What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-03-31 compared with 2024-03-28 · 674 added, 518 removed, 37 unchanged (97% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited

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

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.

They incorporate

detailed-oriented design and engineering and strong case materials and internal and structural layouts, and are backed by responsive

customer service.

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and

analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and

related notes for the fiscal years ended December 31, 2024 and 2023, included in this Annual Report.

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, including in Item 1A.

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.

Unless otherwise noted, all references to shares and per

share amounts for the years ended December 31, 2024 and 2023 presented in this section have been adjusted retroactively to reflect a

1-for-100 reverse stock split, which was effective at 5:00 p.m.

Pacific Time on October 8, 2024 (the “Reverse Stock Split”).

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Reverse Stock Split and Reverse

Stock Split True-Up Payment” below for additional information about the Reverse Stock Split.

Expion360 focuses on the design, assembly, manufacturing,

and sale of lithium iron phosphate (“LiFePO4”) batteries and supporting accessories for recreational vehicles (“RVs”),

marine applications and home energy storage products with plans to expand into industrial applications.

Our high-powered, lithium battery

solutions incorporate innovative concepts and have been designed to include some of the most dense and minimal-footprint batteries in

the RV and marine industries.

In addition, in January 2025 we began selling our e360 Home Energy Storage Solutions, which consist of two

LiFePO4 battery storage solutions and seek to provide consumers with a cost-effective, low barrier of entry, flexible system to power

their homes utilizing solar energy, wind, or grid back-up.

We are deploying multiple intellectual property strategies with research and

products to sustain and scale our business.

This includes design, development and collaboration, using our IP to bring safety, quality

and service to our customers.

Our customers consist of dealers, wholesalers, private-label customers, and original equipment manufacturers

(“OEMs”) who then sell our products to end consumers and drive brand awareness nationally.

Our primary target markets are currently the RV, marine,

and home energy storage industries.

We believe we are well-positioned to capitalize on the rapid market conversion from lead-acid to lithium

batteries as the primary method of power sourcing in these industries.

We are also focused on expanding into the home energy storage market

with the introduction of our e360 Home Energy Storage Solutions, and we hope to establish a new standard in the industry for barrier price,

flexibility, and integration with this offering.

Along with the RV, marine and home energy storage markets, we aim to provide additional

capacities to the expanding electric forklift and industrial material handling markets.

We launched our e360 product line, which is manufactured

for the RV and marine industries, in December 2020.

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 storage market with our introduction

of two LiFePO4 battery storage solutions that enable residential and small business customers to create their own stable micro-energy

grid and lessen the impact of increasing power fluctuations and outages.

As of January 2025, we have begun shipping orders of our e360

Home Energy Storage Solutions.

We currently operate Expion360 as one reportable business

segment, Energy Storage (ES).

Our products provide numerous advantages for various

industries that are looking to migrate to lithium-based energy storage.

They incorporate detailed-oriented design and engineering, strong

case materials, and internal and structural layouts, and are backed by responsive customer service.

Recent Developments

Corporate Leadership

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

2025 Registered Direct Offering and Warrant Private Placement

On January 3, 2025, we sold

to certain institutional investors, in a registered direct offering, an aggregate of (i) 474,193 shares of common stock;

and (ii) 574,193

pre-funded warrants (the “January 2025 Pre-Funded Warrants”) to purchase up to 574,193 shares of common stock (the “January

2025 Pre-Funded Warrant Shares”).

The offering price per share was $2.48 and the offering price per January 2025 Pre-Funded Warrant

Each January 2025 Pre-Funded Warrant was exercisable for one share of common stock for $0.001 immediately and the January

2025 Pre-Funded Warrants were all exercised immediately upon issuance.

The number of January 2025 Pre-Funded Warrant Shares are subject

to adjustments for stock splits, recapitalizations, and reorganizations.

In a concurrent private placement

that closed January 3, 2025, we also issued to the institutional investors unregistered warrants (the “January 2025 Warrants”)

to purchase up to an aggregate of 1,048,386 shares of common stock (the “January 2025 Warrant Shares”) at an exercise price

of $2.36 per share, subject to adjustment for reverse stock splits, recapitalizations, and reorganizations.

The January 2025 Warrants

were immediately exercisable and can be exercised until January 3, 2030.

In connection with the private placement, we filed a registration

statement on Form S-1 (File No.

333-284354), which was

declared effective by the SEC on February 11, 2025, covering the resale of the January 2025 Warrant Shares.

We received net proceeds of approximately $2.2 million

from the offering and used approximately $500,000 of the net proceeds to satisfy a portion of certain amounts

owed to our Series A Warrant holders pursuant to the terms of the outstanding Series A Warrants.

Operating Officer Medical Leave of Absence

16, 2024, Paul Shoun, our Co-Founder, President, Chief Operating Officer, and Chairman of the Board, commenced a temporary medical leave

of absence from his duties as Chief Operating Officer.

During his leave, Mr.

Shoun continued to perform his duties as President and Chairman

of the Board during his leave.

Shoun resumed his duties as Chief Operating Officer in February 2025.

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

return to his full responsibilities, Carson Heagen, our Vice President of Operations, who temporarily assumed the role of Chief Operating

Officer, ceased serving in that capacity.

Resignation of Chief Financial Officer

and Appointment of Interim Chief Financial Officer

December 16, 2024, Greg Aydelott, our Chief Financial Officer, notified us of his resignation effective December 31, 2024, due to family

health concerns.

Aydelott is remaining with the Company in a consulting role on an ongoing basis.

connection with Mr.

