What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-28 compared with 2023-03-30 · 395 added, 380 removed, 160 unchanged (83% of the section changed)

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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, 2022 and 2021, included in this Annual Report on Form

Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks

and uncertainties that may adversely impact our operations and financial results.

These risks and uncertainties are discussed in this

Annual Report on Form 10-K, including in Item 1A.

“Risk Factors” and “Cautionary Note Concerning Forward-Looking Statements”.

Percentage amounts included in this section have not in all cases been calculated on the basis of rounded figures, but on the basis of

such amounts prior to rounding.

For this reason, percentage amounts in this section may vary from those obtained by performing the same

calculations using the figures in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

other amounts that appear in this section may not sum due to rounding.

focus on the design, assembly, manufacturing, and sales of lithium iron phosphate (LiFePO4) batteries and supporting accessories for

recreational vehicles (“RVs”) and marine applications with plans to expand into home energy storage products and industrial

applications.

We design, assemble, and distribute high-powered, lithium battery solutions using ground-breaking concepts 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 & Marine industry.

We are developing the e360 Home Energy Storage:

a system that we expect to significantly change the industry

in barrier price, flexibility, and integration.

We are deploying multiple IP strategies with cutting-edge research and unique products

to sustain and scale the business.

We currently have customers consisting of dealers, wholesalers, private label customers and original

equipment manufacturers who are driving revenue and brand awareness nationally.

corporate headquarters are based in Redmond, Oregon, with assembly in the United States and suppliers based in Asia.

We are currently

in the process of building out manufacturing capacity at our corporate headquarters.

Our long-term target is to onshore the manufacturing

of most of our components and assemblies, including cell manufacturing, to the United States.

main target markets are currently the RV & Marine industry.

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.

Additional focus markets

include home energy storage, where we aim to provide a cost-effective, low barrier of entry, and a do-it-yourself (“DIY”)

flexible system for those looking to power their homes via solar energy, wind, or grid back-up.

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.

e360 product line, which is manufactured for the RV/Marine industry, was launched in December 2020.

The e360 product line, through its

rapid sales growth, has shown to be a preferred conversion solution for lead-acid batteries.

We believe that our e360 Home Energy Storage

system has strong revenue potential with recurring income opportunities for us and our associated sales partners.

financial statements and related notes for the fiscal years ended December 31, 2023 and 2022, included in this Annual Report.

financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties

that may adversely impact our operations and financial results.

These risks and uncertainties are discussed in this Annual Report, including

“Risk Factors” and “Cautionary Note Concerning Forward-Looking Statements and Industry Data.” Percentage

amounts included in this section have not in all cases been calculated on the basis of rounded figures, but on the basis of such amounts

prior to rounding.

For this reason, percentage amounts in this section may vary from those obtained by performing the same calculations

using the figures in our consolidated financial statements included elsewhere in this Annual Report.

Certain other amounts that appear

in this section may not sum due to rounding.

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.

We believe that our product offerings

include some of the most dense and minimal-footprint batteries in the RV and marine industries.

We are developing the e360 Home Energy

Storage System that we expect to change the industry in barrier price, flexibility, and integration.

We are deploying multiple intellectual

property strategies with research and products to sustain and scale the business.

We currently have customers consisting of dealers,

wholesalers, private label customers and original equipment manufacturers who are driving revenue and brand awareness nationally.

primary target markets are currently the RV and marine industries.

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 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

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.

e360 product line, which is manufactured for the RV and marine industries, was launched in December 2020.

The e360 product line, through

its sales growth, has shown to be a preferred conversion solution for lead-acid batteries.

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.

that our e360 Home Energy Storage System has strong revenue potential with recurring income opportunities for us and our associated sales

products provide numerous advantages for various industries that are looking to migrate to lithium-based energy storage.

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customer service.

March 2023, holders of 73,000 warrants previously issued by the Company with an exercise price of $2.90 exercised their warrants on a

cashless basis, which resulted in the issuance of an additional 31,102 shares of the Company’s common stock.

During the same period,

holders of 15,000 warrants previously issued by the Company with an exercise price of $3.32 exercised their warrants by paying the exercise

price, which resulted in the issuance of an additional 15,000 shares of common stock and the receipt by the Company of $49,800.

the date of this Annual Report on Form 10-K, the Company had 770,436 outstanding warrants.

