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iPower Inc. (NASDAQ:IPW), a small-cap company with a market capitalization of $18.2 million and trailing twelve-month revenue of $74.1 million, announced the termination of a material definitive agreement involving its variable interest entity (VIE) structure in China, according to a press release statement filed with the Securities and Exchange Commission. According to InvestingPro analysis, the company appears undervalued at its current price of $0.58 per share.
On August 4, iPower, through its wholly owned subsidiary Dayourenzai (Shenzhen) Technology Co., Ltd., entered into a VIE Contract Termination Agreement with Daheshou (Shenzhen) Information Technology Co., Ltd. and its registered shareholders. As a result, iPower’s subsidiary no longer owns, operates, or controls Daheshou, and services previously conducted by Daheshou will now be performed by iPower and other contractors as needed.
Daheshou had been consolidated into iPower’s financial statements as a variable interest entity through contractual arrangements that allowed iPower to exercise effective control over its operations. Historically, Daheshou was engaged in a portion of iPower’s sales, supply chain, merchandising, and distribution services in China.
The company stated that, in recent years, it has improved efficiency and gradually transitioned many of Daheshou’s services to iPower and other contractors. The termination of the VIE structure is described as part of an effort to simplify operations and improve structural efficiency. According to the filing, this change is not expected to have a material effect on iPower’s business or revenue streams generated from China.
The summary of the VIE Contract Termination Agreement is included in the SEC filing, with the full agreement attached as an exhibit.
iPower Inc. is listed on the Nasdaq Stock Market under the ticker IPW. The information in this article is based on a press release statement included in the company’s recent SEC filing.
In other recent news, iPower Inc. has announced several strategic initiatives and developments. The company plans to expand into blockchain technology, focusing on treasury operations and consumer offerings. This includes accumulating Bitcoin as a treasury reserve asset, marking a significant shift from its current business model. Additionally, iPower has received an extension from Nasdaq to regain compliance with the minimum bid price requirement, giving the company until December 29, 2025, to meet the necessary threshold.
Shareholders recently approved board elections and authorized a reverse stock split, with a significant majority of eligible votes represented. In its efforts to boost U.S. manufacturing, iPower has initiated the production of a new equipment line for its joint venture, United Package NV LLC, under the "Made in USA" initiative. This move aims to enhance operational resilience and improve service delivery. The company expects the joint venture to be fully operational by the fourth quarter of 2025.
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