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What changed in Expion360 Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Expion360 Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+412 added−347 removedSource: 10-K (2025-03-31) vs 10-K (2024-03-28)

Top changes in Expion360 Inc.'s 2024 10-K

412 paragraphs added · 347 removed · 250 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

53 edited+12 added−22 removed19 unchanged
Biggest changeAs of December 31, 2023, we offer the following products for sale: ● 12v batteries: o Group 24 batteries: ● e360 60Ah lithium battery ● e360 80Ah lithium battery ● e360 Extreme Density 95Ah lithium battery o Group 27 batteries: ● e360 100Ah lithium battery ● e360 Extreme Density 120Ah lithium battery o Custom form factor battery: ● e360 Extreme Density 360Ah battery ● e360 Extreme Density 450 Ah lithium battery ● 48v batteries: o Group GC2 batteries: ● e360 36Ah lithium battery ● Expion360 e360 Lithium Power Bundle™ ● Battery monitors ● DC battery chargers ● Industrial tie-downs – 7 models ● Terminal blocks ● Bus bars ● AURA POWERCAP TM 600 ● e360 SmartTalk TM mobile app As of December 31, 2023, we have the following products in our pipeline: ● In September 2023, we introduced a new 4.5 Ah 26650 lithium-ion phosphate battery cell and 12 Volt 450 Ah e360 SmartTalk™ lithium-ion battery.
Biggest changeAs of December 31, 2024, we offered the following products for sale: 12V Batteries: · Group 24: o e360 60Ah LiFePO4 battery o e360 80Ah LiFePO4 battery o e360 95Ah LiFePO4 battery · Group 27: o e360 100Ah LiFePO4 battery o e360 120Ah LiFePO4 battery o e360 100Ah LiFePO4 battery with SmartTalk, CANBus, and VHS Internal Heating o e360 100Ah LiFePO4 battery with SmartTalk, CANBus, and VHS Internal Heating · GC2: o e360 162Ah LiFePO4 battery with SmartTalk, CANBus, and VHC Internal Heating · EX1 Custom: o e360 368Ah LiFePO4 battery o e360 368Ah LiFePO4 battery with SmartTalk o e360 450Ah LiFePO4 battery with SmartTalk · EX2 Edge Custom: o e360 240Ah LiFePO4 battery with SmartTalk, CANBus, and VHC Internal Heating 48V Batteries: · GC2: o e360 36Ah LiFePO4 battery with SmartTalk and CANBus · EX2 Edge Custom: o e360 60Ah LiFePO4 battery with SmartTalk, CANBus, and VHC Internal Heating · 3U Server Rack Home Energy Battery: o e360 100Ah Home Energy LiFePO4 battery with CANBus Accessories: · Battery Monitors · DC-DC Battery Chargers · AC-DC Battery Chargers · Solar Charge Controller Battery Chargers · CANBus Communication Cables · 120W Portable Solar Panel · Industrial Battery Mounting Kits – 10 models · Terminal Blocks · Bus Bars · AURA Powercap 600W Inverter · e360 SmartTalk mobile app 8 As of December 31, 2024, we had the following products in our pipeline: · In September 2023, we introduced a new 4.5 Ah 26650 lithium-ion phosphate battery cell and 12 Volt 450 Ah e360 SmartTalk™ lithium-ion battery.
They incorporate detailed-oriented design and engineering and strong case materials and internal and structural layouts, and are backed by responsive customer service. Our Market Opportunity The trend of vehicle electrification is expected to be a significant growth catalyst for lithium compounds over the next decade and beyond.
They incorporate detailed-oriented design and engineering, strong case materials, and internal and structural layouts, and are backed by responsive customer service. Our Market Opportunity The trend of vehicle electrification is expected to be a significant growth catalyst for lithium compounds over the next decade and beyond.
To maximize the power and efficiency of our batteries, we welded our cells via thick copper/tin-machined collector plates, welded all interior pack points, added a press break flange at each end to create a mechanical backbone for the battery monitoring system (the “BMS”), used high-grade wiring and ring terminals throughout, and treated connections with industrial epoxy for long-lasting protection.
To maximize the power and efficiency of our batteries, we welded our cells via thick copper/tin-machined collector plates, welded all interior pack points, added a press break flange at each end to create a mechanical backbone for the battery monitoring system (“BMS”), used high-grade wiring and ring terminals throughout, and treated connections with industrial epoxy for long-lasting protection.
None of our employees are covered by collective bargaining agreements, and we have never experienced an organized work stoppage, strike, or labor dispute. We believe our working conditions and compensation packages are competitive with those offered by competitors and consider our relations with our employees to be good.
None of our employees are covered by collective bargaining agreements and we have never experienced an organized work stoppage, strike, or labor dispute. We believe working conditions and compensation packages are competitive with those offered by competitors and consider our relations with our employees to be good.
Lithium-based batteries power our daily lives, from consumer electronics to national defense. They enable electrification of the transportation sector and provide stationary grid storage, critical to developing the clean-energy economy. The U.S. has a strong research community, a robust innovation infrastructure for technological advancement of batteries, and an emerging lithium-based battery manufacturing industry, according to the US Department of Energy.
Lithium-based batteries power our daily lives, from consumer electronics to national defense. They enable electrification of the transportation sector and provide stationary grid storage, critical to developing the clean-energy economy. The U.S. has a strong research community, a robust innovation infrastructure for technological advancement of batteries, and an emerging lithium-based battery manufacturing industry, according to the U.S. Department of Energy.
In December 2023, we announced our entrance into the home energy storge market with our introduction of two LiFePO4 battery storage solutions that enable residential and small business customers to create their own stable micro-energy grid and lessen the impact of increasing power fluctuations and outages.
In December 2023, we announced our entrance into the home energy storage market with our introduction of two LiFePO4 battery storage solutions that enable residential and small business customers to create their own stable micro-energy grid and lessen the impact of increasing power fluctuations and outages.
See the section titled “ Risk Factors ” for additional information. 11 Implications of Being an Emerging Growth Company and a Smaller Reporting Company We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
See the section titled “ Risk Factors ” for additional information. Implications of Being an Emerging Growth Company and a Smaller Reporting Company We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”).
We also seek to protect our intellectual property rights through non-disclosure and invention assignment agreements with our employees and consultants and through non-disclosure agreements with business partners and other third parties. We periodically review our development efforts to assess the existence and patentability of new intellectual property.
We also seek to protect our intellectual property rights through non-disclosure and invention assignment agreements with our employees and consultants and through non-disclosure agreements with business partners and other third parties. 10 We periodically review our development efforts to assess the existence and patentability of new intellectual property.
Our website is found at expion360.com and on the Investor Relations section of our website, we post or will post, as applicable, the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the SEC: our Annual Reports on Form 10-K, our Proxy Statements on Schedule 14A, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act.
Our website is found at expion360.com and on the Investor Relations section of our website, we post or will post, as applicable, the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the SEC: our Annual Reports on Form 10-K, our Proxy Statement on Schedule 14A, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act.
We believe that we are well-positioned to capitalize on the rapid market conversion from lead-acid to lithium batteries as the primary method of power sourcing in these industries.
We believe we are well-positioned to capitalize on the rapid market conversion from lead-acid to lithium batteries as the primary method of power sourcing in these industries.
Although we believe we are in material compliance with applicable law concerning matters relating to health, safety, and the environment, the risk of liability relating to these matters cannot be eliminated completely. To date, we have not incurred significant expenditures relating to environmental compliance nor have we experienced any material issues relating to employee health and safety.
Although we believe we are in material compliance with applicable laws concerning matters relating to health, safety, and the environment, the risk of liability relating to these matters cannot be eliminated completely. To date, we have not incurred significant expenditures relating to environmental compliance nor have we experienced any material issues relating to employee health and safety.
ITEM 1. BUSINESS Our Company Expion360 focuses on the design, assembly, manufacturing, and sales of lithium iron phosphate (“LiFePO4”) batteries and supporting accessories for recreational vehicles (“RVs”), marine applications and home energy storage products, with plans to expand into industrial applications.
ITEM 1. BUSINESS Our Company Expion360 focuses on the design, assembly, manufacturing, and sale of lithium iron phosphate (“LiFePO4”) batteries and supporting accessories for recreational vehicles (“RVs”), marine applications and home energy storage products with plans to expand into industrial applications.
In addition, we secured a secondary source for lithium iron phosphate cells used in our batteries from a supplier in Europe, enabling us to source materials outside of Asia in the event it becomes necessary to do so.
In addition, we have a secondary source for lithium iron phosphate cells used in our batteries from a supplier in Europe, enabling us to source materials outside of Asia in the event it becomes necessary to do so.
While we do not have long-term purchase agreements with our third-party manufacturers and our purchases are completed on a purchase order basis, we maintain strong relationships with our manufacturers and cell suppliers, reflected in our ability to increase our purchase order volumes (qualifying us for related volume-based discounts).
While we do not have long-term purchase agreements with these manufacturers and our purchases are completed on a purchase-order basis, we maintain strong relationships with our manufacturers and cell suppliers, reflected in our ability to increase our purchase order volumes (qualifying us for related volume-based discounts).
It is our desire to work closely with federal, state and local governments, as well as private industry to help America be the leader in lithium battery technology.
It is our objective to work closely with federal, state and local governments, as well as private industry to help America be the leader in lithium battery technology.
We are also a smaller reporting company as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company.
We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company.
Along with RV, marine and home energy storage markets, we aim to provide additional capacities to the ever-expanding electric forklift and industrial material handling markets. Expion360’s e360 product line, which is manufactured for the RV and marine industries, was launched in December 2020.
Along with the RV, marine and home energy storage markets, we aim to provide additional capacities to the expanding electric forklift and industrial material handling markets. We launched our e360 product line, which is manufactured for the RV and marine industries, in December 2020.
Furthermore, we believe that our typical battery provides three times the power of the typical, lead-acid battery despite being half the weight (comparing, for example, a typical lead-acid battery like Renogy Deep Cycle AGM, which is rated at 100Ah, to our own LFP 100Ah battery and assuming slow discharge at a .1C rate). 9 Manufacturing and Supply Chain Our batteries are manufactured by multiple third-party manufacturers located in Asia, which also produce our battery cells.
Furthermore, our typical battery may provide three times the power of the typical lead-acid battery despite being half the weight (comparing, for example, a typical lead-acid battery like Renogy Deep Cycle AGM, which is rated at 100Ah, to our own LFP 100Ah battery and assuming slow discharge at a 0.1C rate). 9 Manufacturing and Supply Chain Our batteries are manufactured by multiple third-party manufacturers located in Asia, which also produce our battery cells.
In December 2023, we entered the home energy storage market with our introduction of two LiFePO4 battery storage solutions: a wall mounted all-in-one inverter and 10kW battery and an expandable server rack style battery cabinet system.
In December 2023, we entered the home energy storage market with our introduction of two LiFePO4 battery storage solutions comprising our e360 Home Energy Storage Solution: a wall mounted all-in-one inverter and 10kWh battery and an expandable server rack style battery cabinet system.
Furthermore, we believe that our typical battery provides three times the power of the typical, lead-acid battery despite being half the weight (comparing, for example, a typical lead-acid battery like Renogy Deep Cycle AGM, which is rated at 100Ah, to our own LFP 100Ah battery and assuming slow discharge at a .1C rate).
Furthermore, our typical battery may provide three times the power of the typical, lead-acid battery despite being half the weight (comparing, for example, a typical lead-acid battery like the Renogy Deep Cycle AGM, which is rated at 100Ah, to our own LFP 100Ah battery and assuming slow discharge at a 0.1C rate).
Company Information Expion360 Inc. was initially organized as a limited liability company under the name Yozamp Products Company, LLC in the State of Oregon on June 16, 2016, and converted to a Nevada corporation under its current name pursuant to articles of conversion dated as of November 16, 2021.
Company Information Expion360 Inc. was initially organized as a limited liability company under the name Yozamp Products Company, LLC in the State of Oregon on June 16, 2016 and converted to a Nevada corporation on November 16, 2021.
They include (1) securing access to raw materials; (2) support of the U.S. materials-processing base; (3) stimulation of U.S. electrode, cell, and pack manufacturing; (4) enabling recycling and reuse of critical materials; and (5) support of scientific R&D, STEM education and workforce development. Expion360 is well-positioned to benefit from this national focus.
They include (i) securing access to raw materials; (ii) support of the U.S. materials-processing base; (iii) stimulation of U.S. electrode, cell, and pack manufacturing; (iv) enabling recycling and reuse of critical materials; and (v) support of scientific R&D, STEM education and workforce development. Expion360 is well-positioned to benefit from this national focus.
The strength of these relationships has helped us moderate increased supply-related costs associated with inflation, currency fluctuations, and U.S. government tariffs imposed on our imports and to avoid potential shipment delays. We aim to maintain an appropriate level of inventory to satisfy our expected supply requirements.
The strength of these relationships has helped us moderate increased supply-related costs associated with inflation, currency fluctuations, and U.S. government tariffs imposed on our imports, and avoid potential shipment delays. We aim to maintain an appropriate level of inventory to satisfy our expected supply requirements. We believe we could locate suitable alternative third-party manufacturers to fulfill our requirements if needed.
We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) our common stock, par value $0.001 per share (“Common Stock”) held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year, and our Common Stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
We may take advantage of certain of the reduced reporting requirements available to smaller reporting companies and will be able to take advantage of these reduced reporting requirements for so long as our voting and non-voting Common Stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting Common Stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
We stand by our batteries with an industry leading 12-year warranty. 8 To enable us to provide a full range of components to complement our battery offerings, we offer a suite of accessories and components for new installations or conversions which includes but is not limited to chargers, monitors, inverters, and solar components from brands such as Victron Energy and RedArc.
To enable us to provide a full range of components to complement our battery offerings, we offer a suite of accessories and components for new installations or conversions which includes but is not limited to chargers, monitors, inverters, and solar components from brands such as Victron Energy and RedArc.
We would cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer as defined in the Exchange Act.
We would cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenue of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a “large accelerated filer” under SEC rules.
These provisions include: ● the requirement that we provide only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure; ● reduced disclosure about our executive compensation arrangements; ● exemption from the requirement that we hold a non-binding advisory vote on executive compensation or golden parachute arrangements; and ● an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.
These provisions include: · the requirement that we provide only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure; · reduced disclosure about our executive compensation arrangements; · an exemption from the requirement that we hold a non-binding advisory vote on executive compensation or golden parachute arrangements; and · an exemption from the auditor attestation in the assessment of our internal control over financial reporting. 11 We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company.
Strong National Retail Customers and Distribution Channels Expion360 has sales relationships with many major RV and marine retailers, and plans to use what we believe is a strong reputation in the lithium battery space to create an even stronger distribution channel.
Strong National Retail Customers and Distribution Channels We have sales relationships with many major RV and marine retailers and plan to use our strong reputation in the lithium battery space to create an even stronger distribution channel.
We have implemented policies and procedures, trained our employees, and conducted internal audits to verify compliance with environmental health and safety regulations. In August 2022, our Group 24 and Group 27 batteries passed UL 1973 certification. In February 2023, our custom 360Ah battery also passed UL 1973 certification. Employees As of December 31, 2023, we had 23 full-time employees.
