary of DHS, in accordance with ASC 810-10-25-38A through 25-38J, DHS is considered a VIE of the Company and the financial statements of DHS have been consolidated from the date such control existed, February 15, 2022.
On August 4, 2025, the Company entered into a Variable Interest Entity (“VIE”) Contract Termination Agreement with the VIE, pursuant to which all VIE agreements were terminated. As a result, the Company no longer has a controlling financial interest in the VIE. In accordance with ASC 810-10-40, Consolidation — Deconsolidation of a Subsidiary or Derecognition of a Group of Assets, the Company deconsolidated the VIE as of the termination date.
Upon deconsolidation, the Company derecognized all assets and liabilities of the VIE from its consolidated balance sheet. Because the Company retains no ownership interest or continuing involvement in the VIE following the termination of the agreements, no retained interest was recognized.
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| Goodwill | Goodwill
Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed. The Company accounts for goodwill under ASC Topic 350, Intangibles-Goodwill and Other.
Goodwill is not amortized but is reviewed for potential impairment on an annual basis, or if events or circumstances indicate a potential impairment, at the reporting unit level. The Company’s review for impairment includes an assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill, a quantitative goodwill impairment test is performed, which compares the fair value of the reporting unit with its carrying amounts, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. However, if the carrying amount of the reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
During the year ended June 30, 2026, the Company performed a goodwill impairment analysis following the steps laid out in ASC 350 and concluded that the carrying value of goodwill was impaired, primarily due to a sustained decline in the Company’s share price and market capitalization. Accordingly, the Company recognized a full goodwill impairment charge during the period. As of June 30, 2026 and 2025, the goodwill balance amounted to $0 and $3,034,110, respectively.
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| Intangible assets | Intangible assets
Finite life intangible assets at June 30, 2026 included a covenant not to compete, a supplier relationship, and software recognized as part of the acquisition of Anivia. Intangible assets are recorded at the estimated fair value of these items at the date of acquisition, February 15, 2022. Intangible assets are amortized on a straight-line basis over their estimated useful life as follows:
The Company reviews the recoverability of long-lived assets, including intangible assets, when events or changes in circumstances occur that indicate the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the ability to recover the carrying value of the asset from the expected future pretax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations. The Company did not record any impairment charge for the years ended June 30, 2026 and 2025.
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| Software development | Software development
The Company accounts for costs incurred to develop or obtain software for internal use in accordance with ASC 350-40, Intangibles—Goodwill and Other—Internal-Use Software. Costs incurred during the preliminary project stage are expensed as incurred. Costs incurred during the application development stage are capitalized when the preliminary project stage has been completed, management has authorized and committed to funding the project, and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalizable costs include amounts paid to third-party developers and other costs directly associated with the development and implementation of the software.
Costs incurred for training, data conversion, maintenance, and other post-implementation activities are expensed as incurred. Capitalization ceases when the software is substantially complete and ready for its intended use. Capitalized internal-use software costs are amortized on a straight-line basis over their estimated useful lives beginning when the software is ready for its intended use. The Company evaluates capitalized internal-use software for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.
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| Embedded derivative liability | Embedded derivative liability
The Company evaluates the embedded features of its financial instruments, including its convertible notes payable in accordance with ASC Topic 480, “Distinguishing Liabilities from Equity,” and ASC Topic 815 “Derivatives and Hedging.” Certain conversion options and redemption features are required to be bifurcated from their host instrument and accounted for as free-standing derivative financial instruments should certain criteria be met. The Company applies significant judgment to identify and evaluate complex terms and conditions for its financial instruments to determine whether such instruments are derivatives or contain features that qualify as embedded derivatives. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract and the features of the derivatives. Bifurcated embedded derivatives are recognized at fair value.
The following table provides a roll-forward of changes for financial instruments measured at fair value on a recurring basis for the year ended June 30, 2026:
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| Treasury stock | Treasury stock
The Company accounts for treasury stock under the cost method in accordance with ASC 505-30, Equity — Treasury Stock. Shares of the Company’s common stock repurchased in the open market are recorded at cost and presented as a reduction of stockholders’ equity. Changes in the market value of treasury shares subsequent to repurchase are not recognized in the consolidated financial statements.
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| Fair values of financial instruments | Fair values of financial instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments,” requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and all other current assets and liabilities approximate fair values due to their short-term nature.
For other financial instruments to be reported at fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines the fair value of its financial instruments based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
Level 2 – Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and
Level 3 – Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.
The Company measures certain non-financial assets on a non-recurring basis, including goodwill. As a result of those measurements, as of June 30, 2026 and 2025, the Company had goodwill with a carry book value of $0 and $3,034,110, respectively.
The fair value of goodwill was determined based on a combination of the market approach and the discounted cash flow method, which is an income approach, which required the use of inputs that were unobservable in the marketplace (Level 3), including a discount rate that would be used by a market participant, projections of revenues and cash flows, among others.