Aydelott’s resignation, on December 20, 2024, our Board appointed Brian Schaffner, who serves as our Chief Executive

Officer and as a member of the Board, to serve as our interim Chief Financial Officer effective immediately upon Mr.

The Board has commenced a search for a new Chief Financial Officer.

Stock Split and Reverse Stock Split True-Up Payment

as of 5:00 p.m.

Pacific Time on October 8, 2024 (the “Effective Date”), we effected a 1-for-100 reverse stock split of our

common stock (the “Reverse Stock Split”), which was approved by the Board on September 27, 2024, following stockholder approval

at our annual meeting of stockholders held on September 27, 2024.

No fractional shares of common stock were issued as a result of the

Reverse Stock Split and instead each holder of Common Stock who was otherwise entitled to receive a fractional share as a result of the

Reverse Stock Split received one whole share of common stock in lieu of such fractional share.

As a result of this, 210,668 shares were

issued on or before October 17, 2024.

In addition, the Reverse Stock Split effected a reduction in the number of shares issuable pursuant

to our equity awards, warrants and non-plan options outstanding as of the Effective Date, and a corresponding increase in the respective

exercise prices, conversion prices, reset prices and the like thereunder.

of the daily VWAP of the common stock during the five trading days before and after the Reverse Stock Split, a Reverse Stock Split cash

true-up payment provision in the Series A Warrants, which is capped at $5.0 million in the aggregate under all Series A Warrants, was

triggered, but the payment of the Reverse Stock Split cash true-up payment was suspended in accordance with the terms of the Series A

In connection with the closing of the January 3, 2025 offering, we used $500,000 of the net proceeds from the offering to satisfy

a portion of certain amounts owed to the holders of the Series A Warrants pursuant to the terms thereof.

August 2024 Public Offering and Subsequent

Warrant Exercises and Adjustments to Warrant Exercise and Reset Prices

8, 2024, we sold in a public offering (the “August 2024 Public Offering”) (i) 33,402,000 common units (the “Common Units,”

pre-Reverse Stock Split), each consisting of one share of common stock, two Series A warrants each to purchase one share of common stock

(pre-Reverse Stock Split and pre-Adjustment (as defined below) and each, a “Series A Warrant”) and one Series B warrant to

purchase such number of shares of common stock as determined in the Series B warrant (each, a “Series B Warrant”), and (ii)

16,598,000 pre-funded units (the “Pre-Funded Units,” and together with the Common Units, the “Units,” pre-Reverse

Stock Split), each consisting of one pre-funded warrant to purchase one share of common stock (each, an “August 2024 Pre-Funded

Warrant”), two Series A Warrants, and one Series B Warrant, through Aegis Capital Corp.

serving as underwriter (in its capacity

as such, the “Underwriter”).

The Common Units were sold at a price of $0.20 per unit and the August 2024 Pre-Funded Warrants were sold at a price of $0.199 per unit

(pre-Reverse Stock Split).

we granted the Underwriter a 45-day option to purchase additional shares of common stock and/or August 2024 Pre-Funded Warrants and/or

Series A Warrants and/or Series B Warrants, representing up to 15% of the number of the respective securities sold in the August 2024

Public Offering, solely to cover over-allotments, if any.

The Underwriter partially exercised its over-allotment option with respect to

15,000,000 Series A Warrants and 7,500,000 Series B Warrants (pre-Reverse Stock Split).

2024 Pre-Funded Warrants were immediately exercisable at an exercise price of $0.001 per share (pre-Reverse Stock Split) and could be

exercised at any time until exercised in full.

All August 2024 Pre-Funded Warrants have been exercised.

A Warrant is exercisable at any time or times beginning on September 30, 2024, which was the first trading day following our notice to

the Series A Warrant holders of stockholder approval received at the 2024 Annual Meeting, and will expire five years from such date.

Series A Warrant was initially exercisable at an exercise price of $24.00 per share of common stock (post-Reverse Stock Split).

price of the Series A Warrants was subject to reduction on the 11th trading day after the stockholder approval to the greater of

the lowest daily VWAP during the ten-trading-day period following the stockholder approval and the floor price of $5.206 (representing

20% of the lower of our common stock’s closing price on Nasdaq on the date that we priced the August 2024 Public Offering, post-Reverse

Stock Split) or our common stock’s average closing price on Nasdaq for the five trading days ending on such date (such lower price,

without giving effect to such 20% reduction, the “Nasdaq Minimum Price”), and the number of shares issuable upon exercise

would be proportionately adjusted such that the aggregate exercise price would remain unchanged.

As of September 30, 2024, there

would have been 5,301,592 shares of common stock (post-Reverse Stock Split and assuming the Adjustment had occurred on September 30, 2024)

issuable upon exercise of the Series A Warrants as of that date.

Subsequent to September 30, 2024, the exercise price under the Series

A Warrants was reduced to the floor price of $5.206 (representing 20% of the Nasdaq Minimum Price, post-Reverse Stock Split), beginning

on October 14, 2024, the 11th trading day following stockholder approval.

As of December 31, 2024, 14,900 shares of common stock

have been issued upon exercise of Series A Warrants and 5,286,692 shares of common stock remain issuable upon exercise of Series A Warrants.

B Warrant was exercisable immediately upon issuance at an exercise price of $0.10 per share (post-Reverse Stock Split).

The number of

shares of common stock issuable under the Series B Warrants were subject to adjustment using

a reset price based on the weighted average price of common stock over a rolling five-trading-day period between the issuance date of

the Class B Warrants and the close of trading on the tenth trading day following stockholder approval, subject to certain floor prices.

