What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-10 compared with 2023-05-11 · 314 added, 297 removed, 631 unchanged (49% of the section changed)

Expion360 Inc.

Balance Sheets

March 31, 2023 (unaudited)

FINANCIAL STATEMENTS

June 30, 2023 (unaudited)

December 31, 2022

23 unchanged sentences

Total liabilities

(continued on next page)

Expion360 Inc.

Balance Sheets

March 31, 2023 (unaudited)

on next page)

Sheets – Continued

June 30, 2023 (unaudited)

December 31, 2022

2 unchanged sentences

20,000,000 shares authorized;

shares issued and outstanding

zero shares issued and outstanding

Common stock, par value $ .001 ;

200,000,000 shares authorized;

6,900,566 and 6,802,464 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

6,910,717 and 6,802,464 issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

4 unchanged sentences

Total liabilities and stockholders’ equity

The accompanying notes are an integral

part of these financial statements

Expion360 Inc.

Statements of Operations

For the Three Months Ended March 31,

accompanying notes are an integral part of these financial statements

of Operations (Unaudited)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Cost of sales

2 unchanged sentences

( 1,497,265 )

Other (Income)

( 2,915,246 )

( 3,174,713 )

( 3,249,768 )

Other (Income) / Expense

Interest income

Interest expense

Loss on sale of property & equipment

Settlement expense

Other expense

Total other expense

Other (income) / expense

Total other (income) / expense

Loss before taxes

( 1,478,826 )

Franchise taxes

( 4,090,886 )

( 3,456,104 )

( 4,787,589 )

Franchise taxes / (refund)

$ ( 1,478,788 )

$ ( 4,091,036 )

$ ( 3,456,066 )

$ ( 4,787,889 )

Net loss per share (basic and diluted)

Weighted-average number of common shares outstanding

The accompanying notes are an integral

part of these financial statements

Expion360 Inc.

Statements of Stockholders’

Equity (Deficit) for Three Months ended March 31, 2023 and 2022 (Unaudited)

Paid-in Capital

Stock-holders’ Equity (Deficit)

accompanying notes are an integral part of these financial statements

of Stockholders’ Equity (Deficit) for Six Months ended June 30, 2023 and 2022 (Unaudited)

Additional Paid-in Capital

Total Stock-holders’ Equity (Deficit)

Balance at December 31, 2021

$ ( 6,102,951 )

at March 31, 2022

Balance at March 31, 2022

$ ( 6,799,804 )

Issuance of shares, net of issuance costs

Issuance of shares in exchange for IPO services

Issuance of stock options

( 4,091,036 )

Balance at June 30, 2022

$ ( 10,890,840 )

Balance at December 31, 2022

$ ( 13,639,491 )

Proceeds received from exercise

Stock issued as a result of

litigation settlement

Proceeds received from exercise of warrants

Stock issued as a result of litigation settlement

( 1,977,278 )

at March 31, 2023

Balance at March 31, 2023

$ ( 15,616,769 )

The accompanying notes are an integral

part of these financial statements

Expion360 Inc.

Exercise of warrants

( 1,478,788 )

Balance at June 30, 2023

$ ( 17,095,557 )

accompanying notes are an integral part of these financial statements

Statements of Cash Flows (Unaudited)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash flows from operating activities

4 unchanged sentences

Amortization of debt discount - notes

Decrease in allowance for doubtful accounts

Loss on sale of property and equipment

Increase / (Decrease) in allowance for doubtful accounts

Stock-based settlement

Stock-based compensation

Changes in operating assets and liabilities:

(Increase) / Decrease in accounts receivable

(Increase) / Decrease in inventory

(Increase) / Decrease in prepaid/in-transit inventory

( 1,086,577 )

Increase in accounts receivable

Increase in inventory

Increase in prepaid/in-transit inventory

Increase in prepaid expenses and other current assets

Decrease in deposits

Increase in accounts payable

Increase in deposits

Decrease in accounts payable

Increase / (Decrease) in customer deposits

1 unchanged sentence

Increase in right-of-use assets and lease liabilities

Net cash provided by / (used in) operating activities

Net cash used in operating activities

( 3,521,527 )

( 2,727,928 )

Cash flows from investing activities

Purchases of property and equipment

Net cash used in investing activities

Net proceeds from sale of property and equipment

Net cash provided by / (used in) investing activities

Cash flows from financing activities

Increase in deferred IPO costs

Payments on line-of-credit and short-term revolving loans

Payments on liability for sale of future revenues

Principal payments on long-term debt

( 1,726,850 )

Net proceeds from exercise of warrants

Net cash used in financing activities

Net proceeds from issuance of common stock

Net cash provided by / (used in) financing activities

Net change in cash and cash equivalents

2 unchanged sentences

Cash and cash equivalents, ending

The accompanying notes are an integral

part of these financial statements

Expion360 Inc.

