What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-17 compared with 2025-03-31 · 548 added, 668 removed, 43 unchanged (97% of the section changed)

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.

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 years ended December 31, 2025 and 2024, 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

“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 financial statements included elsewhere in this Annual Report.

Certain other amounts that appear in this section

may not sum due to rounding.

otherwise noted, all references to share and per share data, as well as stockholders’ equity balances for the years ended December

31, 2025 and 2024 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.

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 industrial energy storage products.

Our high-powered, lithium

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

in the RV and marine industries.

We deploy intellectual property strategies to support product development, enhance safety and performance,

and strengthen relationships across our target markets.

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 include the RV, marine, industrial, and commercial energy storage industries.

Within the industrial sector, we participate in

applications such as electric material handling and forklift equipment, where lithium battery adoption continues to increase as an alternative

to traditional lead-acid systems.

We believe the broader transition from lead-acid to lithium batteries presents growth opportunities

across these markets.

In addition to our

current focus areas, we are evaluating opportunities to expand further into industrial and mission-critical commercial applications that

require integrated battery energy storage solutions.

These may include mobile and stationary systems supporting remote operations, security

infrastructure, and other high-reliability environments.

While we continue to assess these adjacent markets, our current commercial activities

remain concentrated in our established RV, marine, and industrial segments.

We launched our e360

product line in December 2020, initially targeting the RV and marine industries.

The line, through its sales growth, has shown to be

a preferred conversion solution for lead-acid batteries.

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 design

and engineering, strong case materials, optimized internal structural layouts, and are supported by responsive customer service.

Recent Developments

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.

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:

December 2025

At-The-Market Issuance Sales Agreement

On December 12, 2025

we signed an at-the-market issuance sales agreement.

We commenced sales under the agreement in January 2026 and have sold an aggregate

of 1,064,396 shares for net proceeds of approximately $932,567 through March 11, 2026.

Private Placement and Management Transition

On October 16, 2025,

we entered into a securities purchase agreement (the “Purchase Agreement”) with two institutional investors pursuant to which

we agreed to sell in a private placement (the “October 2025 Private Placement”) an aggregate of (i) 613,077 shares of common

stock, and (ii) a pre-funded warrant (the “October 2025 Pre-Funded Warrant”) to purchase up to 144,498 shares of common stock.

The offering price per share was $1.65 and the offering price per pre-funded warrant share was $1.6499.

We received net proceeds

of approximately $1.1 million from the October 2025 Private Placement after deducting offering expenses payable by us.

We used the net

proceeds from the offering to pay severance obligations to certain executive officers that transitioned concurrent with the completion

of the October 2025 Private Placement, and for working capital and other general corporate purposes.

See “ Note 7, Equity and

Debt Financings—October 2025 Private Placement ” for additional information regarding the offering.

In connection with

the October 2025 Private Placement, Paul Shoun resigned from his role as President and Chairman of the Board, and Brian Schaffner resigned

from his role as Chief Executive Officer, but retained his role as Director and also acted as a consultant through the transition period.

Also in connection with the private placement, Joseph Hammer was appointed Chief Executive Officer and Chairman of the Board, the Board

increased the number of authorized directors from five to six, and Scott Burell was appointed as a Director.

Affecting Our Results of Operations

Our results of operations

and financial performance are significantly dependent on the following factors:

Consumer Demand

Although our sales are primarily generated from dealers,

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

customers depends on consumer demand.

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

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 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.

Our sales are primarily

generated from dealers, wholesalers, private-label customers, and OEMs serving the RV, marine, and industrial markets.

Because our sales

are generally made on a purchase order basis and are not supported by long-term revenue commitments, the demand for our products from

these customers depends on consumer demand, and our results of operations are sensitive to changes in customer purchasing patterns.

the year ended December 31, 2025, our revenue increased by 71.6% compared to the prior year.

This increase was primarily driven by expanded

distribution relationships in the RV and marine channels, increased adoption of our LiFePO4 battery platforms as customers continued

transitioning from traditional lead-acid systems, growth in sales to select OEM customers, and contributions from recently introduced

product lines, including next-generation GC2, Group 27, and Edge battery models.