We have implemented policies and procedures, trained our employees, and conducted internal audits to verify compliance with environmental health and safety regulations. Our Group 24 and Group 27 batteries and our custom 360Ah battery have passed UL 1973 certification. Employees As of December 31, 2024, we had 20 employees, all of whom worked for us full time.
We hold our lithium batteries to high safety standards, which has enabled us to achieve a UL 1973 compliance.
We hold our lithium batteries to high safety standards, which has enabled us to achieve a UL 1973 compliance. We stand by our batteries with a robust 12-year warranty.
Our batteries utilize lithium iron phosphate, and therefore, are expected to have a lifespan of approximately 12 years - three to four times that of certain lead-acid batteries and with ten times the number of charging cycles.
We believe our custom 360Ah battery also provides a unique capacity to footprint ratio compared to lead-acid and lithium battery competitors. Our batteries utilize lithium iron phosphate and therefore are expected to have a lifespan of approximately 12 years—three to four times that of certain lead-acid batteries—and ten times the number of charging cycles.
Intellectual Property The success of our business and our technology leadership is supported by our proprietary battery technology. We have filed 11 patent applications in the United States to provide protection for our technology, including seven design patent applications and four utility patent applications.
We have filed 11 patent applications in the United States to provide protection for our technology, including seven design patent applications and four utility patent applications.
We have designed custom form factors in both the industry standard Group 24 and Group 27 battery sizes allowing us to visually and structurally differentiate Expion360 within the market space. We believe that our custom 360Ah battery also provides a unique capacity to footprint ratio compared to lead-acid and lithium battery competitors.
Lead-acid battery manufactures also continue to have a presence in the marketplace. We have designed custom form factors in both the industry standard Group 24 and Group 27 battery sizes allowing us to visually and structurally differentiate Expion360 within the market space.
We pursue the registration of our domain names, trademarks, and service marks in the United States. In an effort to protect our brand, as of December 31, 2023, we own 15 trademark registrations to cover our house marks in the United States. We also own nine trademark registrations relating to our house marks in Canada.
We pursue the registration of our domain names and trademarks and service marks in the United States and in an effort to protect our brand, as of December 31, 2024, we have 18 trademarks registered or pending registration to cover our house marks in the United States and have 9 trademarks registered or pending registration in Canada.
Our batteries utilize lithium iron phosphate, and therefore, are expected to have a lifespan of approximately 12 years - three to four times that of certain lead-acid batteries and with ten times the number of charging cycles.
Our lithium-ion batteries offer superior capacity to our lead-acid competitors with an expected lifespan of approximately 12 years—three to four times the lifespan of certain lead-acid batteries—and ten times the number of charging cycles.
The vast expansion of the lithium battery market can be attributed to global trends promoting clean energy, as well as the compact and flexible nature of lithium battery packs which make them easy to install in RVs and boats.
According to IMARC, the market for lithium-ion batteries is projected to grow at 13.2% CAGR to reach $93.3 billion by 2028. 6 The vast expansion of the lithium battery market can be attributed to global trends promoting clean energy, as well as the compact and flexible nature of lithium battery packs, which make them easy to install in RVs and boats.
Expion360 has sales relationships with many major RV retailers, including Camping World, a leading national RV retailer and Meyer Distributing, Inc., a leading national marketer and distributor of automotive and RV specialty products.
Our sales are completed on a purchase order basis and most are without firm, long-term revenue commitments or sales arrangements. Expion360 has sales relationships with many major RV retailers, including Camping World, a leading national RV retailer and Meyer Distributing, Inc., a leading national marketer and distributor of automotive and RV specialty products.
Competitive Strengths We believe the following strengths differentiate Expion360 and create long-term, sustainable competitive advantages: Superior Capacity to Lead Acid Competitors Lead-acid batteries have always been the standard in RV and marine transportation vehicles. Our lithium-ion batteries offer superior capacity to our lead-acid competitors.
Competitive Strengths We believe the following strengths differentiate Expion360 and create long-term, sustainable competitive advantages: Superior Capacity to Lead-Acid Competitors Lead-acid batteries have historically been the standard in RV and marine transportation vehicles, but these industries are experiencing a rapid conversion from lead-acid to lithium batteries as the primary method of power sourcing.
Lithium is a key raw material used to produce our battery cells and as a result, the cost of our battery cells is dependent on the price and availability of lithium, which may be volatile and unpredictable In addition to increased mining and newly located reserves, there is also an industry push to provide more efficient ways to extract lithium from the mined ore.
Lithium, which is extracted from mined ore, is a key raw material used to produce our battery cells and, as a result, the cost of our battery cells is dependent on the price and availability of lithium, which may be volatile and unpredictable and beyond our control.
Competitors Our competitors include lithium-ion battery manufacturers, such as Relion (which was acquired by Brunswick Corporation in September 2021); Dragonfly Energy Holdings Corp (Nasdaq: DFLI), the manufacturer of Battle Born Batteries; Renogy; and Dakota Lithium. Lead-acid battery manufactures also continue to have a presence in the marketplace.
See the section above titled “ Competitive Strengths — Expansion into New Markets ” for additional information about the new home energy storage solutions. Competitors Our competitors include lithium-ion battery manufacturers, such as Relion (which was acquired by Brunswick Corporation in September 2021); Dragonfly Energy Holdings Corp (Nasdaq: DFLI), the manufacturer of Battle Born Batteries; Renogy; and Dakota Lithium.
We use high-grade LiFePO4 encased in steel and meeting the UL 1642 standard (UL File No. MH64383). We believe that our materials and engineering enhance the reliability, stability, and safety of our products.
Our batteries are designed and engineered in-house using premium lithium iron phosphate cells with quality controls at every step. We use high-grade LiFePO4 batteries meeting the UL 1642 standard (UL File No. MH64383). We believe our materials and engineering enhance the reliability, stability, and safety of our products relative to those of our competitors.
Expion360 began taking pre-orders for the new 450 Ah e360 SmartTalk™ battery starting in the fourth quarter of 2023, with initial shipments expected to begin in the first quarter of 2024. ● In December 2023, we introduced our two LiFePO4 battery storage solutions, a wall mounted all-in-one inverter and 10kW battery and an expandable server rack style battery cabinet system.
We have been regularly shipping the battery to our customers, including OEMs, since March 2024. · In December 2023, we introduced a wall mounted all-in-one inverter and 10kW battery and an expandable server rack style battery cabinet system and begun taking orders for the new e360 Home Energy Storage Solutions, which began shipping to customers in January 2025.
We are also focused on expanding into the home energy storage market with the introduction of our two LiFePO4 battery storage systems, where we aim to provide a cost-effective, low barrier of entry, flexible system for those looking to power their homes via solar energy, wind, or grid back-up.
In addition, in January 2025 we began selling our e360 Home Energy Storage Solutions, which consist of two LiFePO4 battery storage solutions and seek to provide consumers with a cost-effective, low barrier of entry, flexible system to power their homes utilizing solar energy, wind, or grid back-up.
We design, assemble, and distribute high-powered, lithium battery solutions using ground-breaking concepts and rugged, high-quality designs with a creative sales and marketing approach. We believe that our product offerings include some of the most dense and minimal-footprint batteries in the RV and marine industries.
Our high-powered, lithium battery solutions incorporate innovative concepts and have been designed to include some of the most dense and minimal-footprint batteries in the RV and marine industries.
We estimate that raw material costs account for over half of our cost of goods sold. The costs of these raw materials, particularly lithium-ion batteries, are volatile and beyond our control. Additionally, availability of the raw materials used to manufacture our products may be limited at times, resulting in higher prices and/or the need to find alternative suppliers.
Additionally, availability of the raw materials used to manufacture our products may be limited at times, resulting in higher prices and/or the need to find alternative suppliers. Our battery cell manufacturers have joint venture factories outside of Asia and have secured sourcing contracts from lithium suppliers in South America and Australia.
Additionally, in June 2023, we unveiled e360 SmartTalk, an innovative mobile app that allows the seamless integration and management of e360 Bluetooth-enabled LiFePO4 batteries. The technology enables users to wirelessly monitor and manage e360 batteries, providing a view of individual battery conditions and performance as well as a comprehensive view of an entire power bank consisting of multiple e360 batteries.
The technology enables users to wirelessly monitor and manage e360 batteries, providing a comprehensive view of both individual battery conditions and performance, and a power bank consisting of multiple e360 batteries. The 48 Volt GC2 LiFePO4 battery was our first e360 SmartTalk Battery for powering electric golf carts and other light electric vehicles.
In addition, in September 2023, Expion360 introduced a new 4.5 Ah 26650 lithium-ion phosphate battery cell. This will allow us to increase energy density by over 32% compared to traditional 3.4 Ah 26650 cells.
In addition, we offer a 4.5 Ah 26650 lithium-ion phosphate battery cell, which allows us to increase energy density by over 32% compared to traditional 3.4 Ah 26650 cells. Expansion into New Markets Our proprietary e360 SmartTalk mobile app is included in many of our battery models and allows the seamless integration and management of e360 Bluetooth-enabled LiFePO4 batteries.
Expion360 Products We focus on the design, assembly, and sales of LiFePO4 batteries and supporting accessories for RV and marine applications, as well as our recent expansion into home energy storage solutions. Our batteries are designed and engineered in-house using premium lithium iron phosphate cells with quality controls at every step.
Home Energy Integration We are currently having discussions with integration partners. This is key for the development of our home energy storage products and subsequent sales growth. Expion360 Products We have historically focused on the design, assembly, and sales of LiFePO4 batteries and supporting accessories for RV and marine applications, and have recently expanded into home energy storage solutions.
Another development of the past few years is lithium cell recycling. This process will recapture the raw lithium from the cell for reuse in future cells. The price of lithium remains subject to volatility and thus we aim to monitor any developments that might adversely affect our supply chain.
In addition to increased mining and newly located reserves, there is an industry push to provide more efficient ways to extract lithium from mined ore. Another development of the past few years is lithium cell recycling. This process will recapture the raw lithium from the cell for reuse in future cells.
Customers We currently have more than 300 customers across the United States consisting of dealers, wholesalers, private-label customers and original equipment manufacturers who then sell our products to end consumers. Our sales are completed on a purchase order basis and most are without firm, long-term revenue commitments or sales arrangements. In addition, we also sell products directly to consumers.
We believe that we can protect our margins through a combination of supplier concessions, customer price increases and efficiencies gained as sales continue to grow. Customers We currently have more than 300 customers across the United States consisting of dealers, wholesalers, private-label customers and OEMs who then sell our products to end consumers.
We also offer a high level of technical support to our customers before and after product sales. 10 We currently derive a significant portion of our revenues from a limited number of customers. During the year ended December 31, 2023, sales to two customers totaled approximately 21% of our total sales.
We currently derive a significant portion of our revenue from a limited number of customers. During the year ended December 31, 2024, sales to one customer accounted for approximately 14% of our gross sales. This customer accounted for 6% of our accounts receivable as of December 31, 2024.
While these customers did not have accounts receivable balances as of December 31, 2023, four other customers had accounts receivable balances totaling $140 thousand, representing 90% of total accounts receivable as of December 31, 2023. Sales to each of our other customers did not exceed 10% during this period.
Sales to each of our other customers did not exceed 10% during this period. Four other customers accounted for 60% of our accounts receivable as of December 31, 2024. Intellectual Property The success of our business and our technology leadership is supported by our proprietary battery technology.
We believe that our e360 Home Energy Storage System has strong revenue potential with recurring income opportunities for us and our associated sales partners. Our products provide numerous advantages for various industries that are looking to migrate to lithium-based energy storage.
As of January 2025, we have begun shipping orders of our e360 Home Energy Storage Solutions. We currently operate Expion360 as one reportable business segment, Energy Storage (ES). Our products provide numerous advantages for various industries that are looking to migrate to lithium-based energy storage.
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We are developing the e360 Home Energy Storage System, a system that we expect to significantly change the industry in barrier price, flexibility, and integration. We are deploying multiple intellectual property strategies with cutting-edge research and unique products to sustain and scale the business.
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We are deploying multiple intellectual property strategies with research and products to sustain and scale our business. This includes design, development and collaboration, using our IP to bring safety, quality and service to our customers.
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We currently have customers consisting of dealers, wholesalers, private label customers and original equipment manufacturers who are driving revenue and brand awareness nationally. Our corporate headquarters are based in Redmond, Oregon, and our suppliers are based in the United States, Asia, and Europe. We are currently in the process of building out manufacturing capacity at our corporate headquarters.
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Our customers consist of dealers, wholesalers, private-label customers, and original equipment manufacturers (“OEMs”) who then sell our products to end consumers and drive brand awareness nationally. Our primary target markets are currently the RV, marine, and home energy storage industries.
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Our long-term target is to onshore the manufacturing of most of our components and assemblies, including cell manufacturing, to the United States. Our primary target markets are currently the RV and marine industries.
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We are also focused on expanding into the home energy storage market with the introduction of our e360 Home Energy Storage Solutions, and we hope to establish a new standard in the industry for barrier price, flexibility, and integration with this offering.
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According to ResearchAndMarkets.com, the global EV market demand is expected to reach $1.66 trillion by 2030, expanding at a compound annual growth rate (“CAGR”) of 14.5% over the forecast period. On a global level, the market is driven by initiatives taken by governments of various countries to promote manufacturing of EVs.
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According to ReportLinker, the global light electric vehicle market is growing at a 9.4% compound annual growth rate (“CAGR”) and is expected to reach $122.7 billion by 2027. Similarly, the global golf cart battery market is growing at a 5.9% CAGR and is anticipated to reach $216.5 million by 2031 according to Allied Market Research.
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For example, the Electric Vehicles Initiative (“EVI”), a multi-government forum with 13 participating countries, works to increase the adoption of EVs globally. Several campaigns and programs have been launched through the EVI forum, including the EV30@30 in 2017 initiative, which aims to have at least 11 countries with EVs reflecting 30% of new vehicle sales by 2030.
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Furthermore, the global RV market was $57.3 billion in 2021, and is anticipated to have a CAGR of 7.6% from 2022 to 2031, with an anticipated market of $117.0 billion by 2031, per Allied Market Research.
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Further, according to ResearchAndMarkets.com, the United States EV market size was valued at $49.1 billion in 2022 and is anticipated to expand at a CAGR of over 15.5% between 2023 and 2032 due to the growing demand for efficient and eco-friendly vehicles. 6 Furthermore, the North American RV market was estimated at roughly $33.95 billion in 2021, and is projected to grow at a 5.0% CAGR from 2024 to 2032 according to Expert Market Research.
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In addition, the global residential solar energy storage market is expected to increase from $20.5 billion in 2023, to an anticipated $518.8 billion in 2032, a CAGR of 43.16%, according to Market Data Forecast. At the intersection of both these trends lies the rapidly expanding lithium battery market.
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There are over 200 national chain RV dealers in the United States, further underscoring the robust market for these vehicles. At the intersection of both these trends lies the rapidly expanding lithium battery market. According to IMARC, the market for lithium-ion batteries is projected to grow at 13.2% CAGR to reach $93.3 billion by 2028.
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Our home energy storage products are currently completing UL testing and certification, as well as other requirements for various Authorities Having Jurisdiction. 7 In January 2024, we introduced our next generation 12V GC2 and Group 27 series LiFePO4 batteries.
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The Biden administration has also laid out a bold agenda to address the climate crisis and build a clean and equitable energy economy that achieves carbon-pollution-free electricity by 2035 and puts the United States on a path to achieve net-zero emissions, economy-wide. We believe this government support will continue to drive rapid growth in the industry.