Statements of Cash

Flows (Unaudited) - Continued

For the Three Months Ended March 31,

of Cash Flows (Unaudited) - Continued

For the Six Months Ended June 30,

Supplemental disclosure of cash flow information:

Cash paid for interest

Cash paid for franchise taxes

Cash paid / (refunded) for franchise taxes

Non-cash financing activities:

Purchased of property and equipment in exchange for accrued expenses and other current liability

Acquisition/modification of operating lease right-of-use asset and lease liability

The accompanying notes are an integral

part of these financial statements

Purchases of property and equipment in exchange for long-term debt

Purchased of property and equipment in exchange for short-term payable

accompanying notes are an integral part of these financial statements

Organization and Nature of Operations

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Upon conversion to a C corporation, all existing LLC members at the time of conversion were issued shares of common

stock and became shareholders of the Company.

stock and became stockholders of the Company.

Company designs, assembles, and distributes premium lithium batteries for RV, Marine, Golf, Industrial, Residential, and Off-The-Grid

8 unchanged sentences

Summary of Significant Accounting Policies

Basis of Presentation

of Presentation

accompanying unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted

9 unchanged sentences

normal recurring accruals) considered necessary for a fair presentation have been included.

results for the three-month periods ended March 31, 2023 and 2022 are not necessarily indicative of the results that may be expected

results for the three- and six-month periods ended June 30, 2023 and 2022 are not necessarily indicative of the results that may be expected

for the year ending December 31, 2023.

1 unchanged sentence

on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 30, 2023.

otherwise noted, all references to shares and shareholders in the accompanying financial statements have been restated retrospectively,

otherwise noted, all references to shares and stockholders in the accompanying financial statements have been restated retrospectively,

to reflect the equity structure of the C corporation as of the beginning of the first period presented.

4 unchanged sentences

reported results of operations.

Going Concern,

Liquidity and Capital Resources

Concern, Liquidity and Capital Resources

Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding before

the Company achieves sustainable revenues and profit from operations.

The Company expects to continue

to incur additional losses for the foreseeable future, and the Company may need to raise additional debt or equity financing to expand

its presence in the marketplace, develop new products, achieve operating efficiencies, and accomplish its long-term business plan over

the next several years.

There can be no assurance as to the availability or terms upon which such financing and capital might be available.

The Company expects to continue to incur additional losses for

the foreseeable future, and the Company may need to raise additional debt or equity financing to expand its presence in the marketplace,

develop new products, achieve operating efficiencies, and accomplish its long-term business plan over the next several years.

be no assurance as to the availability or terms upon which such financing and capital might be available.

presented in the accompanying financial statements, the Company has sustained recurring losses and negative cash flows from operations.

These factors raise substantial doubt about the Company’s ability to continue as a going concern within twelve months after the

date that the financial statements for the three months ended March 31, 2023 are issued.

However, management is working to address its

cash flow challenges, including raising additional capital, alternative supply chain resources, and in-house assembly lines.

date that the financial statements for the three and six month periods ended June 30, 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 continuing to develop in-house assembly lines.

Historically,

the Company’s growth has been funded through a combination of sales of equity interests, third party debt, and working capital

The Company’s sales for the three months ended March 31, 2023 decreased 30.1% compared to the same period in 2022.

March 31, 2023, we received net proceeds of $49,787 from warrant exercises.

On April 1, 2022, the Company completed an initial public

offering and listing of its shares on the Nasdaq Stock Market (IPO).

Proceeds from the IPO, net of costs, totaled $14,772,487, of which

approximately $2,464,000 was used to pay down principal and accrued interest on high interest-bearing debt.

The remaining proceeds will

be used, in part, to stock inventory to keep up with demand and to build in-house assembly lines to improve the cash-flow cycle and help

reduce the four-month turnaround that the Company currently experiences from suppliers in China.

In the first half of 2022, a distribution

warehouse was set up in Indiana to better service customers throughout the U.S.

and an assembly facility was leased in Redmond, Oregon

for future expansion of the in-house assembly lines.

Additionally, management has secured a secondary source for lithium iron phosphate

cells used in its batteries that is based in Denmark, should supply disruption issues with China arise.

Management believes that these

factors will contribute to achieving operating efficiency and profitability.

However, there can be no assurance that the Company will

be successful in achieving its objectives, including achieving operating efficiency and profitability.

The accompanying

financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization

of assets and the settlement of liabilities and commitments in the normal course of business;

however, the above conditions raise substantial

doubt about the Company’s ability to do so.

The financial statements do not include any adjustments to reflect the possible future

effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result should the

Company be unable to continue as a going concern.

Use of Estimates

The Company’s sales for the three months ended June 30, 2023 decreased 21.7% and sales for the six months ended June 30,

2023 decreased 25.8% compared to the same periods in 2022.

For the six months ended June 30, 2023, we received net proceeds of $49,777

from warrant exercises.

On April 1, 2022, the Company completed an initial public offering and listing of its shares on the Nasdaq Stock

Market (IPO).

Proceeds from the IPO, net of costs, totaled $14,772,487, of which approximately $2,464,000 was used to pay down principal

and accrued interest on high interest-bearing debt.

The remaining proceeds have thus far and will continue to be used, in part, to stock

inventory to keep up with demand and to build in-house assembly lines to improve the cash-flow cycle and help reduce the four-month turnaround

that the Company currently experiences from suppliers in China.

In the first half of 2022, a distribution warehouse was set up in Indiana

to better service customers throughout the U.S.

and an assembly facility was leased in Redmond, Oregon for future expansion of the in-house

assembly lines.