The growth in sales also reflects improved channel penetration

and broader customer adoption of higher-capacity battery configurations.

While macroeconomic factors, including interest rates and fuel

costs, may influence consumer demand in the RV and marine industries, our recent results reflect increased market acceptance of our products

and expansion of our distribution footprint.

We have recently

added several new distributors and OEM customers in RV and marine markets.

These relationships contributed to incremental order volume

during 2025 and are expected to support revenue growth in 2026, although the timing and magnitude of future orders will continue to remain

subject to customer demand and overall market conditions.

Manufacturing

and Supply Chain

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 generally transact on a purchase order basis, we maintain strong relationships with

our manufacturers and cell suppliers, which have historically enabled us to increase our purchase volumes and qualify for volume-based

The strength of these relationships, together with ongoing supplier negotiations and purchasing strategies, have supported

our efforts to manage supply-related costs associated with inflation, currency fluctuations, and U.S.

government tariffs imposed on our

imports, as well as to mitigate potential shipment delays.

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

supply requirements.

While we believe we could locate suitable alternative third-party manufacturers to fulfill our requirements if needed,

transitioning suppliers could require time and result in additional costs.

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.

Accordingly, pricing for certain raw materials and components is influenced by market conditions

and supplier negotiations.

We estimate 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 fluctuations in lithium pricing can affect our battery cell

From time to time, changes in raw material availability may influence pricing dynamics or sourcing strategies.

Certain of our

battery cell manufacturers have 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 from a supplier in Europe, providing additional

geographic diversification and sourcing flexibility.

Industry initiatives

to expand lithium production capacity and lithium cell recycling may affect long-term supply dynamics.

For example, 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,

which recaptures 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 remains subject to market volatility.

We continue to monitor developments that

may affect our supply chain.

Management expects that products sourced

from our Asian third-party manufacturers may be subject to additional tariffs in 2026.

We intend to mitigate the potential impact on

margins through a combination of supplier negotiations, selective customer price adjustments, ongoing cost optimization initiatives,

and the development of lower-cost product configurations designed to improve manufacturing efficiency and overall unit economics as sales

volumes increase.

The effectiveness of these measures will depend on market conditions, sales volume, product mix, and future tariff

developments.

additional information regarding supply chain risks, see the section titled “ Risk Factors—Our results of operations could

be adversely affected by changes in the cost and availability of raw materials our reliance on third-party manufacturers and suppliers ”

and “ —Increases in costs, disruption of supply, or shortage of any of our battery components such as electronic and mechanical

parts could harm our business .”

Product and Customer

As of December 31,

2025, we sell 14 models of LiFEPO4 batteries, the Aura 600, and various individual or bundled accessories for battery systems.

are sold to dealers, wholesalers, private-label customers, and OEMs at differing prices and with varying cost structures.

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, which

may affect pricing and gross margins.

Accessory and OEM sales typically have lower average selling prices and resulting margins relative

to other distribution channels.

As a result, shifts in customer mix 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 and broader customer penetration typically

has, and may continue to, offset the impact of lower-margin product and customer mix.

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

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.

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

We continue to invest

in research and development to enhance the performance, reliability, and integration capabilities of our LiFePO4 battery systems.

R&D efforts focus on battery management systems, thermal management, product durability, system integration, and application-specific

configurations for the RV, marine, industrial, and specialty vehicle markets.

As electrification

trends evolve across mobile and stationary applications, customer requirements continue to develop, including demand for improved energy

density, communication protocols, remote monitoring capabilities, and system-level integration.

Our development initiatives are intended

to address these evolving requirements and support competitiveness within our core markets.

We also evaluate

emerging technologies and broader industry developments that may influence future product design, including advancements in cell chemistry,

system architecture, and energy management software.

Artificial intelligence (“AI”) and data-driven analytics are increasingly

being incorporated into energy management, predictive maintenance, and supply chain optimization across the battery industry.

is not currently a primary driver of our product offerings, we monitor developments in this area and assess potential applications that

may enhance system diagnostics, performance monitoring, and operational efficiency over time.

