Expion360 Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our management is responsible for establishing and maintaining adequate disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act, for our Company. Consequently, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act as of December 31, 2025. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are designed at a reasonable assurance level as of December 31, 2025. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. “Internal control over financial reporting,” as defined in Rule 13a-15(f) under the Exchange Act, means a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management, with the participation and supervision of our principal executive officer and our principal financial and accounting officer, assessed the effectiveness of our internal control over financial reporting. In making this assessment, our management used the criteria set forth in Internal Control – Integrated Framework (2013) as issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2025. This Annual Report does not include an attestation report of the Company’s registered public accounting firm due to an exemption established by SEC rules for emerging growth companies. 45 Changes in Internal Control Over Financial Reporting During the three months ended December 31, 2025, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934). Limitation on Effectiveness of Controls and Procedures In designing and evaluating our controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In assessing whether our disclosure controls and procedures were effective at a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. There are inherent limitations to the effectiveness of any system of controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. In addition, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. ITEM 9B. OTHER INFORMATION Rule 10b5-1 Plan and Non-Rule 10b5-1 Trading Arrangement Adoptions, Terminations, and Modifications Our directors and officers may enter into trading plans or other arrangements with financial institutions to purchase or sell shares of our common stock, which plans or arrangements are intended to comply with the affirmative defense provisions of Rule 10b5-1 of the Exchange Act or which may represent a non-Rule 10b5-1 trading arrangement, as defined under Item 408(a) of Regulation S-K. During the three months ended December 31, 2025, none of our directors or officers adopted , terminated or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION Not applicable. 46 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Code of Business Conduct and Ethics We have adopted a written code of business conduct and ethics, or the Code of Business Conduct and Ethics, which applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. Our Code of Business Conduct and Ethics is available on our website at www.investors.expion360.com in the “Corporate Governance” section of the “Investor Relations” page. In addition, we intend to post on our website all disclosures that are required by law concerning any amendments to, or waivers from, any provision of our Code of Business Conduct and Ethics. The inclusion of our website address in this Annual Report does not include or incorporate by reference the information on the website into this Annual Report. Insider Trading Policy We have adopted an Insider Trading Policy governing the purchase, sale and/or other dispositions of our securities by our directors, officers and employees that are reasonably designed to promote compliance with insider trading laws, rules and regulations. The Insider Trading Policy is filed as an exhibit to this Annual Report. The remaining information required by this item will be included in our definitive proxy statement for our 2026 annual meeting of stockholders (the “2026 Proxy Statement"), to be filed with the SEC no later than 120 days after December 31, 2025, and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information required by this item will be included in the 2026 Proxy Statement and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this item will be included in the 2026 Proxy Statement and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item will be included in the 2026 Proxy Statement and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this item will be included in the 2026 Proxy Statement and is incorporated herein by reference. 47 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a)(1) Financial Statements Our financial statements are listed in the “Index to the Financial Statements,” which appears on page F-1 of this Annual Report. (a)(2) Financial Statement Schedules All financial statement schedules are omitted because the information called for is not required or is shown either in the financial statements or the notes thereto. (a)(3) Exhibits The following is a list of exhibits filed as part of this Annual Report. Incorporated by Reference Exhibit Number Description Form Exhibit Filing Date 3.1 Articles of Incorporation of the Company, effective as of November 4, 2021 S-1 3.1 3/31/2022 3.2 Certificate of Amendment of Articles of Incorporation, effective as of October 8, 2024 8-K 3.1 10/7/2024 3.3 Amended and Restated Bylaws of the Company, dated August 21, 2024 8-K 3.1 8/27/2024 4.1 Form of the Company’s Common Stock Certificate S-1 4.1 3/31/2022 4.2 Form of Representative’s Warrant Agreement S-1 4.4 3/31/2022 4.3 Form of Senior Secured Promissory Note issued to bridge loan investors S-1 4.5 3/31/2022 4.4 Description of Capital Stock - - - 4.5 March 2022 Form of Common Stock Warrant S-1 10.1 3/31/2022 4.6 March 2023 Form of Warrant with an Exercise Price of $2.90 10-K 10.15 3/30/2023 4.7 March 2023 Form of Warrant with an Exercise Price of $3.32 10-K 10.16 3/30/2023 4.8 December 2023 Form of Convertible Note 8-K 4.1 12/29/2023 4.9 August 2024 Form of Pre-Funded Warrant 8-K 4.1 8/9/2024 4.10 August 2024 Form of Series A Warrant 8-K 4.2 8/9/2024 4.11 August 2024 Form of Series B Warrant 8-K 4.3 8/9/2024 4.12* October 2025 Form of Pre-Funded