Additionally, management has secured a secondary source for lithium iron phosphate cells used in its batteries that is

based in Denmark, should supply disruption issues with China arise.

Management believes that these factors will contribute to achieving

operating efficiency and profitability.

However, there can be no assurance that the Company will be successful in achieving its objectives,

including achieving operating efficiency and profitability.

accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the

realization of assets and the settlement of liabilities and commitments in the normal course of business;

however, the above conditions

raise substantial doubt about the Company’s ability to do so.

The financial statements do not include any adjustments to reflect

the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that

may result should the Company be unable to continue as a going concern.

preparation of financial statements in conformity with U.S.

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and, accordingly, the Company’s accounting estimates require the exercise of judgment.

Cash and Cash

and Cash Equivalents

Company considers all cash amounts which are not subject to withdrawal restrictions or penalties and all highly liquid investments purchased

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management believes that the Company is not exposed to any significant credit risk with respect to its cash and cash equivalents.

March 31, 2023, cash balances exceeded FDIC limits by $ 388,011 and investment accounts totaling $ 5,019,907 are invested in US Treasury

related ultra-short paper.

Company has two accounts at Silicon Valley Bank (SVB).

As of March 31, 2023 all funds were transferred to another banking institution

and no exposure currently exists.

Accounts Receivable

of June 30, 2023, cash balances exceeded FDIC limits by $624,952 and investment accounts totaling $2,567,798 are invested in US Treasury-related

ultra-short paper.

receivable are recorded at the invoiced amount, are due within a year or less, and generally do not bear any interest.

8 unchanged sentences

For the three months

ended March 31, 2023 the Company wrote off $18,804.

There was no allowance for doubtful accounts as of March 31, 2023 or December 31,

2022, as management believed all outstanding amounts to be fully collectible.

Customer Deposits

As of March 31, 2023 and December 31,

2022, the Company had customer deposits totaling $ 208,611 and $ 58 , respectively.

ended June 30, 2023 and 2022, the Company wrote off $0 and $19,604, respectively.

For the six months ended June 30, 2023 and 2022, the

Company received $800 against bad debt expense and wrote off $19,604, respectively.

There was no allowance for doubtful accounts as of

June 30, 2023 or December 31, 2022, as management believed all outstanding amounts to be fully collectible.

of June 30, 2023 and December 31, 2022, the Company had customer deposits totaling $156,938 and $58, respectively.

is stated at the lower of cost (first in, first out) or net realizable value and consists of batteries and accessories, resale items,

components, and related landing costs.

As of March 31, 2023 and December 31, 2022, the Company had inventory that consisted of finished

As of June 30, 2023 and December 31, 2022, the Company had inventory that consisted of finished

assemblies totaling $2,342,945 and $2,722,765, respectively, and raw materials (inventory components, parts, and packaging) totaling

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Company periodically reviews its inventory for evidence of slow-moving or obsolete inventory and provides for an allowance when considered

The Company determined that no such reserve was necessary as of March 31, 2023 or December 31, 2022.

The Company determined that no such reserve was necessary as of June 30, 2023 or December 31, 2022.

The Company prepays for

inventory purchases from foreign suppliers.

Prepaid inventory totaled $1,228,188 and $141,611 at March 31, 2023 and December 31, 2022,

respectively, and included inventory in transit where title had passed to the Company but had not yet been physically received.

Vendor and Foreign

Concentrations of Inventory Suppliers

the three months ended March 31, 2023 and 2022, respectively, approximately 86% and 60%, respectively, of inventory purchases were made

Prepaid inventory totaled $160,854 and $141,611 at June 30, 2023 and December 31, 2022, respectively,

and included inventory in transit where title had passed to the Company but had not yet been physically received.

and Foreign Concentrations of Inventory Suppliers

the three months ended June 30, 2023 and 2022, respectively, approximately 74% and 96%, respectively, of inventory purchases were made

from foreign suppliers in China and Hong Kong.

Any adverse change in either the economic or political conditions abroad could negatively

impact the Company’s supply chain.

The inability to obtain product to meet sales demand could adversely affect results of operations.

However, the Company has secured a secondary source for lithium iron phosphate cells used in its batteries from a supplier in Denmark,

enabling the Company to source materials outside of China in the event it becomes necessary to do so.

Property and Equipment

During the six months ended June 30, 2023 and 2022, respectively, approximately 80% and

91%, respectively, of inventory purchases were made from foreign suppliers in China and Hong Kong.

Any adverse change in either the economic

or political conditions abroad could negatively impact the Company’s supply chain.

The inability to obtain product to meet sales

demand could adversely affect results of operations.

However, the Company has secured a secondary source for lithium iron phosphate cells

used in its batteries from a supplier in Denmark, enabling the Company to source materials outside of China in the event it becomes necessary

and Equipment

and equipment are stated at cost less depreciation calculated on the straight-line basis over the estimated useful lives of the related

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Manufacturing

Leasehold improvements

are amortized over the shorter of the lease term or their estimated useful lives.

improvements are amortized over the shorter of the lease term or their estimated useful lives.

renewals, and extraordinary repairs that extend the lives of the assets are capitalized;

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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.

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.

Company’s obligation to make lease payments arising from the lease.