Our research and

development spending may fluctuate depending on product development cycles, customer requirements, and broader market conditions.

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.

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.

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

Our sales are primarily within the United States.

Cost of Sales

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

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.

significant costs include research and development, software and information technology, insurance, and facility and related costs.

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 $0 and $667,000 for the years ended December 31, 2025 and 2024, respectively.

Provision for

We 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.

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

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

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.

We have concluded there were no material unrecognized tax benefits as of December 31, 2025 or December

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, 2025 or December 31, 2024, and did not recognize any interest or penalties in our statement of operations

for the years ended December 31, 2025 or 2024, 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.

Sheet Arrangements

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,

do not have any material off-balance sheet arrangements.

of Non-GAAP Financial Measures

disclose financial measures calculated and presented in accordance with the generally accepted accounting principles in the United States

however, 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 costs that are not indicative of our core results of operations and

are largely outside of our control.

However, 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 GAAP.

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

an adjustment related to obsolete inventory.

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.

of Operations

December 31, 2025, Compared to the Year Ended December 31, 2024

The following table

sets forth certain operational data as a percentage of sales:

Years Ended December 31,

% of Net sales

3 unchanged sentences

Loss from operations

Other expense - net

(10,703,505 )

Other (income) / expense - net

Loss before income taxes

1 unchanged sentence

(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.

sales for the year ended December 31, 2025 increased by $4.0 million, or 71.6%, compared to the year ended December 31, 2024.

$9.7 million for the year ended December 31, 2025 and $5.6 million for the year ended December 31, 2024.

The year-over-year increase

reflects expansion of our customer base, increased sales to key customers, and broader adoption of our LiFePO4 battery platforms across

distribution and OEM channels.

Cost of Sales

Cost of sales for the year ended

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

Cost of sales were $4.5 million for the

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

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

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

of sales for the year ended December 31, 2025 increased by $3.8 million, or 86.0%, compared to the year ended December 31, 2024.

of sales were $8.3 million for the year ended December 31, 2025 and $4.5 million for the year ended December 31, 2024.

Cost of sales

as a percentage of sales increased by 6.7 percentage points in 2025, to 86.1% compared to 79.5% in 2024.

of sales for the year ended December 31, 2025 includes a one-time $0.9 million adjustment related to obsolete inventory.

Excluding this

adjustment, which management believes is not indicative of ongoing operating performance, cost of sales for the year ended December 31,

2025 would have increased by $2.9 million, or 65.8%, compared to the year ended December 31, 2024, and cost of sales as a percentage

of sales would have decreased by 2.7 percentage points in 2025, to 76.8% compared to 79.5% in 2024.

improvement in pre-adjustment cost of sales reflects favorable product mix, including increased sales of higher-margin battery models,

as well as a greater proportion of direct-to-consumer sales through our website, while the increase in adjusted cost of sales is primarily

due to the adjustment for inventory identified as obsolete or overvalued.

gross profit for the year ended December 31, 2025 increased by $0.2 million, or 15.8%, compared to the year ended December 31, 2024.

Gross profit was $1.3 million for the year ended December 31, 2025 and $1.2 million for the year ended December 31, 2024.

as a percentage of sales decreased by 6.7% for the year ended December 31, 2025, to 13.9% compared to 20.5% for the year ended December

For the year ended December 31, 2025, a significant increase in net sales was somewhat offset by an increase in cost of sales,

which includes a one-time adjustment for obsolete inventory, resulting in a decrease in the gross profit margin.

Gross profit for the

year ended December 31, 2025 prior to the adjustment would have been $2.2 million, and as a percent of sales, would have increased by

2.7 percentage points, to 23.2%, primarily due to a more favorable product mix and an increase in direct-to-consume sales.

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,

and Administrative Expenses

general, and administrative expenses for the year ended December 31, 2025 increased by $4.1 million, or 52.2%, compared to the year ended

December 31, 2024.

Selling, general, and administrative expenses were $12.0 million for the year ended December 31, 2025 and $7.9 million

for the year ended December 31, 2024.