January 2023, the Company made certain leadership changes which included appointing Brian Schaffner as Chief Executive Officer, succeeding

company Co-Founder John Yozamp who resigned as Chief Executive Officer and as a Director and assumed the new position of Chief Business

Development Officer.

In addition, Co-Founder, Director and Chief Operating Officer, Paul Shoun, was appointed to the additional position

of President.

Greg Aydelott was also promoted from Chief Accounting Officer to Chief Financial Officer.

Independent company director,

David Hendrickson has been elected Chairman of the Board, succeeding John Yozamp.

January 2023, the Company repaid a vehicle loan with an interest rate of 11.21% in the amount of $89,360 which included principal, interest,

The repayment removed debt with the highest interest rate and provides us with more flexibility to dispose or re-purpose the

related asset, which is a 2019 Freightliner truck.

January 2023, introduced AURA POWERCAP™ 600 and AURA POWERCAP™ 800.

Expion360 began taking pre-orders of the new AURA POWERCAP™

600 and 800 in Q1 2023 with anticipated deliveries Q2 2023.

See “— Competitive Strengths—Expansion into New Markets ”

for additional information about the AURA POWERCAP™ 600 and AURA POWERCAP™ 800.

Factors Affecting Our Operating Results

operating results and financial performance are significantly dependent on the following factors:

most of our current sales are generated through dealers, wholesalers and original equipment manufacturers (“OEM”) focused

Recent Developments

Corporate Leadership

December 2023, John Yozamp retired as our Chief Business Development Officer.

In connection with Mr.

Yozamp’s retirement, the Company

Yozamp entered into:

(i) a consulting agreement pursuant to which Mr.

Yozamp has agreed to provide services as our independent

sales representative for a period of six months, subject to extension or earlier termination as provided for in the agreement, and (ii)

a standard release agreement pursuant to which Mr.

Yozamp agreed to release certain claims against us.

Convertible Note

Financing and Equity Line of Credit Financing

December 2023, we entered into a securities purchase agreement (the “Note Purchase Agreement”) with 3i, LP (“3i”)

pursuant to which we sold, and 3i purchased:

(i) a senior unsecured convertible note we issued in the aggregate principal amount of $2,750,000,

with an 10.0% original issue discount and an interest rate of 9.0% per annum (the “3i Note”), (ii) up to $247,500 in newly

issued shares of Common Stock (the “Interest Shares”), which may be payable, at our option and subject to the fulfillment

of certain conditions set forth in the 3i Note, to satisfy interest payments under the Note, and 63,497 shares of Common Stock, which

is equal to $300,000 of shares of Common Stock calculated as of the date of the Note Purchase Agreement issued to 3i as consideration

for its commitment to purchase the Note (collectively, the “3i Note Transaction”).

The 3i Note is convertible into a maximum

of 727,387 shares of Common Stock.

The conversion of the 3i Note is subject to the terms of the Note Purchase Agreement, including the

beneficial ownership limitations and share issuance caps specified therein.

In connection with the 3i Note Transaction, we filed a prospectus

supplement with the SEC pursuant to Rule 424(b) under the Securities

December 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”).

In connection with the Equity

Line of Credit Financing, we filed a Registration Statement on Form S-1 (File No.

333-276663) with the SEC on January 23, 2024, which

was declared effective on February 9, 2024.

January 2024, we introduced our next generation GC2 and Group 27 series lithium iron phosphate (“LiFePO4”) batteries.

new versions now 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™ (“VHC™”) internal heating, Bluetooth®

and controller area network (“CAN Bus”) communication.

Expion360 began taking pre-orders of the new GC2 and Group 27 batteries

in Q1 2024 with anticipated deliveries Q2 2024.

See the section titled “ Business—Expansion into New Markets ”

for additional information about the higher amp-hour cells and Vertical Heat Conduction™ internal heating.

Debt Repayment

January 23, 2024 the Company paid off a stockholder note payable with principal due of $62,500, along with the remaining interest due.

February 29, 2024, the Company sold two trucks and paid off combined principal of $72,115 for the corresponding notes payable, as well

as interest and fees.