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

ROU assets and lease liabilities are initially recognized based on the present value of the future minimum lease payments over the lease

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Company accounts for lease and non-lease components as a single lease component for all its leases.

Impairment of

Long-Lived Assets

of Long-Lived Assets

assets consist primarily of property and equipment.

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No long-lived asset impairment was

recognized during the three months ended March 31, 2023 or 2022.

Product Warranties

recognized during the three or six months ended June 30, 2023 or 2022.

Company sells the majority of its products to customers along with conditional repair or replacement warranties.

5 unchanged sentences

Management estimates no liability

as of March 31, 2023 and December 31, 2022 because, historically, there have been very few claims and costs for repairs or replacement

as of June 30, 2023 and December 31, 2022 because, historically, there have been very few claims and costs for repairs or replacement

parts have been nominal.

It is possible that the Company’s estimate of liability for product liability claims will change in the

Liability for

Company does not have a formal return policy but does accept returns under its warranty policies.

Returns have historically been minimal.

Revenue Recognition

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.

To determine revenue recognition, the Company

performs the following five steps:

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.

To determine revenue recognition, the Company performs the following five

(i) identify the contract(s) with a customer;

(ii) identify the performance obligation(s)

in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligation(s)

in the contract;

and (v) recognize revenue when (or as) the performance obligation(s) are satisfied.

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.

As such, accounts receivable is recorded at the time of shipment or will call, when the Company’s

right to the consideration becomes unconditional and the Company determines there are no uncertainties regarding payment terms or transfer

Concentration of Major Customers

(ii) identify the performance obligation(s) in the contract;

(iii) determine

the transaction price;

(iv) allocate the transaction price to the performance obligation(s) in the contract;

and (v) recognize

revenue when (or as) the performance obligation(s) are satisfied.

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.

As such, accounts receivable is recorded at the time of shipment or will call, when the Company’s right to the consideration becomes

unconditional and the Company determines there are no uncertainties regarding payment terms or transfer of control.

Concentration

of Major Customers

customer is considered a major customer when net revenue attributable to the customer exceeds 10% of total revenue for the period or

outstanding receivable balances exceed 10% of total receivables.

the three months ended March 31, 2023, sales to two customers totaled $381,048, comprising approximately 25% of total sales.

the three months ended June 30, 2023, sales to two customers totaled $504,334, comprising approximately 30% of total sales.

These customers

represented 43% of total accounts receivable as of March 31, 2023.

Accounts receivable from one additional customer totaled $72,184,

representing approximately 12% of total accounts receivable as of March 31, 2023.

the three months ended March 31, 2022, sales to one customer totaled $896,984, comprising approximately 42% of total sales.

receivable for this customer totaled $114,674, representing approximately 20% of total accounts receivable as of March 31, 2022.

receivable from two additional customers totaled $151,494 and $73,065, representing in aggregate approximately 39% of total accounts

receivable as of March 31, 2022.

Shipping and Handling

represented 29% of total accounts receivable as of June 30, 2023.

During the six months ended June 30, 2023, sales to two customers totaled

$708,042, comprising approximately 22% of total sales.

These customers represented 29% of total accounts receivable as of June 30, 2023.

Accounts receivable from one additional customer totaled $63,388, representing approximately 16% of accounts receivable as of June 30,

the three months ended June 30, 2022, sales to two customers totaled $672,180, comprising approximately 31% of total sales.

These customers

represented 46% of total accounts receivable as of June 30, 2022.

During the six months ended June 30, 2022, sales to one customer totaled

$1,218,581, comprising approximately 28% of total sales.

This customer represented 35% of total accounts receivable as of June 30, 2022.

Accounts receivable from two additional customers totaled $202,717, representing approximately 25% of accounts receivable as of June

and Handling Costs

and handling fees billed to customers are classified on the Statement of Operations as “Sales, net” and totaled $ 15,365 and

$4,151 during the three months ended March 31, 2023 and 2022, respectively.

Shipping and handling costs for shipping product to customers

totaled $43,208 and $38,724 during the three months ended March 31, 2023 and 2022, respectively, and are classified in selling, general,

and administrative expense in the accompanying Statements of Operations.

Advertising and

Marketing Costs

$ 7,230 during the three months ended June 30, 2023 and 2022, respectively, and $ 24,898 and $ 11,381 during the six months ended June 30,

2023 and 2022, respectively.

Shipping and handling costs for shipping product to customers totaled $ 48,549 and $ 43,934 during the three

months ended June 30, 2023 and 2022, respectively, and $ 91,757 and $ 82,658 during the six months ended June 30, 2023 and 2022, respectively,

and are classified in selling, general, and administrative expense in the accompanying Statements of Operations.

and Marketing Costs

Company expenses advertising and marketing costs as incurred.

Advertising and marketing expense totaled $ 297,673 and $ 151,701 for the

three months ended March 31, 2023 and 2022, respectively, and is included in selling, general and administrative expense in the accompanying

Statements of Operations.

Research and Development

three months ended June 30, 2023 and 2022, respectively and $ 452,832 and $ 311,738 for the six months ended June 30, 2023 and 2022, respectively,

and is included in selling, general and administrative expense in the accompanying Statements of Operations.

and Development

and development costs are expensed as incurred.

