| RELATED PARTY TRANSACTIONS |
10. RELATED PARTY TRANSACTIONS
| a) | The table below sets forth the major related parties and
their relationships with the Company: |
| Name of related parties and Relationship with the Company | | - Tuanfang Liu is the Co-Chief Executive Officer and Chairman of the Company. | | - Jiangyan Zhu is the wife of Tuanfang Liu and a director of the Company. | | - Eigate (Hong Kong) Technology Co., Limited (“Eigate”) is a wholly-owned and controlled by the Company’s Chairman. | | - Aspire Global is a company controlled by the Chairman of the Company. | | - Aspire International Hong Kong Limited is a wholly-owned subsidiary of Aspire Global. | | - Shenzhen Yi Jia, a Chinese company that is 95% owned by the Company’s Chairman and 5% by the Chairman’s cousin. | | - IKE Tek LLC, a join venture that the Company has 40% membership interests in |
| b) | Tuanfang Liu is also Aspire Global’s chief executive officer and a director of both the Company and Aspire Global, and his wife, Jiangyan Zhu, is also a director of both companies. As of December 31, 2024, Mr. Liu and Ms. Zhu beneficially own 66.5% and 5.0%, respectively, of the outstanding shares of Aspire Global. As of December 31, 2024, Mr. Liu and Ms. Zhu beneficially own 58.7% and 4.4%, respectively, of the outstanding shares of the Company. |
| c) | For the three and six months ended December 31, 2024 and 2023, the majority of the Company’s nicotine and cannabis vaping products were purchased from Shenzhen Yi Jia. As of December 31, 2024 and June 30, 2024, the accounts payable–related party was $86,375,645 and $67,046,472, respectively, which was payable to Shenzhen Yi Jia. Pricing for products purchased from Shenzhen Yi Jia is determined by the volume of products ordered and shall be the most favorable market price offered by Shenzhen Yi Jia in negotiations. There are no fixed payment terms regarding these balances and they are classified as current liabilities. The relationship between the related parties, including the payment terms, is reviewed on a quarterly basis. As long as strategic objectives are met, the Company expects the relationship will continue without significant modification. For the three months ended December 31, 2024 and 2023, the purchases from Shenzhen Yi Jia were $30,975,378 and $25,464,800, respectively. For the six months ended December 31, 2024 and 2023, the purchases from Shenzhen Yi Jia were $61,558,483 and $48,983,213, respectively. |
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