Warrant 8-K 4.1 10/17/2025 4.13* October 2025 Form of Common Warrant 8-K 4.2 10/17/2025 4.14 January 2025 Form of Pre-Funded Warrant 8-K 4.1 1/3/2025 4.15 January 2025 Form of Common Warrant 8-K 4.2 1/3/2025 10.1† Non-Employee Director Compensation Policy, effective October 16, 2025 10-Q 10.6 11/13/2025 10.2† Expion360 Inc. 2021 Incentive Award Plan S-1 10.2 3/31/2022 10.3† Amendment to Expion360 Inc. 2021 Incentive Award Plan 10-K 10.3 3/28/2024 10.4† Expion360 Inc. 2021 Employee Stock Purchase Plan S-1 10.3 3/31/2022 10.5 Commercial Lease of premises at 2025 SW Deerhound Avenue Redmond, OR S-1 10.8 3/31/2022 10.6* Underwriting Agreement, dated August 7, 2024, between Expion360 Inc. and Aegis Capital Corp. 8-K 1.1 8/9/2024 10.7* At-The-Market Issuance Sales Agreement, dated December 12, 2025, by and between Expion360 Inc. and Aegis Capital Corp. 8-K 10.1 12/15/2025 10.8† Employment Agreement, between Carson Heagen and Expion360 Inc., dated April 1, 2025 10-Q 10.1 5/15/2025 48 10.9† Amended and Restated Employment Agreement, by and between the Company and Shawna Bowin, effective September 3, 2025 10-Q 10.1 11/13/2025 10.10* Form of Securities Purchase Agreement, dated as of January 2, 2025, by and among the Company and the purchasers on the signature pages thereto 8-K 10.1 1/3/2025 10.11* Form of Registration Rights Agreement, dated as of January 2, 2025, by and among the Company and the purchasers on the signature pages thereto 8-K 10.2 1/3/2025 10.12* Form of Securities Purchase Agreement, dated October 16, 2025 8-K 10.1 10/17/2025 10.13 Severance Agreement, Consulting Agreement and General Release, by and between the Company and Brian Schaffner, dated October 16, 2025 8-K 10.2 10/17/2025 10.14 Severance Agreement and General Release, by and between the Company and Paul Shoun, dated October 16, 2025 8-K 10.3 10/17/2025 10.15*† Employment Agreement, by and between the Company and Joseph Hammer, October 16, 2025 8-K 10.4 10/17/2025 10.16† Form of Indemnification Agreement - - - 21.1 Subsidiaries of the Company 10-K 21.1 3/28/2024 19.1 Expion360 Inc. Insider Trading Policy - - - 23.1 Consent of M&K CPAS PLLC - - - 24.1 Power of Attorney (reference is made to the signature page hereto) - - - 31.1 Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - - - 31.2 Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - - - 32.1# Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - - - 32.2# Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - - - 97.1 Expion360 Inc. Executive Compensation Clawback Policy 10-K 97.1 3/28/2024 101.INS XBRL Instance Document. - - - 101.SCH XBRL Taxonomy Extension Schema Document. - - - 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. - - - 101.DEF XBRL Taxonomy Extension Definition Linkbase Document. - - - 101.LAB XBRL Taxonomy Extension Label Linkbase Document. - - - 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. - - - 104 Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101). - - - † Indicates a management contract or compensatory plan or arrangement. # The certification shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act, and shall not be incorporated by reference into any of the registrant’s filings under the Securities Act or the Exchange Act, whether made before or after the date of this Quarterly Report, irrespective of any general incorporation language contained in any such filing. * Certain of the schedules (and similar attachments) to this exhibit have been omitted in accordance with Item 601(a)(5) of Regulation S-K under the Securities Act because they do not contain information material to an investment decision and that information is not otherwise disclosed in the exhibit or the disclosure document. The registrant agrees to furnish a copy of all omitted schedules (or similar attachments) to the Commission upon its request. ITEM 16. FORM 10-K SUMMARY None. 49 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned thereunto duly authorized. Expion360 Inc. By: /s/ Joseph Hammer Joseph Hammer Chief Executive Officer and Chairman of the Board of Directors ( Principal Executive Officer ) Date: March 16, 2026 POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints Joseph Hammer and Shawna Bowin, and each of them, as his or her true and lawful attorneys-in-fact, proxies and agents, each with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and to file the same, with any exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorneys-in-fact, proxies and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, proxies and agents, or their or his or her substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Joseph Hammer Chief Executive Officer and Chairman of the Board of Directors ( Principal Executive Officer ) March 16, 2026 Joseph Hammer /s/ Shawna Bowin Chief Financial Officer (Principal Financial and Accounting Officer) March 16, 2026 Shawna Bowin /s/ Scott Burell Director March 16, 2026 Scott Burell /s/ George Lefevre Director March 16, 2026 George Lefevre /s/ Tien Q. Nguyen Director March 16, 2026 Tien Q. Nguyen /s/ Brian Schaffner Director March 16, 2026 Brian Schaffner /s/ Steven M. Shum Director March 16, 2026 Steven M. Shum 50 Index to Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID # 2738 ) F-1 Balance Sheets F-3 Statements of Operations F-4 Statements of Stockholders’ Equity (Deficit) F-5 Statements of Cash Flows F-6 Notes to the Financial Statements F-8 51 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Expion360, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Expion360, Inc. (the Company) as of December 31, 2025 and 2024, and the related statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company suffered a net loss from operations and negative cash flows from operations, and has a net capital deficiency, each of which are factors that raise substantial doubt about its ability to continue as a going concern. Management’s plans to address these challenges are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. F- 1 Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Going Concern Due