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These new versions include higher amp-hour options (4.0Ah and 4.5Ah cell technology) and the latest advancements in power technology features, including Expion360’s proprietary Vertical Heat Conduction™ internal heating, Bluetooth®, and controller area network (“CANBus”) communication. We began delivering the new 12V GC2 and Group 27 batteries to customers in the second quarter of 2024.
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The 12 volt 450 Ah battery was introduced in September 2023 as our first e360 battery incorporating our 4.5 Ah cell technology. 7 Battery Pack Flexibility Our battery packs are also highly flexible, designed to be moved and used in various applications seamlessly. We plan to onshore our semi-automated pack assembly in Redmond, Oregon.
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In July 2024, we launched our new Edge battery, which offers a slim design and adds greater flexibility during installation. The Edge is offered in both 12V and 48V versions. We are seeing high customer interest and started shipping the new Edge in July 2024.
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The initial equipment has arrived and subject to market conditions, we are working on setup and development of additional equipment to automate the line. This should allow us to use a more flexible approach to forming and creating new battery packs.
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We estimate that raw material costs account for over half of our cost of goods sold.
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By onshoring, we expect to be able to react to market demands at a much quicker pace and increase profit levels over our competition. Expansion into New Markets In furtherance of our vision of stored energy, in the second quarter of 2023, we commenced deliveries of a portable power generator product, the AURA POWERCAP™ 600 (the “Aura 600”).
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However, notwithstanding any efforts to improve the sustainability and efficiency of lithium mining, the price of lithium is volatile. We continue to monitor developments that may adversely affect our supply chain. Management expects that products from our Asian third-party manufacturers will be subject to additional tariffs in 2025.
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The Aura 600 is designed to fit and convert any one of Expion360’s Group 24 lithium batteries into a 600W mobile power station. The Aura 600’s proprietary patent pending design allows it to join seamlessly to 60Ah, 80Ah, and 95Ah Expion360 batteries. The Aura 600 is an exclusive fit to Expion360 batteries and is not compatible with other brands.
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In addition, we also sell products directly to end consumers. We intend to continue to focus on our sales and distribution channels to develop existing customer relationships and grow our customer base. We also offer a high level of technical support to our customers before and after product sales.
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The Aura 600 contains beneficial features and functions for a compact portable power unit, including the ability to recharge the battery from the input charge port using the included 7 Amp household charger and the ability to recharge remotely with Expion360’s lightweight portable solar panel options, which are sold separately.
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In January 2023, we also announced our plans to introduce the AURA POWERCAP™ 800 (the “Aura 800”), which is designed to fit and convert any one of our Group 27 lithium batteries into an 800W mobile power station. The Aura 800’s design allows it to join to 100Ah and 120Ah Expion360 batteries.
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While we have completed development of the Aura 800 and accepted pre-orders of the product, demand for the Aura 800 has been softer than anticipated and we have no current plans to commence commercial sales of the product. We remain focused on growing our commercial sales of the Aura 600.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf our facilities become inoperable for any reason, our ability to produce our products could be negatively impacted. · Our failure to introduce new products and product enhancements and broad market acceptance of new technologies introduced by our competitors could adversely affect our business. · We may not be able to adequately protect our proprietary intellectual property and technology and we may need to defend ourselves against intellectual property infringement claims. · If our electronic data is compromised or if we fail to keep pace with developments in technology, our business could be significantly harmed. · Our ability to raise capital in the future may be limited, which could make us unable to fund our capital requirements and sustain our operations. · We depend on our senior management team and other key employees, and significant attrition within our management team or unsuccessful succession planning could adversely affect our business. · Sales of substantial amounts of our securities in the public markets, or the perception that such sales might occur, could reduce the price of our securities and may dilute your voting power and your ownership interest in us.
Biggest changeIf our facilities become inoperable for any reason, our ability to produce our products could be negatively impacted. · We could face potential product liability or warranty claims relating to our products, including the components thereof, which could reduce market adoption, result in reputation damage, and result in significant costs and liabilities, which would reduce our profitability. · Our operations expose us to litigation, tax, environmental, and other legal compliance risks. · Our failure to introduce new products and product enhancements that respond to customer and end consumer demand, and any broad market acceptance of new technologies introduced by our competitors, could adversely affect our business. · We may not be able to adequately protect our proprietary intellectual property and technology and we may need to defend ourselves against intellectual property infringement claims. · Any acquisitions that we complete may dilute stockholder ownership interests in the Company, may have adverse effects on our financial condition and results of operations and may cause unanticipated liabilities. · If our electronic data is compromised, or we experience a failure in our information technology or storage systems, our business could be significantly harmed. · Our ability to raise capital in the future may be limited, which could make us unable to fund our capital requirements and our stockholders may be diluted by future securities offerings. · We depend on our senior management team and other key employees, and significant attrition within our management team or unsuccessful succession planning could adversely affect our business. 13 Risks Related to Ownership of our Common Stock · Our stock price may fluctuate significantly, and you may lose all or a part of your investment. · Sales of substantial amounts of our securities in the public markets, or the perception that such sales might occur, could reduce the price of our securities and may dilute your voting power and your ownership interest in us. · The exercise of outstanding warrants may result in a substantial increase in the number of shares of our common stock that are outstanding. · The Series A Warrants and Series B Warrants may have an adverse effect on the market price of our common stock and make it more difficult to effect a business combination. · The Reverse Stock Split cash true-up payment provision in the Series A Warrants we sold in the August 2024 Public Offering may have a material adverse impact on our financial condition, may impede our ability to raise additional capital, and may discourage an acquisition of us by a third party.
In addition, the Russia-Ukraine war and the Israel-Palestine conflict has and may continue to further exacerbate disruptions in the global supply chain. As a result of sanctions imposed in relation to the Russia-Ukraine conflict, gas prices in the United States have risen to historic levels, and geopolitical tensions in the Middle East has impacted global shipping routes.
In addition, the Russia-Ukraine war and the Israel-Palestine conflict has and may continue to further exacerbate disruptions in the global supply chain. As a result of sanctions imposed in relation to the Russia-Ukraine conflict, gas prices in the United States have risen to historic levels, and geopolitical tensions in the Middle East have impacted global shipping routes.
We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in the jurisdictions in which we conduct or in the future may conduct activities, including, the U.S. Foreign Corrupt Practices Act (“FCPA”).
We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in the jurisdictions in which we conduct or in the future may conduct activities, including, the U.S. Foreign Corrupt Practices Act (the “FCPA”).
If we are unable to enter into or maintain commercial arrangements with these suppliers on favorable terms, or if any of these suppliers experience unanticipated delays, disruptions or shutdowns or other difficulties ramping up their supply of products or materials to meet our requirements, our assembly operations and customer deliveries would be seriously impacted, potentially resulting in liquidated damages and harm to our customer relationships.
However, if we are unable to enter into or maintain commercial arrangements with these suppliers on favorable terms, or if any of these suppliers experience unanticipated delays, disruptions or shutdowns or other difficulties ramping up their supply of products or materials to meet our requirements, our assembly operations and customer deliveries would be seriously impacted, potentially resulting in liquidated damages and harm to our customer relationships.
Alternatively, if a court were to find the choice of forum provision contained in our Articles of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition. I TEM 1B. UNRESOLVED STAFF COMMENTS None.
Alternatively, if a court were to find the choice of forum provision contained in our Articles of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition. 31 I TEM 1B. UNRESOLVED STAFF COMMENTS None.
The prices for these materials fluctuate and their available supply may be unstable, depending on market conditions and global demand for these materials, including as a result of increased global production of electric vehicles (“EVs”) and energy storage products. Furthermore, fluctuations or shortages in petroleum and other economic conditions may cause us to experience significant increases in freight charges.
The prices for these materials fluctuate and their available supply may be unstable, depending on market conditions and global demand for these materials, including as a result of increased global production of electric vehicles and energy storage products. Furthermore, fluctuations or shortages in petroleum and other economic conditions may cause us to experience significant increases in freight charges.
In addition, while the pandemic positively impacted our battery sales due to more consumers adopting the RV lifestyle, there is no guarantee that any such increase would be sustained, which could cause our results of operations to fluctuate. 15 If we fail to expand our sales and distribution channels, our business could suffer.
In addition, while the pandemic positively impacted our battery sales due to more consumers adopting the RV lifestyle, there is no guarantee that any such increase would be sustained, which could cause our results of operations to fluctuate. If we fail to expand our sales and distribution channels, our business could suffer.
Such a lawsuit could also divert the time and attention of our management from our business. 24 We do not anticipate paying dividends on our Common Stock in the foreseeable future, you may not receive any return on investment unless you sell your Common Stock for a price greater than that which you paid for it.
Such a lawsuit could also divert the time and attention of our management from our business. We do not anticipate paying dividends on our common stock in the foreseeable future, and you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.
We cannot assure you that our portfolio of primarily lithium-ion products will remain competitive with products based on new technologies. We may not be able to adequately protect our proprietary intellectual property and technology and we may need to defend ourselves against intellectual property infringement claims.
We cannot assure you that our portfolio of primarily lithium-ion products will remain competitive with products based on new technologies. 22 We may not be able to adequately protect our proprietary intellectual property and technology and we may need to defend ourselves against intellectual property infringement claims.
Labor unrest or other disruptions could result in product shortages and delays in distributing our products to retailers, which could materially and adversely affect our business, financial condition, results of operations and prospects. The uncertainty in global economic conditions could negatively affect our operating results.
Labor unrest or other disruptions could result in product shortages and delays in distributing our products to retailers, which could materially and adversely affect our business, financial condition, results of operations, and prospects. The uncertainty in global economic conditions could negatively affect our results of operations.
These risks include, but are not limited to: ● supply shortages caused by the inability or unwillingness of suppliers and their competitors to build or operate component production facilities to supply the numbers of battery components required to support the rapid growth of the electric RV and marine component vehicle industry and other industries in which we operate as demand for such components increases; ● disruption in the supply of electronic circuits due to quality issues or insufficient raw materials; ● a decrease in the number of manufacturers of battery components; and ● an increase in the cost of raw materials.
These risks include, but are not limited to: · supply shortages caused by the inability or unwillingness of suppliers and their competitors to build or operate component production facilities to supply the numbers of battery components requires to support the rapid growth of the electric RV and marine component vehicle industry and other industries in which we operate as demand for such components increases; · disruption in the supply of electronic circuits due to quality issues or insufficient raw materials · a decrease in the number of manufacturers of battery components; and · an increase in the cost of raw materials.
Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies.
Our management team has limited experience managing a public company. Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies.
Furthermore, there is inherent risk associated with accounts receivable concentration as a deterioration in the financial condition of a limited number of account debtors, or any other factor which affects their ability or willingness to pay could in turn have a material adverse effect on our financial condition. 14 We may not be able to successfully manage our growth.
Furthermore, there is inherent risk associated with accounts receivable concentration as a deterioration in the financial condition of a limited number of account debtors, or any other factor which affects their ability or willingness to pay could in turn have a material adverse effect on our financial condition. 17 We may not be able to successfully manage our growth.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares. 27 Risks Related to Our Capital Structure Our long-term lease and debt obligations could adversely affect our ability to raise additional capital to fund operations and limit our ability to enter into certain transactions.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares. 30 Risks Related to Our Capital Structure Our long-term lease and debt obligations could adversely affect our ability to raise additional capital to fund operations and limit our ability to enter into certain transactions.
Our Articles of Incorporation provides that the Nevada Eighth Judicial District Court of Clark County, Nevada shall be the exclusive forum for certain litigation that may be initiated by our stockholders, including claims under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our Articles of Incorporation provide that the Nevada Eighth Judicial District Court of Clark County, Nevada shall be the exclusive forum for certain litigation that may be initiated by our stockholders, including claims under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
If any of our customers experience declining or delayed sales due to market, economic or competitive conditions, we could be pressured to reduce the prices we charge for our products which could have an adverse effect on our margins and financial position and could negatively affect our revenues and results of operations and/or trading price of our common stock.
If any of our customers experience declining or delayed sales due to market, economic or competitive conditions, we could be pressured to reduce the prices we charge for our products which could have an adverse effect on our margins and financial position and could negatively affect our revenue and results of operations and/or trading price of our common stock.
We are required to comply with certain SEC rules that implement Sections 302 and 404 of Sarbanes-Oxley, which require management to certify financial and other information in our quarterly and annual reports and beginning with this Annual Report, provide an annual management report on the effectiveness of our internal control over financial reporting.
We are required to comply with certain SEC rules that implement Sections 302 and 404 of Sarbanes-Oxley, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting.
Our ability to achieve significant and sustained penetration of key developing markets, including the RV and marine markets, will depend upon our success in developing or acquiring these and other technologies, either independently, through joint ventures, or through acquisitions, which in each case may require significant capital.
Our ability to achieve significant and sustained penetration of key developing markets, including the RV marine, and home energy markets, will depend upon our success in developing or acquiring these and other technologies, either independently, through joint ventures, or through acquisitions, which in each case may require significant capital.
We cannot assure you that we will be able to continue to control our operating, assembly and manufacturing expenses, to raise or maintain our prices or increase our unit volume or unit mix, in order to maintain or improve our operating results. 13 We have a history of losses.
We cannot assure you that we will be able to continue to control our operating, assembly and manufacturing expenses, to raise or maintain our prices or increase our unit volume or unit mix, in order to maintain or improve our results of operations. We have a history of losses.
In either case, our operating results and net income may be adversely affected. In addition, entities holding intellectual property rights relating to our technology may bring suits alleging infringement of such rights or otherwise asserting their rights and seeking licenses.
In either case, our results of operations and net income may be adversely affected. In addition, entities holding intellectual property rights relating to our technology may bring suits alleging infringement of such rights or otherwise asserting their rights and seeking licenses.
Our operating results are directly affected by the general global economic conditions of the industries in which our major customer groups operate. Our business is also highly dependent on the economic and market conditions in each of the geographic areas in which we operate.
Our results of operations are directly affected by the general global economic conditions of the industries in which our major customer groups operate. Our business is also highly dependent on the economic and market conditions in each of the geographic areas in which we operate.
Although we believe we could locate alternative suppliers to fulfill our needs, we may be unable to find a sufficient alternative supply in a reasonable time or on commercially reasonable terms. 17 Further, our dependence on these third-party suppliers entails additional risks, including: ● inability, failure or unwillingness of third-party suppliers to comply with regulatory requirements; ● breach of supply agreements by the third-party suppliers; ● misappropriation or disclosure of our proprietary information, including our trade secrets and know-how; ● relationships that third-party suppliers may have with others, which may include our competitors, and failure of third-party suppliers to adequately fulfill contractual duties, resulting in the need to enter into alternative arrangements, which may not be available, desirable or cost-effective; and ● termination or nonrenewal of agreements by third-party suppliers at times that are costly or inconvenient for us.
Although we believe we could locate alternative suppliers to fulfill our needs, we may be unable to find a sufficient alternative supply in a reasonable time or on commercially reasonable terms. 15 Further, our dependence on these third-party suppliers entails additional risks, including: · inability, failure, or unwillingness of third-party suppliers to comply with regulatory requirements; · breach of supply agreements by the third-party supplies; · misappropriation or disclosure of our proprietary information, including our trade secrets and know-how; · relationships that third-party suppliers may have with others, which may include our competitors, and failure of third-party suppliers to adequately fulfill contractual duties, resulting in the need to enter into alternative arrangements, which may not be available, desirable, or cost-effective; and · termination or non-renewal of agreements by third-party suppliers at times that are costly or inconvenient for us.