Research and development costs charged to expense amounted to $ 94,078 and $ 107,058 for

the three months ended March 31, 2023 and 2022, and are included in selling, general and administrative expenses in the accompanying

Statements of Operations.

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.

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.

The effect on deferred tax

assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date.

income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities.

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.

the three months ended June 30, 2023 and 2022, respectively, and $ 171,258 and $ 112,375 for the six months ended June 30, 2023 and 2022,

respectively, and are included in selling, general and administrative expenses in the accompanying Statements of Operations.

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.

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.

The effect on deferred tax assets and liabilities

of a change in tax rates is recognized in income in the period that included the enactment date.

Deferred income tax expense represents

the change during the period in the deferred tax assets and deferred tax liabilities.

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

March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (CARES Act).

7 unchanged sentences

previously enacted Tax Cuts and Jobs Act.

As of March 31, 2023 and December 31, 2022, the Company has not recorded any income tax provision/(benefit)

As of June 30, 2023 and December 31, 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.

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impact of the CAA and its impact on its financial statements in 2023 and beyond.

Fair Value of

Financial Instruments

Value of Financial Instruments

Company accounts for its financial assets and liabilities in accordance with ASC Topic 820, Fair Value Measurement .

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Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, short-term

revolving loans, shareholder promissory notes, and long-term debt.

revolving loans, stockholder promissory notes, and long-term debt.

The fair value of cash and cash equivalents, accounts receivable,

accounts payable, and short-term revolving loans approximates their respective carrying values because of the short-term nature of those

The fair value of the shareholder promissory notes, convertible notes, and long-term debt approximates their respective

The fair value of the stockholder promissory notes, convertible notes, and long-term debt approximates their respective

carrying values because the interest rate approximates market rates available to the Company for similar obligations with the same maturities.

Segment Reporting

Company currently operates in one reportable segment.

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The Company has identified its CODM as the Chief Executive Officer.

Basic and Diluted

Net Loss Per Share

and Diluted Net Loss Per Share

basic net loss per share is calculated by dividing the net loss by the weighted average number of shares outstanding during the period.

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Schedule of net loss per share

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

$ ( 1,478,788 )

$ ( 4,091,036 )

$ ( 3,456,066 )

$ ( 4,787,889 )

Weighted average common shares outstanding – basic and diluted

Basic and diluted net loss per share

of March 31, 2023 and December 31, 2022, the Company has outstanding warrants and options convertible into 1,629,936 and 1,717,936 shares

of June 30, 2023 and December 31, 2022, the Company has outstanding warrants and options convertible into 1,607,330 and 1,717,936 shares

of common stock, respectively.

2 unchanged sentences

Schedule of anti-dilutive share

March 31, 2023

December 31, 2022

Stock options

Stock-Based Compensation

Company accounts for stock-based compensation in accordance with ASC 718, “Compensation—Stock Compensation”, which

6 unchanged sentences

Changes to assumptions could cause significant adjustments to the valuation.

New Accounting

Pronouncements

Accounting Pronouncements

September 2022, the FASB issued ASU 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50):

45 unchanged sentences

an impact on the Company’s financial statements or disclosures.

Accounting Guidance

Issued but Not Yet Adopted

Guidance Issued but Not Yet Adopted

March 2023, the FASB issued ASU 2023-02, “Investments—Equity Method and Joint Ventures (Topic 323):

18 unchanged sentences

Property and Equipment, Net

Property and equipment

consist of the following:

and equipment consist of the following:

Schedule of property and equipment

8 unchanged sentences

Property and equipment, net

expense was $ 48,120 and $ 29,026 for the three months ended March 31, 2023 and 2022, respectively.

expense was $ 53,872 and $ 38,280 for the three months ended June 30, 2023 and 2022, respectively.

Depreciation expense was $ 101,992 and

$ 67,306 for the six months ended June 30, 2023 and 2022, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses

and other current liabilities consist of the following:

expenses and other current liabilities consist of the following:

Schedule of accrued expenses and other current liabilities

As of March 31, 2023

As of June 30, 2023

As of December 31, 2022

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15, 2021 and $694 thereafter through January 26, 2022.

During the three months ended March 31, 2022, the Company repaid a total of $11,797,

During the three months ended June 30, 2022, the Company repaid a total of $11,797,

including $295 of interest.

There were no payments made in the three months ended March 31, 2023.

There were no payments made in the three months ended June 30, 2023.

Interest was recognized at an effective

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The Purchase Agreements were secured by substantially all of the assets of the Company.

of March 31, 2023 and December 31, 2022, the Company had no remaining liability related to the Purchase Agreements.

of June 30, 2023 and December 31, 2022, the Company had no remaining liability related to the Purchase Agreements.

Short-Term Revolving Loans

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the loans had been repaid and a balance of $0 was outstanding.

Under the WC Loan Agreements and

in accordance with the modified terms, the Company was subject to monthly extended maturity interest of one percent on the ending outstanding

monthly balance which increased one percent for each month beyond the extended maturity date.

Under the WC Loan Agreements and in accordance with the modified terms,

the Company was subject to monthly extended maturity interest of one percent on the ending outstanding monthly balance which increased

one percent for each month beyond the extended maturity date.

The WC Loans were repaid in full in April 2022.