to factors such as the net loss for the year, negative cash flows from operations, and the net capital deficiency, the Company evaluated the need to include a going concern qualification in the financial statements. See discussion in Note 2. Auditing management’s determination regarding the inclusion of a going concern qualification requires significant judgement given the fact that the Company uses management estimates of future revenues and expenses, as well as assumptions about future fundraising activity, which are not able to be substantiated. To evaluate the appropriateness of the going concern qualification, we examined and evaluated the financial information, including management’s plans to mitigate the going concern qualification, and management’s disclosure on going concern. /s/ M&K CPAS, PLLC We have served as the Company’s auditor since 2021. The Woodlands, TX March 16, 2026 F- 2 Expion360 Inc. Balance Sheets As of December 31, 2025 As of December 31, 2024 Assets Current Assets Cash and cash equivalents $ 2,969,096 $ 547,565 Accounts receivable, net 718,964 613,022 Inventory 2,858,780 4,831,461 Prepaid/in-transit inventory 318,440 1,612,686 Prepaid expenses and other current assets 179,645 236,461 Total current assets 7,044,925 7,841,195 Property and equipment 807,083 914,081 Accumulated depreciation ( 478,861 ) ( 430,191 ) Property and equipment, net 328,222 483,890 Other Assets Operating leases – right-of-use asset 666,199 754,832 Deposits 32,016 27,471 Total other assets 698,215 782,303 Total assets $ 8,071,362 $ 9,107,388 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 403,792 $ 338,091 Customer deposits 2,978 48,474 Accrued expenses and other current liabilities 221,863 187,464 Current portion of operating lease liability 337,246 256,153 Current portion of long-term debt 31,058 31,758 Suspended liability — 4,985,948 Total current liabilities 996,937 5,847,888 Long-term debt, net of current portion and discount 166,187 198,412 Operating lease liability, net of current portion 372,478 542,764 Total liabilities $ 1,535,602 $ 6,589,064 Stockholders’ equity Preferred stock, par value $ .001 ; 20,000,000 shares authorized; 0 zero shares issued and outstanding — — Common stock, par value $ .001 ; 200,000,000 shares authorized; 9,781,739 and 2,096,082 issued and outstanding as of December 31, 2025 and 2024, respectively 9,782 2,096 Additional paid-in capital 47,336,405 37,091,468 Accumulated deficit ( 40,810,427 ) ( 34,575,240 ) Total stockholders’ equity 6,535,760 2,518,324 Total liabilities and stockholders’ equity $ 8,071,362 $ 9,107,388 The accompanying notes are an integral part of these financial statements. F- 3 Expion360 Inc. Statements of Operations For the Years Ended December 31, 2025 2024 Net sales $ 9,651,870 $ 5,624,939 Cost of sales 8,314,472 4,469,711 Gross profit 1,337,398 1,155,228 Selling, general and administrative 12,040,903 7,909,219 Loss from operations ( 10,703,505 ) ( 6,753,991 ) Other (income) / expense Interest income ( 16,147 ) ( 86,121 ) Interest expense 20,226 976,618 Loss on sale of property and equipment 13,353 146,760 Settlement expense — 709,900 Suspended liability expense / (income) ( 4,485,948 ) 4,985,948 Other (income) / expense 48 ( 6,073 ) Total other (income) / expense ( 4,468,468 ) 6,727,032 Loss before taxes ( 6,235,037 ) ( 13,481,023 ) Tax (income) / expense 150 ( 1,548 ) Net loss $ ( 6,235,187 ) $ ( 13,479,475 ) Net loss per share (basic and diluted) $ ( 1.13 ) $ ( 21.03 ) Weighted-average number of common shares outstanding 5,511,875 641,011 The accompanying notes are an integral part of these financial statements. F- 4 Expion360 Inc. Statements of Stockholders’ Equity Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity (Deficit) Shares Amount Balance at December 31, 2023 69,230 $ 69 $ 26,445,378 $ ( 21,095,765 ) $ 5,349,682 Stock issued for ELOC 4,336 4 828,487 — 828,491 Proceeds received from cashless exercise of warrants 16 — ( 4 ) — ( 4 ) Proceeds received from cash exercise of warrants — — 26 — 26 Stock issued for interest payment 414 — 90,839 — 90,839 Issuance of stock options — — 464,328 — 464,328 Issuance of RSUs — — 141,417 — 141,417 Settlement of vested RSUs 525 — 46,889 — 46,889 Settlement of commitment shares 635 1 ( 1 ) — — Stock issued as a result of litigation settlement 1,000 1 208,999 — 209,000 Issuance of shares and pre-funded warrants, net of issuance costs 500,000 500 8,681,190 — 8,681,690 Proceeds from exercise of Series A warrants 14,900 15 77,555 — 77,570 Proceeds from exercise of Series B warrants 1,294,367 1,296 106,575 — 107,871 Shares issued for true-up upon completion of Reverse Stock Split 210,659 210 ( 210 ) — — Net loss — — — ( 13,479,475 ) ( 13,479,475 ) Balance at December 31, 2024 2,096,082 $ 2,096 $ 37,091,468 $ ( 34,575,240 ) $ 2,518,324 Proceeds received from cash exercise of Series A warrants 4,384,749 4,386 4,927,430 — 4,931,816 Proceeds received from cash exercise of Series B warrants 85,252 85 8,440 — 8,525 Proceeds received from cash exercise of January 2025 warrants 599,193 599 784,344 — 784,943 Issuance of shares and pre-funded warrants, net of issuance cost 1,661,463 1,661 2,872,524 — 2,874,185 Issuance of stock options — — 482,804 — 482,804 Issuance and settlement of RSUs 505,000 505 680,345 — 680,850 Issuance of shares in exchange for services 450,000 450 489,050 — 489,500 Net loss — — — ( 6,235,187 ) ( 6,235,187 ) Balance at December 31, 2025 9,781,739 $ 9,782 $ 47,336,405 $ ( 40,810,427 ) $ 6,535,760 The accompanying notes are an integral part of these financial statements. F- 5 Expion360 Inc. Statements of Cash Flows For the Years Ended December 31, 2025 2024 Cash flows from operating activities Net loss $ ( 6,235,187 ) $ ( 13,479,475 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation 116,645 173,973 Amortization of convertible note costs — 667,144 Loss on sale of property and equipment 13,353 146,760 Stock-based settlement — 209,000 Stock-based compensation 1,163,654 616,632 Issuance of common stock in exchange for services 489,500 — Non-cash expense in exchange for