Our close working relationships with our foreign suppliers to date, reflected in our ability to increase our purchase order volumes (qualifying us for related volume-based discounts) and to order and receive delivery of components in advance of required demand, has helped us moderate or offset increased supply-related costs associated with inflation, currency fluctuations and tariffs imposed on our battery imports by the U.S. government and avoid potential shipment delays.
Our close working relationships with our foreign suppliers to date, reflected in our ability to increase our purchase order volumes (qualifying us for related volume-based discounts) and to order and receive delivery of components in advance of required demand, has helped us moderate or offset increased supply-related costs associated with inflation, currency fluctuations, and tariffs imposed on our battery imports by the U.S. government.
These obligations and constituents require significant attention from our senior management and can divert their attention away from the day-to-day management of our business, which can harm our business, operating results and financial condition.
These obligations and constituents require significant attention from our senior management and can divert their attention away from the day-to-day management of our business, which can harm our business, results of operations and financial condition.
We also may not achieve the benefits that we anticipate from any new system or technology, such as fuel abatement technologies, and a failure to do so could result in higher than anticipated costs or could impair our operating results.
We also may not achieve the benefits that we anticipate from any new system or technology, such as fuel abatement technologies, and a failure to do so could result in higher than anticipated costs or could impair our results of operations.
If we are determined to have infringed upon a third-party’s intellectual property rights, we may have to pay substantial damages, obtain a license or cease making certain products, which in turn could have a material adverse effect on our business, operating results and financial condition. 21 Quality problems with our products could harm our reputation and erode our competitive position.
If we are determined to have infringed upon a third-party’s intellectual property rights, we may have to pay substantial damages, obtain a license or cease making certain products, which in turn could have a material adverse effect on our business, results of operations and financial condition. Quality problems with our products could harm our reputation and erode our competitive position.
In addition, during the years ended December 31, 2023 and 2022, approximately 70% and 85%, respectively, of inventory purchases were made from foreign suppliers in Asia. Our dependence on a limited number of key third-party manufacturers and suppliers exposes us to challenges and risks in ensuring that we maintain adequate supplies required to produce our batteries.
In addition, during the years ended December 31, 2024 and 2023, approximately 82% and 70%, respectively, of inventory purchases were made from foreign suppliers in Asia. Our dependence on a limited number of key third-party manufacturers and suppliers exposes us to challenges and risks in ensuring that we maintain adequate supplies required to produce our batteries.
The summary should be read in conjunction with the more detailed risk factors set forth in this “Risk Factors” section and the other information contained in this Annual Report. · We operate in an extremely competitive industry and are subject to pricing pressures. · We have a history of losses.
The summary should be read in conjunction with the more detailed risk factors set forth in this “Risk Factors” section and the other information contained in this Annual Report. Risks Related to Our Business · We operate in an extremely competitive industry and are subject to pricing pressures. · We have a history of losses.
These factors raise substantial doubt about our ability to continue as a going concern over the next twelve months and our independent auditors have included a “going concern” explanatory paragraph in their report on our financial statements as of and for the years ended December 31, 2023 and 2022.
These factors raise substantial doubt about our ability to continue as a going concern over the next 12 months and our independent auditors have included a “going concern” explanatory paragraph in their report on our financial statements as of and for the years ended December 31, 2024 and 2023.
Our audited financial statements as of and for the years ended December 31, 2023 and 2022 were prepared on the assumption that we would continue as a going concern. For the years ended December 31, 2023 and 2022, the company has sustained recurring losses and negative cash flows from operations.
Our audited financial statements as of and for the years ended December 31, 2024 and 2023 were prepared on the assumption that we would continue as a going concern. For the years ended December 31, 2024 and 2023, we sustained recurring losses and negative cash flows from operations.
Our products are heavily dependent on the end markets that we serve and our operating results will vary by location, depending on the economic environment in these markets.
Our products are heavily dependent on the end markets that we serve and our results of operations will vary by location, depending on the economic environment in these markets.
The trading price of our securities may be volatile and subject to wide price fluctuations in response to various factors, including: · market conditions in the broader stock market; · actual or anticipated fluctuations in our quarterly financial condition and results of operations, or those of other companies in our industry; · actual or anticipated strategic, technological, or regulatory threats, whether or not warranted by actual events; · whether any securities analysts cover our stock; · issuance of new or changed securities analysts’ reports or recommendations, if any; · investor perceptions of our Company, the lithium battery and accessory industry; · the volume of trading in our stock; · changes in accounting standards, policies, guidance, interpretations, or principles; · sales, or anticipated sales, of large blocks of our stock; · additions or departures of key management personnel, creative, or other talent; · regulatory or political developments, including changes in laws or regulations that are applicable to our business; · litigation and governmental investigations; · sales or distributions of our common stock by significant stockholders, the entity through which our controlling stockholder holds its investment, or other insiders; · natural disasters and other calamities; and · macroeconomic conditions.
The trading price of our securities may be volatile and subject to wide price fluctuations in response to various factors, including: · market conditions in the broader stock market; · actual or anticipated fluctuations in our quarterly financial condition and results of operations, or those of other companies in our industry; · actual or anticipated strategic, technological, or regulatory threats, whether or not warranted by actual events; · whether any securities analysts cover our stock; · issuance of new or changed securities analysts’ reports or recommendations, if any; · investor perceptions of our Company, the lithium battery and accessory industry; · the volume of trading in our stock; · changes in accounting standards, policies, guidance, interpretations, or principles; · sales, or anticipated sales, of large blocks of our stock; · additions or departures of key management personnel, creative, or other talent; · regulatory or political developments, including changes in laws or regulations that are applicable to our business; · litigation and governmental investigations; · sales or distributions of our common stock by significant stockholders, the entity through which our controlling stockholder holds its investment, or other insiders; · natural disasters and other calamities; and · macroeconomic conditions. 25 Furthermore, the stock market has experienced extreme volatility that in some cases has been unrelated or disproportionate to the operating performance of particular companies.
If we are unable to expand our sales and distribution channels, we may not be able to increase revenue or achieve market acceptance of our products. We have recently expanded our direct sales force and plan to recruit additional sales personnel.
If we are unable to expand our sales and distribution channels, we may not be able to increase revenue or achieve market acceptance of our products. We are expanding our direct sales force and plan to recruit additional sales personnel.
Any such cost increase or supply interruption could materially and negatively impact our business, prospects, financial condition and operating results. 18 The prices for our battery components fluctuate depending on market conditions and global demand, and could adversely affect our business, prospects, financial condition and operating results.
Any such cost increase or supply interruption could materially and negatively impact our business, prospects, financial condition and results of operations. 16 The prices for our battery components fluctuate depending on market conditions and global demand, and could adversely affect our business, prospects, financial condition and results of operations.
We have substantial customer concentration, with a limited number of customers accounting for a substantial portion of our sales in 2023 and 2022. We currently derive a significant portion of our revenues from a limited number of customers.
We have substantial customer concentration, with a limited number of customers accounting for a substantial portion of our sales in 2024 and 2023. We currently derive a significant portion of our revenue from a limited number of customers.
Volatile raw material costs can significantly affect our operating results and make period-to-period comparisons extremely difficult.
Volatile raw material costs can significantly affect our results of operations and make period-to-period comparisons extremely difficult.
If our facilities become inoperable for any reason, our ability to produce our products could be negatively impacted. We have two warehouse locations in Redmond, Oregon and a third warehouse in Elkhart, Indiana.
If our facilities become inoperable for any reason, our ability to produce our products could be negatively impacted. We have a warehouse location in Redmond, Oregon and another in Elkhart, Indiana.
We may be responsible for remediating damage to our properties caused by former owners by our existing operations or by our future operations. Changes in environmental and climate laws or regulations could lead to new or additional investment in production designs and could increase environmental compliance expenditures.
These laws may also assess costs to repair damage to natural resources. We may be responsible for remediating damage to our properties caused by former owners by our existing operations or by our future operations. Changes in environmental and climate laws or regulations could lead to new or additional investment in production designs and could increase environmental compliance expenditures.
As described in Section 101 of the JOBS Act, the “emerging growth company” classification can be retained for up to five years following our initial public offering or until the earlier occurrence of the following: the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeded $700.0 million as of the prior June 30; or the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. 26 If some investors find our securities less attractive as a result of any choices to reduce future disclosure, there may be a less active market for our securities and our stock price may be more volatile.
As described in Section 101 of the JOBS Act, the “emerging growth company” classification can be retained for up to five years following our initial public offering or until the earlier occurrence of the following: the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeded $700.0 million as of the prior June 30; or the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
If we cannot generate sufficient cash flow from operations to service our lease and debt obligations, we may need to further refinance our debt, dispose of assets or issue equity to obtain necessary funds.
If we cannot generate sufficient cash flow from operations to service our lease and debt obligations or the Reverse Stock Split cash true-up payment, we may need to further refinance our debt, dispose of assets or issue equity to obtain necessary funds.
Changes in tax laws or tax rulings could materially affect our financial position, results of operations, and cash flows. The income and non-income tax regimes we are subject to or operate under are unsettled and may be subject to significant change.
The income and non-income tax regimes we are subject to or operate under are unsettled and may be subject to significant change. Changes in tax laws or tax rulings, or changes in interpretations of existing laws, could materially affect our financial position, results of operations, and cash flows. The overall tax environment remains uncertain and increasingly complex.
We did not experience any major residual impacts in 2023. Any of the above factors could, in turn, negatively impact our sales and earnings generation and result in a material adverse effect on our business, cash flow, results of operations and financial position. 16 Government reviews, inquiries, investigations, and actions could harm our business or reputation.
Any of the above factors could, in turn, negatively impact our sales and earnings generation and result in a material adverse effect on our business, cash flow, results of operations and financial position. Government reviews, inquiries, investigations, and actions could harm our business or reputation.
New sales personnel will require training and take time to achieve full productivity, and there is strong competition for qualified sales personnel in our business. In addition, we believe that our future success is dependent upon establishing successful relationships with a variety of distribution partners.
New sales personnel will require training and take time to achieve full productivity, and there is strong competition for qualified sales personnel in our business. In addition, we believe our future success is dependent upon establishing successful relationships with a variety of distribution partners. To date, we have entered into agreements with only a small number of these distribution partners.
We may otherwise experience supply disruptions or delays, and although we carefully manage our inventory and lead-times, our suppliers may not continue to provide us with battery components in our required quantities, to our required specifications and quality levels or at attractive prices.
At this time, we cannot predict how such enacted tariffs will impact our business. We may otherwise experience supply disruptions or delays, and although we carefully manage our inventory and lead-times, our suppliers may not continue to provide us with battery components in our required quantities, to our required specifications and quality levels or at attractive prices.
Even if an inquiry does not result in these types of determinations, regulatory authorities could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business, and it potentially could create negative publicity which could harm our business and/or reputation.
Even if an inquiry does not result in these types of determinations, regulatory authorities could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business, and it potentially could create negative publicity which could harm our business and/or reputation. 19 We are currently, and will likely continue to be, dependent on our two warehouse facilities.
These risks include, among other things, possible liability relating to product liability matters, personal injuries, intellectual property rights, contract-related claims, government contracts, taxes, health and safety liabilities, environmental matters and compliance with competition laws and laws governing improper business practices. We could be charged with wrongdoing as a result of such matters.
We are subject to a variety of litigation, tax, environmental, health and safety and other legal compliance risks. These risks include, among other things, possible liability relating to product liability matters, personal injuries, intellectual property rights, contract-related claims, government contracts, taxes, health and safety liabilities, environmental matters and compliance with competition laws and laws governing improper business practices.
If we fail to develop or acquire, assemble and manufacture and sell, products that satisfy our customers’ demands, or we fail to respond effectively to new product announcements by our competitors by quickly introducing competitive products, then market acceptance of our products could be reduced and our business could be adversely affected.
If we fail to develop or acquire, assemble and manufacture and sell, products that satisfy our customers’ demands, or we fail to respond effectively to new product announcements by our competitors by quickly introducing competitive products, then we may fail to maintain our competitive position in our markets, and our business and financial condition could be adversely affected.
Any mishandling, other safety issue or fire related to the cells or batteries could disrupt our operations. In addition, any accident, whether occurring at our facilities or from the use of our batteries, may result in significant production interruption, delays or claims for substantial damages caused by personal injuries or property damage.
In addition, any accident, whether occurring at our facilities or from the use of our batteries, may result in significant production interruption, delays or claims for substantial damages caused by personal injuries or property damage.
Further, negative public perceptions regarding the suitability or safety of lithium-ion cells or any future incident involving lithium-ion cells, such as a vehicle or other fire, even if such incident does not involve our products, could seriously harm our business and reputation. 19 To facilitate an uninterrupted supply of lithium-ion batteries, we store a significant number of lithium-ion batteries at our facilities.
Further, negative public perceptions regarding the suitability or safety of lithium-ion cells or any future incident involving lithium-ion cells, such as a vehicle or other fire, even if such incident does not involve our products, could seriously harm our business and reputation.
The costs to successfully achieve our expansion goals may be greater than we expect, and we may fail to achieve our anticipated cost efficiencies, which could have a material adverse effect on our business, financial condition and results of operations.
Our plans for expansion may experience delays, incur additional costs, or cause disruption to our existing production lines. The costs to successfully achieve our expansion goals may be greater than we expect, and we may fail to achieve our anticipated cost efficiencies, which could have a material adverse effect on our business, financial condition and results of operations.
In addition, the Sarbanes-Oxley, as well as rules promulgated by the Securities and Exchange Commission (“SEC”) and The Nasdaq Capital Market (“Nasdaq”), require us to adopt corporate governance practices applicable to U.S. public companies. Compliance with these rules and regulations will continue to increase our legal and financial compliance costs.
In addition, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), as well as rules promulgated by the SEC and Nasdaq require us to adopt corporate governance practices applicable to U.S. public companies. Compliance with these rules and regulations will continue to increase our legal and financial compliance costs.
Computer hackers and others routinely attempt to breach the security of technology products, services and systems, and to fraudulently induce employees, customers, or others to disclose information or unwittingly provide access to systems or data. While we devote significant resources to security measures to protect our systems and data, these measures cannot provide absolute security.
Computer hackers and others routinely attempt to breach the security of technology products, services and systems, and to fraudulently induce employees, customers, or others to disclose information or unwittingly provide access to systems or data.
Although we did not have any cash or cash equivalent balances on deposit at Silicon Valley Bank, if other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to raise additional financing or to access our existing cash, cash equivalents and investments may be threatened.
If banks or financial institutions enter receivership or become insolvent in response to financial conditions affecting the banking system and financial markets, our ability to raise additional financing or to access our existing cash, cash equivalents and investments may be threatened.