The terms of each WC Loan are summarized

terms of each WC Loan are summarized below:

$200,000 limit –

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There was no accounting impact to the financial statements related to the modifications.

Long-term debt consisted

of the following at March 31, 2023 and December 31, 2022:

Schedule of long-term debt

March 31, 2023

Long-Term Debt

debt consisted of the following at June 30, 2023 and December 31, 2022:

Schedule of long term debt payment

June 30, 2023

December 31, 2022

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The notes are senior to all other debt and are secured by substantially all assets of the Company.

The notes included detachable warrants to purchase 482,268 shares of common stock at an exercise price of $3.32 per share (see Note 10 – Stockholders’ Equity).

The notes included detachable warrants to purchase 482,268 shares of common stock at an exercise price of $3.32 per share (see Note 10 – Stockholders’ Equity in Item 1 – Financial Statements of Part I – Financial Information).

Debt issuance costs and discount totaling $1,287,160 at date of issuance were being amortized and recognized as additional interest expense over the term of the notes using the straight-line method because it was not substantially different from the effective interest rate method.

We determined the expected life of the notes to be the contractual term.

Interest expense related to these notes includes amortization of debt issuance costs and discount in the amount of $0 and $214,527, respectively, for the three months ended March 31, 2023 and 2022, respectively.

Interest expense related to these notes includes amortization of debt issuance costs and discount in the amount of $982,317 and $1,196,843, respectively, for the three months and six months ended June 30, 2022, respectively.

The notes were paid in full in April 2022.

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Note payable – finance company.

Payable in monthly installments of $994, including interest at 8.5% per annum, due July 2026, secured by a vehicle and personally guaranteed by a shareholder.

Payable in monthly installments of $994, including interest at 8.5% per annum, due July 2026, secured by a vehicle and personally guaranteed by a stockholder.

The Note was paid in full September 2022.

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The note was paid in full January 2023.

Notes payable – The Company has six notes payable to GM Financial for vehicles at March 31, 2023 and December 31, 2022.

Notes payable – The Company has acquired six notes payable to GM Financial for vehicles.

In April 2022, the Company secured a commercial line up to $300,000 to be used to finance vehicle purchases.

The agreementexpired in April 2023 but

was renewed for a commercial line up to $350,000 and prevailing GM Financial existing term notes will remain.

The agreement expired in April 2023 but was renewed for a commercial line up to $350,000 and prevailing GM Financial existing term notes will remain.

The new agreement expires in April 2024.

The notes are payable in aggregate monthly installments of $4,679, including interest at rates ranging from 5.89% to 7.29% per annum, mature at various dates from October 2027 to May of 2028, and are secured by the related vehicles.

One note was paid off when the corresponding vehicle was sold in May 2023, so there are five notes remaining at June 30, 2023.

The notes are currently payable in aggregate monthly installments of $4,084, including interest at rates ranging from 5.89% to 7.29% per annum, mature at various dates from October 2027 to May of 2028, and are secured by the related vehicles.

Two of the notes are personally guaranteed by a co-founder.

1 unchanged sentence

Long-term debt, net of unamortized debt discount and current portion

Future maturities of long-term debt are

Schedule of long term debt payment

Twelve months ending March 31,

maturities of long-term debt are as follows:

Schedule of Maturities of Long-Term Debt

Twelve months ending June 30,

Promissory Notes

of both March 31, 2023 and December 31, 2022, the Company had an outstanding principal balance of $825,000 due to shareholders under

unsecured Promissory Notes Agreements (“Notes”).

of both June 30, 2023 and December 31, 2022, the Company had an outstanding principal balance of $825,000 due to stockholders under unsecured

Promissory Notes Agreements (“Notes”).

The Notes require monthly interest-only payments at 10% per annum.

mature at various dates from August 2023 to December 2024 as follows:

August 2023 - $500,000;

The Notes mature

at various dates from January 2024 to December 2024 as follows:

January 2024 - $125,000;

August 2024 - $500,000 (this note would have

matured at August 2023, but in June 2023, an agreement was signed extending the maturity date to August 2024);

and December 2024 - $200,000.

paid to the shareholders under the Notes totaled $ 20,627 and $ 20,627 during the three months ended March 31, 2023 and March 31, 2022,

respectively.

There was no accrued interest as of March 31, 2023 or December 31, 2022 related to these Notes.

paid to the stockholders under the Notes totaled $20,627 and $13,751 during the three months ended June 30, 2023 and June 30, 2022, respectively.

Interest paid to the stockholders under the Notes totaled $41,254 and $34,378 during the six months ended June 30, 2023 and June 30,

2022, respectively, with $6,876 accrued interest as of June 30, 2022.

There was no accrued interest as of June 30, 2023 or December 31,

2022 related to these Notes.

Commitments and Contingencies

Operating Leases

Company leases its warehouses and office space under long-term lease arrangements.

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in ASC 842, Leases , that require classification as financing leases, and accordingly, these leases are accounted for as operating

The Company does not recognize a right-of-use asset and lease liability for short

term leases, which have terms of 12 months or less.

For longer-term lease arrangements that are recognized on the Company’s Balance

Sheet, the right-of-use asset and lease liability are initially measured at the commencement date based upon the present values of the

lease payments due under the leases.