asset disposal 21,420 — (Increase) / Decrease in inventory valuation 903,717 — Decrease in right-of-use assets and lease liabilities — ( 67,778 ) Increase / (Decrease) in suspended liability ( 4,485,948 ) 4,985,948 Changes in operating assets and liabilities: Increase in accounts receivable ( 105,942 ) ( 458,087 ) (Increase) / Decrease in inventory 1,068,964 ( 1,006,071 ) (Increase) / Decrease in prepaid/in-transit inventory 1,294,246 ( 1,448,738 ) (Increase) / Decrease in prepaid expenses and other current assets 56,816 ( 47,043 ) (Increase) / Decrease in deposits ( 4,545 ) 31,425 Increase in accounts payable 65,701 51,106 Increase / (Decrease) in customer deposits ( 45,496 ) 31,051 Increase in accrued expenses and other current liabilities 34,399 21,819 Increase / (Decrease) in right-of-use assets and lease liabilities ( 560 ) 9,789 Decrease in suspended liability ( 500,000 ) — Net cash used in operating activities ( 6,149,263 ) ( 9,562,545 ) Cash flows from investing activities Purchases of property and equipment — ( 19,203 ) Net proceeds from sale of property and equipment 4,250 132,611 Net cash provided by investing activities 4,250 113,408 Cash flows from financing activities Principal payments on convertible note — ( 2,750,000 ) Principal payments on long-term debt ( 32,925 ) ( 119,111 ) Principal payments on stockholder promissory notes — ( 762,500 ) Net proceeds from exercise of warrants 5,725,284 185,434 Net proceeds from issuance of common stock 2,874,185 9,510,181 Net cash provided by financing activities 8,566,544 6,064,004 Net change in cash and cash equivalents 2,421,531 ( 3,385,133 ) Cash and cash equivalents, beginning 547,565 3,932,698 Cash and cash equivalents, ending $ 2,969,096 $ 547,565 F- 6 Expion360 Inc. Statements of Cash Flows - Continued For the Years Ended December 31, Supplemental disclosure of cash flow information: 2025 2024 Cash paid for interest $ 20,894 $ 220,714 Cash paid / (received) for franchise taxes $ 150 $ ( 258 ) Non-cash financing activities: Acquisition/modification of operating lease right-of-use asset and lease liability $ 198,216 $ — Issuance of common stock for payment on accrued interest $ — $ 90,839 Issuance of common stock for payment on accrued compensation $ — $ 36,029 The accompanying notes are an integral part of these financial statements. F- 7 NOTES TO THE FINANCIAL STATEMENTS 1. Organization and Nature of Operations Expion360 Inc. (the “Company”) was incorporated in the State of Nevada in November 2021. Effective November 1, 2021, the Company converted to a C corporation. The Company was originally formed as a limited liability company in the State of Oregon in June 2016. The Company designs, assembles, manufactures, and sells lithium iron phosphate (“LiFePO4”) batteries and supporting accessories for recreational vehicles (“RVs”), marine, and industrial applications. The Company’s 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. The Company’s customers consist of dealers, wholesalers, private-label customers, and original equipment manufacturers (“OEMs”) who then sell its products to end consumers. The Company currently operates in one reportable business segment, Energy Storage (ES). 2. Summary of Significant Accounting Policies Basis of Presentation The audited financial statements and accompanying notes have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with current year presentation. These reclassifications had no effect on the reported results of operations. Going Concern The Company’s activities are subject to significant risks and uncertainties, including that it may be unable to secure additional funding before it achieves profitability or positive cash flow from operations. The Company expects to continue to incur operating losses for the foreseeable future, and will need to raise additional debt or equity financing to fund working capital, purchase inventory, expand its presence in the marketplace, develop new products, achieve operating efficiencies, and accomplish its long-term business plan. There can be no assurance that additional financing will be available on acceptable terms or at all. Historically, the Company’s operations have been funded through a combination of sales of equity securities, and issuances of third party debt and working capital loans. As presented in the accompanying financial statements, the Company has sustained recurring losses and negative cash flows from operations and has a significant negative stockholders’ equity balance. The Company incurred net losses of $ 6.2 million and $ 13.5 million for the years ended December 31, 2025 and 2024, respectively. The Company had negative flows from operating activities of $ 6.1 million and $ 9.6 million for the years ended December 31, 2025 and 2024, respectively. In addition, the Company had accumulated deficits of $ 40.8 million and $ 34.6 million as of December 31, 2025 and 2024, respectively. The Company has never achieved profitability or positive cash flows from operations, and may not be able to do so for the foreseeable future. These factors raise substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date that the financial statements for the year ended December 31, 2025 are issued. However, management is working to address its operational and liquidity challenges, including raising additional capital, managing inventory levels, identifying alternative supply chain resources, and managing operational expenses. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business; however, the above conditions raise substantial doubt about the Company’s ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. F- 8 Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company’s significant accounting estimates include the carrying value of inventory, the depreciable lives of fixed assets, operating lease assets and liabilities, and stock-based compensation and warrant valuation. Management evaluates its estimates and assumptions on an ongoing basis using historical experience, existing and known circumstances, authoritative accounting guidance, and other factors management believes to be reasonable and makes adjustments when facts and circumstances dictate. These estimates are based on information available as of the date of the financial statements. Actual results could differ from these estimates, which may result in material effects on the Company’s financial condition, results of operations and liquidity. To the extent there are differences between these estimates and actual results, the Company’s financial statements may be materially impacted. Inventory Inventory is stated at the lower of cost (first in, first out) or net realizable value and consists of batteries and accessories, resale items, components, and related landing costs. As of December 31, 2025 and 2024, the Company had inventory that consisted of finished assemblies totaling $ 2,269,267 and $ 4,077,013 , respectively, and raw materials (inventory components, parts, and packaging) totaling $ 589,513 and $ 754,448 , respectively. The valuation of inventory includes fixed production overhead costs based on normal capacity of the assembly warehouse. The Company periodically reviews its inventory for evidence of slow-moving or obsolete inventory and provides for an allowance when considered necessary. In 2025, the Company wrote off and wrote down $ 919,730 in obsolete inventory. A portion of the obsolete inventory was sold for scrap or recycled, and a portion has been retained to use in marketing promotions and was either written down to its estimated net realizable value or written off completely. The value of obsolete inventory that remains on the Balance Sheet as of December 31, 2025 is $ 547,294 . The Company prepays for inventory purchases from foreign suppliers. Prepaid inventory totaled $ 318,440 and $ 1,612,686 at December 31, 2025 and 2024, respectively, and included inventory in transit where title had passed to the Company but had not yet been physically received. Vendor and Foreign Concentrations of Inventory Suppliers During the years ended December 31, 2025 and 2024, approximately 55% and 82%, respectively, of inventory purchases were made from foreign suppliers in Asia. Any adverse change in either the economic or political conditions abroad could negatively impact the Company’s supply chain. The inability to obtain product to meet sales demand could adversely affect the Company’s results of operations. However, the Company has secured a secondary source for lithium iron phosphate cells used in its batteries from a supplier in Europe, enabling the Company to source materials outside of Asia in the event it becomes necessary to do so. Cash and Cash Equivalents The Company considers all cash amounts which are not subject to withdrawal restrictions or penalties, and all highly liquid investments purchased with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company maintains its cash and cash equivalents balances with high-quality financial institutions located in the United States. Cash accounts are secured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 per institution. At times, balances may exceed federally insured limits. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to any significant credit risk with respect to its cash and cash equivalents balances. As of December 31, 2025, the Company had investment accounts with a balance of $ 1,516,145 that was invested in U.S. treasury securities. F- 9 Revenue Recognition The Company’s revenue is generated from the sale of products consisting primarily of batteries and accessories. The Company recognizes revenue when control of goods is transferred to its customers in an amount that reflects the consideration it is expected to be entitled to in exchange for those goods or services. To determine revenue recognition, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the performance obligation(s) are satisfied. Revenue is recognized upon shipment or delivery to the customer, as that is when the customer obtains control of the promised goods and the Company’s performance obligation is considered satisfied. As such, accounts receivable is recorded at the time of shipment or will call, when the Company’s right to the consideration becomes unconditional and the Company determines there are no uncertainties regarding payment terms or transfer of control. Accounts Receivable Accounts receivable are recorded at the invoiced amount, are due within a year or less, and generally do not bear any interest. The Company performs ongoing credit evaluations of its customers and generally requires no collateral. An allowance for uncollectible accounts is recorded to reduce accounts receivable to the estimated amount that will be collected. The allowance is based upon management’s review of the accounts receivable aging and specific identification of potentially uncollectible balances. Recoveries of accounts previously written off and adjustments to the allowance for uncollectible accounts are recorded as adjustments to bad debt expense. There were no allowances for doubtful accounts as of December 31, 2025 or December 31, 2024, as management believed all outstanding amounts to be fully collectible. Concentration of Major Customers A customer is considered a major customer when net revenue attributable to the customer exceeds 10% of total revenue for the period or the outstanding accounts receivable balance exceeds 10% of total accounts receivable balances. During the year ended December 31, 2025, sales to four customers totaled $ 5,795,965 , or approximately 60 % of our total sales, and represented 69 % of our outstanding accounts receivable at December 31, 2025. During the year ended December 31, 2024, sales to one customer totaled $ 726,292 , or approximately 14 % of our total sales and represented approximately 6 % of our outstanding accounts receivable at December 31, 2024. Four other customers had accounts receivable balances totaling $ 339,111 , representing 60 % of total accounts receivable as of December 31, 2024. Sales to each of our other customers did not exceed 10% during the respective