Item 1. Business
ITEM 1. BUSINESS
Our Company
Expion360 focuses
on the design, assembly, manufacturing, and sale of lithium iron phosphate (“LiFePO4”) batteries and supporting accessories
for recreational vehicles (“RVs”), marine, and 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, 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 current customers and to build relationships with customers in a variety of industries. 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, and industrial power sectors. We believe the ongoing transition from traditional lead-acid batteries
to LiFePO4 battery systems as the preferred power storage solution presents growth opportunities across these industries. In addition
to the RV and marine markets, we are expanding our focus to include industrial, construction, surveillance, remote monitoring, and other
mission-critical applications requiring reliable, high-energy-density battery systems. We are also pursuing opportunities within the
electric forklift and industrial material handling markets, where lithium battery adoption continues to increase.
We launched our e360
product line in December 2020, initially targeting the RV and marine industries. Through continued sales growth and product development,
the e360 product line has gained adoption among customers transitioning from lead-acid battery systems. We have since expanded our product
portfolio to include next-generation lithium battery models designed to increase capacity, improve energy density, enhance manufacturability,
and expand integration capabilities for OEM and industrial applications. These products are intended to support mobile and off-grid systems
for construction, industrial power, surveillance, and remote monitoring applications.
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.
Our
Market Opportunity
Lithium-based
batteries power a broad range of applications, from consumer electronics to transportation systems and national defense infrastructure.
They support electrification trends across multiple industries and enable both mobile and stationary energy storage solutions. The United
States maintains a strong research ecosystem and an emerging domestic battery manufacturing base, supported by federal initiatives aimed
at strengthening supply chains and advancing battery technology, according to the U.S. Department of Energy.
Expion360
currently focuses on the deep cycle, off-grid, RV, marine, industrial, and specialty vehicle markets, where high-performance LiFePO4
battery systems are increasingly displacing legacy lead-acid solutions. These applications require lightweight, high-energy-density,
and durable power systems capable of operating in varied and demanding environmental conditions.
The
global RV market was valued at approximately $60.7 billion in 2022 and is projected to grow at a compound annual growth rate (CAGR) of
11.5% from 2023 through 2030, reaching an estimated $144.55 billion by 2031, according to Grand View Research. Increasing electrification
within RV platforms, including off-grid and extended-runtime applications, continues to support adoption of lithium-based battery systems.
More
broadly, trends toward equipment electrification, reduced generator runtime, remote monitoring infrastructure, and mobile industrial
applications are contributing to sustained demand for advanced battery systems. According to IMARC, the global
lithium-ion battery market exceeded $150 billion in 2025 and continues to expand as electrification advances across transportation, industrial,
and specialty equipment sectors.
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Beyond
our established presence in RV and marine applications, we are evaluating opportunities in adjacent light electric vehicle, surveillance,
and remote monitoring applications that require high-reliability battery systems. According to Precedence Research, the global light
electric vehicle market was estimated at $107 billion in 2025 and is projected to reach $268 billion by 2035. While these adjacent markets
represent potential long-term growth opportunities, our current commercial focus remains concentrated in deep-cycle, recreational, and
specialty-use applications.
We
believe the compact form factor, modularity, and high energy density of our lithium battery systems position us to address applications
requiring lightweight, high-capacity power solutions across RVs, marine systems, industrial equipment, and remote monitoring applications.
While
we do not currently manufacture battery cells domestically, we monitor developments in U.S. supply chain policy and manufacturing initiatives
that may influence the industry over time. We periodically evaluate strategic opportunities that could align with our long-term objectives;
however, our current operations rely primarily on established offshore third-party manufacturing partners. Domestic supply chain initiatives
represent potential future developments rather than current operational drivers.