The increase in selling, general, and administrative expenses was primarily due to increases in

salaries and benefits, including executive severance and performance-related bonuses, increased stock-based compensation expense associated

with the grant of options and RSUs to executives, directors, and non-executive employees, and increases in legal and professional fees.

Selling, general, and administrative expenses as a percentage of net sales decreased to 124.8% in the year ended December 31, 2025 from

140.6% in the year ended December 31, 2024, reflecting a partial operating leverage resulting from higher revenue, despite increased

personnel and professional expenses.

Presented in the

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

Years Ended December 31,

Salaries and benefits

1 unchanged sentence

Sales and marketing

Rents, maintenance, utilities

Research and development

Software, fees, tech support

Rents, maintenance, utilities

Travel expenses

Supplies, office

Other Expense

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.

Office Supplies

Other (Income)

income and expense for the year ended December 31, 2025 was income of $4.5 million and for the year ended December 31, 2024 was expense

of $6.7 million.

Other income for the year ended December 31, 2025 was mainly due to the reversal of the previously-recognized $4.5 million

suspended liability expense associated with the Reverse Stock Split cash true-up provision contained in the Series A Warrants issued

in the August 2024 offering.

The reversal resulted from the repricing of the warrants in August 2025, as further described in “ Note

7, Equity and Debt Financings—Convertible Note Financing .” Other income also included approximately $16,000 in interest

These amounts were partially offset by $20,000 interest expense and $13,000 loss on sale of property and equipment.

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.

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

for the year ended December 31, 2024 was made up of $5.0 million in suspended liability expense associated with the Reverse Stock Split

cash true-up payment provision in the Series A Warrants, as well as approximately $977,000 in interest expense and $709,000 in settlement

net loss for the years ended December 31, 2025 and 2024 was $6.2 million and $13.5 million, respectively.

The reduction in the net loss

for the year ended December 31, 2025 reflects increased net sales, improved gross margins on inventory sold, notwithstanding the one-time

adjustment for obsolete inventory, and the absence of the prior-year warrant-related expense, partially offset by higher selling, general,

and administrative expenses.

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

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

Offering, as well as increased interest associated with the 3i Note (as defined in “ Note 7, Equity and Debt Financings ”)

and increased settlement expense.

and Capital Resources

Our operations have

been financed primarily through net proceeds from sales of equity securities and issuances of third-party debt and working capital loans.

As of December 31, 2025 and 2024, our current assets exceeded current liabilities by $6.0 million and $2.0 million, respectively, and

we had cash and cash equivalents of $3.0 million and $0.5 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,

2025, our short-term liquidity requirements included (a) principal debt payments totaling approximately $31,000, (b) lease obligation

payments of approximately $337,000, including imputed interest, and (c) $0.6 million in accrued expenses, accounts payable, and other

current liabilities.

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.

We expect to continue to incur additional losses for the foreseeable future, and we may need to raise additional

debt or equity financing to expand

our presence in the

marketplace, develop new products, achieve operating efficiencies, and accomplish our long-term business plans over the next several

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

the years ended December 31, 2025 and 2024, 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, 2025 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.

For additional

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

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

1 unchanged sentence

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.

of December 31, 2025, our long-term debt totaled $197,000, comprised of $139,000 outstanding under a COVID-19 Economic Injury Disaster

Loan and $58,000 outstanding under vehicle financing arrangements.

In August 2025, we repaid an equipment loan with an interest rate

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%.

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.

This represents reduction of debt by $3.0 million and additional reduction

in lease liability of $2.3 million in 2024 and 2025, an overall improvement to our liquidity over the past two years.

Vehicle Financing

As of December 31,

2025, the Company has three notes payable to GM Financial for vehicles.

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 and April 2025

for the same amount, and expires in April 2026, which we plan to renew again for the same amount.

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.

See “ Note 5, Long-Term Debt.”

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.

Operating Lease

Our estimated future

obligations consist of total operating lease liabilities.

As of December 31, 2025, we had $710,000 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:

As of December 31,

2025, our long-term debt totaled $197,000, including the current portion, which consists of $31,000.