As of December 31, 2024, 1,294,367 shares of common stock (post-Reverse Stock Split) had been issued upon exercise of Series B Warrants

and there were 1,032,198 shares of common stock (post-Reverse Stock Split) issuable upon exercise of Series B Warrants based on the reset

price of $5.45 (representing the lowest arithmetic average of the daily VWAP during the five-trading-day period from September 12, 2024

through September 18, 2024).

Effective October 8, 2024, after market close, the Reverse Stock Split occurred and as of December 31, 2024,

87,384 shares of common stock remain issuable upon exercise of Series B Warrants using the

reset price, which was reduced to the floor price of $5.206 (representing 20% of the Nasdaq Minimum Price (post-Reverse Stock Split and

post-Adjustment).

Key Factors Affecting Our Results of Operations

Our results of operations 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.

Our sales are completed on a purchase

order basis, and most are without firm, long-term revenue commitments or sales arrangements, which we expect to continue going forward.

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

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, 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

to successfully enter these markets.

We expect to incur significant marketing costs understanding these new markets, and researching

and targeting customers in these end markets, which may not result in sales.

If we fail to execute on this growth strategy in accordance

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

Although our sales are primarily generated from dealers,

wholesalers, private-label customers and OEMs focused on the RV, marine, and home energy markets, the demand for our products from these

customers depends on consumer demand.

Our sales are completed on a purchase order basis, and most are without firm, long-term revenue

commitments or sales arrangements, which we expect to continue going forward.

Accordingly, our growth prospects and future sales are

subject to risks and uncertainties related in part to consumer demand for our products, which is affected by a number of factors, including

fuel costs, discretionary spending, macroeconomic conditions, including inflation, changes in tariffs and interest rates, geopolitical

pressures, and volatility in the RV, marine, and home energy markets.

In recent years we have seen a rise in fuel costs, higher interest

rates, and other changes in macroeconomic conditions, which have resulted in decreased consumer spending decisions and affecting our

industry as a whole.

In addition, we expect escalating tensions between the U.S.

and China, where several of our key manufacturers and

suppliers are located, as well as the ongoing risk of new or additional tariffs impacting lithium-ion batteries or related parts, to

increase our cost of goods sold, which could require us to increase prices to our customers or result in lower gross margins on our products.

These conditions have had, and may continue to have, a negative effect on our business, financial condition, and results of operations.

While RV and marine applications have historically

driven our revenue, in January 2025, we began shipping orders of our e360 Home Energy Storage Solution, comprised of two LiFePO4 battery

storage solutions.

Our e360 Home Energy Storage Solutions aim to provide consumers with a cost-effective, low barrier of entry, flexible

system to power their homes utilizing solar energy, wind, or grid back-up.

The success of our strategy depends on (i) the continued growth

of these addressable markets in line with our expectations, and (ii) our ability to successfully enter and maintain a competitive position

in the RV, marine, and home energy markets with commercially viable products.

We expect to incur significant marketing costs understanding

and growing our presence within these markets, and researching and targeting customers in these markets, and our efforts may not be successful

in generating sales.

If we fail to execute on this growth strategy in accordance with our expectations, our sales growth could be limited

to the growth of existing products and existing end markets.

Expion360 has recently added several new distributors

and OEM customers in RV and marine markets.

Management believes that orders resulting from these new relationships will result in significant

new revenue streams in the year ending December 31, 2025.

In addition, Expion360 began shipping Home Energy Storage Systems in January

Manufacturing and Supply Chain

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

We then assemble

and package the batteries in the United States for sale to our customers.

While we do not have long-term purchase arrangements with our

third-party manufacturers and our purchases are completed on a purchase order basis, we have had strong relationships with our third-party

manufacturers spanning many years.

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.

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

third party suppliers that meet our approval and quality standards, and as a result, we may have limited control over the agreed pricing

for these raw materials and battery components.

We estimate that raw material costs account for over half of our cost of goods sold.

The costs of these raw materials, particularly lithium-ion batteries, are volatile and beyond our control.

Additionally, availability

of the raw materials used to manufacture our products may be limited at times, resulting in higher prices and/or the need to find alternative

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.

Our batteries are manufactured by multiple third-party

manufacturers located in Asia, which also produce our battery cells.

While we do not have long-term purchase agreements with these manufacturers

and our purchases are completed on a purchase-order basis, we maintain strong relationships with our manufacturers and cell suppliers,

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

The strength of these

relationships has helped us moderate increased supply-related costs associated with inflation, currency fluctuations, and U.S.

tariffs imposed on our imports, and avoid potential shipment delays.

We aim to maintain an appropriate level of inventory to satisfy our

expected supply requirements.

We believe we could locate suitable alternative third-party manufacturers to fulfill our requirements if

Our third-party manufacturers source the raw materials

and battery components required for the production of our batteries directly from third-party suppliers that meet our approval and quality

standards and, as a result, we may have limited control over the agreed pricing for these raw materials and battery components.

that raw material costs account for over half of our cost of goods sold.

Lithium, which is extracted from mined ore, is a key raw material

used to produce our battery cells and, as a result, the cost of our battery cells is dependent on the price and availability of lithium,

which may be volatile and unpredictable and beyond our control.

Additionally, availability of the raw materials used to manufacture our

products may be limited at times, resulting in higher prices and/or the need to find alternative suppliers.

Our battery cell manufacturers

have joint venture factories outside of Asia and have secured sourcing contracts from lithium suppliers in South America and Australia.

In addition, we have a secondary source for lithium iron phosphate cells used in our batteries from a supplier in Europe, enabling us

to source materials outside of Asia in the event it becomes necessary to do so.

In addition to increased mining and newly located

reserves, there is an industry push to provide more efficient ways to extract lithium from mined ore.