March 11, 2024, the Company sold another truck and paid off the principal of $14,196 for the corresponding note payable, as well as interest

February 2024, a holder of 7,535 warrants previously issued by the Company with an exercise price of $3.32 exercised their warrants on

a cashless basis, which resulted in the issuance of an additional 1,606 shares of Common Stock.

As of the date of this Annual Report,

the Company had 765,295 outstanding warrants.

Key Factors Affecting Our Operating

Our operating results and financial performance

are significantly dependent on the following factors:

Consumer Demand

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.

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Therefore, our future sales will be subject to risks and uncertainties related to end user demand.

from end users is affected by a number of factors which may include fuel costs, overall macroeconomic conditions, and travel restrictions

(resulting from COVID-19 or otherwise).

from end users is affected by a number of factors which may include fuel costs, overall macroeconomic conditions, inflation, interest

rates, and geopolitical pressures.

During the COVID-19 pandemic, the increased adoption of the RV lifestyle benefited battery suppliers.

However, more recently we have seen a rise in fuel costs and other changes in macroeconomic conditions which has created a decrease in

end user spending decisions which is affecting our markets.

RV and marine applications drive current revenues, Expion360 has plans to expand into the home energy market in the coming years.

e360 Home Energy Storage system is planned to target entry level customers with its modular design that will allow for DIY expansion.

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.

Furthermore, Expion360 plans to file for IP protection for Expion360’s “Smart Talk” upon completion

of development.

“Smart Talk” is designed to allow multiple batteries in a bank to communicate as one and be linked to a network.

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.

RV and marine applications drive current revenues, Expion360 announced in December 2023 its entry into the home energy storage market

with its introduction of two LiFePO4 battery storage solutions.

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.

The success of our strategy requires (1) continued growth of these addressable markets in line with our expectations and (2) our ability

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with our expectations, our sales growth would be limited to the growth of existing products and existing end markets.

Manufacturing

and Supply Chain

batteries are manufactured by multiple third-party manufacturers located in China, who also produce our battery cells.

Manufacturing and Supply Chain

batteries are manufactured by multiple third-party manufacturers located in Asia, who also produce our battery cells.

We then assemble

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manufacturers spanning many years.

Our close working relationships with our China-based third-party manufacturers and cell suppliers,

reflected in our ability to increase our purchase order volumes (qualifying us for related volume-based discounts) and to order and receive

delivery of cells in anticipation of required demand, has helped us moderate increased supply-related costs associated with inflation,

currency fluctuations, and U.S.

Our close working relationships with our foreign suppliers, 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 anticipation

of required demand, 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.

We believe that we could locate alternative third-party

manufacturers to fulfill our needs.

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.

third-party manufacturers source the raw materials and battery components required for the production of our batteries directly from

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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

For example, a global shortage and component supply disruptions of electronic battery components are currently being reported,

and the full impact to us is yet unknown.

Our battery cell manufacturers also have joint venture factories outside of China and have

secured sourcing contracts from lithium suppliers in South America and Australia.

In addition, 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.

and Customer Mix

sell six models of LiFEPO4 batteries, the AURA POWERCAP, and individual or bundled accessories for battery systems.

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.

While we work with our suppliers to limit price and supply cost increases,

our products may see price increases resulting from a rise in supply costs due to currency fluctuations, inflation, and tariffs.

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.

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.

Our battery cell manufacturers have joint venture factories outside of Asia and have secured sourcing contracts from lithium

suppliers in South America and Australia.

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.

Product and Customer

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.

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.

While we work with our suppliers to limit price and supply cost increases, our products may see price increases resulting from a rise

in supply costs due to currency fluctuations, inflation, and tariffs.

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.

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.

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 develop new products and expand into

new markets, we may experience competition with a broader range of companies.

These companies may have more resources than us and be

able to allocate more resources to their current and future products.

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.

and Development

As we develop new products and expand into new markets, we may experience competition

with a broader range of companies.

These companies may have more resources than us and be able to allocate more resources to their current

and future products.

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.

Research and Development

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.

geographic areas and market segments.

technologies are rapidly emerging in the markets where we conduct business and many new energy storage technologies have been introduced

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As a result, we may need to raise additional funds for these research and development efforts.