Our Articles of Incorporation provides that, subject to limited exceptions, the Nevada Eighth Judicial District Court of Clark County, Nevada shall be, to the fullest extent permitted by law, be the sole and exclusive forum for: (i) any derivative action or proceeding brought in the name or right of the Corporation or on its behalf, (ii) any action asserting a claim for breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of Nevada Revised Statutes Chapters 78 or 92A, our Articles of incorporation or our Bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our Articles of Incorporation or Bylaws, or (v) any action asserting a claim governed by the internal affairs doctrine. 28 Although these choice of forum provisions would not apply to suits brought to enforce any duty or liability created by the Exchange Act or rules and regulations thereunder, and suits brought to enforce the Securities Act or rules and regulations thereunder are granted concurrent jurisdiction in federal and state courts pursuant to preemptive federal law, these choice of forum provisions may otherwise limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and our directors, officers, employees and agents.
Our Articles of Incorporation provides that, subject to limited exceptions, the Nevada Eighth Judicial District Court of Clark County, Nevada shall be, to the fullest extent permitted by law, be the sole and exclusive forum for: (i) any derivative action or proceeding brought in the name or right of the Corporation or on its behalf, (ii) any action asserting a claim for breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of Nevada Revised Statutes Chapters 78 or 92A, our Articles of incorporation or our Bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our Articles of Incorporation or Bylaws, or (v) any action asserting a claim governed by the internal affairs doctrine.
There can be no assurances that any of our efforts to expand our sales and distribution channels will be successful. Our ability to expand into international markets is uncertain. Our strategy is to expand our operations into international markets.
In addition, we will need to manage potential conflicts between our direct sales force and any third-party reselling efforts. There can be no assurances that any of our efforts to expand our sales and distribution channels will be successful. 18 Our ability to expand into international markets is uncertain. Our strategy is to expand our operations into international markets.
Such damage or injury could lead to adverse publicity and potentially a product recall, which could have a material adverse effect on our brand, business, financial condition and results of operations. We could face potential product liability claims relating to our products, which could result in significant costs and liabilities, which would reduce our profitability.
Such damage or injury could lead to adverse publicity and potentially a product recall, which could have a material adverse effect on our brand, business, financial condition and results of operations.
In addition, we provide confidential and proprietary information to our third-party business partners in certain cases where doing so is necessary to conduct our business.
While we devote significant resources to security measures to protect our systems and data, these measures cannot provide absolute security. 23 In addition, we provide confidential and proprietary information to our third-party business partners in certain cases where doing so is necessary to conduct our business.
Our Articles of Incorporation authorizes us to issue shares of Common Stock and options, rights, warrants and appreciation rights relating to Common Stock for the consideration and on the terms and conditions established by our Board of Directors (“Board”) in its sole discretion, whether in connection with our incentive plans, acquisitions or otherwise.
See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—January 2025 Registered Direct Offering and Warrant Private Placement ” for additional information regarding the offering. 26 Our Articles of Incorporation authorizes us to issue shares of common stock and options, rights, warrants and appreciation rights relating to common stock for the consideration and on the terms and conditions established by our Board in its sole discretion, whether in connection with our incentive plans, acquisitions or otherwise.
In addition, our customers have many choices for energy storage solutions in the markets that we serve including both traditional lead-acid products as well as lithium-ion products.
We compete with a number of major international and domestic manufacturers, assemblers and distributors, as well as a large number of smaller, regional competitors. In addition, our customers have many choices for energy storage solutions in the markets that we serve, including both traditional lead-acid products as well as lithium-ion products.
For example, the United States Environmental Protection Agency has promulgated regulations applicable to projects involving greenhouse gas emissions above a certain threshold, and the United States and certain states within the United States have enacted, or are considering, limitations on greenhouse gas emissions. 20 Changes in climate change concerns, or in the regulation of such concerns, including greenhouse gas emissions, could subject us to additional costs and restrictions, including increased energy and raw materials costs.
For example, the United States Environmental Protection Agency has promulgated regulations applicable to projects involving greenhouse gas emissions above a certain threshold, and the United States and certain states within the United States have enacted, or are considering, limitations on greenhouse gas emissions.
To date, we have entered into agreements with only a small number of these distribution partners. We cannot be certain that we will be able to reach agreement with additional distribution partners on a timely basis or at all, or that these distribution partners will devote adequate resources to selling our products.
We cannot be certain that we will be able to reach agreement with additional distribution partners on a timely basis or at all, or that these distribution partners will devote adequate resources to selling our products. Furthermore, if our distribution partners fail to adequately market or support our products, the reputation of our products in the market may suffer.
If our existing stockholders sell substantial amounts of our securities in the public market, the market price of our securities could decrease significantly. The perception in the public market that our stockholders might sell securities could also depress our market price. As of March 23, 2024, we had 7,036,937 shares of Common Stock outstanding.
The perception in the public market that our stockholders might sell securities could also depress our market price. As of March 25, 2025, we had 3,144,468 shares of common stock outstanding.
We have reserved 1,000,000 shares of Common Stock for issuance upon the exercise of outstanding stock options under the 2021 Incentive Award Plan and 2,500,000 shares of Common Stock for issuance pursuant to our 2021 Employee Stock Purchase Plan.
We have reserved 10,000 shares of common stock for issuance upon the exercise of outstanding stock options under the 2021 Incentive Award Plan and 25,000 shares of common stock for issuance pursuant to our 2021 Employee Stock Purchase Plan. In addition, as of December 31, 2024, there were outstanding warrants to purchase up to 5,380,965 shares of common stock.
If convicted or found liable, we could be subject to significant fines, penalties, repayments or other damages (in certain cases, treble damages). In the area of taxes, changes in tax laws and regulations, as well as changes in related interpretations and other tax guidance could materially impact our tax receivables and liabilities and our deferred tax assets and tax liabilities.
In the area of taxes, changes in tax laws and regulations, as well as changes in related interpretations and other tax guidance could materially impact our tax receivables and liabilities and our deferred tax assets and tax liabilities.
As of March 23, 2024, we had 200,000,000 shares of Common Stock authorized, of which 7,036,937 were issued.
As of December 31, 2024, we had 200,000,000 shares of common stock authorized, of which 2,096,082 were issued.
Several of our competitors have strong technical, marketing, sales, manufacturing, distribution and other resources, as well as significant name recognition, established positions in the market and long-standing relationships with OEMs and other customers. Our ability to maintain and improve our operating margins has depended, and continues to depend, on our ability to control and reduce our costs.
In addition, several of our competitors may be able to devote greater resources to technical, marketing, sales, manufacturing, distribution and other resources, as well as significant name recognition, established positions in the market and long-standing relationships with OEMs and other customers.
In addition, if we fail to implement the requirements with respect to our internal accounting and audit functions, our ability to report our financial results on a timely and accurate basis could be impaired. Our management team has limited experience managing a public company.
We may not be successful in continuing to implement these requirements and implementing them could adversely affect our business, results of operations and financial condition. In addition, if we fail to implement the requirements with respect to our internal accounting and audit functions, our ability to report our financial results on a timely and accurate basis could be impaired.
As our costs increase, we may not be able to generate sufficient revenue to achieve and sustain profitability. · Our audited financial statements include a statement that there is a substantial doubt about our ability to continue as a going concern and a continuation of negative financial trends could result in our inability to continue as a going concern. · We have substantial customer concentration, with a limited number of customers accounting for a substantial portion of our sales in 2023 and 2022. · Nearly all of our raw materials enter the United States through a limited number of ports, and we rely on third parties to store and ship some of our inventory; labor unrest at these ports or other product delivery difficulties could interfere with our distribution plans and reduce our revenue. · Increases in costs, disruption of supply or shortage of any of our battery components, such as electronic and mechanical parts, or raw materials used in the production of such parts could harm our business. · We are currently, and will likely continue to be, dependent on our three warehouses.
As our costs increase, we may not be able to generate sufficient revenue to achieve and sustain profitability. · Our audited financial statements include a statement that there is a substantial doubt about our ability to continue as a going concern and a continuation of negative financial trends could result in our inability to continue as a going concern. · Our results of operations could be adversely affected by changes in the cost and availability of raw materials and we are dependent on third-party manufacturers and suppliers. · Increases in costs, disruption of supply or shortage of any of our battery components, such as electronic and mechanical parts, or raw materials used in the production of such parts, could harm our business. · Our business and future growth depends on the needs and success of our customers. · We have substantial customer concentration, with a limited number of customers accounting for a substantial portion of our sales in 2024 and 2023. · If we fail to expand our sales and distribution channels, our business could suffer. · The uncertainty in global economic conditions could negatively affect our results of operations. · We are currently, and will likely continue to be, dependent on our two warehouse facilities.
There can be no assurance that we will be able to recoup increasing costs of our components by increasing prices, which in turn could damage our brand, business, prospects, financial condition and operating results. We are currently, and will likely continue to be, dependent on our three warehouse facilities.
There can be no assurance that we will be able to recoup increasing costs of our components by increasing prices, which in turn could damage our brand, business, prospects, financial condition and results of operations. Our business and future growth depends on the needs and success of our customers. Our customers include dealers, wholesalers, private-label customers and OEMs.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations and adversely affect our results of operations and financial condition. Risk Factor Summary The following is a summary of the most significant risks and uncertainties that we believe could adversely affect our business, financial condition and results of operations.
Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may become material and adversely affect our business. If any of the following risks or other risks not specified below materialize, our business, financial condition and results of operations could be materially and adversely affected.
For example, the senior convertible note issued to 3i, LP (the “3i Note”) contains restrictions on our ability to pay dividends or make distributions. If we issue additional equity securities, existing stockholders may experience dilution, and the new equity securities could have rights senior to those of our Common Stock.
If we issue additional equity securities, existing stockholders may experience dilution, and the new equity securities could have rights senior to those of our common stock.
We plan to manufacture lithium-ion batteries in the future which involves processing, storing, disposing of and otherwise moving large amounts of hazardous materials.
We plan to manufacture lithium-ion batteries in the future which involves processing, storing, disposing of and otherwise moving large amounts of hazardous materials, and federal, state, and local regulations impose significant environmental requirements on the manufacturing, storage, transportation, and disposal of various components of advanced energy storage systems.
In addition, private parties, including employees, could bring personal injury or other claims against us due to the presence of, or exposure to, hazardous substances used, stored or disposed of by us or contained in our products.
In addition, private parties, including employees, could bring personal injury or other claims against us due to the presence of, or exposure to, hazardous substances used, stored or disposed of by us or contained in our products. 21 Certain environmental laws assess liability on owners or operators of real property for the cost of investigation, removal or remediation of hazardous substances at their current or former properties or at properties at which they have disposed of hazardous substances.
Our credit documents contain, and any future indebtedness likely will contain, restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to pay dividends and make other restricted payments. As a result, capital appreciation, if any, of our Common Stock may be your major source of gain for the foreseeable future.
Any future debt facilities we may enter into may contain restrictions on our ability to pay dividends or make distributions, and any new credit facilities we may enter into may contain similar restrictions. As a result, capital appreciation, if any, of our common stock may be your major source of gain for the foreseeable future.
During the year ended December 31, 2022, sales to our top three customers totaled approximately 41% of our total sales. Amounts due from these customers totaled approximately 43% of our total accounts receivable at December 31, 2022. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers.
During the year ended December 31, 2023, sales to two customers totaled approximately 21% of our gross sales, and four other customers had accounts receivable balances representing 92% of total accounts receivable as of December 31, 2023. There are inherent risks whenever a large percentage of gross sales are concentrated with a limited number of customers.
Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. We choose to avail ourselves of this extended transition period and defer adoption of certain changes in accounting standards.
If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. 29 Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
Lithium-ion batteries are our most significant raw material and are used along with significant amounts of plastics, steel, copper and other materials in our assembly and manufacturing processes.
We currently rely on multiple third-party manufacturers located in Asia to manufacture our batteries and battery cells, and we intend to continue to rely on these suppliers going forward. Lithium-ion batteries are our most significant raw material and are used along with significant amounts of plastics, steel, copper and other materials in our assembly and manufacturing processes.
As our costs increase, we may not be able to generate sufficient revenue to achieve and sustain profitability. We have experienced net losses in each period since inception. We generated net losses of $7.5 million for each of the years ended December 31, 2023 and 2022. Part of our business strategy is to focus on our long-term growth.
As our costs increase, we may not be able to generate sufficient revenue to achieve and sustain profitability. We have experienced net losses in each period since inception.
In the event that any of our products prove to be defective, we may be required to recall or redesign such products, which would result in significant unexpected costs. Any insurance we maintain may not be available on terms acceptable to us or such coverage may not be adequate for liabilities actually incurred.
Any insurance we maintain may not be available on terms acceptable to us or such coverage may not be adequate for liabilities actually incurred. Further, any claim or product recall could result in adverse publicity against us, which could adversely affect our sales or increase our costs.
Changes to the statutory tax rate may occur at any time, and any related expense or benefit recorded may be material to the fiscal quarter and year in which the law change is enacted. The Company regularly assesses the likely outcomes of its tax audits and disputes to determine the appropriateness of its tax reserves.
We closely monitor these proposals as they arise in the countries where it operates. Changes to the statutory tax rate may occur at any time, and any related expense or benefit recorded may be material to the fiscal quarter and year in which the law change is enacted.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe program is integrated into our overall risk management systems and processes, and includes a cybersecurity risk assessment process that routinely evaluates potential impacts of cybersecurity risks on our business, including our operations, financial stability, and reputation. These assessments inform our cybersecurity risk mitigation strategies.
Biggest changeThe program is integrated into our overall risk management systems and processes, and includes a cybersecurity risk assessment process that routinely evaluates potential impacts of cybersecurity risks on our business, including our operations, financial stability, and reputation. The Audit Committee also reviews with management the implementation and effectiveness of the Company’s controls to monitor and mitigate cybersecurity risks.
Our Audit Committee has the authority to oversee and review the adequacy of our cybersecurity, information and technology security, and data privacy programs, procedures, and policies. The Audit Committee regularly receives updates from management with respect to our efforts to manage data protection, cybersecurity, and information and technology risks, and assesses the results of reviews from internal audits.
Our Audit Committee has the authority to oversee and review the adequacy of our cybersecurity, information and technology security, and data privacy programs, procedures, and policies. 32 The Audit Committee regularly receives updates from management with respect to our efforts to manage data protection, cybersecurity, and information and technology risks, and assesses the results of reviews from internal audits.
For more information on risks to us from cybersecurity threats, see the section entitled “ Risk Factors — If our electronic data is compromised, or we experience a failure in our information technology or storage systems, our business could be significantly harmed. ” included within this Annual Report. 29 Cybersecurity Governance Our Board is actively involved in overseeing risks from cybersecurity threats.
For more information on risks to us from cybersecurity threats, see the section titled “ Risk Factors—If our electronic data is compromised, or we experience a failure in our information technology or storage systems, our business could be significantly harmed ” included within this Annual Report. Cybersecurity Governance Our Board is actively involved in overseeing risks from cybersecurity threats.
Item 1c. cybersecurity We maintain an information security and cybersecurity program, as well as a cybersecurity governance framework, which are designed to protect our information systems against operational risks related to cybersecurity.
Item 1c. cybersecurity Risk Management and Strategy We maintain an information security and cybersecurity program, as well as a cybersecurity governance framework, which are designed to protect our information systems against operational risks related to cybersecurity.
Our policy is for the Board and the Audit Committee to receive prompt and timely information regarding any cybersecurity risk (including any incident) that meets reporting thresholds, as well as ongoing updates regarding any such risk.
Our policy is for the Board and the Audit Committee to receive prompt and timely information regarding any significant cybersecurity incidents, as well as ongoing updates regarding any such incidents.