Another development of the past

few years is lithium cell recycling.

This process will recapture the raw lithium from the cell for reuse in future cells.

However, notwithstanding

efforts to improve the sustainability and efficiency of lithium mining, the price of lithium is volatile.

We continue to monitor developments

that may adversely affect our supply chain.

Management expects that products from our Asian third-party

manufacturers will be subject to additional tariffs in 2025.

We believe that we can protect our margins through a combination of supplier

concessions, customer price increases and efficiencies gained as sales continue to grow.

For additional information regarding, see the section

titled “ Risk Factors—Our results of operations could be adversely affected by changes in the cost and availability of raw

materials and we are dependent on third-party manufacturers and suppliers ” and “ Risk Factors—Increases in costs,

disruption of supply or shortage of any of our battery components, such as electronic and mechanical parts, or raw materials used in the

production of such parts could harm our business .”

Product and Customer Mix

As of December 31, 2024, we sell 15 models of LiFEPO4

batteries, the Aura 600, and various individual or bundled accessories for battery systems.

Our products are sold to different customers

(i.e., dealers, wholesalers, private-label customers, OEMs, etc.) at differing prices and have varying costs.

The average selling price

and costs of goods sold for a particular product will vary with changes in the sales channel mix, volume of products sold, and the prices

of such products sold relative to other products.

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 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.

The relative margins of products sold also impact our results of operations.

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.

We compete with both traditional lead-acid and lithium-ion

battery manufacturers that primarily either import their products and/or components or manufacture their products and/or components under

a private label.

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 lower costs than us, which may require us to evaluate our own costs, lower our product prices, or

increase our sales volume to maintain our expected profitability levels.

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 and market segments.

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

over the past several years.

Our ability to achieve significant and sustained penetration of key developing markets, including the RV

and marine markets, will depend upon our success in developing these and other technologies, either independently, through joint ventures,

We anticipate that additional investments in our infrastructure

and research and development spending will be required to scale our operations and increase productivity, address the needs of our customers,

further develop and enhance our products and services, and expand into new geographic areas and market segments.

New technologies are rapidly emerging in the markets

where we conduct business and many new energy storage technologies have been introduced over the past several years.

Our ability to achieve

significant and sustained penetration of key developing markets, including the RV, marine, residential energy storage, and small commercial

energy storage markets, will depend upon our success in developing these and other technologies, either independently, through joint ventures,

or through acquisitions, which in each case may require significant capital and commitment of resources to research and development.

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

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.

we may need to seek additional debt and equity financing to fund our research and development efforts and planned growth.

Certifications

We have completed the final requirements

to obtain UL Safety Certifications on our new 12V Group 27 100Ah and 132Ah batteries, and on our 12V GC2 battery.

Now that these certifications

have been completed, all of the batteries produced by us will have a UL Safety Certification, emphasizing our commitment to quality, safety

and service for our customers.

Key Line Items

Our revenue is generated from the sale of products

consisting primarily of batteries and accessories.

We recognize revenue when control of goods or services is transferred to our customers

in an amount that reflects the consideration 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, 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.

Our 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

Selling, general, and administrative expenses consist

primarily of salaries and benefits, legal and professional fees, and sales and marketing costs.

Other costs include facility and related

costs, research and development, software and information technology, and insurance.

Interest and Other Income, net

Interest expense consists of interest costs on loans

with interest rates ranging from 3.75% to 10.0% and amortization of convertible note costs.

The amortized convertible note costs were

$667,000 and $0 for the years ended December 31, 2024 and 2023, respectively.

Provision for Income Taxes

We are subject to corporate federal and state income

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 be realized.

We have adopted the provisions in ASC 740, Income

Taxes , related to accounting for uncertain tax positions, which require recognition of the impact of a tax position in the financial

statements if the position is more likely than not to be sustained upon examination and on the technical merits of the position.

concluded there were no material unrecognized tax benefits as of December 31, 2024 or December 31, 2023.

Our practice is to recognize interest and/or penalties

related to income tax matters as income tax expense.

We had no accrual for interest or penalties on our balance sheet at December 31,

2024 or December 31, 2023, and did not recognize any interest or penalties in our statement of operations for the years ended December

31, 2024 or 2023, since there are no material unrecognized tax benefits.

We do not expect any material change to the amount of unrecognized

tax benefits to occur within the next 12 months.

Off-Balance Sheet Arrangements

We do not have any material off-balance

sheet arrangements.

have no material off-balance sheet arrangements.

of Operations

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:

Use of Non-GAAP Financial Measures

We disclose financial

measures calculated and presented in accordance with generally accepted accounting principles in the United States (US GAAP);

we provide certain financial information on a non-GAAP basis (non-GAAP financial measures).

We provide non-GAAP financial measures to

provide information that may assist investors in understanding our results of operations and assessing our prospects for future performance,

which consist of adjusted cost of sales.

We believe evaluating certain financial and operating measures on an adjusted basis is important

as it excludes liquidation costs that are not indicative of our core results of operations and are largely outside of our control.

our non-GAAP financial measures are not intended to represent and should not be considered more meaningful measures than, or alternatives

to, measures of financial or operating performance as determined in accordance with US GAAP.

We calculate our

adjusted cost of sales non-GAAP financial measures for current period financial information by excluding the effect of liquidation of

non-core product in the consolidated financial statements.

The information presented on an adjusted cost of sales basis, as we present

such information, may not necessarily be comparable to similarly titled information presented by other companies, and may not be appropriate

measures for comparing our performance relative to other companies.