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.

Materially, all of our sales are within the United States.

primary cost of sales is related to our direct product and landing costs.

Direct labor costs consist of payroll costs (including taxes

and benefits) of employees directly engaged in assembly activities.

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.

General and Administrative Expenses

general and administrative expenses consist primarily of salaries, benefits, and sales and marketing costs.

Other costs include facility

and related costs, professional fees and other legal expenses, consulting, and tax and accounting services.

and Other Income, net

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 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.

Cost of Sales

primary cost of sales as a percentage of sales is related to our direct product and landing costs.

Direct labor costs consist of payroll

costs (including taxes and benefits) of employees directly engaged in assembly activities.

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.

Selling, General

and Administrative Expenses

general and administrative expenses consist primarily of salaries and benefits, legal and professional fees, and sales and marketing

Other costs include facility and related costs, research and development, software and tech support, and travel expenses.

Other Income, net

expense consists of interest costs on loans with interest rates ranging from 3.75% to 11.2% and amortization of debt issuance costs.

As of December 31, 2022, all debt issuance costs have been fully amortized.

for Income Taxes

November 2021, the Company was a limited liability company taxed as a Subchapter S corporation and was not a taxpaying entity for federal

income tax purposes.

The Company’s taxable income or losses were allocated to its members in accordance with their respective ownership

Therefore, no provision or liability for federal income taxes has been included in the accompanying historical financial

Certain states impose minimum franchise taxes on entities taxed as an S corporation, accordingly, the accompanying financial

statements include provisions for state franchise tax fees.

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 existing 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

Company has adopted the provisions in ASC 740, Income Taxes, related to accounting for uncertain tax positions.

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

at December 31, 2022 and 2021.

Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense.

The Company had

no accrual for interest or penalties on the Company’s balance sheet at December 31, 2022 or 2021 and did not recognize interest

and/or penalties in the statement of operations for the years ended December 31, 2022 and 2021, since there are no material unrecognized

tax benefits.

Management believes no material change to the amount of unrecognized tax benefits will occur within the next twelve months.

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

are 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 existing assets and liabilities and their respective

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.

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.

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.

have adopted the provisions in ASC 740, Income Taxes, related to accounting for uncertain tax positions.

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.

practice is to recognize interest and/or penalties related to income tax matters in income tax expense.

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.

Management believes

no material change to the amount of unrecognized tax benefits will occur within the next twelve months.

Sheet Arrangements

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of Operations

Ended December 31, 2022, Compared to the Year Ended December 31, 2021

Year Ended December 31, 2023, Compared

to the Year Ended December 31, 2022

following table sets forth certain operational data as a percentage of sales:

Fiscal Year Ended 12/31/2022

Fiscal Year Ended 12/31/2021

% of Net sales

Fiscal Years Ended December 31,

Cost of sales

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Loss before income taxes

net for the year ended December 31, 2022 increased by $2.6 million, or 58.6%, compared to the year ended December 31, 2021.

$4.5 million for the year ended December 31, 2021 and $7.2 million for the year

ended December 31, 2022.

The year over year increase was primarily attributable to increases in our overall sales volumes as a result

of our expanding product offerings, growing distribution network, and expanded OEM market penetration.

cost of sales for the year ended December 31, 2022 increased by $2.0 million, or 69.7%, compared to the year ended December 31, 2021.

Cost of sales were $2.9 million for the year ended December 31, 2021 and $4.9 million for the year ended December 31, 2022.

net for the year ended December 31, 2023 decreased by $1.2 million, or 16.5%, compared to the year ended December 31, 2022.

$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.

Cost of Sales

as a percentage of sales increased by 4.5% in that period.

The increase in cost of sales was primarily related to increases in facilities

costs and labor as we expanded our operations, and in supplier and shipping costs, which the Company is currently monitoring.

gross profit for the year ended December 31, 2022 increased by $643,000, or 39.1%, compared to the year ended December 31, 2021.

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.

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

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.

gross profit for the year ended December 31, 2023 decreased by $713,000, or 31.2%, compared to the year ended December 31, 2022.