The fair value of financial instruments measured on a recurring basis as of June 30, 2026 consisted of the following:
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| Revenue recognition | Revenue recognition
The Company recognizes revenues from service and product sales, net of promotional discounts and return allowances, when the following revenue recognition criteria are met: a contract has been identified, separate performance obligations are identified, the transaction price is determined, the transaction price is allocated to separate performance obligations and revenue is recognized upon satisfying each performance obligation. The Company transfers the risk of loss or damage upon shipment or completion of service, therefore, revenue from product sales is recognized when it is shipped to the customer and the revenue from services is recognized upon completion of services. Return allowances, which reduce product revenue by the Company’s best estimate of expected product returns, are estimated using historical experience.
The Company evaluates the criteria of ASC 606 - Revenue Recognition Principal Agent Considerations in determining whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. Generally, when the Company is primarily responsible for fulfilling the promise to provide a specified good or service and the Company has discretion in establishing the price, revenue is recorded at gross.
Payments received prior to the delivery of goods to customers are recorded as customer deposits.
The Company periodically provides incentive offers to its customers to encourage purchases. Such offers include current discount offers, such as percentage discounts off current purchases and other similar offers. Current discount offers, when accepted by the Company’s customers, are treated as a reduction to the purchase price of the related transaction.
Sales discounts are recorded in the period in which the related sales are recorded. Sales return allowances are estimated based on historical amounts and are recorded upon recognizing the related sales. Shipping and handling costs are recorded as selling expenses.
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| Cost of revenue | Cost of revenue
Cost of revenue mainly consists of costs for purchases of products, net of purchase discounts and rebates, and related inbound freight and delivery fees.
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| Operating expenses | Operating expenses
Operating expenses, which consist of selling and fulfillment and general and administrative expenses, including inventory reserves, are expensed as incurred. Vendor warranty credits resulting from refund of returns on quality issues are recorded to offset merchant selling fees. During the years ended June 30, 2026 and 2025, the Company recorded vendor credit of $0 and $48,903, respectively. Outbound freight costs related to shipping costs to customers are considered periodic costs and are reflected in selling and fulfillment expenses.
Advertising costs are expensed as incurred. Total advertising and promotional costs included in selling and fulfillment expenses for the years ended June 30, 2026 and 2025 were as following.
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| Inventories | Inventories
Inventory consists of finished goods ready for sale and is stated at the lower of cost or net realizable value. The Company values its inventory using the weighted average costing method. The Company’s policy is to include as a part of inventory and cost of goods sold any freight incurred to ship the product from its vendors to warehouses. The Company regularly reviews inventory and considers forecasts of future demand, market conditions and product obsolescence.
If the estimated realizable value of the inventory is less than cost, the Company makes provisions in order to reduce its carrying value to its estimated market value. The Company also reviews inventory for slow moving inventory and obsolescence and records allowance for obsolescence.
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| Debt issuance costs | Debt issuance costs
Costs incurred in connection with the issuance of debt are deferred and amortized as interest expense over the term of the related debt using the effective interest method. To the extent that the debt is outstanding, these amounts are reflected in the consolidated balance sheets as direct deductions from the carrying amount of the outstanding borrowings.
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| Equity offering costs | Equity offering costs
The Company capitalizes certain legal, accounting and other third-party fees that are directly related to an equity financing that is probable of successful completion until such financing is consummated. After consummation of an equity financing, these costs are recorded as a reduction of the proceeds received as a result of the offering. Should a planned equity financing be abandoned, terminated or significantly delayed, the deferred offering costs are immediately written off to operating expenses in the consolidated statements of operations and comprehensive income (loss) in the period of determination. As of June 30, 2026 and 2025, there were no deferred offering costs included in the consolidated balance sheets.
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| Segment reporting | Segment reporting
The Company follows ASC 280, Segment Reporting. The Company’s chief operating decision maker (“CODM”), the Chief Executive Officer, reviews the consolidated results of operations when making decisions about allocating resources and assessing the performance of the Company as a whole and, hence, the Company has only reportable segment. The Company does not distinguish between markets or segments for the purpose of internal reporting.
The CODM uses consolidated net income (loss), as reported in the consolidated statements of operations, as the measure of segment profit or loss in assessing segment performance and allocating resources. The significant expense categories and amounts regularly provided to the CODM are the consolidated expense categories presented in the Company’s consolidated statements of operations. Accordingly, the Company has not separately duplicated such information in this note and refers to the consolidated statements of operations for the significant segment expense information.
For the years ended June 30, 2026 and 2025, sales through Amazon to Canada and other foreign countries were approximately 6.8% and 7.2% of the Company’s total sales, respectively. During the year ended June 30, 2026, sales of hydroponic products, including ventilation and grow light systems, were approximately 10.0% of the Company’s total sales and the remaining 90.0% consisted of general gardening, home goods, and other products and accessories. During the year ended June 30, 2025, sales of hydroponic products, including ventilation and grow light systems, were approximately 19% of the Company’s total sales and the remaining 81% consisted of general gardening, home goods, and other products and accessories. As of June 30, 2026 and 2025, the Company had approximately $0 and $1.0 million of inventory stored in China, respectively. The Company’s majority of long-lived assets are located in the State of California, United States, a majority of the deferred tax assets are US related, and a majority of the Company’s revenues are derived from within the United States.
