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Ispire Values Asset With No Book Value At $74.2 Million, Will Restate Financials

The company waited until after the market closed on a Friday to disclose the botched valuation accounted for nearly 80% of the company’s assets.

September 15, 2023

On a Friday after the market closed Ispire Technologies (ISPR), an e-cigarettes and cannabis vaping products manufacturer, acknowledged nearly two years of financial statements are not accurate.

Despite being a publicly traded company for just six months, Ispire’s auditor, MSPC Certified Public Accountants and Advisors, informed the Audit Committee the company’s financial statements for the year ended December 31, 2022 and the nine months ended June 30, 2023 must be restated.

At issue are intangible assets consisting of intellectual property rights that were transferred to Ispire by a control party.

Instead of recording the intangibles at the transferor’s book value— which was “nil”— Ispire recorded the intangibles as having a value of $74,259,915, or 79.1% of the company’s assets.

Likewise, Ispire says the transferred intangible assets represented 90.9% of stockholder equity as of March 31, 2023.

Interestingly, the restatement will result in Ispire reporting a lower net loss after amortization expense associated with the intangibles is excluded.

Notably, Ispire’s latest 10-Q was filed in May 2023, four months before the company acknowledged a problem with the value of its intangibles. In that filing, the company’s Intangibles were reduced from $72.7 million the prior quarter to zero.

Ispire did not immediately respond when DuDil asked exactly when the company became aware of the valuation error or whether an opportunity existed to disclose the matter earlier than after the close on a Friday.

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