Results of Operations

Year Ended December 31, 2024, Compared to the

Year Ended December 31, 2023

The following table sets forth certain operational

data as a percentage of sales:

Fiscal Years Ended December 31,

% of Net sales

Cost of sales

3 unchanged sentences

Loss before income taxes

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

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.

(13,481,023 )

(13,479,475 )

Net sales for the year ended December

31, 2024 decreased by $356,000, or 6.0%, compared to the year ended December 31, 2023.

Sales were $5.6 million for the year ended December

31, 2024 and $6.0 million for the year ended December 31, 2023.

The year-over-year decrease was primarily attributable to decreases in

the consumer market, driving decreases in OEM sales.

Our net sales for the three months ended December 31, 2024, however, increased by

$1.1 million, or 131%, compared to the three months ended December 31, 2023.

Sales were $2.0 million for the three months ended December

31, 2024 and $859,000 for the three months 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 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.

Cost of sales for the year ended

December 31, 2024 increased by $64,000, or 1.5%, compared to the year ended December 31, 2023.

Cost of sales were $4.5 million for the

year ended December 31, 2024 and $4.4 million for the year ended December 31, 2023.

Cost of sales as a percentage of sales increased by

5.8% in 2024.

The change in cost of sales was primarily related to a decrease in overall sales, resulting in a decrease in economies of

scale pertaining to fixed costs, as well as the liquidation of some non-core product in 2024 increasing our cost of sales above what they

would have been without the liquidation.

During the year ended December 31,

2024, we liquidated some non-core product, which was a factor in reducing leased warehouse space.

If we had not done the liquidation,

cost of sales for the year ended December 31, 2024 would have decreased by $42,000, or 0.9%, compared to the year ended December 31, 2023.

Cost of sales would have been $4.4 million for the year ended December 31, 2024 and $4.4 million for the year ended December 31, 2023.

Cost of sales as a percentage of sales would have increased by 4.5% in the year ended December 31, 2024 compared to the prior year.

Our gross profit for the year ended

December 31, 2024 decreased by $420,000, or 26.7%, compared to the year ended December 31, 2023.

Gross profit was $1.2 million for the

year ended December 31, 2024 and $1.6 million for the year ended December 31, 2023.

Gross profit as a percentage of sales decreased by

5.8% for the year ended December 31, 2024, to 20.5% compared to 26.3% for the year ended December 31, 2023.

The decrease in gross profit

for the year ended December 31, 2024 was primarily attributable to lower sales volumes due to the slowdown in the RV industry resulting

in lower economies of scale on our fixed costs, as well as the liquidation of non-core product increasing our cost of sales above what

they would have been without the liquidation.

Selling, General, and Administrative Expenses

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:

expenses for the year ended December 31, 2024 decreased by $836,000, or 9.6%, compared to the year ended December 31, 2023.

Selling, general,

and administrative expenses were $7.9 million for the year ended December 31, 2024 and $8.7 million for the year ended December 31, 2023.

The decrease in selling, general, and administrative expenses was primarily due to decreases in legal and professional fees as well as

salaries and benefits, which was partially offset by an increase in licenses and fees, due to cash premium fees paid when making repayment

on our convertible note as well as fees for exiting the warehouse lease.

Presented in the table below is the composition of

selling, general and administrative expenses:

Fiscal Years Ended December 31,

8 unchanged sentences

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

Other expense for the years ended

December 31, 2024 and 2023 was $6.7 million and $283,000, respectively.

Other expense for the year ended December 31, 2024 was made up

of $5.0 million in suspended liability expense due to the Reverse Stock Split cash true-up payment provision in the Series A Warrants

we sold in the August 2024 Public Offering, as well as $977,000 in interest expense and $709,000 in settlement expense.

Other expense

for the year ended December 31, 2023 was made up almost entirely of settlement expense, with interest income and interest expense offsetting

each other at $126,000 and $125,000, respectively.

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

from 10.0 to 15.0%.

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

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

operations have been financed primarily through net proceeds from the sale of securities and from borrowings.

As of December 31, 2023

and 2022, our current assets exceeded current liabilities by $4.3 million and $10.8 million, respectively, and we had cash and cash equivalents

of $3.9 million and $7.2 million, respectively.

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

$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

months and believe those requirements to consist primarily of funds necessary to pay operating expenses, interest and principal payments

on our debt, and capital expenditures related to assembly line expansion.

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 $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

$2.5 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 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 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 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.

Our net loss for the years ended

December 31, 2024 and 2023 was $13.5 million and $7.5 million, respectively.

The net loss in the year ended December 31, 2024 was primarily

the result of the $5.0 million in suspended liability expense due to the Reverse Stock Split cash true-up payment provision in the Series

A Warrants we sold in the August 2024 Public Offering, as well as the increased interest due to the 3i Note (as defined in Note 7, “ Equity

and Debt Financings—Convertible Note Financing ”) and increased settlement expense.

Liquidity and Capital Resources

Our operations have been financed primarily through

net proceeds from sales of our common stock and equity and debt financings.

As of December 31, 2024 and 2023, our current assets exceeded

current liabilities by $2.0 million and $4.3 million, respectively, and we had cash and cash equivalents of $548,000 and $3.9 million,

respectively.

We generally consider our short-term liquidity requirements

to consist of those items that are expected to be incurred within the next 12 months and believe those requirements to consist primarily

of funds necessary to pay operating expenses, interest and principal payments on our debt.

As of December 31, 2024, our short-term liquidity

requirements included (a) principal debt payments totaling approximately $32,000 net of amortization, (b) lease obligation payments of

approximately $256,000, including imputed interest, and (c) $5.0 million in suspended

liability expense due to the Reverse Stock Split cash true-up payment provision in the Series A Warrants we sold in the August 2024 Public

We generally consider our long-term liquidity requirements

to consist of those items that are expected to be incurred beyond the next 12 months.