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

Years Ended December 31,

Net cash used in operating activities

3 unchanged sentences

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.

flows used in operating activities

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

Our primary uses of cash for operating activities include

purchases of inventory, as well as selling, general, and administrative expenses including salaries and benefits, legal and professional

fees, and sales and marketing expenses.

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 $6.1 million for the year ended December 31, 2025, compared to negative cash

flows of $9.6 million for the corresponding period in 2024.

The decrease in cash used in operating activities was primarily attributable

to lower net losses and favorable changes in working capital during 2025.

Factors affecting operating cash flows during the periods included:

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

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

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

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

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

the year ended December 31, 2025, our net loss of $6.2 million adjusted for several non-cash

items, including stock-based compensation of $1.2 million, issuance of common stock in exchange

for services of $490,000, depreciation of $117,000, non-cash expense related to asset disposals

of $21,000, and loss on sale of property and equipment of $13,000.

These adjustments also

reflect the impact of a decrease in the suspended liability associated with the cash true-up

payments related to the Reverse Stock Split provision in the Series A Warrants.

ended December 31, 2024, our net loss of $13.5 million included several non-cash items, 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.

· 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.

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.

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.

provided by a decrease in inventory for the year ended December 31, 2025 was $2.0 million,

and cash used by an increase in inventory for the year ended December 31, 2024 was $1.0 million,

while cash provided by a decrease in prepaid inventory for the year ended December 31, 2025

was $1.3 million, and cash used by an increase in prepaid inventory for the year ended December

31, 2024 was $1.4 million.

These changes primarily reflect the timing of significant inventory

purchases and advance payments to suppliers.

Turnaround time for receiving inventory from

foreign sources can take up to 120 days, with prepayments required.

provided by / (used in) other operating activities such as changes in accounts receivable

and accounts payable primarily reflect normal timing differences in customer collections

and vendor payments and were not significant drivers of operating cash flows during the periods

flows provided by investing activities

provided by investing activities was $4,000 for the year ended December 31, 2025 and was related to selling some small vehicles.

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, 2024.

This was offset by net proceeds of $133,000 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 flows provided

by financing activities

provided by financing activities was $8.6 million for the year ended December 31, 2025.

During that year, we had net proceeds from exercise

of warrants totaling $5.7 million, net proceeds from the issuance of common stock totaling $2.9 million, offset by principal payments

on long-term debt totaling $33,000.

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.

Accounting 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 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.

These estimates involve judgments

that are inherently uncertain and subject to change as future events and conditions evolve.

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

On a recurring basis, we evaluate our judgments

and estimates in light of changes in circumstances, facts, and experience.

The effects of material revisions in an estimate, if any,

will be reflected in the financial statements prospectively from the date of the change in the estimate.

critical accounting estimate is one that involves a significant degree of judgment or complexity and where a different assumption could

reasonably have a material impact on our financial condition or results of operations.

The critical accounting estimates below 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

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.

Inventory is stated

at the lower of cost or net realizable value.

Cost is determined using first-in, first-out method.

Net realizable value represents the

estimated selling price in the ordinary course of business less reasonably predictable costs of sales.

Although our products

have long shelf lives when stored properly, inventory may become obsolete due to technological changes, product redesigns, or shifts

in consumer demand.

Management regularly evaluates inventory quantities on hand relative to forecasted demand, product life cycles, and

market conditions, and records adjustments to the valuation of inventory using the allowance method when necessary.

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

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

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.

We recognize operating

lease assets and lease liabilities in the balance sheet 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

8, Commitments and Contingencies,” to our financial statements within this Annual Report for additional information, including

more details of our accounting policy elections and disclosures and remaining minimum operating lease commitments.

Property and Equipment

Property and equipment

are stated at cost less depreciation calculated on the straight-line basis over the estimated useful lives of the related assets as follows:

and transportation equipment

Manufacturing

furniture and equipment

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 regularly.

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.

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 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

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 options, volatility of our stock price, risk-free interest 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 to these assumptions or estimates could result in significant changes in the valuations.

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

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 bases.

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

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 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.

We recognize 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 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.

11, Income Taxes” to our financial statements within this Annual Report for further information on our income taxes.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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 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

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