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 as a

percentage of sales decreased by 4.5% for the year ended December 31, 2022, from 31.9% to 36.4% for the year ended December 31, 2021.

The decrease in gross profit for the year ended December 31, 2022 was primarily attributable to increases in facilities costs and labor

as we expanded our operations, and in landed costs, which the Company is currently monitoring.

General and Administrative Expenses

general and administrative expenses increased by $5.3 million, or 183%, to $8.2 million for the year ended December 31, 2022 compared

to $2.9 million for the year ended December 31, 2021, primarily due to increased costs to support our growth in sales and business development

efforts along with various expenses that were incurred due to planning and preparing for our initial public offering.

The most substantial

increases were in salaries and benefits, of which $2,114,529 was a non-cash expense attributable to stock-based compensation, legal and

professional services incurred in anticipation of our initial public offering, sales and marketing, and rents and utilities.

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,

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.

Selling, General and Administrative

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.

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.

in the table below is the composition of selling, general and administrative expenses:

Fiscal Year Ended

Fiscal Year Ended 12/31/2021

Fiscal Years Ended December 31,

Salaries and benefits

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Research and development

Travel expenses

Software, fees, tech support

Travel expenses

Supplies, office

other expense for the year ended December 31, 2022 and 2021 was $1.6 million and $3.4 million, 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, 2021 was primarily

attributable to extinguishment loss on debt settlement.

The extinguishment of debt was related to settlement on convertible notes issued

The noteholders agreed to settle the debt for an aggregate 1,527,647 shares of common stock with a fair value of $5,545,359

($3.63 per share).

Since this transaction involved contemporaneous issuance of shares of common stock by the Company to the converting

noteholders, we evaluated the transaction for modification and extinguishment accounting and determined that the debt was extinguished

as a result of the issuance of shares that do not represent the exercise of a conversion right contained in the original terms of the

notes at issuance.

The settlement of the debt resulted in a recognized loss of $2,262,658 recorded as extinguishment loss on debt settlement

on the accompanying statements of operations, calculated as the excess of the fair value of the shares issued over the carrying amount

In addition, the fair value of warrants of $407,700 issued in exchange for services related to obtain the notes (see Note

12 – Stockholders’ Equity-Warrants/Options) and the unamortized portion of debt discount remaining at date of settlement

of $120,729 were also recorded as extinguishment loss on debt settlement for an aggregate loss of $2,791,087 on the accompanying statements

of operations.

the year ended December 31, 2022 and 2021, non-cash amortization of debt discount totaled $1.2 million and $118,000, respectively.

expense attributable to debt obligations totaled $409,000 and $436,000 during the year ended December 31, 2022 and 2021, respectively.

Other Expense

expense for the years ended December 31, 2023 and 2022 was $283,000 and $1.6 million, respectively.

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.

the years ended December 31, 2023 and 2022, non-cash amortization of debt discount totaled $0.00 and $1.2 million, respectively.

expense attributable to debt obligations totaled $125,000 and $409,000 during the years ended December 31, 2023 and 2022, respectively.

In April 2022, with the use of proceeds from the IPO, the Company paid off approximately $2.5 million in debt with interest rates ranging

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net loss for the years ended December 31, 2023 and 2022 was $7.5 million and $7.5 million, respectively.

The increase in net loss was

primarily the result of increased selling, general, and administrative expenses as we invested in human resources, facilities, and business

development in preparation of our expanded growth objectives along with an increase in legal and professional costs in connection with

our initial public offering.

Additionally, for the year ended December 31, 2022, the Company recognized $2.1 million in non-cash expenses

related to stock-based compensation, compared to $188,000 for the year ended December 31, 2021.

Further, for the year ended December

31, 2022, the Company recognized non-cash interest expense of approximately $1.2 million.

Therefore, of the $7.5 million net loss for

the year ended December 31, 2022, a total of $3.3 million was non-cash expenses.

The net loss in the year ended

December 31, 2023 was primarily the result of decreased sales;

a large decrease in other expenses, especially interest expense, which

was offset by the decreased sales, resulting in a net loss very similar for the years ended December 31, 2023 and 2022.