Our activities are subject to significant risks

and uncertainties, including failing to secure additional funding before we achieve sustainable revenue and profit from operations.

expect to continue to incur additional losses for the foreseeable future, and we may need to raise additional debt or equity financing

to expand our presence in the marketplace, develop new products, achieve operating efficiencies, and accomplish our long-term business

plans over the next several years.

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

be available to us.

For the years ended December 31, 2024 and 2023, we sustained recurring losses and negative cash flows from operations.

These factors raise substantial doubt about our ability to continue as a going concern within 12 months after the date the financial statements

for the year ended December 31, 2024 are issued.

However, management is working to address its cash flow challenges, including by raising

additional capital, managing inventory levels, identifying alternative supply chain resources, and managing operational expenses.

additional information regarding risks associated with our ability to continue as a going concern, please see the risk factor titled “ Our

audited financial statements include a statement that there is a substantial doubt about our ability to continue as a going concern and

a continuation of negative financial trends could result in our inability to continue as a going concern ” in Item 1A, “ Risk

Factors ” of this Annual Report.

Financing Obligations

As of December 31, 2024, our long-term

debt totaled $230,000, comprised of $143,000 outstanding under a COVID-19 Economic Injury Disaster Loan, $84,000 outstanding under vehicle

financing arrangements, and an equipment loan for $3,000.

In January 2024, we repaid $62,500 in principal on a stockholder promissory

note with an interest rate of 10.0%, and in August 2024, we repaid two shareholder loans with principal of $500,000 and $200,000, respectively,

both with interest rates of 10.0%.

In February and March 2024, we sold three vehicles including repayment of the related vehicle loans

with interest rates of 5.5%-5.9% in the total amount of approximately $88,000, which included principal and interest.

In August 2024,

we repaid a short-term convertible note for a total of $2.7 million including principal, interest, and fees.

Stockholder Promissory Notes

Stockholder promissory notes had

an outstanding principal balance of $0 as of December 31, 2024, as they were repaid in August 2024.

See Note 6 - Stockholder Promissory

Notes for further information on stockholder promissory notes.

Vehicle Financing Arrangements

As of December 31, 2024, the Company has three notes

payable to GM Financial for vehicles.

In addition, in April 2022, the Company secured a commercial line of up to $300,000 to be used to

finance vehicle purchases, which was increased to $350,000 in April 2023, renewed in April 2024 for the same amount, and expires in April

2025, which we plan to renew again.

The notes are payable in aggregate monthly installments of approximately $2,560, including interest

at rates ranging from 6.1% to 7.3% per annum, mature at various dates from October 2027 to May 2028, and are secured by the related vehicles.

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

A separate vehicle financing note has been repaid in connection

with the sale of the related vehicle.

See Note 5, 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:

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 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

flows of $5.5 million for the corresponding period in 2022.

Convertible Note Financing

On December 27, 2023, we entered

into a securities purchase agreement with 3i, LP (“3i”) pursuant to which we sold, and 3i purchased, the 3i Note in the aggregate

original principal amount of $2,750,000, for gross proceeds of $2.5 million.

On August 8, 2024, in connection with the closing of the

August 2024 Public Offering, we repaid the 3i Note, and our obligations under the 3i Note were fully satisfied and discharged.

the closing of the August 2024 Public Offering, we had issued 415 shares of common stock (post-Reverse Stock Split) for the payment of

$90,839 in interest .

Equity Line of Credit

On December 27, 2023, we

entered into the Common Stock Purchase Agreement, pursuant to which we had the right, but not the obligation, to sell to Tumim Stone Capital,

LLC (“Tumim”), and Tumim was obligated to purchase, up to the lesser of (a) $20,000,000 in aggregate gross purchase price

of newly issued common stock and (b) the Exchange Cap (as defined in the purchase agreement) (the “Equity Line of Credit”).

In connection with the August 2024 Public Offering, we mutually agreed with Tumim to terminate the Equity Line of Credit, effective immediately

upon the closing of the August 2024 Public Offering.

Prior to the closing of the August 2024 Public Offering, we had sold 4,336 shares

of common stock (post-Reverse Stock Split) under the Equity Line of Credit for an aggregate amount of $828,491, of which $434,958 was

used to repay a portion of the balance under the 3i Note, consisting of $380,042 to the loan principal, $34,204 to interest, and $20,712

as a redemption premium .

Operating Lease Liabilities

Our estimated future obligations consist of total

operating lease liabilities.

As of December 31, 2024, we had $799,000 in total operating lease liabilities, including the current portion.

Other Indebtedness

As of December 31, 2024, our long-term debt totaled

$230,170, including the current portion, which consists of $31,758.

The following table shows a summary

of our cash flows for the periods presented:

Net cash used in operating activities

$ (9,562,545 )

$ (5,531,232 )

Net cash provided by investing activities

Net cash provided by financing activities

Cash flows used in operating activities

Our largest source of operating

cash is cash collection from sales of our products.

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.

We generated negative cash flows

from operating activities of $9.6 million for the year ended December 31, 2024, compared to negative cash flows of $5.5 million for the

corresponding period in 2023.

Factors affecting operating cash flows during the periods included:

the year ended December 31, 2023, our loss of $7.5 million was reduced by non-cash transactions

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

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.