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| Leases | Leases
The Company records right-of-use (“ROU”) assets and related lease obligations on our balance sheet.
ROU assets represent our right to use an underlying asset for the lease terms and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company generally uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
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| Stock-based compensation |
The Company applies ASC No. 718, “Compensation-Stock Compensation,” which requires that share-based payment transactions with employees and nonemployees, upon adoption of ASU 2018-07, be measured based on the grant date fair value of the equity instrument and recognized as compensation expense over the requisite service period, with a corresponding addition to equity. Under this method, compensation costs related to employee share options or similar equity instruments is measured at the grant date based on the fair value of the award and is recognized over the period during which an employee is required to provide service in exchange for the award, which generally is the vesting period. In addition to the requisite service period, the Company also evaluates the performance condition and market condition under ASC 718-10-20. For an award which contains both a performance and a market condition, and where both conditions must be satisfied for the award to vest, the market condition is incorporated into the fair value of the award, and that fair value is recognized over the employee’s requisite service period or nonemployee’s vesting period if it is probable the performance condition will be met. If the performance condition is ultimately not met, compensation costs related to the award should not be recognized (or should be reversed) because the vesting condition in the award has not been satisfied.
The Company will recognize forfeitures of such equity-based compensation as they occur.
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| Income taxes | Income taxes
The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance must be established for deferred tax assets when it is more-likely-than-not (a probability level of more than 50%) that they will not be realized. Valuation allowances are recorded, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company has analyzed filing positions in each of the federal and state jurisdictions where the Company is required to file income tax returns, as well as open tax years in such jurisdictions. The Company has identified the U.S. federal jurisdiction, and the states of Nevada and California, as its “major” tax jurisdictions. However, the Company has certain tax attribute carryforwards which will remain subject to review and adjustment by the relevant tax authorities until the statute of limitations closes with respect to the year in which such attributes are utilized.
The Company believes that our income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740, Income Taxes. The Company’s policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes.
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| Employee Retention Credit | Employee Retention Credit
The Company accounts for refundable Employee Retention Credits (“ERC”) as government assistance. ERC amounts are recognized when the Company has reasonable assurance that it has complied with the applicable eligibility requirements and conditions of the program and that the credits are received and retained. Amounts recognized are based on the credits received and are presented as other income in the consolidated statements of operations.
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| Commitments and contingencies | Commitments and contingencies
In the ordinary course of business, the Company is subject to certain contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical and specific facts and circumstances of each matter.
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| Earnings per share |
Basic earnings per share is computed by dividing net income attributable to holders of common stock by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share give effect to potentially dilutive securities outstanding during the period using the treasury stock method or if-converted method, as applicable, except when their effect would be antidilutive.
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| Recently issued accounting pronouncements | Recently issued accounting pronouncements
In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which makes technical corrections, clarifications and other incremental improvements to various Topics in the Accounting Standards Codification. The amendments include, among other matters, clarifications related to diluted earnings per share and treasury stock. The amendments are generally effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of adopting the amendments on its consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for costs incurred to develop software for internal use. Among other changes, the amendments remove references to software development project stages and revise the guidance for determining when capitalization of software development costs should begin. The amendments are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of adopting the amendments on its consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides a practical expedient and accounting policy election for measuring expected credit losses on certain trade receivables and contract assets arising under ASC 606. The amendments are effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its measurement of expected credit losses.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to provide additional disclosures about certain expenses included in the income statement. The amendments require disclosure of specified expense categories included within relevant expense captions, including purchases of inventory, employee compensation, depreciation and intangible asset amortization, as applicable, as well as certain other qualitative and quantitative information. In January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03 for entities with non-calendar fiscal years. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting the amendments on its consolidated financial statement disclosures.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. Under this ASU, public business entities must annually “(1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income [or loss] by the applicable statutory income tax rate).” This ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025. Entities are permitted to early adopt the standard “for annual financial statements that have not yet been issued or made available for issuance.” The amendments should be applied on a prospective basis. Retrospective application is permitted. The adoption of this standard did not have a material impact on its consolidated financial statements but resulted in additional income tax disclosures.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This ASU incorporates certain U.S. Securities and Exchange Commission (SEC) disclosure requirements into the FASB Accounting Standards Codification™ (“Codification”). The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. In SEC Release No. 33-10532, Disclosure Update and Simplification, issued August 17, 2018, the SEC referred certain of its disclosure requirements that overlap with, but require incremental information to, generally accepted accounting principles to the FASB for potential incorporation into the Codification. The ASU incorporates into the Codification 14 of the 27 disclosures referred by the SEC. They modify the disclosure or presentation requirements of a variety of Topics in the Codification. The requirements are relatively narrow in nature. Some of the amendments represent clarifications to, or technical corrections of, the current requirements. Because of the variety of Topics amended, a broad range of entities may be affected by one or more of those amendments. For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. For all other entities, the amendments will be effective two years later. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.
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