Within selling,

general, and administrative expense, a large reduction in salary and benefits expense for the year ended December 31, 2023 versus the

prior year was offset by large increases in legal and professional fees and research and development, among other expenses.

and Capital Resources

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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 $7.2 million and $773,000, respectively.

of $3.9 million and $7.2 million, respectively.

On April 1, 2022, we closed our initial public offering which resulted in approximately

million of net proceeds.

$14.8 million of net proceeds, which management continues to use for working capital and general corporate purposes.

generally consider our short-term liquidity requirements to consist of those items that are expected to be incurred within the next twelve

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of December 31, 2023, we expect our short-term liquidity requirements to include (a) approximately $270,000 of capital additions;

principal debt payments totaling approximately $571,000;

and (c) lease obligation payments of approximately $719,000, including imputed

generally consider our long-term liquidity requirements to consist of those items that are expected to be incurred beyond the next twelve

months and believe these requirements consist primarily of funds necessary for eighteen months.

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.

For the years ended December 31, 2022 and 2021, the Company 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 year ended December 31, 2022 are issued.

However, management is working

to address its cash flow challenges, including raising additional capital, alternative supply chain resources, and in-house assembly

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 on Form 10-K.

principal debt payments totaling approximately $3.6 million net of amortization;

and (c) lease obligation payments of approximately $736,000,

including imputed interest.

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.

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

sustainable revenues and profit from operations.

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.

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.

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.

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.

April 1, 2022, we closed our initial public offering which resulted in approximately $14.8 million of net proceeds, of which approximately

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

of December 31, 2022, the Company long-term debt totaled $510,475, comprised of $150,114 outstanding under a COVID-19 Economic Injury

Disaster Loan, $350,537 outstanding under vehicle financing arrangements, and an equipment loan for $9,824.

In January 2023, the Company

repaid a vehicle loan with an interest rate of 11.21% in the amount of $89,360 which included principal, interest, and fees.

as of December 31, 2022, the Company had outstanding shareholder loans totaling $825,000.

$2.5 million was used to pay down principal and accrued interest on high interest-bearing debt.

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.

we sold a vehicle including repayment of the related vehicle loan with an interest rate of 5.9% in the amount of approximately $31,600

which included principal and interest.

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

addition, as of December 31, 2023, we had outstanding stockholder loans totaling $762,500 and a short-term convertible note totaling

approximately $2.8 million.

Promissory Notes

promissory notes due to shareholders had an outstanding principal balance of $825,000 as of December 31, 2022.

promissory notes due to stockholders had an outstanding principal balance of $762,500 as of December 31, 2023.

The unsecured promissory

notes require monthly interest-only payments at 10% per annum and mature at various dates from August 2023 to December 2024.

13 “Certain Relationships and Related Transactions and Director Independence—Certain Related Party Transactions” for

more information about the unsecured promissory notes.

Financing Arrangements

of December 31, 2022, the Company has six notes payable to GM Financial for vehicles.

notes require monthly interest-only payments at 10% per annum and mature at various dates from January 2024 to December 2024.

2024, the Company repaid a $62,500 note maturing on January 29, 2024.

A $500,000 note matures in August 2024 and another note for $200,000

matures in December 2024.

Vehicle Financing

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 expires in April 2023.

The notes are payable in aggregate

monthly installments of $4,676, 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 of the Company.

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.

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.

A separate vehicle financing note has a current balance outstanding of $14,000,

with monthly payments of approximately $500 at an interest rate of 5.5% and a maturity date in July 2026.

See Note 7, Long-Term Debt.

Note Financing

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”).

The gross proceeds to us were $2.5 million, prior to the payment of legal fees

and transaction expenses.

The offering of securities in the Convertible Note Financing was made pursuant

to an effective shelf registration statement on Form S-3 (File No.

333-272956), which we filed with the SEC on June 27, 2023 and declared

effective on July 10, 2023.

principal repayment amount of the short-term convertible notes totals $2.75 million.

The associated costs and expenses incurred in connection

with the Convertible Note Financing of approximately $80,000 will be amortized over the 12-month period ending December 31, 2024.

convertible 3i Note requires monthly interest-only payments at 9.0% per annum, payable in cash or, subject to certain conditions set

forth in the Note,common stock (subject to certain conditions), and matures December 27, 2024 unless earlier converted or redeemed.