Competitive
Strengths
We
believe the following strengths differentiate Expion360 and create long-term, sustainable competitive advantages:
Superior Capacity
to Lead-Acid Competitors
Lead-acid batteries
have historically been the standard in RV and marine transportation vehicles, but these industries are experiencing a rapid conversion
from lead-acid to lithium batteries as the primary method of power sourcing. Our lithium-ion batteries are designed to offer superior
capacity to traditional lead-acid batteries, with an expected lifespan of approximately 12 years under standard operating conditions—three
to four times that of certain lead-acid batteries—and ten times the number of charge cycles. Furthermore, our typical battery may
provide three times the power of the typical, lead-acid battery despite being half the weight (comparing, for example, a typical lead-acid
battery like the Renogy Deep Cycle AGM, which is rated at 100Ah, to our own LFP 100Ah battery and assuming slow discharge at a 1C rate).
In addition, we offer
a 4.5 Ah 26650 lithium-ion phosphate battery cell, which allows us to increase energy density by over 32% compared to traditional 3.4
Ah 26650 cells.
Expansion into New Markets
Our proprietary e360
SmartTalk mobile app is included in many of our battery models and allows the seamless integration and management of e360 Bluetooth-enabled
LiFePO4 batteries. The technology enables users to wirelessly monitor and manage e360 batteries, providing a comprehensive view of both
individual battery conditions and performance as well as information about a power bank consisting of multiple e360 batteries. Our 48
Volt GC2 LiFePO4 battery was the first model to incorporate e360 SmartTalk for electric golf carts and other light electric vehicle applications.
In 2024, we introduced
our next generation 12V GC2 and Group 27 series LiFePO4 batteries incorporating higher amp-hour cell options (4.0Ah and 4.5Ah) and the
latest technology, including our proprietary Vertical Heat Conduction™ internal heating, Bluetooth®, and controller area network
(“CANBus”) communication. We also launched the Edge battery in 2024, which offers a slim design designed to provide installation
flexibility. The Edge is offered in both 12V and 48V configurations.
In February 2026,
we announced plans to release three next-generation lithium-ion battery models expected to be commercially available in the second half
of 2026. The new models include upgraded Group 27 (12.8V 140Ah), GC2H (12.8V 180Ah), and EX1 (12.8V 420Ah) batteries, each designed to
increase capacity relative to prior generations. These
platforms incorporate our VHC™ internal heating technology, SmartTalk™ Bluetooth connectivity, and CANBus communication,
and are engineered to meet UL 1973 safety standards, with final certification pending. The redesigned batteries are also intended to
support manufacturing efficiencies and margin improvement initiatives.
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Also in February
2026, we entered into a strategic partnership with Dealer Accessory Supply (“DAS”) related to the launch of the DASGen Hybrid
Energy Storage System, representing our entry into the industrial energy storage market. DASGen is designed to function as an energy
buffer between diesel generators and jobsite electrical loads and is intended to support reduced generator runtime, subject to site conditions
and usage. Under the partnership, DAS serves as the final system assembler, while we supply the battery technology and lead sales and
marketing efforts. The system utilizes our lithium iron phosphate battery platform and is integrated with industrial power electronics.
Initial field deployments have been completed, with performance dependent on site-specific operating conditions.
Strong National
Retail Customers and Distribution Channels
We maintain sales
relationships with major RV and marine retailers and plan to use our strong reputation in the lithium battery space to create an even
stronger distribution channel. We have decades of experience in the energy and RV industries and cultivate relationships with numerous
retailers in the space, including Camping World, a leading national RV retailer; and Keystone Automotive, a leading national marketer
and distributor of automotive and RV specialty products.
Expion360 Products
We have historically
focused on the design, assembly, and sale of LiFePO4 batteries and supporting accessories for RV and marine applications, and have recently
expanded into home energy storage solutions and the industrial energy storage market. Our batteries are designed and engineered in-house
using premium lithium iron phosphate cells with quality controls at every step. We use high-grade LiFePO4 batteries meeting the UL 1642
standard (UL File No. MH64383). We believe our materials and engineering enhance the reliability, stability, and safety of our products
relative to those of our competitors. We reimagined the standard battery case and included built-in rubber feet, radiused corners, 96.7%
larger terminal connection pads, interior molded ribs for structural security, and the highest-grade ABS plastics with additives for
fire retardancy. To maximize the power and efficiency of our batteries, we welded our cells via thick copper/tin-machined collector plates,
welded all interior pack points, added a press break flange at each end to create a mechanical backbone for the battery monitoring system
(“BMS”), used high-grade wiring and ring terminals throughout, and treated connections with industrial epoxy for long-lasting
protection. Our internal “smart” BMS design includes multiple safety and performance features, such as low temperature discharge,
auto shutoff, short circuit protection, low- and high-voltage shutoffs, and overcurrent disconnect. Our structurally sound BMS board
features a bolted design, eliminating all unnecessary solder, resulting in one cohesive pack with a long lifespan. We hold our lithium
batteries to high safety standards, which has enabled us to achieve a UL 1973 compliance. We stand by our batteries with a robust 12-year
warranty.