· For the year ended December 31, 2024, our net loss of $13.5 million was

reduced by non-cash transactions including approximately $5.0 million in suspended liability expense due to the Reverse Stock Split cash

true-up payment provision in the Series A Warrants we sold in the August 2024 Public Offering, amortization of convertible note costs

of approximately $667,000, stock-based compensation of $617,000, stock-based settlement of $209,000, and depreciation of $174,000.

the year ended December 31, 2023, our net loss of $7.5 million was reduced by non-cash transactions including stock-based compensation

of $560,000, stock-based settlement of $252,000, and depreciation of $206,000.

· Cash provided / (used) by accounts receivable was ($458,000) and $162,000

for the years ended December 31, 2024 and 2023, respectively, representing an increase in accounts receivable for the year ended December

31, 2024 and a decrease in accounts receivable for the year ended December 31, 2023.

Sales are generally collected within 30 to 45 days.

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

· Cash used for increases in (or provided by decreases in) inventory and

prepaid inventories were $2.5 million and ($682,000) for the years ended December 31, 2024 and 2023, respectively.

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.

Cash used for capital purchases of property and equipment

related to expanding and improving our facilities and infrastructure was $567,000 during the year ended December 31, 2022.

This was offset

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

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 $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

estimated future obligations consist of long-term operating lease liabilities.

As of December 31, 2023, we had $2.8 million in long-term

operating lease liabilities.

Accounting Policies and Estimates

above discussion and analysis of our financial condition and results of operations is based upon our financial statements.

The preparation

of financial statements in conformity with the generally accepted accounting principles in the United States (“GAAP”) requires

management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosures

of contingent assets and liabilities.

Our significant accounting policies are described in Note 2, Summary of Significant Accounting

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,

components, and related landing costs.

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

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.

Turnaround time for receiving inventory from foreign sources

can take up to 120 days, with prepayments required.

Cash flows provided by / (used in) investing

Cash provided by investing activities

was $113,000 for the year ended December 31, 2024.

Cash used for capital purchases of property and equipment for quality assurance and

leasehold improvements to our testing lab totaled $19,000 during the year ended December 31, 2023.

This was offset by net proceeds of

$132,000 received for the sale and disposal of property and equipment during the year ended December 31, 2024, which included property

and equipment and leasehold improvements related to the warehouse lease terminated in September 2024, as well as the sale of three vehicles.

Cash provided by investing activities

was $17,000 for the year ended December 31, 2023.

Cash used for capital purchases of property and equipment related to research and development,

quality assurance, and logistics equipment was $20,000 during the year ended December 31, 2023.

This was offset by net proceeds of $37,000

received for the sale and disposal of property and equipment during the year ended December 31, 2023.

Cash flows provided by financing activities

Cash provided by financing activities

was $6.1 million for the year ended December 31, 2024.

For the year ended December 31, 2024, we paid down debt principal of $3.6 million,

which was offset by net cash proceeds of $9.5 million from issuance of common stock and $185,000 net cash proceeds from exercise of warrants.

Cash provided by financing activities

was $2.2 million for the year ended December 31, 2023.

For the year ended December 31, 2023, we paid down debt principal of $224,000,

which was offset by net cash proceeds of $2.4 million from incurrence of short-term debt and net cash proceeds of $50,000 from the exercise

Critical Accounting Estimates

The above discussion and analysis

of our financial condition and results of operations is based upon our financial statements.

The preparation of financial statements in

conformity with the generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates

and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosures of contingent assets and

We base our estimates on historical experience, known trends and events, and various other factors that we believe are reasonable

under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities

that are not readily apparent from other sources.

Our actual results may differ from these estimates under different assumptions or conditions.

On a recurring basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience.

of material revisions in an estimate, if any, will be reflected in the consolidated financial statements prospectively from the date of

the change in the estimate.

Critical accounting estimates are

those that we consider to be the most important in portraying our financial condition and results of operations and also require the greatest

number of judgments by management.

Judgments or uncertainties regarding the application of these policies may result in materially different

amounts being reported under different conditions or using different assumptions.

We consider the following policies to be the most critical

in understanding the judgments that are involved in preparing the financial statements.

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

assets as follows:

and transportation equipment

furniture and equipment

Manufacturing

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

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

other repairs and maintenance charges are expensed

The cost and related accumulated depreciation and amortization applicable to assets retired are removed from the accounts,

and the gain or loss on disposition is recognized in the statements of operations.

Company determines if an arrangement is a lease at inception.

Operating lease right-of-use (“ROU”) assets represent the Company’s

right to use an underlying asset during the lease term, and operating lease liabilities represent

the Company’s

obligation to make lease payments arising from the lease.

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

term at commencement date calculated using the Company’s incremental borrowing rate applicable to the lease asset, unless the implicit

rate is readily determinable.

ROU assets also include any lease payments made at or before lease commencement and exclude any lease incentives

The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the

Company will exercise that option.

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.

Property and equipment are stated at cost less depreciation

calculated on the straight-line basis over the estimated useful lives of the related assets as follows:

Vehicles and transportation equipment

Office furniture and equipment

Manufacturing equipment

Warehouse equipment

Tooling and molds

Leasehold improvements are amortized over the shorter

of the lease term or their estimated useful lives.

Useful life is estimated for each item at the time

of purchase based on the typical useful life in our experience and best judgment, and remaining useful life of existing assets is evaluated

If an estimated useful life were to be inaccurate, there would not be a material effect on our financials, and the estimated

depreciation would be trued up at the time of disposal or impairment.

It is our experience that the estimated useful lives of our assets

are generally materially accurate.

We determine if an arrangement is a lease at inception.

Operating lease right-of-use (“ROU”) assets represent our right to use an underlying asset during the lease term, and operating

lease liabilities represent our obligation to make lease payments arising from the lease.