Note 9 , Convertible Notes and Equity Line of Credit.

Line Purchase Agreement

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”).

In connection with the Equity

Line of Credit Financing, we filed a Registration Statement on Form S-1 (File No.

333-276663) with the SEC on January 23, 2024, which

was declared effective on February 9, 2024.

See Note 9, Convertible Note and Equity Line of Credit.

following table shows a summary of our cash flows for the periods presented:

Net cash used in operating activities

$ (5,468,572 )

$ (3,896,830 )

Net cash used in investing activities

Net cash provided by financing activities

flows used in operating activities

cash used in operating activities

cash provided by / (used in) investing activities

cash provided by financing activities

Cash flows used in

operating activities

largest source of operating cash is cash collection from sales of our products.

Our primary use of cash from operating activities are

for increases in inventory purchases, increased marketing, and research and development.

In the last several years, we have generated

negative cash flows from operating activities and have supplemented working capital requirements through net proceeds from the sales

of membership interests/common stock and convertible notes and incurrence of indebtedness.

Our primary use of cash for operating activities are

related to legal and professional fees, sales and marketing expenses, and research and development.

In the last several years, we have

generated negative cash flows from operating activities and have supplemented working capital requirements through net proceeds from

sales of our common stock.

generated negative cash flows from operating activities of $5.5 million for the year ended December 31, 2023, compared to negative cash

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the year ended December 31, 2023, 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.

For the year ended December 31, 2021,

our loss of $4.7 million was reduced by non-cash transactions including extinguishment loss

on debt settlement of $2.8 million related to the settlement of convertible notes issued

in 2021, stock-based compensation of $188,000, amortization of debt discount on convertible

notes of $118,000, and debt conversion expense on induced conversion of $112,000.

provided/(used) by accounts receivable was $458,000 and ($566,000), for the year ended December

31, 2022 and 2021, respectively, representing a decrease in accounts receivable for the year

ended December 31, 2022 and an increase in accounts receivable for the year ended December

31, 2021, respectively.

including stock-based compensation of $560,000, stock-based settlement of $252,000, and depreciation

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.

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.

Sales are generally collected within 30 to 45 days.

These changes

are mainly due to timing where a few large orders were placed and had open balances as of

December 31, 2021, but they were within payment terms.

significant changes include a decrease in customer deposits of $437,000 during the year ended

December 31, 2022, representing a use of cash in 2022 that customers deposited in 2021.

Additionally,

long-term deposits had no change during the year ended December 31, 2022 compared to an increase

of $56,000 for the corresponding period in 2021.

The increase in deposits in 2021 was primarily

due to the addition of lease properties with corresponding security deposits paid in late

No new deposits were made in 2022.

used for inventory and prepaid inventories increased by $1.5 million and $2.4 million for

the years ended December 31, 2022 and 2021, respectively.

These increases are primarily due

to significant purchases and prepayments of inventory to Chinese suppliers that were made

in 2022 in order to have sufficient inventory for projected sales in 2022 and 2023.

time for receiving inventory from foreign sources can take up to 120 days, with prepayments

Sales for the year ended December 31, 2022 increased over sales for the year ended

December 31, 2021 by $2.6 million.

flows used in investing activities

changes are mainly due to timing between sales being recognized and payment being received.

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.

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.

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.

flows provided by / (used in) investing activities

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.

This was offset by net proceeds of $37,000 received for the sale and disposal of property and equipment during the year ended December

We anticipate that we will spend up to $270,000 in 2024 as we continue to enhance our quality control measures.

used cash in investing activities of $516,000 for the year ended December 31, 2022.

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by net proceeds of $52,000 received for the sale of property and equipment during the year ended December 31, 2022.

We anticipate that

we will spend up to $379,000 in 2023 as we continue to automate our new assembly line and enhance our quality control measures.

cash used in investing activities of $114,000 for the year ended December 31, 2021 consisted entirely of purchases of property and equipment.

flows provided by financing activities

Cash flows provided by financing

provided by financing activities was $2.2 million for the year ended December 31, 2023.