To enable us to provide
a full range of components to complement our battery offerings, we offer a suite of accessories and components for new installations
or conversions which includes but is not limited to chargers, monitors, inverters, and solar components from brands such as Victron Energy
and RedArc.
Competitors
Our competitors include
lithium-ion battery manufacturers, such as Relion (which was acquired by Brunswick Corporation in September 2021); Dragonfly Energy Holdings
Corp (Nasdaq: DFLI), the manufacturer of Battle Born Batteries; Renogy; and Dakota Lithium. Lead-acid battery manufactures also continue
to have a presence in the marketplace. We have designed custom form factors in both the industry standard Group 24 and Group 27 battery
sizes allowing us to visually and structurally differentiate Expion360 within the market space. We believe our custom EX1 battery also
provides a unique capacity to footprint ratio compared to lead-acid and lithium battery competitors. Our lithium iron phosphate batteries
are designed to provide improved cycle life, energy density, and weight relative to traditional lead-acid batteries.
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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 historically have enabled us to increase our purchase volumes and qualify for volume-based
discounts. The strength of these relationships has helped us moderate increased supply-related costs associated with inflation, currency
fluctuations, and U.S. government 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 needed.
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. 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, 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 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 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 any 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.
While we expect that
products from our Asian third-party manufacturers will be subject to additional tariffs in 2026, we believe that we can protect our margins
through a combination of supplier concessions, customer price increases and operational efficiencies gained as sales continue to grow.
U.S. trade policy has been subject to significant legislative, regulatory, and judicial developments in recent years. For example, in
February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (“IEEPA”) does not authorize
the President to impose tariffs. While that decision invalidated certain tariffs imposed under that authority, tariffs and other trade
measures may continue to be imposed under other statutory authorities or through future legislation. However, there can be no assurance
that such efforts will fully offset increased costs.
Customers
We currently have
around 300 customers across the United States consisting of dealers, wholesalers, private-label customers and OEMs who then sell our
products to end consumers. Our sales are completed on a purchase-order basis and most are without firm, long-term revenue commitments
or sales arrangements. Expion360 has sales relationships with many major RV retailers, including Camping World, a leading national RV
retailer, and Keystone Automotive, a leading national marketer and distributor of automotive and RV specialty products. In addition,
we also sell products directly to end consumers. We intend to continue to focus on our sales and distribution channels to develop existing
customer relationships and grow our customer base. We also offer a high level of technical support to our customers before and after
product sales.
We currently derive
a significant portion of our revenue from a limited number of customers. During the year ended December 31, 2025, sales to four customers
accounted for approximately 60% of our gross sales. These customers accounted for 69% of our outstanding accounts receivable as of December
31, 2025. Sales to each of our other customers did not exceed 10% during this period.
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Intellectual Property
The success of our
business and our technology leadership is supported by our proprietary battery technology. We have filed 11 patent applications in the
United States to provide protection for our technology, including seven design patent applications and four utility patent applications.
In addition, we rely upon a combination of trademark and trade secret laws in the United States, as well as license agreements and other
contractual protections, to establish, maintain and enforce rights in our proprietary technologies. We also seek to protect our intellectual
property rights through non-disclosure and invention assignment agreements with our employees and consultants and through non-disclosure
agreements with business partners and other third parties.