Removed
The results are regularly shared with management and the Audit Committee of our Board as part of the committee’s involvement in managing and overseeing cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe square footage of this facility is approximately 31,400 square feet, and from February 1, 2023 to January 31, 2024, the rental cost of this facility was approximately $32,400 per month. Some of the equipment for the assembly line was received in October 2022 due to a delay by our equipment supplier.
Biggest changeThe square footage of this facility is approximately 33,770 square feet, and from February 1, 2024 to September 30, 2024, the rental cost of this facility was approximately $33,340 per month. On September 24, 2024, we voluntarily terminated the lease, effective as of October 1, 2024 as part of an effort to identify cost reduction opportunities.
We believe that these facilities are sufficient to meet our current and anticipated needs in the near term and that additional space can be obtained on commercially reasonable terms as needed.
We believe these facilities are sufficient to meet our current and anticipated needs in the near term and that additional space can be obtained on commercially reasonable terms as needed.
Currently it is primarily used for office space, and a backup location for warehousing and distribution to local customers. The square footage of this facility is approximately 7,000 square feet, leased at a cost of $4,900 per month.
Currently, it is primarily used for office space and as a backup location for warehousing and distribution to local customers. The square footage of this facility is approximately 7,000 square feet, leased at a cost of $4,900 per month.
From January 31, 2023 to January 30, 2024, the rental cost of our headquarters was approximately $19,000 per month. We also lease a facility in Redmond, Oregon primarily used for warehousing, but it is also expected to be used for our first battery pack assembly plant in the United States.
From January 31, 2024 to January 30, 2025, the rental cost of our headquarters was approximately $19,600 per month. We previously leased a facility in Redmond, Oregon, which was primarily used for warehousing.
We are working on setup and development of additional equipment to automate the line, subject to market conditions. We also lease a property in Elkhart, Indiana. In 2023, it served to provide a stocking location for several large manufacturers in the area. Elkhart is a hub for RV manufacturing in the United States.
The lease termination is expected to result in approximately $40,000 of cost savings per month over the 51 months following its termination. We also lease a property in Elkhart, Indiana. In 2024, it served to provide a stocking location for several large manufacturers in the area. Elkhart is a hub for RV manufacturing in the United States.
Added
We plan to continue operating our warehousing out of its Redmond, Oregon headquarters and Elkhart, Indiana locations. In connection with the termination of the lease, we paid one extra month’s rent, a $30,000 fee, and a broker commission of approximately $89,000.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not currently party to any pending legal proceedings that we believe would, individually or in the aggregate, have a material adverse effect on our financial condition, cash flows or results of operations. 30 ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 31 PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS We may become, from time to time, involved in routine litigation or subject to disputes or claims related to our business activities. We are not currently party to any pending legal proceedings that we believe would, individually or in the aggregate, have a material adverse effect on our financial condition, cash flows or results of operations.
Removed
ITEM 3. LEGAL PROCEEDINGS We may become, from time to time, involved in routine litigation or subject to disputes or claims related to our business activities.
Added
On September 6, 2024, we received a staff determination from The Nasdaq Listing Qualifications Department of Nasdaq to delist our Common Stock from Nasdaq indicating that (i) we were not in compliance with Nasdaq Listing Rule 5550(a)(2) because the closing bid price per share for our Common Stock had closed below $1.00 for the previous 30 consecutive business days, and (ii) we are subject to the provisions contemplated under Nasdaq Listing Rule 5810(c)(3)(A)(iii) because, as of September 5, 2024, our Common Stock had a closing bid price of $0.10 or less for at least ten consecutive trading days (the “Staff Determination”).
Added
On September 12, 2024, the Company requested an appeal hearing on the Staff Determination from a Hearings Panel (the “Panel”) by filing a hearing request with Nasdaq pursuant to the procedures set forth in the Nasdaq Listing Rules, staying the delisting of the Company’s common stock pending the Panel’s decision Upon successful completion of the Reverse Stock Split, we received a letter from the Nasdaq Office of General Counsel on October 23, 2024, advising us that we had regained compliance with the minimum bid price continued listing requirements in Listing Rule 5550(a)(2) and that we are therefore in compliance with Nasdaq’s listing requirements.
Added
Consequently, the scheduled hearing before the Panel on October 24, 2024 was cancelled. Our Common Stock continues to be listed and traded on Nasdaq. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 33 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Common Stock began trading on Nasdaq on April 1, 2022 under the symbol “XPON.” As of March 23, 2024, there were approximately 11 registered holders of our Common Stock .
Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock began trading on Nasdaq on April 1, 2022 under the symbol “XPON.” As of March 25, 2025, there were approximately 16 registered holders of our common stock, which does not include beneficial owners of our common stock whose shares are held in the names of various securities brokers, dealers, and registered clearing agencies .
Further, the outstanding 3i Note and any future debt facilities we may enter into may contain restrictions on our ability to pay dividends or make distributions, and any new credit facilities we may enter into may contain similar restrictions.
Further, any future debt facilities we may enter into may contain restrictions on our ability to pay dividends or make distributions, and any new credit facilities we may enter into may contain similar restrictions.
Recent Sales of Unregistered Securities from Registered Securities There were no sales of unregistered equity securities during the fiscal year ended December 31, 2023 that were not previously reported in a Quarterly Report on Form 10-Q or Current Report on Form 8-K.
Recent Sales of Unregistered Securities from Registered Securities There were no sales of unregistered equity securities during the fiscal year ended December 31, 2024 that were not previously reported in a Quarterly Report on Form 10-Q or Current Report on Form 8-K. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. ITEM 6. [RESERVED]
Removed
Use of Proceeds from Registered Securities On April 5, 2022, we completed our initial public offering of 2,145,000 shares of common stock, including shares issued upon the exercise in full of the underwriters’ option to purchase 321,750 additional shares of common stock, at a public offering price of $7.00 per share, resulting in aggregate gross proceeds of $17,267,250 and net proceeds of $14,772,487 after issuance costs of $2,494,763.
Removed
The offer and sale of these shares were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-262285), which was declared effective by the SEC on March 31, 2022. Paulson Investment Company LLC, Alexander Capital, LP and Revere Securities LLC acted as underwriters for the offering.
Removed
Shares of our common stock began trading on Nasdaq on April 1, 2022 and, following the sale of all the shares upon the closing of the initial public offering on April 5, 2022, the offer terminated.
Removed
No offering expenses were paid directly or indirectly to any of our directors, officers, persons owning 10% or more of any class of our equity securities, or to their associates, or to our affiliates.
Removed
There has been no material change in the planned use of proceeds from our initial public offering from that described in the final prospectus for our initial public offering dated March 31, 2022, filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on April 4, 2022, and those disclosed in this Annual Report.
Removed
Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. ITEM 6. [RESERVED] 32

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOff-Balance Sheet Arrangements We have no material off-balance sheet arrangements. 37 Results of Operations Year Ended December 31, 2023, Compared to the Year Ended December 31, 2022 The following table sets forth certain operational data as a percentage of sales: Fiscal Years Ended December 31, 2023 2022 $ % of Net sales $ % of Net sales Net sales $ 5,981,134 100.0 % $ 7,162,837 100.0 % Cost of sales 4,405,611 73.7 4,874,392 68.1 Gross profit 1,575,523 26.3 2,288,445 31.9 Selling, general, and administrative expenses 8,745,135 146.2 8,241,859 115.1 Loss from operations (7,169,612 ) (119.9 ) (5,953,414 ) (83.1 ) Other expense - net 283,369 4.7 1,591,976 22.2 Loss before income taxes (7,452,981 ) (124.6 ) (7,545,390 ) (105.3 ) Net loss (7,456,274 ) (124.7 ) (7,536,540 ) (105.2 ) Sales, net Sales, net for the year ended December 31, 2023 decreased by $1.2 million, or 16.5%, compared to the year ended December 31, 2022.
Biggest changeThe information presented on an adjusted cost of sales basis, as we present such information, may not necessarily be comparable to similarly titled information presented by other companies, and may not be appropriate measures for comparing our performance relative to other companies. 41 Results of Operations Year Ended December 31, 2024, Compared to the Year Ended December 31, 2023 The following table sets forth certain operational data as a percentage of sales: Fiscal Years Ended December 31, 2024 2023 $ % of Net sales $ % of Net sales Net sales $ 5,624,939 100.0 % $ 5,981,134 100.0 % Cost of sales 4,469,711 79.5 4,405,611 73.7 Gross profit 1,155,228 20.5 1,575,523 26.3 Selling, general, and administrative expenses 7,909,219 140.6 8,745,135 146.2 Loss from operations (6,753,991 ) (120.1 ) (7,169,612 ) (119.9 ) Other expense - net 6,727,032 119.6 283,369 4.7 Loss before income taxes (13,481,023 ) (239.7 ) (7,452,981 ) (124.6 ) Net loss (13,479,475 ) (239.6 ) (7,456,274 ) (124.7 ) Net Sales Net sales for the year ended December 31, 2024 decreased by $356,000, or 6.0%, compared to the year ended December 31, 2023.
As we introduce new products, we may see a change in product and sales channel mix which could result in period-to-period fluctuations in our overall gross margin. Competition We compete with both traditional lead-acid and lithium-ion battery manufacturers that primarily either import their products or components or manufacture products under a private label.
As we introduce new products, we may see a change in product and sales channel mix, which could result in period-to-period fluctuations in our overall gross margin. Competition We compete with both traditional lead-acid and lithium-ion battery manufacturers that primarily either import their products and/or components or manufacture their products and/or components under a private label.
Critical accounting policies are those that we consider to be the most important in portraying our financial condition and results of operations and also require the greatest number of judgments by management. Judgments or uncertainties regarding the application of these policies may result in materially different amounts being reported under different conditions or using different assumptions.
Critical accounting estimates are those that we consider to be the most important in portraying our financial condition and results of operations and also require the greatest number of judgments by management. Judgments or uncertainties regarding the application of these policies may result in materially different amounts being reported under different conditions or using different assumptions.
In December 2023, we announced our entrance into the home energy storge market with our introduction of two LiFePO4 battery storage solutions that enable residential and small business customers to create their own stable micro-energy grid and lessen the impact of increasing power fluctuations and outages.
In December 2023, we announced our entrance into the home energy storage market with our introduction of two LiFePO4 battery storage solutions that enable residential and small business customers to create their own stable micro-energy grid and lessen the impact of increasing power fluctuations and outages.
We recognize revenue when control of goods or services is transferred to its customers in an amount that reflects the consideration it is expected to be entitled to in exchange for those goods or services. All of our sales are primarily within the United States.
We recognize revenue when control of goods or services is transferred to our customers in an amount that reflects the consideration it is expected to be entitled to in exchange for those goods or services. All of our sales are primarily within the United States.
We believe that we are well-positioned to capitalize on the rapid market conversion from lead-acid to lithium batteries as the primary method of power sourcing in these industries.
We believe we are well-positioned to capitalize on the rapid market conversion from lead-acid to lithium batteries as the primary method of power sourcing in these industries.
Our products are sold to different customers ( i.e. , dealers, wholesalers, OEMs, etc.) at differing prices and have varying costs. The average selling price and costs of goods sold for a particular product, will vary with changes in the sales channel mix, volume of products sold, and the prices of such products sold relative to other products.
Our products are sold to different customers (i.e., dealers, wholesalers, private-label customers, OEMs, etc.) at differing prices and have varying costs. The average selling price and costs of goods sold for a particular product will vary with changes in the sales channel mix, volume of products sold, and the prices of such products sold relative to other products.
Critical Accounting Policies and Estimates The above discussion and analysis of our financial condition and results of operations is based upon our financial statements.
Critical Accounting Estimates The above discussion and analysis of our financial condition and results of operations is based upon our financial statements.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and related notes for the fiscal years ended December 31, 2023 and 2022, included in this Annual Report.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and related notes for the fiscal years ended December 31, 2024 and 2023, included in this Annual Report.
Cash flows provided by / (used in) investing activities Cash provided by investing activities was $17,000 for the year ended December 31, 2023. Cash used for capital purchases of property and equipment related to research and development, quality assurance, and logistics equipment was $20,000 during the year ended December 31, 2023.
Cash provided by investing activities was $17,000 for the year ended December 31, 2023. Cash used for capital purchases of property and equipment related to research and development, quality assurance, and logistics equipment was $20,000 during the year ended December 31, 2023.
Accessory and OEM sales typically have lower average selling prices and resulting margins which could decrease our margins and therefore negatively affect our growth or require us to increase the prices of our products. However, the benefits of increased sales volumes typically offset these reductions. The relative margins of products sold also impact our results of operation.
Accessory and OEM sales typically have lower average selling prices and resulting margins, which could decrease our margins and negatively affect our growth or require us to increase the prices of our products. However, the benefits of increased sales volumes typically offset these reductions. The relative margins of products sold also impact our results of operations.
Our competitors may source products or components at a lower cost than us which may require us to evaluate our own costs, lower our product prices, or increase our sales volume to maintain our expected profitability levels.
Our competitors may source products or components at lower costs than us, which may require us to evaluate our own costs, lower our product prices, or increase our sales volume to maintain our expected profitability levels.
We expect to continue to incur additional losses for the foreseeable future, and we may need to raise additional debt or equity financing to expand our presence in the marketplace, develop new products, achieve operating efficiencies, and accomplish its long-term business plan over the next several years.
We expect to continue to incur additional losses for the foreseeable future, and we may need to raise additional debt or equity financing to expand our presence in the marketplace, develop new products, achieve operating efficiencies, and accomplish our long-term business plans over the next several years.
Research and Development We anticipate that additional investments in our infrastructure and research and development spending will be required to scale our operations and increase productivity, to address the needs of our customers, to further develop and enhance our service, and to expand into new geographic areas and market segments.
Research and Development We anticipate that additional investments in our infrastructure and research and development spending will be required to scale our operations and increase productivity, address the needs of our customers, further develop and enhance our products and services, and expand into new geographic areas and market segments.
There can be no assurance as to the availability or terms upon which such financing and capital might be available. For the years ended December 31, 2023 and 2022, we sustained recurring losses and negative cash flows from operations.
There can be no assurance as to the availability or terms upon which such financing and capital might be available to us. For the years ended December 31, 2024 and 2023, we sustained recurring losses and negative cash flows from operations.
These factors raise substantial doubt about our ability to continue as a going concern within twelve months after the date that the financial statements for the year ended December 31, 2023 are issued. However, management is working to address its cash flow challenges, including raising additional capital, managing inventory levels, identifying alternative supply chain resources, and managing operational expenses.
These factors raise substantial doubt about our ability to continue as a going concern within 12 months after the date the financial statements for the year ended December 31, 2024 are issued. However, management is working to address its cash flow challenges, including by raising additional capital, managing inventory levels, identifying alternative supply chain resources, and managing operational expenses.
Along with RV, marine and home energy storage markets, we aim to provide additional capacities to the ever-expanding electric forklift and industrial material handling markets. Expion360’s e360 product line, which is manufactured for the RV and marine industries, was launched in December 2020.
Along with the RV, marine and home energy storage markets, we aim to provide additional capacities to the expanding electric forklift and industrial material handling markets. We launched our e360 product line, which is manufactured for the RV and marine industries, in December 2020.