For the year ended December 31, 2023, we paid

down debt principal of $2.4 million, which was offset by net cash proceeds of $14.8 million from the sale of common stock.

cash provided by financing activities of $4.5 million for the year ended December 31, 2021, consisted of $4.2 million net proceeds from

issuance of convertible notes and long-term debt, proceeds of $838,000 from the issuance of membership units/common stock, and proceeds

of $125,000 on sale of future revenues.

This was partially offset by payments on debt and liability of future revenues of $636,000.

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.

provided by financing activities was $12.4 million for the year ended December 31, 2022.

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.

and Other Obligations

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The preparation

of financial statements in conformity with 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 of the accompanying financial statements for the years ended December 31, 2022 and 2021.

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.

We consider the following policies

to be the most critical in understanding the judgments that are involved in preparing the financial statements.

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

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.

We consider the following policies to be the most critical in understanding the judgments that are involved in preparing the financial

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

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

assemblies totaling $2,722,765 and $985,537, respectively, and raw materials (inventory components, parts, and packaging) totaling $1,807,371

and $1,066,343, respectively.

The valuation of inventory includes fixed production overhead costs based on normal capacity of the assembly

and Equipment

assemblies totaling $2,967,021 and $3,243,485, respectively, and raw materials (inventory components, parts, and packaging)

totaling $858,369 and $1,286,651, respectively.

The valuation of inventory includes fixed production overhead costs based

on normal capacity of the assembly warehouse.

Property 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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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.

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

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.

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 will exercise that option.

Leases with a term of 12 months or less are not recognized on the Company’s Balance Sheet.

Company’s leases do not contain any residual value guarantees.

Lease expense for minimum lease payments is recognized on a straight-line

basis over the lease term.

Leases with a term of 12 months or less are not recognized on the Company’s balance sheets.

The Company’s leases do not contain any residual value guarantees.

Lease expense for minimum lease payments is recognized on a

straight-line basis over the lease term.

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

Revenue Recognition

Company’s revenue is generated from the sale of products consisting primarily of batteries and accessories.

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

and Handling Costs

and handling fees billed to customers are classified on the Statement of Operations as “Sales, net” and totaled $23,188 and

$25,688 during the years ended December 31, 2022 and 2021, respectively.

Shipping and Handling

and handling fees billed to customers are classified on the statements of operations as “Sales, net” and totaled $70,712

and $23,200 during the years ended December 31, 2023 and 2022, respectively.

Shipping and handling costs for shipping product to customers

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and administrative expense in the accompanying statements of operations.

and Development

Research and Development

and development costs are expensed as incurred.

2 unchanged sentences

statements of operations.

January 1, 2017 to October 31, 2021, the Company was not subject to federal or state income taxes since it was a limited liability company

taxed as an S corporation.

The Company’s taxable income or losses were allocated to its members in accordance with their respective

ownership percentages.

Therefore, no provision or liability for federal income taxes was included in the accompanying financial statements

for the relevant periods in 2021.

Certain states impose minimum franchise taxes on entities taxed as an S corporation.

Accordingly, the

accompanying financial statements include provisions for state franchise tax fees.

November 1, 2021, the Company converted from an LLC to a C corporation and, as a result, became subject to corporate federal and state

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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

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 be realized.

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

The Cares Act is an emergency

economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort

to curtail the effect of COVID-19.

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 (the “CARES Act”).

Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund

a nationwide effort to curtail the effect of COVID-19.

The CARES Act provides sweeping tax changes in response to the COVID-19 pandemic.

Some of the more

significant provisions are removal of certain limitations on utilization of net operating losses, increasing the loss carryback period

for certain losses to five years, and increasing the ability to deduct interest expense, as well as amending certain provisions of the

previously enacted Tax Cuts and Jobs Act.

As of December 31, 2022 and 2021, 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.

Some of the more significant provisions are removal of certain limitations on utilization of net operating losses, increasing the loss

carryback period for certain losses to five years, and increasing the ability to deduct interest expense, as well as amending certain

provisions of the previously enacted Tax Cuts and Jobs Act.

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.

December 27, 2020, the United States enacted the Consolidated Appropriations Act of 2021 (“CAA”).

12 unchanged sentences

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-K

Item 7. Management’s Discussion and Analysis