The Company does not recognize a right-of-use asset and lease liability for short term leases, which have terms of 12 months

For longer-term lease arrangements that are recognized on the Company’s Balance Sheet, the right-of-use asset and lease

liability are initially measured at the commencement date based upon the present values of the lease payments due under the leases.

implicit interest rates of the Company’s lease arrangements are generally not readily determinable and as such, the Company applies

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in January 2028 and contains one three-year option to renew.

The lease is guaranteed by the a co-founder.

The lease is guaranteed by a co-founder.

Company has two other leases—one that expired in January 2023 and one that expires in February 2025.

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for annual increases based on a fixed amount and generally require the Company to pay real estate taxes, insurance, and repairs.

leases are guaranteed by the a co-founder.

The following is

a summary of total lease costs during the three months ended March 31, 2023 and 2022:

leases are guaranteed by a co-founder.

following is a summary of total lease costs during the three months and six months ended June 30, 2023 and 2022:

Schedule of lease cost

Three Months Ended

Three Months Ended June 30,

Six Months Ended June 30,

Operating lease cost

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Sublease income

weighted-average remaining lease term was 5.25 years and 5.49 years as of March 31, 2023 and December 31, 2022, respectively.

average discount rate was 8.49% and 8.48%, as of March 31, 2023 and December 31, 2022, respectively.

weighted-average remaining lease term was 5.01 years and 5.49 years as of June 30, 2023 and December 31, 2022, respectively.

average discount rate was 8.48% and 8.48%, as of June 30, 2023 and December 31, 2022, respectively.

Operating cash flows from the operating

leases totaled $92,107 and $93,756 for the three months ended March 31, 2023 and 2022, respectively.

total lease liability as of March 31, 2023 and December 31, 2022 was $3,113,919 and $3,220,019, respectively.

following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of March 31, 2023, for years

ending March 31:

of future minimum lease payment

leases totaled $114,110 and $112,914 for the three months ended June 30, 2023 and 2022, respectively, and $206,217 and $206,670 for the

six months ended June 30, 2023 and 2022, respectively.

total lease liability as of June 30, 2023 and December 31, 2022 was $2,999,808 and $3,220,019, respectively.

following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of June 30, 2023, for years

ending June 30:

Schedule of future minimum lease payment

Total future minimum lease payments

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Sublease rental income is recorded based on the contractual rental payments which are not substantially different from recognition

on a straight-line basis over the lease term and totaled $20,161 and $36,113 during the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023 and December 31, 2022, deferred income and a sublease deposit totaled $4,445 and $14,168, respectively, and is included

in accrued expenses and other current liabilities on the accompanying Balance Sheets.

The following

are the total future minimum sublease payments as of March 31, 2023:

on a straight-line basis over the lease term and totaled $10,440 and $24,743 during the three months ended June 30, 2023 and 2022, respectively,

and $29,036 and $60,856 during the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023 and December 31, 2022,

deferred income and a sublease deposit totaled $4,445 and $14,168, respectively, and is included in accrued expenses and other current

liabilities on the accompanying Balance Sheets.

following are the total future minimum sublease payments as of June 30, 2023:

Schedule of future minimum sublease payments

Twelve months ending March 31,

Twelve months ending June 30,

Total future minimum lease

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Sinha and the matter has been resolved with cash and the issuance of common stock (see Note 10 – Stockholders’

Equity in Item 1 – Financial Statements of Part I – Financial Information ).

Stockholders’ Equity

4 unchanged sentences

Sinha dated March 21, 2023.

As of March 31, 2023 and

December 31, 2022, 6,900,566 and 6,802,464 shares,

respectively, of common stock were issued and outstanding.

No shares of preferred stock have been issued.

As of June 30, 2023 and

December 31, 2022, 6,910,717 and 6,802,464 shares, respectively, of common stock were issued and outstanding.

No shares of preferred

stock have been issued.

holder of common stock is entitled to one vote for each share of common stock.

8 unchanged sentences

no shares of preferred stock have been issued, no rights and privileges of preferred stockholders have been defined.

Initial Public

Public Offering

April 1, 2022, the Company completed an initial public offering (“IPO”).

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impact to additional paid-in capital.

the period ending March 31, 2023, 15,000 warrants exercisable at $3.32 per share were exercised on a cash basis which resulted in the

the six months ended June 30, 2023, 15,000 warrants exercisable at $3.32 per share were exercised on a cash basis which resulted in the

issuance of 15,000 shares of common stock.

This leaves 544,431 warrants remaining with an exercise price of $3.32.

the period ending March 31, 2023, 73,000 warrants exercisable at $2.90 per share were exercised using the cashless conversion option

In addition, 22,606 warrants exercisable at $3.32 per share were exercised using the cashless

conversion option, which resulted in the issuance of 10,151 shares of common stock.

This leaves 521,825 warrants remaining with an exercise

price of $3.32.

the six months ended June 30, 2023, 73,000 warrants exercisable at $2.90 per share were exercised using the cashless conversion option

which resulted in the issuance of 31,102 shares of common stock.