Our ability to achieve significant and sustained penetration of key developing markets, including the RV and marine markets, will depend upon our success in developing these and other technologies, either independently, through joint ventures, or through acquisitions, which in each case may require significant capital and commitment of resources to research and development.
Our ability to achieve significant and sustained penetration of key developing markets, including the RV, marine, residential energy storage, and small commercial energy storage markets, will depend upon our success in developing these and other technologies, either independently, through joint ventures, or through acquisitions, which in each case may require significant capital and commitment of resources to research and development.
For the year ended December 31, 2023, we paid down debt principal of $224,000, which was offset by net cash proceeds of $2.4 million from incurrence of short-term debt and net cash proceeds of $50,000 from the exercise of warrants. Cash provided by financing activities was $12.4 million for the year ended December 31, 2022.
For the year ended December 31, 2023, we paid down debt principal of $224,000, which was offset by net cash proceeds of $2.4 million from incurrence of short-term debt and net cash proceeds of $50,000 from the exercise of warrants.
We had no accrual for interest or penalties on our balance sheet at December 31, 2023 or December 31, 2022 and recognize interest and/or penalties in the statement of operations for the years ended December 31, 2023 and 2022, since there are no material unrecognized tax benefits.
We had no accrual for interest or penalties on our balance sheet at December 31, 2024 or December 31, 2023, and did not recognize any interest or penalties in our statement of operations for the years ended December 31, 2024 or 2023, since there are no material unrecognized tax benefits.
We generated negative cash flows from operating activities of $5.5 million for the year ended December 31, 2023, compared to negative cash flows of $5.5 million for the corresponding period in 2022.
We generated negative cash flows from operating activities of $9.6 million for the year ended December 31, 2024, compared to negative cash flows of $5.5 million for the corresponding period in 2023.
Sales were $7.2 million for the year ended December 31, 2022 and $6.0 million for the year ended December 31, 2023. The year-over-year decrease was primarily attributable to decreases in the consumer market, driving decreases in OEM sales.
Sales were $5.6 million for the year ended December 31, 2024 and $6.0 million for the year ended December 31, 2023. The year-over-year decrease was primarily attributable to decreases in the consumer market, driving decreases in OEM sales.
The notes are payable in aggregate monthly installments of approximately $4,100, including interest at rates ranging from 5.9% to 7.3% per annum, mature at various dates from October 2027 to May 2028, and are secured by the related vehicles. Two of the notes are personally guaranteed by a co-founder of the Company.
The notes are payable in aggregate monthly installments of approximately $2,560, including interest at rates ranging from 6.1% to 7.3% per annum, mature at various dates from October 2027 to May 2028, and are secured by the related vehicles. Two of the notes are personally guaranteed by a co-founder of the Company.
Leases The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset during the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
Leases We determine if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets represent our right to use an underlying asset during the lease term, and operating lease liabilities represent our obligation to make lease payments arising from the lease.
We generally consider our short-term liquidity requirements to consist of those items that are expected to be incurred within the next twelve months and believe those requirements to consist primarily of funds necessary to pay operating expenses, interest and principal payments on our debt, and capital expenditures related to assembly line expansion.
We generally consider our short-term liquidity requirements to consist of those items that are expected to be incurred within the next 12 months and believe those requirements to consist primarily of funds necessary to pay operating expenses, interest and principal payments on our debt.
The preparation of financial statements in conformity with the generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosures of contingent assets and liabilities. Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies.
The preparation of financial statements in conformity with the generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosures of contingent assets and liabilities.
Revenue Recognition The Company’s revenue is generated from the sale of products consisting primarily of batteries and accessories. The Company recognizes revenue when control of goods or services is transferred to its customers in an amount that reflects the consideration it is expected to be entitled to in exchange for those goods or services.
Revenue Recognition Our revenue is generated from the sale of products consisting primarily of batteries and accessories. We recognize revenue when control of goods or services is transferred to our customers in an amount that reflects the consideration we are expected to be entitled to in exchange for those goods or services.
Gross profit as a percentage of sales decreased by 5.6% for the year ended December 31, 2023, to 26.3% compared to 31.9% for the year ended December 31, 2022.
Gross profit as a percentage of sales decreased by 5.8% for the year ended December 31, 2024, to 20.5% compared to 26.3% for the year ended December 31, 2023.
Gross Profit Our gross profit for the year ended December 31, 2023 decreased by $713,000, or 31.2%, compared to the year ended December 31, 2022. Gross profit was $2.3 million for the year ended December 31, 2022 and $1.6 million for the year ended December 31, 2023.
Gross Profit Our gross profit for the year ended December 31, 2024 decreased by $420,000, or 26.7%, compared to the year ended December 31, 2023. Gross profit was $1.2 million for the year ended December 31, 2024 and $1.6 million for the year ended December 31, 2023.
Sales are generally collected within 30 to 45 days. These changes are mainly due to timing between sales being recognized and payment being received. 41 ● Cash used for inventory and prepaid inventories decreased by $682,000 and increased by $1.5 million for the years ended December 31, 2023 and 2022, respectively.
Sales are generally collected within 30 to 45 days. These changes are mainly due to timing between sales being recognized and payment being received. · Cash used for increases in (or provided by decreases in) inventory and prepaid inventories were $2.5 million and ($682,000) for the years ended December 31, 2024 and 2023, respectively.
Operating leases are included in ROU assets, current operating lease liabilities, and long-term operating lease liabilities on the Company’s balance sheets. The Company does not have any finance leases.
Operating leases are included in ROU assets, current operating lease liabilities, and long-term operating lease liabilities on our balance sheets. We do not have any finance leases.
Our activities are subject to significant risks and uncertainties, including failing to secure additional funding before the Company achieves sustainable revenues and profit from operations.
Our activities are subject to significant risks and uncertainties, including failing to secure additional funding before we achieve sustainable revenue and profit from operations.
See also the risk factor entitled “ Our audited financial statements include a statement that there is a substantial doubt about our ability to continue as a going concern and a continuation of negative financial trends could result in our inability to continue as a going concern ” in Item 1A, “Risk Factors” of this Annual Report.
For additional information regarding risks associated with our ability to continue as a going concern, please see the risk factor titled “ Our audited financial statements include a statement that there is a substantial doubt about our ability to continue as a going concern and a continuation of negative financial trends could result in our inability to continue as a going concern ” in Item 1A, “ Risk Factors ” of this Annual Report.
Property and Equipment Property and equipment are stated at cost less depreciation calculated on the straight-line basis over the estimated useful lives of the related assets as follows: Vehicles and transportation equipment 5 – 7 years Office furniture and equipment 3 – 7 years Manufacturing equipment 3 – 10 years Warehouse equipment 3 – 10 years QA equipment 3 – 10 years Tooling and molds 5 – 10 years Leasehold improvements are amortized over the shorter of the lease term or their estimated useful lives.
We consider the following policies to be the most critical in understanding the judgments that are involved in preparing the financial statements. 46 Property and Equipment Property and equipment are stated at cost less depreciation calculated on the straight-line basis over the estimated useful lives of the related assets as follows: Vehicles and transportation equipment 5 – 7 years Office furniture and equipment 3 – 7 years Manufacturing equipment 3 – 10 years Warehouse equipment 3 – 10 years QA equipment 3 – 10 years Tooling and molds 5 – 10 years Leasehold improvements are amortized over the shorter of the lease term or their estimated useful lives.
Cash Flows The following table shows a summary of our cash flows for the periods presented: Years Ended December 31, 2023 2022 Net cash used in operating activities $ (5,531,232 ) $ (5,468,572 ) Net cash provided by / (used in) investing activities $ 16,578 $ (515,692 ) Net cash provided by financing activities $ 2,246,108 $ 12,412,270 Cash flows used in operating activities Our largest source of operating cash is cash collection from sales of our products.
Cash Flows The following table shows a summary of our cash flows for the periods presented: Years Ended December 31, 2024 2023 Net cash used in operating activities $ (9,562,545 ) $ (5,531,232 ) Net cash provided by investing activities $ 113,408 $ 16,578 Net cash provided by financing activities $ 6,064,004 $ 2,246,108 Cash flows used in operating activities Our largest source of operating cash is cash collection from sales of our products.
Other expense for the year ended December 31, 2023 was made up almost entirely of settlement expense of $282,000, with interest income and interest expense offsetting each other at $126,000 and $125,000, respectively. Other expense for the year ended December 31, 2022 was made up almost entirely of interest expense.
Other expense for the year ended December 31, 2023 was made up almost entirely of settlement expense, with interest income and interest expense offsetting each other at $126,000 and $125,000, respectively. Net Loss Our net loss for the years ended December 31, 2024 and 2023 was $13.5 million and $7.5 million, respectively.
Our sales are completed on a purchase order basis, and most are without firm, long-term revenue commitments or sales arrangements, which we expect to continue going forward. Therefore, our future sales will be subject to risks and uncertainties related to end user demand.
Our sales are completed on a purchase order basis, and most are without firm, long-term revenue commitments or sales arrangements, which we expect to continue going forward.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. We have adopted the provisions in ASC 740, Income Taxes, related to accounting for uncertain tax positions.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
For the year ended December 31, 2022, our loss of $7.5 million was reduced by non-cash transactions including stock-based compensation of $2.1 million, amortization of debt discount on convertible notes of $1.2 million, and depreciation of $165,000. ● Cash provided by accounts receivable was $162,000 and $458,000 for the year ended December 31, 2023 and 2022, respectively, representing a decrease in accounts receivable for the years ended December 31, 2023 and 2022.
For the year ended December 31, 2023, our net loss of $7.5 million was reduced by non-cash transactions including stock-based compensation of $560,000, stock-based settlement of $252,000, and depreciation of $206,000. · Cash provided / (used) by accounts receivable was ($458,000) and $162,000 for the years ended December 31, 2024 and 2023, respectively, representing an increase in accounts receivable for the year ended December 31, 2024 and a decrease in accounts receivable for the year ended December 31, 2023.
Liquidity and Capital Resources Overview Our operations have been financed primarily through net proceeds from the sale of securities and from borrowings. As of December 31, 2023 and 2022, our current assets exceeded current liabilities by $4.3 million and $10.8 million, respectively, and we had cash and cash equivalents of $3.9 million and $7.2 million, respectively.
Liquidity and Capital Resources Overview Our operations have been financed primarily through net proceeds from sales of our common stock and equity and debt financings. As of December 31, 2024 and 2023, our current assets exceeded current liabilities by $2.0 million and $4.3 million, respectively, and we had cash and cash equivalents of $548,000 and $3.9 million, respectively.
Equity Line Purchase Agreement On December 27, 2023, we entered into a common stock purchase agreement (the “Common Stock Purchase Agreement”) with Tumim Stone Capital, LLC (“Tumim”), pursuant to which we have the right, but not the obligation, to sell to Tumim, and Tumim is obligated to purchase, up to the lesser of (a) $20,000,000 in aggregate gross purchase price of newly issued Common Stock and (b) the Exchange Cap (as defined in the Common Stock Purchase Agreement) (the “Equity Line of Credit Financing”).
Prior to the closing of the August 2024 Public Offering, we had issued 415 shares of common stock (post-Reverse Stock Split) for the payment of $90,839 in interest . 44 Equity Line of Credit On December 27, 2023, we entered into the Common Stock Purchase Agreement, pursuant to which we had the right, but not the obligation, to sell to Tumim Stone Capital, LLC (“Tumim”), and Tumim was obligated to purchase, up to the lesser of (a) $20,000,000 in aggregate gross purchase price of newly issued common stock and (b) the Exchange Cap (as defined in the purchase agreement) (the “Equity Line of Credit”).
Cost of Sales Total cost of sales for the year ended December 31, 2023 decreased by $469,000, or 9.6%, compared to the year ended December 31, 2022. Cost of sales were $4.9 million for the year ended December 31, 2022 and $4.4 million for the year ended December 31, 2023.
Cost of Sales Cost of sales for the year ended December 31, 2024 increased by $64,000, or 1.5%, compared to the year ended December 31, 2023. Cost of sales were $4.5 million for the year ended December 31, 2024 and $4.4 million for the year ended December 31, 2023.
See Note 7, Long-Term Debt. 40 Convertible Note Financing On December 27, 2023, we entered into a securities purchase agreement with 3i, LP (“3i”), pursuant to which the Company sold and 3i purchased a senior unsecured convertible note (the “3i Note”) in the aggregate original principal amount of $2.75 million (the “Convertible Note Financing”).
Convertible Note Financing On December 27, 2023, we entered into a securities purchase agreement with 3i, LP (“3i”) pursuant to which we sold, and 3i purchased, the 3i Note in the aggregate original principal amount of $2,750,000, for gross proceeds of $2.5 million.
Vehicle Financing Arrangements As of December 31, 2023, the Company has five notes payable to GM Financial for vehicles. In addition, in April 2022, the Company secured a commercial line of up to $300,000 to be used to finance vehicle purchases, which was increased to $350,000 in April 2023 and expires in April 2024.
In addition, in April 2022, the Company secured a commercial line of up to $300,000 to be used to finance vehicle purchases, which was increased to $350,000 in April 2023, renewed in April 2024 for the same amount, and expires in April 2025, which we plan to renew again.
We currently have customers consisting of dealers, wholesalers, private label customers and original equipment manufacturers who are driving revenue and brand awareness nationally. Our primary target markets are currently the RV and marine industries.
Our customers consist of dealers, wholesalers, private-label customers, and original equipment manufacturers (“OEMs”) who then sell our products to end consumers and drive brand awareness nationally. Our primary target markets are currently the RV, marine, and home energy storage industries.
Revenue is recognized upon shipment or delivery to the customer, as that is when the customer obtains control of the promised goods and the Company’s performance obligation is considered satisfied.
Revenue is recognized upon shipment or delivery to the customer, as that is when the customer obtains control of the promised goods and our performance obligation is considered satisfied. Warrants Warrants are measured at fair value upon issuance and are not subsequently remeasured unless they are required to be reclassified.
The costs can increase or decrease based on costs of product and assembly parts (purchased at market pricing), customer supply requirements, and the amount of labor required to assemble a product, along with the allocation of fixed overhead. 36 Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of salaries and benefits, legal and professional fees, and sales and marketing costs.
Per full absorption cost accounting, overhead related to our cost of sales is added, consisting primarily of warehouse rent and utilities. The costs can increase or decrease based on costs of product and assembly parts (purchased at market pricing), customer supply requirements, and the amount of labor required to assemble a product, along with the allocation of fixed overhead.
We are also focused on expanding into the home energy storage market with the introduction of our two LiFePO4 battery storage solutions, where we aim to provide a cost-effective, low barrier of entry, flexible system for those looking to power their homes via solar energy, wind, or grid back-up.
Our e360 Home Energy Storage Solutions aim to provide consumers with a cost-effective, low barrier of entry, flexible system to power their homes utilizing solar energy, wind, or grid back-up.
In addition, sales and marketing expenses, along with research and development expenses, increased significantly for the year ended December 31, 2023 compared to December 31, 2022. 38 Presented in the table below is the composition of selling, general and administrative expenses: Fiscal Years Ended December 31, 2023 2022 Salaries and benefits $ 3,681,410 $ 4,864,239 Legal and professional 2,034,374 887,741 Sales and marketing 929,220 677,679 Rents, maintenance, utilities 573,652 616,141 Research and development 397,662 278,382 Software, fees, tech support 234,285 190,222 Travel expenses 199,845 217,626 Depreciation 182,825 151,353 Insurance 179,989 128,202 Supplies, office 58,049 135,187 Other 273,824 95,087 Total $ 8,745,135 $ 8,241,859 Other Expense Other expense for the years ended December 31, 2023 and 2022 was $283,000 and $1.6 million, respectively.