We periodically review
our development efforts to assess the existence and patentability of new intellectual property. We pursue the registration of our domain
names and trademarks and service marks in the United States and in an effort to protect our brand, as of December 31, 2025, we have 18
trademarks registered or pending registration to cover our house marks in the United States and have nine trademarks registered or pending
registration in Canada.
Government Regulations
We are subject to
inspections by federal, state, and local regulators overseeing environmental health and safety, which could result in possible citations
and/or fines. Lithium-ion battery shipments are categorized as “dangerous goods” and are subject to rules governing their
transportation. We have implemented policies and procedures, trained our employees, and conducted internal audits to verify compliance
with environmental health and safety regulations.
As of December 31,
2025, our currently commercialized lithium iron phosphate batter models have achieved UL 1973 certification. Certain next-generation
models remain subject to final certification.
Employees
As of December 31,
2025, we had 22 employees, all of whom worked for us full time. None of our employees are covered by collective bargaining agreements
and we have never experienced an organized work stoppage, strike, or labor dispute. We believe working conditions and compensation packages
are competitive with those offered by competitors and consider our relations with our employees to be good.
Environmental,
Health, and Safety
We and our third-party
manufacturers and suppliers are, and could become, subject to a wide range of international, federal, state, provincial, and local governmental
regulations directed at preventing or mitigating environmental harm, as well as to the storage, discharge, handling, generation, disposal
and labeling of toxic or other hazardous substances. Although we outsource our manufacturing, the manufacturing of our products by our
third-party manufacturers and suppliers require the use of hazardous materials that similarly subject these third parties, and therefore
our business, to such environmental laws and regulations. Noncompliance by us or third-party manufacturers with applicable environmental
or safety regulations could result in regulatory actions, penalties, or operational disruptions. Increased compliance costs by our third-party
manufacturing partners may also result in increased costs to our business. Our business and operations are also subject to health and
safety laws and regulations adopted by government agencies such as the Occupational Safety and Health Administration. Although we believe
we are in material compliance with applicable laws concerning matters relating to health, safety, and the environment, the risk of liability
relating to these matters cannot be eliminated completely. To date, we have not incurred significant expenditures relating to environmental
compliance nor have we experienced any material issues relating to employee health and safety. See the section titled “ Risk
Factors ” for additional information.
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Implications of
Being an Emerging Growth Company and a Smaller Reporting Company
We qualify as an
“emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). As an emerging
growth company, we have elected to take advantage of specified reduced disclosure and other requirements that are otherwise applicable
generally to public companies. These provisions include:
●
the
requirement that we provide only two years of audited financial statements in addition to
any required unaudited interim financial statements with correspondingly reduced “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” disclosure;
●
reduced
disclosure about our executive compensation arrangements;
●
an
exemption from the requirement that we hold a non-binding advisory vote on executive compensation
or golden parachute arrangements; and
●
an
exemption from the auditor attestation in the assessment of our internal control over financial
reporting.
We may take advantage
of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be
an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross
revenue of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion
of our initial public offering; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous
three years; or (iv) the date on which we are deemed to be a “large accelerated filer” under SEC rules.
We
are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company
even after we are no longer an emerging growth company. We may take advantage of certain of the reduced reporting requirements available
to smaller reporting companies and will be able to take advantage of these reduced reporting requirements for so long as our voting and
non-voting Common Stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter,
or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting Common
Stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
Company Information
Expion360 Inc. was
initially organized as a limited liability company under the name Yozamp Products Company, LLC in the State of Oregon in June 2016 and
converted to a Nevada corporation in November 2021.
Our website is found
at expion360.com and on the Investor Relations section of our website, we post the following filings as soon as reasonably practicable
after they are electronically filed with or furnished to the SEC: our Annual Reports on Form 10-K, our Proxy Statement on Schedule 14A,
our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Exchange Act.
All of the information
on our Investor Relations web page is available to be viewed free of charge. Information contained on our website is not part of this
Annual Report or our other filings with the SEC. We assume no obligation to update or revise any forward-looking statements in this Annual
Report whether as a result of new information, future events or otherwise, unless we are required to do so by law.
The SEC also maintains
a website found at http://www.sec.gov/ that contains reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC.
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