Operating leases are included in ROU assets,

current operating lease liabilities, and long-term operating lease liabilities on our balance sheets.

We do not have any finance leases.

We recognize operating lease assets and lease liabilities

in the consolidated balance sheets on the lease commencement date, based on the present value of the outstanding lease payments over the

reasonably certain lease term.

The lease term includes the non-cancelable period at the lease commencement date, plus any additional periods

covered by an option to extend (or not to terminate) the lease that is reasonably certain to be exercised, or an option to extend (or

not to terminate) a lease that is controlled by the lessor.

We discount unpaid lease payments using the interest

rate implicit in the lease or, if the rate cannot be readily determined, our incremental borrowing rate (IBR).

See Note 8, “Commitments and Contingencies,”

of our consolidated financial statements within this Annual Report for further information, including more details of our accounting policy

elections and disclosures and remaining minimum operating lease commitments.

Revenue Recognition

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

The Company recognizes

revenue when control of goods or services is transferred to its customers in an amount that reflects the consideration it is expected

to be entitled to in exchange for those goods or services.

To determine revenue recognition, the Company performs the following five

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

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

(iii) determine

the transaction price;

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

and (v) recognize

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

Revenue is recognized upon shipment or delivery to the customer, as

that is when the customer obtains control of the promised goods and the Company’s performance obligation is considered satisfied.

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

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

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

totaled $199,288 and $169,300 during the years ended December 31, 2023 and 2022, respectively, and are classified in selling, general

and administrative expense in the accompanying statements of operations.

Research and Development

and development costs are expensed as incurred.

Research and development costs charged to expense amounted to $391,148 and $270,100 for

the years ended December 31, 2023 and 2022, respectively, and are included in selling, general and administrative expenses in the accompanying

statements of operations.

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

income taxes.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between

the financial statement carrying amounts of exiting assets and liabilities and their respective tax basis.

Deferred tax assets, including

tax loss and credit carryforwards, and liabilities are measured using the enacted tax rates expected to apply to taxable income in the

years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities

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

Deferred income tax expense represents

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

Deferred tax assets are reduced by a valuation

allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not

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

The CAA includes provisions

extending certain CARES Act provisions and adds coronavirus relief, tax and health extenders.

The Company will continue to evaluate the

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

Our revenue is generated from the sale of products

consisting primarily of batteries and accessories.

We recognize revenue when control of goods or services is transferred to our customers

in an amount that reflects the consideration we are expected to be entitled to in exchange for those goods or services.

Revenue is recognized

upon shipment or delivery to the customer, as that is when the customer obtains control of the promised goods and our performance obligation

is considered satisfied.

Warrants are measured at fair value upon issuance

and are not subsequently remeasured unless they are required to be reclassified.

See “ Note 7—Equity and Debt Financings ”

and “Note 9—Stockholders’ Equity” in our accompanying consolidated financial statements for information

on the warrants.

Changes in assumptions used to estimate fair value could occur from stock pricing volatility depending on our performance

and our position in the industry and changes in market interest rates which can result in materially different results.

Stock-Based Compensation

We use the Black-Scholes option-pricing model to determine

the fair value of option grants.

In estimating fair value, management is required to make certain assumptions and estimates such as the

expected life of units, volatility of our future share price, risk-free rates, future dividend yields and estimated forfeitures at the

initial grant date.

Restricted stock unit awards are valued based on the closing trading price of our common stock on the date of grant.

Changes in assumptions used to estimate fair value could occur from stock pricing volatility depending on our performance and our position

in the industry and changes in market interest rates which can result in materially different results.

Effective November 1, 2021, the Company converted

from an LLC to a C corporation and, as a result, became subject to corporate federal and state income taxes.

Income taxes are accounted

for using the asset and liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable

to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax

Deferred tax assets and liabilities are measured using enacted tax rates that will be in effect for the years in which those tax

assets and liabilities are expected to be realized or settled.

We record a valuation allowance to reduce deferred tax assets to the amount

that is believed more likely than not to be realized.

We believe it is more likely than not that forecasted income, together with future

reversals of existing taxable temporary differences, will be sufficient to recover our deferred tax assets.

In the event that we determine

all, or part of our net deferred tax assets are not realizable in the future, we will record an adjustment to the valuation allowance

and a corresponding charge to earnings in the period such determination is made.

The calculation of tax liabilities involves significant

judgment in estimating the impact of uncertainties in the application of US GAAP and complex tax laws.

Resolution of these uncertainties

in a manner inconsistent with our expectations could have a material impact on our financial condition and results of operations.

tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by

the taxing authorities, based on the technical merits of the position.

The tax benefits recorded in the consolidated financial statements

from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate

On March 27, 2020, the United States enacted the Coronavirus

Aid, Relief and Economic Security Act (the “CARES Act”).

As of December 31, 2024 and 2023, we have not recorded any income

tax provision/(benefit) resulting from the CARES Act, mainly due to our history of net operating losses.

See “Note 11—Income Taxes”

of our consolidated financial statements within this Annual Report for further information on our income taxes.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for

by Item 304 of Regulation S-K.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

information called for by this Item 8 is found in a separate section of this Annual Report starting on page F-1.

See the “Index

to Financial Statements” on page F-1.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

As a smaller reporting company (as

defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by Item 305 of Regulation S-K.

FINANCIAL STATEMENTS AND SUPPLEMENTARY

The information called for by this

Item 8 is found in a separate section of this Annual Report starting on page F-1.

See the “Index to Financial Statements”

CHANGES IN AND DISAGREEMENTS WITH

ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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