Presented in the table below is the composition of selling, general and administrative expenses: Fiscal Years Ended December 31, 2024 2023 Salaries and benefits $ 3,260,866 $ 3,681,410 Legal and professional 1,584,589 2,034,374 Sales and marketing 926,430 929,220 Rents, maintenance, utilities 449,997 573,652 Research and development 295,292 397,662 Software, fees, tech support 274,780 234,285 Insurance 263,930 179,989 Depreciation 155,315 182,825 Travel expenses 137,298 199,845 Supplies, office 23,876 58,049 Other 536,846 273,824 Total $ 7,909,219 $ 8,745,135 Other Expense Other expense for the years ended December 31, 2024 and 2023 was $6.7 million and $283,000, respectively.
Management believes no material change to the amount of unrecognized tax benefits will occur within the next twelve months.
We do not expect any material change to the amount of unrecognized tax benefits to occur within the next 12 months.
Income Taxes Effective November 1, 2021, the Company converted from an LLC to a C corporation and, as a result, became subject to corporate federal and state income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of exiting assets and liabilities and their respective tax basis.
Income Taxes Effective November 1, 2021, the Company converted from an LLC to a C corporation and, as a result, became subject to corporate federal and state income taxes. Income taxes are accounted for using the asset and liability method.
Our battery cell manufacturers have joint venture factories outside of Asia and have secured sourcing contracts from lithium suppliers in South America and Australia.
Additionally, availability of the raw materials used to manufacture our products may be limited at times, resulting in higher prices and/or the need to find alternative suppliers. Our battery cell manufacturers have joint venture factories outside of Asia and have secured sourcing contracts from lithium suppliers in South America and Australia.
As of December 31, 2023, we expect our short-term liquidity requirements to include (a) approximately $270,000 of capital additions; (b) principal debt payments totaling approximately $3.6 million net of amortization; and (c) lease obligation payments of approximately $736,000, including imputed interest. 39 We generally consider our long-term liquidity requirements to consist of those items that are expected to be incurred beyond the next 12 months and believe these requirements consist primarily of funds necessary for the next 18 months.
As of December 31, 2024, our short-term liquidity requirements included (a) principal debt payments totaling approximately $32,000 net of amortization, (b) lease obligation payments of approximately $256,000, including imputed interest, and (c) $5.0 million in suspended liability expense due to the Reverse Stock Split cash true-up payment provision in the Series A Warrants we sold in the August 2024 Public Offering. 43 We generally consider our long-term liquidity requirements to consist of those items that are expected to be incurred beyond the next 12 months.
In February and March 2024, we sold a total of three vehicles including repayment of the related vehicle loans in the aggregated amount of approximately $86,300 and interest rates of 5.5% to 5.9%. See Note 15 , Subsequent Events .
In February and March 2024, we sold three vehicles including repayment of the related vehicle loans with interest rates of 5.5%-5.9% in the total amount of approximately $88,000, which included principal and interest. In August 2024, we repaid a short-term convertible note for a total of $2.7 million including principal, interest, and fees.
In addition, we secured a secondary source for lithium iron phosphate cells used in its batteries from a supplier in Europe, enabling us to source materials outside of Asia in the event it becomes necessary to do so. 35 Product and Customer Mix As of December 31, 2023, we sell eight models of LiFEPO4 batteries, the Aura, and individual or bundled accessories for battery systems, two of which we have released over the last 12 months.
In addition, we have a secondary source for lithium iron phosphate cells used in our batteries from a supplier in Europe, enabling us to source materials outside of Asia in the event it becomes necessary to do so.
This was offset by net proceeds of $37,000 received for the sale and disposal of property and equipment during the year ended December 31, 2023. We anticipate that we will spend up to $270,000 in 2024 as we continue to enhance our quality control measures. We used cash in investing activities of $516,000 for the year ended December 31, 2022.
This was offset by net proceeds of $37,000 received for the sale and disposal of property and equipment during the year ended December 31, 2023. Cash flows provided by financing activities Cash provided by financing activities was $6.1 million for the year ended December 31, 2024.
The decrease in gross profit for the year ended December 31, 2023 was primarily attributable to lower sales volumes due to the slowdown in the RV industry resulting in lower economies of scale on the fixed costs.
The decrease in gross profit for the year ended December 31, 2024 was primarily attributable to lower sales volumes due to the slowdown in the RV industry resulting in lower economies of scale on our fixed costs, as well as the liquidation of non-core product increasing our cost of sales above what they would have been without the liquidation. 42 Selling, General, and Administrative Expenses Selling, general, and administrative expenses for the year ended December 31, 2024 decreased by $836,000, or 9.6%, compared to the year ended December 31, 2023.
As of December 31, 2023, our long-term debt totaled $349,000, comprised of $147,000 outstanding under a COVID-19 Economic Injury Disaster Loan, $196,000 outstanding under vehicle financing arrangements, and an equipment loan for $6,000. In January 2023, we repaid a vehicle loan with an interest rate of 11.2% in the amount of approximately $89,400 which included principal, interest, and fees.
Financing Obligations As of December 31, 2024, our long-term debt totaled $230,000, comprised of $143,000 outstanding under a COVID-19 Economic Injury Disaster Loan, $84,000 outstanding under vehicle financing arrangements, and an equipment loan for $3,000.
As of December 31, 2023 and 2022, the Company has not recorded any income tax provision/(benefit) resulting from the CARES Act, mainly due to the Company’s history of net operating losses. On December 27, 2020, the United States enacted the Consolidated Appropriations Act of 2021 (“CAA”).
As of December 31, 2024 and 2023, we have not recorded any income tax provision/(benefit) resulting from the CARES Act, mainly due to our history of net operating losses. See “Note 11—Income Taxes” of our consolidated financial statements within this Annual Report for further information on our income taxes.
Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense.
We have concluded there were no material unrecognized tax benefits as of December 31, 2024 or December 31, 2023. Our practice is to recognize interest and/or penalties related to income tax matters as income tax expense.
Cost of sales as a percentage of sales increased by 5.6% in 2023. The change in cost of sales was primarily related to decreases in overall sales, resulting in a decrease in economies of scale pertaining to fixed costs.
The change in cost of sales was primarily related to a decrease in overall sales, resulting in a decrease in economies of scale pertaining to fixed costs, as well as the liquidation of some non-core product in 2024 increasing our cost of sales above what they would have been without the liquidation.
As of the date of this Annual Report, the Company had 765,295 outstanding warrants. 34 Key Factors Affecting Our Operating Results Our operating results and financial performance are significantly dependent on the following factors: Consumer Demand Although most of our current sales are generated through dealers, wholesalers and original equipment manufacturers (“OEMs”) focused on the RV and marine markets, ultimate demand for our products is reliant on demand from consumers.
Key Factors Affecting Our Results of Operations Our results of operations and financial performance are significantly dependent on the following factors: Consumer Demand Although our sales are primarily generated from dealers, wholesalers, private-label customers and OEMs focused on the RV, marine, and home energy markets, the demand for our products from these customers depends on consumer demand.
Factors affecting operating cash flows during the periods included: ● For the year ended December 31, 2023, our loss of $7.5 million was reduced by non-cash transactions including stock-based compensation of $560,000, stock-based settlement of $252,000, and depreciation of $206,000.
Factors affecting operating cash flows during the periods included: · For the year ended December 31, 2024, our net loss of $13.5 million was reduced by non-cash transactions including approximately $5.0 million in suspended liability expense due to the Reverse Stock Split cash true-up payment provision in the Series A Warrants we sold in the August 2024 Public Offering, amortization of convertible note costs of approximately $667,000, stock-based compensation of $617,000, stock-based settlement of $209,000, and depreciation of $174,000.
However, more recently we have seen a rise in fuel costs, higher interest rates, and other changes in macroeconomic conditions which have created a decrease in end user spending decisions which is affecting our markets. These conditions may continue to have a negative effect on our business.
In recent years we have seen a rise in fuel costs, higher interest rates, and other changes in macroeconomic conditions, which have resulted in decreased consumer spending decisions and affecting our industry as a whole.
For the year ended December 31, 2022, we paid down debt principal of $2.4 million, which was offset by net cash proceeds of $14.8 million from sales of our common stock. Contractual and Other Obligations Our estimated future obligations consist of long-term operating lease liabilities. As of December 31, 2023, we had $2.8 million in long-term operating lease liabilities.
For the year ended December 31, 2024, we paid down debt principal of $3.6 million, which was offset by net cash proceeds of $9.5 million from issuance of common stock and $185,000 net cash proceeds from exercise of warrants. Cash provided by financing activities was $2.2 million for the year ended December 31, 2023.
Cash used for capital purchases of property and equipment related to expanding and improving our facilities and infrastructure was $567,000 during the year ended December 31, 2022. This was offset by net proceeds of $52,000 received for the sale of property and equipment during the year ended December 31, 2022.
This was offset by net proceeds of $132,000 received for the sale and disposal of property and equipment during the year ended December 31, 2024, which included property and equipment and leasehold improvements related to the warehouse lease terminated in September 2024, as well as the sale of three vehicles.
If we fail to execute on this growth strategy in accordance with our expectations, our sales growth would be limited to the growth of existing products and existing end markets. Manufacturing and Supply Chain Our batteries are manufactured by multiple third-party manufacturers located in Asia, who also produce our battery cells.
If we fail to execute on this growth strategy in accordance with our expectations, our sales growth could be limited to the growth of existing products and existing end markets. Expion360 has recently added several new distributors and OEM customers in RV and marine markets.
We then assemble and package the batteries in the United States for sale to our customers. While we do not have long-term purchase arrangements with our third-party manufacturers and our purchases are completed on a purchase order basis, we have had strong relationships with our third-party manufacturers spanning many years.
While we do not have long-term purchase agreements with these manufacturers and our purchases are completed on a purchase-order basis, we maintain strong relationships with our manufacturers and cell suppliers, reflected in our ability to increase our purchase order volumes (qualifying us for related volume-based discounts).
Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Deferred tax assets and liabilities are measured using enacted tax rates that will be in effect for the years in which those tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
The success of our strategy requires (1) continued growth of these addressable markets in line with our expectations and (2) our ability to successfully enter these markets. We expect to incur significant marketing costs understanding these new markets, and researching and targeting customers in these end markets, which may not result in sales.
We expect to incur significant marketing costs understanding and growing our presence within these markets, and researching and targeting customers in these markets, and our efforts may not be successful in generating sales.
Turnaround time for receiving inventory from foreign sources can take up to 120 days, with prepayments required. ● Other significant changes include an increase in customer deposits of $17,000 during the year ended December 31, 2023, and a decrease in customer deposits of $437,000 during the year ended December 31, 2022, due to large deposits customers made in 2021 that we applied to orders in 2022, whereas 2023 saw deposits and usage occurring in the same year.
These changes are primarily due to the timing of significant purchases and prepayments of inventory. Turnaround time for receiving inventory from foreign sources can take up to 120 days, with prepayments required. 45 Cash flows provided by / (used in) investing activities Cash provided by investing activities was $113,000 for the year ended December 31, 2024.
Our e360 Home Energy Storage System aims to provide a cost-effective, low barrier of entry, flexible system for those looking to power their homes via solar energy, wind, or grid back-up. We see the vision of stored energy as a portable, moving concept, where stored energy can be transported from the home to other devices outside of it.
In addition, in January 2025 we began selling our e360 Home Energy Storage Solutions, which consist of two LiFePO4 battery storage solutions and seek to provide consumers with a cost-effective, low barrier of entry, flexible system to power their homes utilizing solar energy, wind, or grid back-up.
We aim to maintain an appropriate level of inventory to satisfy our expected supply requirements. We believe that we could locate alternative third-party manufacturers to fulfill our needs.
The strength of these relationships has helped us moderate increased supply-related costs associated with inflation, currency fluctuations, and U.S. government tariffs imposed on our imports, and avoid potential shipment delays. We aim to maintain an appropriate level of inventory to satisfy our expected supply requirements. We believe we could locate suitable alternative third-party manufacturers to fulfill our requirements if needed.
It requires that the Company recognize the impact of a tax position in the financial statements if the position is more likely than not to be sustained upon examination and on the technical merits of the position. Management has concluded that there were no material unrecognized tax benefits as of December 31, 2023 or December 31, 2022.
We have adopted the provisions in ASC 740, Income Taxes , related to accounting for uncertain tax positions, which require recognition of the impact of a tax position in the financial statements if the position is more likely than not to be sustained upon examination and on the technical merits of the position.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $503,000, or 6.1%, to $8.7 million for the year ended December 31, 2023 compared to $8.2 million for the year ended December 31, 2022, primarily due to an increase in legal and professional fees, which was partially offset by a significant decrease achieved in salaries and benefits.
The decrease in selling, general, and administrative expenses was primarily due to decreases in legal and professional fees as well as salaries and benefits, which was partially offset by an increase in licenses and fees, due to cash premium fees paid when making repayment on our convertible note as well as fees for exiting the warehouse lease.
As a result, we may need to raise additional funds for these research and development efforts. Key Line Items Revenue Our revenue is generated from the sale of products consisting primarily of batteries and accessories.
Now that these certifications have been completed, all of the batteries produced by us will have a UL Safety Certification, emphasizing our commitment to quality, safety and service for our customers. 39 Key Line Items Net Sales Our revenue is generated from the sale of products consisting primarily of batteries and accessories.
We believe that our e360 Home Energy Storage System has strong revenue potential with recurring income opportunities for us and our associated sales partners. Our products provide numerous advantages for various industries that are looking to migrate to lithium-based energy storage.
As of January 2025, we have begun shipping orders of our e360 Home Energy Storage Solutions. We currently operate Expion360 as one reportable business segment, Energy Storage (ES). Our products provide numerous advantages for various industries that are looking to migrate to lithium-based energy storage.
Overview Expion360 focuses on the design, assembly, manufacturing, and sales of LiFePO4 batteries and supporting accessories for RVs, marine applications and home energy storage products with plans to expand into industrial applications. We design, assemble, and distribute high-powered, lithium battery solutions using ground-breaking concepts with a creative sales and marketing approach.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Reverse Stock Split and Reverse Stock Split True-Up Payment” below for additional information about the Reverse Stock Split. 34 Overview Expion360 focuses on the design, assembly, manufacturing, and sale of lithium iron phosphate (“LiFePO4”) batteries and supporting accessories for recreational vehicles (“RVs”), marine applications and home energy storage products with plans to expand into industrial applications.
As of December 31, 2023, we have debt issuance costs of $667,144 related to a short-term convertible note, which will be amortized January 2024 through December 2024. Provision for Income Taxes We are subject to corporate federal and state income taxes.
Interest and Other Income, net Interest expense consists of interest costs on loans with interest rates ranging from 3.75% to 10.0% and amortization of convertible note costs. The amortized convertible note costs were $667,000 and $0 for the years ended December 31, 2024 and 2023, respectively. Provision for Income Taxes We are subject to corporate federal and state income taxes.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).
The tax benefits recorded in the consolidated financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).

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