This leaves 78,000 warrants remaining with an exercise price of $2.90.

of March 31, 2023 and December 31, 2022, a total of 770,436 and 858,436 warrants were issued and outstanding, respectively.

of June 30, 2023 and December 31, 2022, a total of 747,830 and 858,436 warrants were issued and outstanding, respectively.

30, 2023 and December 31, 2022, a total of 30,000 options, which were not issued under a specified plan, were outstanding.

3 unchanged sentences

Average Remaining Life (Yrs)

Stock Option Plans

of March 31, 2023, the Company had adopted two stock-based compensation plans, the 2021 Incentive Award Plan and the 2021 Employee Stock

of June 30, 2023, the Company had adopted two stock-based compensation plans, the 2021 Incentive Award Plan and the 2021 Employee Stock

Purchase Plan, both of which are described below and became effective upon the initial public offering.

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smaller number of shares as is determined by the Company's board or committee.

As of March 31, 2023, the aggregate number of shares that

As of June 30, 2023, the aggregate number of shares that

can be issued under the Plan is 1,199,623 of which 829,500 have been granted.

2 unchanged sentences

however, the exercise price shall not be less than 100% of the fair value on the grant date

(110% for options granted to greater than 10% shareholders) and the term shall not exceed ten years.

(110% for options granted to greater than 10% stockholders) and the term shall not exceed ten years.

Employee Stock Purchase Plan

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2.83 % – 3.01 %

Company did not grant any options during the three months ending March 31, 2023.

The following table

summarizes the Company’s stock option activity under the 2021 Incentive Plan:

Company did not grant any options during the three or six months ending June 30, 2023.

following table summarizes the Company’s stock option activity under the 2021 Incentive Plan:

Schedule of stock option activity

8 unchanged sentences

The aggregate intrinsic

value of options outstanding and options exercisable as of March 31, 2023 is $1,173,130, as all options are in the money.

The weighted-average

grant-date fair value of the options granted during the three months ended March 31, 2023 to employees and non-employees was $ 1,847,193

and $ 267,336 , respectively.

All options were immediately vested and there was no unrecognized compensation expense as of March 31, 2023.

Common Stock Reserved

for Future Issuance

following is a summary of common stock shares reserved for future issuance as of March 31, 2023:

Schedule of common stock shares reserved for future issuance

value of options outstanding and options exercisable as of June 30, 2023 is $1,280,965, as all options are in the money.

the three months ended June 30, 2023, the weighted-average grant-date fair value of the options granted to employees and non-employees

was $ 1,847,193

and $ 267,336 ,

respectively.

All options were immediately vested and there was no unrecognized compensation expense as of June 30, 2023.

Stock Reserved for Future Issuance

following is a summary of common stock shares reserved for future issuance as of June 30, 2023:

of common stock shares reserved for future issuance

Exercise of warrants

Exercise of options unrelated to any Plan

Exercise of stock options – 2021 Incentive Award Plan

Total shares of common stock reserved for future issuances

Company has incurred losses and consequently recorded no provision for state or federal income taxes for the three months ended March

The Company maintains a full valuation allowance on all deferred tax assets, as it has concluded that it is more likely than

not that these assets will not be realized.

As of March 31, 2023 and December 31, 2022, there were no material unrecognized tax benefits

Exercise of options unrelated to

stock options – 2021 Incentive Award Plan

of common stock reserved for future issuances

Company has incurred losses and consequently recorded no provision for state or federal income taxes for the three or six months ended

June 30, 2023.

The Company maintains a full valuation allowance on all deferred tax assets, as it has concluded that it is more likely

than not that these assets will not be realized.

As of June 30, 2023 and December 31, 2022, there were no material unrecognized tax benefits

included in the accompanying balance sheets that would, if recognized, affect the effective tax rate.

For the three months ended March

31, 2023 and 2022, the Company incurred a provision for state franchise fees of $ 0 and $ 150 , respectively.

For the three months ended June

30, 2023, the Company received a refund of $38 for state taxes overpaid for the 2021 tax year, and for the three months ended June 30,

2022, the Company incurred state taxes of $150.

For the six months ended June 30, 2023, the Company received a refund of $ 38

for state taxes overpaid for the 2021 tax year,

and for the six months ended June 30, 2022, the Company incurred state taxes of $ 300 .

Company adopted a 401(k) Plan (“Plan”) for the benefit of its employees.

6 unchanged sentences

Related Party Transactions

of March 31, 2023 and December 31, 2022, related party transactions consisted of Shareholder Promissory Notes (see Note 8 – Shareholder

Promissory Notes).

of June 30, 2023 and December 31, 2022, related party transactions consisted of Stockholder Promissory Notes (see Note 8 – Stockholder

Promissory Notes in Item 1 – Financial Statements of Part I – Financial Information).

Subsequent Events

date to which events occurring after March 31, 2023, the date of the most recent Balance Sheets, have been evaluated for possible adjustment

to the financial statements or disclosures is May 10, 2023, which is the date the financial statements were issued.

April 2023, the Company had 22,606 cashless warrants exercised resulting in 10,151 additional shares of common stock issued.

date to which events occurring after June 30, 2023, the date of the most recent Balance Sheets, have been evaluated for possible adjustment

to the financial statements or disclosures is August 9, 2023, which is the date the financial statements were issued.

There were no material

subsequent events that require recognition of additional disclosure in these financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements