What changed in this filing

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Item 9A. Controls and Procedures

2024-03-28 compared with 2023-03-30 · 670 added, 1384 removed, 615 unchanged (77% of the section changed)

CONTROLS AND PROCEDURES

of Disclosure Controls and Procedures

management is responsible for establishing and maintaining adequate disclosure controls and procedures for our company.

Consequently,

our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our

disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of December 31, 2022, the end of the period covered

by this Annual Report.

In designing and evaluating the disclosure controls and procedures, management recognized that any controls and

procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management

is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on that

evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are designed

at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports

that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities

and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including

our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Report on Internal Control over Financial Reporting

Annual Report does not include a report of management's assessment regarding internal control over financial reporting or an attestation

report of the Company's registered public accounting firm due to a transition period established by rules of the Securities and Exchange

Commission for newly public companies.

in Internal Control over Financial Reporting

the year ended December 31, 2022, there were no changes in our internal control over financial reporting that materially affected, or

are reasonably likely to materially affect, our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)

and 15d-15(f) under the Securities Exchange Act of 1934).

Evaluation of

Disclosure Controls and Procedures

management is responsible for establishing and maintaining adequate disclosure controls and procedures, as defined in Rule 13a-15(e)

under the Exchange Act, for our Company.

Consequently, our management, with the participation of our principal executive officer and

principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the

Exchange Act as of December 31, 2023.

In designing and evaluating the disclosure controls and procedures, management recognized that

any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired

control objectives.

In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints,

and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their

Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls

and procedures are designed at a reasonable assurance level as of December 31, 2023.

Annual Report on Internal Control Over Financial Reporting

management is responsible for establishing and maintaining adequate internal control over financial reporting.

“Internal control

over financial reporting,” as defined in Rule 13a-15(f) under the Exchange Act, means a process designed to provide reasonable

assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance

Our management, with the participation and supervision of our principal executive officer and our principal financial and

accounting officer, assessed the effectiveness of our internal control over financial reporting.

making this assessment, our management used the criteria set forth in Internal Control – Integrated Framework (2013) as

issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, our management concluded that

our internal control over financial reporting was effective as of December 31, 2023.

Annual Report does not include an attestation report of the Company’s registered public accounting firm due to an exemption established

by SEC rules for emerging growth companies.

Changes in Internal

Control Over Financial Reporting

the years ended December 31, 2023 and December 31, 2022, there were no changes in our internal control over financial reporting that

materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Exchange

Act Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934).

OTHER INFORMATION

1 unchanged sentence

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

and Executive Officers

board of directors consists of four directors, and each director’s term expires at each annual meeting of stockholders.

Our executive

officers are appointed by the directors and the directors may, at any time, terminate the appointment or otherwise revoke, withdraw,

alter, or vary all or any of the functions, duties, and powers of the officer.

is a list of the names, ages, positions, and a brief account of business experience, of the individuals who serve as the executive officers

and directors as of the date of this filing:

Executive Officers

Brian Schaffner

Chief Executive Officer

Co-Founder and Chief Business Development Officer

Co-Founder and President and Chief Operating Officer and Director

Greg Aydelott

Chief Financial Officer

David Hendrickson

Chairman and Director

George Lefevre

Schaffner – CEO .

Schaffner has served as our Chief Executive Officer since January 26, 2023 and was previously our

Chief Financial Officer beginning in March 2021.

Schaffner is a seasoned executive having served over the past three decades in a

variety of capacities including CEO, CFO, CIO, controller and VP Finance in senior-living, assisted-living skilled nursing facilities,

retail stores and schools.

Schaffner’s educational instructional experience includes the secondary and university levels with

courses including accounting, cost accounting, management, personal finance, welding, auto mechanics and aviation ground school.

Schaffner graduated from Walla Walla College with a Bachelor of Science in Business Administration and Accounting in 1992, and from the

University of Phoenix with a Masters in Business Administration in 1997.

Yozamp – Co-Founder and Chief Business Development Officer .

Yozamp has served as our Co-Founder and Chief

Business Development Officer since January 26, 2023 and was previously our Chief Executive Officer since our inception in June 2016.

Yozamp boasts over 30 years of sales and marketing experience, of which includes 24 years of product concept, development and

manufacturing.

Yozamp was recognized in the HDTV’s “Best New Idea” at the 2008 Chicago Hardware Show.

Yozamp supported the #1 item sold at the Sam’s club individual road show.

Just prior to launching Expion360, Mr.

was founder, owner, and operator of the largest solar manufacturing company (Zamp solar) in the US focusing on the RV and off grid

Shoun – Co-Founder and President and Chief Operating Officer and Director .

Shoun has served as our Co-Founder, President

and Chief Operating Officer since January 26, 2023 and was previously our Chief Operating Officer since March 2020.

Before joining the

Shoun worked at Tensility International Corporation, where he served as a Business Development Manager, Project Manager

and Manufacturing Manager from October 2014 to March 2020.

Prior to October 2014, Mr.

Shoun spent over 17 years as the managing director

of a corporate consulting firm.

Shoun brings over 30 years of engineering and corporate management experience.

Shoun brings extensive expertise in project management, product development, engineering leadership, business accounting, ERP/CRM system

management, and product marketing.

Shoun’s prior notable clients include Chrysler, Boeing, Nike IHM, Intel, and Daimler Trucks

North America.

We believe Mr.

Shoun is qualified to serve on our board of directors because of his extensive experience in engineering,

product development and product marketing and his role in building the Company.

Aydelott – Chief Financial Officer.

Aydelott has served as our Chief Financial Officer since January 26, 2023 and was

previously our Chief Accounting Officer since May 10, 2022.

Prior to his appointment as Chief Accounting Officer of the Company, Mr.

Aydelott served as our Controller from February 22, 2022 until May 10, 2022.

Before joining the Company, Mr.

Aydelott worked at Samaritan

Health Services in Corvallis, Oregon from June 2021 to March 2022, where he served as Sr.

Financial Analyst.

Samaritan Health Services

is a regional hospital system serving three counties and has no affiliation with the Company.

Before joining Samaritan Health Services

in June 2021, Mr.

Aydelott was Director of Business Operations of Mission Senior Living in Carson City, Nevada from January 2016 to June

Mission Senior Living is a growing senior housing company with communities in four states and has no affiliation with the Company.

Hendrickson – Chairman and Independent Director.

Hendrickson serves on our board of directors as the Chairman.

Hendrickson is an accomplished business advisor of publicly traded global corporations across many industries.

He has an intimate

understanding of effective corporate governance and how it affects a company’s valuation.

He has served as CEO of DLH International

His focus includes board governance, organizational development, C-suite buildouts, strategic planning, compensation, marketing

and Environmental, Social, and Corporate Governance (ESG) risk factors.

Prior to founding DLH International, he was a Senior Partner

and Board Member at Heidrick & Struggles International, Inc.

HSII), in London, Paris, New York and Greenwich.

was a founding partner of the Firm’s Transnational Practice and a senior member of the Firm’s International Technology Practice.

Hendrickson began his career with International Business Machines Corporation (NYSE:

IBM) and held various marketing, sales,

product development and management positions and was a member of the IBM Personal Computer announcement team.

He contributed to the book,

“The IBM Way:

Insights into the World's Most Successful Marketing Organization.” Mr.

Hendrickson completed the Driving Strategic

Innovation Program, International Institute for Management Development (IMD), Lausanne, Switzerland, the Entrepreneurship Development

Program, Massachusetts Institute of Technology Sloan School of Management, Cambridge, MA and the National Association Corporate Directors

(NACD) Master Class®:

Cyber-Risk Oversight.

Hendrickson serves on the advisory board of a private liberal arts college and has

served on private company boards.

He served as an elected Board Member of the Rainforest Alliance, New York, NY, and the Stanford Institute

for the Quantitative Study of Society (SIQSS), Stanford University.

He is an active member of the National Association of Corporate Directors.

We believe Mr.

Hendrickson is qualified to serve on our board of directors because of his extensive experience working with publicly

traded global companies and corporate governance expertise.

Lefevre – Independent Director .

Lefevre serves on our board of directors.

Lefevre is a business consultant focused

on business development and structural guidance for companies.

From 2009 through 2020, Mr.

Lefevre was the founder of HAPA Capital, LLC.

HAPA was a consulting firm specializing in biotechnology and frontier technology.

From 2014 through 2015, Mr.

Lefevre was the CEO of

a startup company that completed a change in management effective June 26, 2014, and expanded into hemp and cannabidiol (“CBD”)

The expansion was focusing on the development, research, and commercialization of products derived from hemp and cannabis plants.

From 1991 to 1998, Mr.

Lefevre directly invested in and managed investment portfolios.

Lefevre was also the President of GL Investment

Group, a regional investment bank in Southern California where he was directly responsible for providing in excess of $500 million in

funding to biotechnology and high-tech companies.

Lefevre graduated from California State University, Long Beach with a Bachelor

of Science in Business Administration, majoring in Finance.

We believe Mr.

Lefevre is qualified to serve on our board of directors because

of his extensive experience serving in leadership roles at other public companies and extensive investment experience.

Independent Director.

Shum serves on our board of directors.

Shum is the CEO of INVO Bioscience, Inc.

a position he has held since October 10, 2019, and is also a director of INVO Bioscience, Inc., a position he has held since October

Previously, Mr.

Shum was Interim Chief Executive Officer (from May 2019 to October 7, 2019) and Chief Financial Officer of

Eastside Distilling (Nasdaq:

ESDI) (from October 2015 to August 2019).

Prior to joining Eastside, Mr.

Shum served as an Officer and Director

of XZERES Corp, a publicly-traded global renewable energy company, from October 2008 until April 2015 in various officer roles, including

Chief Operating Officer from September 2014 until April 2015, Chief Financial Officer, Principal Accounting Officer and Secretary from

April 2010 until September 2014 (under former name, Cascade Wind Corp) and Chief Executive Officer and President from October 2008 to

Shum also serves as the managing principal of Core Fund Management, LP and the Fund Manager of Core Fund, LP.

a founder of Revere Data LLC (now part of Factset Research Systems, Inc.) and served as its Executive Vice President for four years,

heading up the product development efforts and contributing to operations, business development, and sales.

He spent six years as an

investment research analyst and portfolio manager of D.N.B.

Capital Management, Inc.

His previous employers include Red Chip Review and

Laughlin Group of Companies.

He earned a B.S.

in Finance and a B.S.

in General Management from Portland State University in 1992.

Shum is qualified to serve on our board of directors because of his extensive experience serving in leadership roles at other

public companies.

have a separately designated standing audit committee (the “Audit Committee”) established in accordance with Section 3(a)(58)(A)

of the Exchange Act.

Our Audit Committee consists of Messrs.

Lefevre, Shum and Hendrickson, each of whom meet the requirements for independence

under the rules of The Nasdaq Stock Market LLC and SEC rules and regulations and is financially literate.

Shum is the chair of our

Audit Committee and has been determined by our board of directors to be an “audit committee financial expert” as such term

is defined under SEC rules and regulations.

to Shareholder Director Nomination Process

were no material changes in 2022 to the process by which our shareholders may recommend nominees to our board of directors.

of Business Conduct and Ethics

January 3, 2022, our board of directors adopted a written code of business conduct and ethics (“Code of Business Conduct and Ethics”)

that applies to our directors, officers, and employees, including our principal executive officer, principal financial officer, principal

accounting officer or controller, or persons performing similar functions.

Our Code of Business Conduct and Ethics is available on the

investor relations page of our website at www.expion360.com and.

intend to disclose future amendments to such code, or any waivers of its requirements, applicable to our principal executive officer,

principal financial officer, principal accounting officer or controller, or persons performing similar functions, or our directors, on

our website identified above.

The inclusion of our website address in this Annual Report on Form 10-K does not include or incorporate

by reference the information on our website into this Annual Report on Form 10-K.

Relationships and Other Arrangements

are no family relationships among any of our executive officers or directors.

There are no arrangements or understandings between or

among our executive officers and directors pursuant to which any director or executive officer was or is to be selected as a director

or executive officer.

Section 16(a) Reports

16(a) of the Exchange Act requires our directors, executive officers and stockholders who beneficially own more than 10% of any

class of our equity securities registered pursuant to Section 12 of the Exchange Act (collectively, the “Reporting

Persons”) to file initial statements of beneficial ownership of securities and statements of changes in beneficial ownership

of securities with respect to our equity securities with the SEC.

Based on our review of the copies of such forms filed with the SEC

and upon any written representations of the Reporting Persons received by us, we believe that during the fiscal year ended December

31, 2022, there have been five late Form

3 filings for each of Brian Schaffner, Paul Shoun, John Yozamp, Steve Shum and George Lefevre and there have been six late Form 4 filings

for each of Brian Schaffner, Paul Shoun, John Yozamp, David Hendrickson, Steve Shum and George Lefevre, in each case covering one transaction.

information required by this item will be included in our definitive proxy statement for our 2024 annual meeting of stockholders (the

“2024 Proxy Statement"), to be filed with the SEC no later than 120 days after December 31, 2023, and is incorporated herein

by reference.

EXECUTIVE COMPENSATION

section discusses the material components of the executive compensation program for our executive officers who are named in the “Summary

Compensation Table” below.

In 2022, our “named executive officers” and their positions were as follows:

Schaffner, who currently serves as our Chief Executive Officer, and who served as our Chief

Financial Officer through January 25, 2023;

Shoun, who serves as our Co-Founder, President and Chief Operating Officer;

Yozamp, who currently serves as Co-Founder and Chief Business Development Officer and served

as our Chief Executive Officer through January 25, 2023.

on next page)

Compensation Table

following table sets forth information concerning the compensation of our named executive officers for the years ended December 31,

2021 and December 31, 2022.

and Principal

Awards ($)(3)

Incentive Plan Compensation ($)(2)

Compensation ($)(4)

Schaffner (5)

Executive Officer;

Former Chief Financial Officer

Operating Officer

Business Development Officer;

Former Chief Executive Officer

reflect base salary earned by each named executive officer during the applicable year

of the named executive officers voluntarily chose to forego any bonuses for 2022.

reflect the full grant-date fair value of stock options granted during 2022 computed in accordance

with ASC Topic 718, rather than the amounts paid to or realized by the named individual.

We provide information regarding the assumptions used to calculate the value of all option

awards made to executive officers in Note 12 to our audited financial statements included

this Annual Report on Form 10-K.

2022, includes:

(i) $1,500 in consulting fees and $10,305 in home office expenses for Mr.

Schaffner, (ii) $9,000 in home office expenses and $12,000 in automobile expenses for Mr.

Shoun and (iii) $12,000 in home office expenses and $24,000 in automobile expenses for Mr.

Schaffner served as a CFO consultant from March 2021 until his appointment as Chief Financial

Officer in February 2022.

Consulting Fee

named executive officers receive a base salary to compensate them for services rendered to us.

The base salary payable to each named

executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role

and responsibilities.

As of January 1, 2022, Mr.

Schaffner was providing consulting services to the Company at the rate of $1,500

He began receiving an annual base salary of $120,000 beginning on February 21, 2022.

As of January 1, 2022, the annual base

salary for Mr.

Shoun was $260,000 and the annual base salary for Mr.

Yozamp was $330,000.

The annual base salaries of Messrs.

Shoun and Yozamp were changed to $270,400, $270,400 and $283,200 respectively, effective January 26, 2023.

Annual Bonuses

2022, target bonuses were not established for the named executive officers, and they voluntarily declined participation in the discretionary

year-end holiday bonuses provided to other employees.

Therefore, no annual bonuses were paid to the named executive officers in 2022.

Incentive Award Plan

have adopted the 2021 Incentive Award Plan (the “2021 Incentive Award Plan”).

The purpose of the 2021 Incentive Award Plan

is to enhance our ability to attract, retain and motivate persons who make, or we believe can make, important contributions by providing

these individuals with equity ownership opportunities and/or equity-linked compensatory opportunities.

We believe that equity awards

are necessary to remain competitive in the industry in which we operate in and are essential in recruiting and retaining the highly qualified

service providers who help thus meet our goals.

2022, Messrs.

Yozamp, Shoun and Schaffner were granted stock options under the 2021 Incentive Award Plan as set forth below.

options vested immediately upon grant.

The executive officers had not been granted stock options prior to 2022.

Executive Officer

Stock Options Granted

Elements of Compensation

maintain a 401(k) retirement savings plan for our employees, including our named executive officers, who satisfy certain eligibility

requirements.

Substantially all employees are eligible to participate.

We have the option to make profit sharing contributions to our

401(k) plan at our discretion.

No profit-sharing contributions have yet been made.

The Internal Revenue Code allows eligible employees

to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to our 401(k) plan.

that providing a vehicle for tax-deferred retirement savings through our 401(k) plan adds to the overall desirability of our executive

compensation package and further incentivizes our employees, including our named executive officers, in accordance with our compensation

Benefits and Perquisites

Health/Welfare

of our full-time employees, including our named executive officers, are eligible to participate in our health and welfare plans, which

include medical and vision benefits.

the duration of 2022, our named executive officers received the following perquisites:

Shoun was entitled to automobile expenses of $1,000 per month and Mr.

entitled to automobile expenses of $2,000 per month.

Office Reimbursement Expenses;

Schaffner and Yozamp were each entitled to $1,000

per month in home office reimbursement expenses (with Mr.

Schaffner’s expenses prorated

for the month of February).

Shoun was entitled to $1000 per month in home office reimbursement

expenses but elected to only take $750 per month for 2022.

While Messrs.

Shoun and Yozamp’s Initial Employment Agreements (as defined

below) each provide for full time security benefits, they did not receive any such benefits

Schaffner received $1,500 for consulting work performed for the Company before being named Chief Financial Officer in February 2022

Tax Gross Ups

do not make gross-up payments to cover our named executive officers’ personal income taxes that may pertain to any of the compensation

or perquisites paid or provided by our company.

Equity Awards at Fiscal Year-End

following table summarizes the number of shares of common stock underlying outstanding equity incentive plan awards for each named executive

officer as of December 31, 2022.

Number of Securities Underlying Unexercised Options (#) Exercisable

Number of Securities Underlying Unexercised Options (#) Unexercisable

Option Exercise Price ($)

Option Expiration Date

Brian Schaffner (1)(2)

Paul Shoun (1)(2)

John Yozamp (1)(2)

of each of the awards were vested and exercisable immediately upon the grant date.

of the stock options granted to the named executive officers in 2022 are incentive stock

Yozamp holds common stock in the Company possessing more than 10% of the total combined

voting power of all classes of stock in the Company, Section 422 of the Code requires that

the exercise price of an incentive stock option granted to him will be at least 110% of the

fair market value of a share of common stock on the date of grant, and not to remain exercisable

for a period of longer than 5 years from the date of grant.

Compensation Arrangements

Initial Employment Agreements

November 15, 2021, we entered into employment agreements with our then Chief Executive Officer and Chairman of our board of directors,

John Yozamp, and our Chief Operating Officer, Paul Shoun;

on February 21, 2022, we entered into an employment agreement with our then

Chief Financial Officer, Brian Schaffner (together, the “Initial Employment Agreements”) to reflect their compensation arrangements.

The Initial Employment Agreements entered into with Mr.

Shoun and Mr.

Yozamp each had a term of employment with a three-year duration,

while the Initial Employment Agreement entered into with Mr.

Schaffner had an employment term with a one-year duration.

Under the terms

of the Initial Employment Agreements, Mr.

Schaffner was entitled to a base salary of $120,000, Mr.

Shoun was entitled to a base salary

of $260,000 and Mr.

Yozamp was entitled to a base salary of $330,000.

Each executive officer was also eligible for an annual bonus, to

be granted by the Company’s board of directors or compensation committee based on performance objectives and targets established

Under the Initial Employment Agreements, Messrs.

Schaffner, Shoun and Yozamp were also entitled to participate in the Plan

and in any profit sharing, qualified and nonqualified retirement plans and any health, life, accident, disability insurance, vacation,

paid time off, supplemental medical reimbursement insurance, or benefit plans or programs as we may choose to make available at any point

Under the Initial Employment Agreements, the executive officers were also entitled to annual fringe benefits and perquisites

(including auto expense, security and reimbursement for the executive officer’s home office) and reimbursement for reasonable and

necessary out-of-pocket business, entertainment, and travel expenses incurred in connection with the performance of their duties.

addition, the employment agreements contain provisions providing for severance payments, including both base salary payment throughout

the remainder of the executive’s term of employment, and a payment equal to an additional 12 months of base salary, an amount equal

to the executive annual bonus measured at target rate of performance, and continuation of benefits under certain circumstances including

termination by us without Cause or for Good Reason (each as defined in the Initial Employment Agreements), upon execution of a general

release of claims in our favor.

The Initial Employment Agreements included restrictive covenants, including a two-year non-competition

provision, a-two year no-solicitation and non-disparagement provision and a confidentiality provision.

Amended and Restated Schaffner Employment Agreement

January 26, 2023, we promoted Brian Schaffner from his position as our Chief Financial Officer to our Chief Executive Officer.

In connection

with his new role, we entered into an Amended and Restated Employment Agreement with Mr.

Schaffner, effective January 26, 2023 (the “Schaffner

Employment Agreement”), setting forth the terms and conditions of Mr.

Schaffner’s employment as Chief Executive Officer.

Schaffner Employment Agreement provides for a one-year term ending on April 1, 2023, the first anniversary of our initial public offering,

which term renews automatically unless terminated by the Company or Mr.

Pursuant to the Schaffner Employment Agreement, the

Company will pay Mr.

Schaffner a base salary of $270,400 per year, increased from $120,000.

Schaffner’s existing employment

agreement, the Schaffner Agreement provides for an annual bonus award based on the achievement of performance objectives and targets

established annually by the Company’s board of directors or compensation committee, and standard employee benefits.

Upon a termination

Schaffner’s employment agreement by the Company without Cause or a resignation for Good Reason (each term as defined in

the Schaffner Employment Agreement), Mr.

Schaffner will be paid (a) if terminated prior to April 1, 2023, an amount equal to the remaining

unpaid amounts under the initial employment term, (b) continued base salary for one year, (c) an amount equal to his annual target bonus

for the year of termination, (d) any earned but unpaid bonuses and (e) continued medical and dental benefits for up to one year.

Schaffner Agreement provides for the same employee benefits as under Mr.

Schaffner’s original employment agreement, except that

he will also receive an automobile allowance of $1,000 per month.

The restrictive covenants in the Initial Employment Agreement to which

Schaffner is a party will continue to apply.

Amended and Restated Shoun Employment Agreement

January 26, 2023, we promoted Paul Shoun from his position as our Chief Operating Officer to our Co-Founder, President and Chief Operating

In connection with his new role, we entered into an Amended and Restated Employment Agreement with Mr.

Shoun, effective January

26, 2023 (the “Shoun Agreement”), setting forth the terms and conditions of Mr.

Shoun’s employment as our Co-Founder,

President and Chief Operating Officer.

Shoun Employment Agreement provides for a three-year term ending on April 1, 2025, the third anniversary of our initial public offering,

which term renews automatically unless terminated by the Company or Mr.

Pursuant to the Shoun Employment Agreement, the Company

Shoun a base salary of $270,400 per year, increased from $260,000.

Like the Initial Employment Agreement to which Mr.

is a party, the Shoun Employment Agreement provides for an annual bonus award based on the achievement of performance objectives and

targets established annually by the Company’s board of directors or compensation committee, and standard employee benefits.

a termination of the Shoun Employment Agreement by the Company without Cause or a resignation for Good Reason (each term as defined in

the Shoun Employment Agreement), Mr.

Shoun will be paid (a) if terminated prior to April 1, 2025, an amount equal to the remaining unpaid

amounts under the initial employment term, (b) continued base salary for one year, (c) an amount equal to his annual target bonus for

the year of termination, (d) any earned but unpaid bonuses and (e) continued medical and dental benefits for up to one year.

Employment Agreement provides for the same employee benefits as under the Initial Employment Agreement to which Mr.

Shoun is a party,

except that he will no longer be entitled to security benefits.

The restrictive covenants in the Initial Employment Agreement to which

Shoun is a party will continue to apply.

Amended and Restated Yozamp Employment Agreement

January 26, 2023, we and Mr.

Yozamp agreed that, effective January 25, 2023, he ceased to be our Chief Executive Officer and Chairman

of the Company’s board of directors and a member of our board of directors, and assumed the position of the our Co-Founder and

Chief Business Development Officer.

In connection with his new role, we entered into an Amended and Restated Employment Agreement with

Yozamp, effective January 26, 2023 (the “Yozamp Employment Agreement”), setting forth the terms and conditions of Mr.

Yozamp’s employment as our Co-Founder and Chief Business Development Officer.

Yozamp Employment Agreement provides for a term that ends on December 31, 2023, or if Mr.

Yozamp achieves certain sales objectives, on

December 31, 2024.

The Yozamp Agreement provides for a reduction in Mr.

Yozamp’s base salary from $330,000 to $283,200 per year,

and the replacement of the annual bonus with commission payments

based on the achievement of sales targets agreed to in the Yozamp Agreement rather than an annual bonus.

Upon a termination of Mr.

employment agreement by the Company without Cause or a resignation for Good Reason (each term as defined in the Yozamp Employment Agreement),

Yozamp will be paid an amount equal to the remaining unpaid amounts under the employment term and continued medical and dental benefits

for up to one year, as well as any accrued but unpaid commissions.

The Yozamp Employment Agreement provides for the same employee benefits

Yozamp’s original employment agreement, except that he will no longer be entitled to security benefits.

The restrictive

covenants in the Initial Employment Agreement to which Mr.

Yozamp is a party will continue to apply.

Director Compensation Table

Earned or Paid in Cash ($)

Awards ($)(1)(2)

Other Compensation ($)

reflect the full grant-date fair value of stock awards and stock options granted during 2022

computed in accordance with ASC Topic 718, rather than the amounts paid to or realized

by the named individual.

We provide information regarding the assumptions used to calculate

the value of all option awards made to our directors in Note 12 to our audited financial

statements included this Annual Report on Form 10-K.

of December 31, 2022, Mr.

Hendrickson held options to purchase 30,000 shares of our common

Lefevre held 30,000 options to purchase shares of our common stock and Mr.

held options to purchase 40,000 shares of our common stock.

information required by this item will be included in the 2024 Proxy Statement and is incorporated herein by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Authorized for Issuance Under Equity Compensation Plans

conjunction with our IPO, the Company adopted the 2021 Incentive Award Plan and our 2021 Employee Stock Purchase Plan (the “2021

The following table summarizes equity compensation plan information for the 2021 Incentive Award Plan and the 2021 ESPP,

all stockholder approved, as a group, as of December 31, 2022.

Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights [1]

Weighted Average Exercise Price of Outstanding Options, Warrants and Rights

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities reflected in Column (a) [2]

Plan Category

Equity Compensation Plans Approved by Stockholders

Equity Compensation Plans not Approved by Stockholders

shares of common stock issuable upon the exercise of outstanding stock options under the 2021 Incentive Award Plan

[2] As of December 31, 2022, there were 30,000 shares of common

stock available for future issuance under the 2021 Incentive Award Plan and 2,500,000 shares available for grants under the 2021 ESPP

(of which 0 shares were subject to outstanding purchase rights during the current purchase period).

Ownership of Certain Beneficial Owners and Management

solely upon information made available to us, the following table sets forth certain information with respect to the beneficial ownership

of our common stock as of March 27, 2023 as to (1) each person (or group of affiliated persons) who is known by us to own beneficially

more than 5% of our common stock;

(2) each of our directors;

(3) each of our executive officers;

and (4) all directors and executive

officers of the Company as a group.

We believe that all persons named in the

table have sole voting and investment power with respect to all shares beneficially owned by them, except as noted.

Unless otherwise

indicated, the address of each stockholder listed in the table is c/o Expion360, 2025 SW Deerhound Avenue, Redmond, OR 97756.

Beneficial ownership

is determined in accordance with SEC rules and includes voting or investment power with respect to securities.

All shares of common stock

subject to options or warrants exercisable within 60 days of March 27, 2023, are deemed to be outstanding and beneficially owned by the

persons holding those options or warrants for the purpose of computing the number of shares beneficially owned and the percentage ownership

of that person.

They are not, however, deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership

of any other person.

to the paragraph above, percentage ownership of outstanding shares is based on 6,848,566 shares of common stock outstanding as of March

Beneficial Owner

Beneficially Owned

5% or greater

Shareholders:

AOS Holdings, LLC

James Yozamp, Jr

and Executive Officers :

Brian Schaffner (Chief

Executive Officer) (3)

John Yozamp (Co-Founder

and Chief Business Development Officer) (4)

Paul Shoun (Co-Founder

and President and Chief Operating Officer and Director) (5)

Greg Aydelott (Chief

Financial Officer) (6)

David Hendrickson

(Chairman and Independent Director) (7)

George Lefevre (Independent

Director) (8)

Steven Shum (Independent

Director) (9)

Directors and Executive

Officers as a Group (seven persons)

______________________________________

Less than 1%.

on a third-party report dated as of February 15, 2023.