periods. Customer Deposits As of December 31, 2025 and 2024, the Company had customer deposits totaling $ 2,978 and $ 48,474 , respectively. Leases Contractual arrangements that meet the definition of a lease are classified as an operating lease or finance lease at inception. The Company does not have any finance leases. Operating lease right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset during the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating leases are included in ROU assets, current operating lease liabilities, and long-term operating lease liabilities on the Balance Sheets. Lease ROU assets and lease liabilities are initially recognized based on the present value of the future minimum lease payments over the lease term at commencement date calculated using the Company’s incremental borrowing rate (“IBR”) applicable to the lease asset. As the implicit rates for the Company's operating leases are generally not determinable, the Company uses an IBR based on the information available at the respective lease commencement dates to determine the present value of future payments. IBR represents the interest rate that the Company would expect to incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis with similar terms and payments, in an economic environment where the leased asset is located. F- 10 ROU assets also include any lease payments made at or before lease commencement and exclude any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of 12 months or less are not recognized on the Balance Sheets. The Company’s leases do not contain any residual value guarantees. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company accounts for lease and non-lease components as a single lease component for all of its leases. 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: Schedule of estimated useful lives Vehicles and transportation equipment 5 - 7 years Manufacturing equipment 3 - 10 years Office furniture and equipment 3 - 7 years Warehouse equipment 3 - 10 years QA equipment 3 - 10 years Tooling and molds 5 - 10 years Leasehold improvements are amortized over the shorter of the lease term or their estimated useful lives. Betterments, renewals, and extraordinary repairs that extend the lives of the assets are capitalized; other repairs and maintenance charges are expensed as incurred. The cost and related accumulated depreciation and amortization applicable to assets retired are removed from the accounts, and the gain or loss on disposition is recognized in the Statements of Operations. Impairment of Long-Lived Assets Long-lived assets consist primarily of property and equipment. When events or circumstances indicate the carrying value of a long-lived asset may be impaired, the Company estimates the future undiscounted cash flows to be derived from the use and eventual disposition of the asset to assess whether or not a potential impairment exists. If the carrying value exceeds the estimate of future undiscounted cash flows, the impairment is calculated as the excess of the carrying value of the asset over the estimate of its fair value. Fair value is determined primarily using the estimated cash flows discounted at a rate commensurate with the risk involved. No long-lived asset impairment was recognized during the years ended December 31, 2025 or 2024. Product Warranties The Company sells the majority of its products to customers along with conditional repair or replacement warranties. The Company’s branded products carry warranties ranging from one year to up to twelve years from the date of sale, depending on the specific product. The Company determines its estimated liability for warranty claims based on the Company’s experience with respect to the number and value of warranty claims actually made. Historically, there have been very few claims and the costs associated with those claims have been nominal. Accordingly, management estimated no liabilities associated with warranty claims as of December 31. 2025 and 2024. Liability for Refunds The Company does not have a formal return policy but does accept returns under its warranty policies. Returns have historically been minimal. Revenue is recorded net of returns. Any returns of discontinued product are not added back to inventory and therefore related costs are nominal and not recorded as an asset. No refund liability was recognized in the years ended December 31, 2025 and 2024. F- 11 Shipping and Handling Costs Shipping and handling fees billed to customers totaled $ 49,386 and $ 99,201 for the years ended December 31, 2025 and 2024, respectively, and are included in net sales on the Statement of Operations. Shipping and handling costs for shipping product to customers totaled $ 357,484 and $ 260,946 for the years ended December 31, 2025 and 2024, respectively, and are included in selling, general and administrative expense on the Statements of Operations. Advertising and Marketing Costs The Company expenses advertising and marketing costs as incurred. Advertising and marketing expense totaled $ 1,001,730 and $ 926,430 for the years ended December 31, 2025 and 2024, respectively, and are included in selling, general and administrative expense on the Statements of Operations. Research and Development Research and development activities primarily consist of product design and engineering, battery cell evaluation and testing, prototype development, performance validation, certification and compliance testing, and enhancements to existing battery systems and related technologies. Research and development costs are expensed as incurred. Research and development costs charged to expense amounted to $ 558,882 and $ 295,292 for the years ended December 31, 2025 and 2024, respectively, and are included in selling, general and administrative expenses on the Statements of Operations. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of exiting assets and liabilities and their respective tax basis. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Fair Value of Financial Instruments The Company accounts for its financial assets and liabilities in accordance with ASC Topic 820, Fair Value Measurement. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value, as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data. These inputs include quoted prices for similar assets or liabilities; quoted market prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs are used when little or no market data is available. Determining fair value requires that we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in the assessment of fair value. The fair value hierarchy gives the lowest priority to Level 3 inputs. F- 12 The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, and long-term debt. The fair value of cash and cash equivalents, accounts receivable, and accounts payable approximates their respective carrying values because of the short-term nature of those instruments. The fair value of long-term debt approximates their respective carrying values because the interest rate approximates market rates available to the Company for similar obligations with the same maturities. Basic and Diluted Net Loss Per Share Basic net income or loss per share is calculated by dividing net income or loss by the weighted average number of shares outstanding during the period without consideration of potentially dilutive securities. Diluted earnings or loss per share typically adjusts the basic earnings or loss per share for the potentially dilutive impact of securities. We calculate both the basic and diluted net loss per share using the weighted average number of common shares outstanding during the periods presented without consideration of dilutive securities. The Company’s potentially dilutive securities, which primarily of outstanding warrants, options and restricted stock units (“RSUs”), were excluded in the calculation of diluted net loss per share as the result would have been anti-dilutive due to the Company's net loss position in each period presented. As a result, the Company’s basic and diluted earnings per share are equal for the respective periods. The following shows the amounts used in computing net loss (basic and diluted) per share: Years Ended December 31, 2025 2024 Net loss $ ( 6,235,187 ) $ ( 13,479,475 ) Weighted average common shares outstanding – basic and diluted 5,511,875 641,011 Basic and diluted net loss per share $ ( 1.13 ) $ ( 21.03 ) As of December 31, 2025 and 2024, the Company had outstanding warrants and options exercisable for, and outstanding RSUs that could be settled for, an aggregate of 1,773,624 and 5,392,395 shares of common stock, respectively. The following table sets forth the number of shares excluded from the computation of diluted loss per share for the respective periods, as their inclusion would have been anti-dilutive. Years Ended December 31, 2025 2024 Warrants 6,639 6,889 Warrants – Series A 901,943 5,286,692 Warrants – Series B 2,132 87,384 Warrants – January 2025 449,193 — Stock options 214,217 11,430 RSUs 55,000 — Pre-funded warrants 144,498 — 1,773,622 5,392,395 Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation—Stock Compensation”, which requires compensation costs to be recognized at grant date fair value over the requisite service period of each of the awards. The Company recognizes forfeitures of awards as they occur. F- 13 The fair value of options is determined using the Black-Scholes option-pricing model. In order to calculate the fair value of options, certain assumptions and estimates are made with respect to variables such as the expected life of options, volatility of the stock price, risk-free interest rates, future dividend yields, and estimated forfeitures at the initial grant date. Changes to these assumptions or estimates could cause result in significant changes to the valuations. New Accounting Pronouncements In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements.” This ASU was issued to update guidance on disclosures that should be provided in interim reporting periods. The Company already complies with the guidance in this ASU, so there will be no impact on its financial statements or disclosures. Accounting Guidance Issued but Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40).” This ASU was issued to improve the disclosures about an entity’s expenses, and require certain types of expenses to be disclosed individually, and is effective for annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this standard on its financial statements or disclosures. 3. Property and Equipment, Net Property and equipment consist of the following: Schedule of property and equipment Years Ended December 31, 2025 2024 Vehicles and transportation equipment $ 299,015 $ 406,013 Manufacturing equipment 168,099 168,099 Office furniture and equipment 153,698 153,698 Warehouse equipment 72,964 72,964 Leasehold improvements 69,725 69,725 QA equipment 43,582 43,582 807,083 914,081 Less: accumulated depreciation ( 478,861 ) ( 430,191 ) Property and equipment, net $ 328,222 $ 483,890 Depreciation expense was $ 116,645 and $ 173,973 for the years ended December 31, 2025 and 2024, respectively. There were disposals and sales of fixed assets during the years ended December 31, 2025 and 2024 resulting in net cash received of $ 4,250 and $ 132,611 , respectively, and the recognition of losses of $ 13,353 and $ 146,760 , respectively. The disposals in the year ended December 31, 2025 consisted of the sale of two small vehicles and the exchange of a vehicle for services rendered. The disposals in the year ended December 31, 2024 primarily related to sales of equipment and leasehold improvements arising from the termination of a lease. F- 14 4. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following: Years Ended December 31, 2025 2024 Accrued salaries and payroll liabilities $ 146,407 $ 145,686 Commissions 49,505 30,913 Deferred income and deposit (sublease) 17,754 4,549 Franchise tax 150 150 Accrued interest 92 760 Other 7,955 5,406 Accrued expenses and other current liabilities $ 221,863 $ 187,464 5. Long-Term Debt Long-term debt consisted of the following at December 31, 2025 and 2024: December 31, 2025 December 31, 2024 Note payable – bank. Payable in monthly installments of $ 332 , including interest at 5.8 % per annum, secured by equipment. This note was repaid in full in August 2025 . — 2,657 Note payable – credit union. Payable in monthly installments of $ 508 , including interest at 5.45 % per annum, , secured by a vehicle. This note was repaid in full in March 2024 . — — Note payable – SBA: The Economic Injury Disaster Loan is payable in monthly installments of $ 731 , including interest at 3.75 % per annum, matures in May 2050 , and is unsecured. 138,853 143,144 Notes payable – The Company has acquired six notes payable to GM Financial for vehicles. In April 2022, the Company secured a commercial line up to $300,000 to be used to finance vehicle purchases. The original agreement expired in April 2023 but was renewed for a commercial line up to $350,000 with prevailing GM Financial existing terms each year since. The current agreement expires in April 2026. One note was paid off when the corresponding vehicle was sold in May 2023, two notes were paid off when the corresponding vehicles were sold in February 2024, and three notes remain outstanding as of December 31, 2025. The notes are currently payable in aggregate monthly installments of $ 2,560 , including interest at rates ranging from 6.14% to 7.29% per annum, mature at various dates from October 2027 to May of 2028 , and are secured by the related vehicles. 58,392 84,369 Total $ 197,245 $ 230,170 Less current portion ( 31,058 ) ( 31,758 ) Long-term debt, net of unamortized debt discount and current portion $ 166,187 $ 198,412 F- 15 Future maturities of long-term debt are as follows: Schedule of maturities of long-term debt Years ending December 31, 2026 $ 31,058 2027 30,381 2028 8,099 2029 4,002 2030 4,155 Thereafter 119,550 Total $ 197,245 6. Stockholder Promissory Notes The Company previously issued unsecured promissory notes to certain stockholders (the “Stockholder Notes”). As of December 31, 2025 and 2024, the Company had no outstanding principal balance due pursuant to the Stockholder Notes, which were fully repaid in August 2024. Interest paid to stockholders under the Stockholder Notes totaled $ 0 and $ 42,862 during the years ended December 31, 2025 and 2024, respectively. There was no accrued interest under the Stockholder Notes as of December 31, 2025 or 2024. 7. Equity and Debt Financings October 2025 Private Placement On October 16, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with two institutional investors pursuant to which the Company 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 $1.649. The Company received net proceeds of approximately $1.1 million from the October 2025 Private Placement after deducting offering expenses payable by the Company. The Company 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. The October 2025 Pre-Funded Warrant is exercisable immediately upon issuance for cash or on a cashless basis at the discretion of the holder. The exercise price of the October 2025 Pre-Funded Warrant is $0.001 per share. The number of pre-funded warrant shares that may be issuable is subject to adjustment for stock splits, recapitalizations, and reorganizations. The holder of the October 2025 Pre-Funded Warrant does not have any voting rights, but does have the right to participate in any dividends or distributions made by the Company. The offer and sale of the securities in the October 2025 Private Placement was made pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), provided by Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder. January 2025 Public Offering In January 2025, the Company sold in a public offering (the “January 2025 Public Offering”) (i) 474,193 shares of common stock, (ii) pre-funded warrants (the “January 2025 Pre-Funded Warrants”) to purchase 574,193 shares of common stock, which were exercised immediately upon closing, and (iii) warrants to purchase 1,048,386 shares of common stock at an exercise price of $2.36 per share (the “January 2025 Warrants”). The offering price per share was $2.48 and the offering price per pre-funded warrant share was $2.479. The Company received net proceeds of approximately $1.8 million from the January 2025 Public Offering after deducting offering expenses payable by the Company. The Company used the net proceeds from the offering to pay certain obligations under the Series A Warrants (as defined below), and for working capital and other general corporate purposes. F- 16 The January 2025 Pre-Funded Warrants are exercisable immediately upon issuance for cash or on a cashless basis at the discretion of the holder. The exercise price of the January 2025 Pre-Funded Warrants is $0.001 per share. The number of pre-funded warrant shares that may be issuable is subject to adjustment for stock splits, recapitalizations, and reorganizations. The holders of the January 2025 Pre-Funded Warrants do not have any voting rights, but do have the right to participate in any dividends or distributions made by the Company. The fair value of the January 2025 Warrants was determined at the date of issuance using the Black-Scholes option-pricing model based on the following estimates and assumptions: a per share price of common stock on date of grant of $ 2.22 ; expected dividend yield of 0 %; expected volatility of 158.64 %; risk-free interest rate of 4.41 %; and expected life of five years. The warrants were valued at $2.064 per share, with a total value of $2,163,869. The offer and sale of the securities in the January 2025 Public Offering was made pursuant to an effective shelf registration statement on Form S-3 (File No. 333-272956), which the Company filed with the SEC on June 27, 2023 and was declared effective on July 10, 2023 (the “Shelf Registration Statement”). The offer and sale of the January 2025 Warrants was made pursuant to a registration statement on Form S-1 (File No. 333-284354), which the Company filed with the SEC on January 17, 2025 and was declared effective on February 11, 2025. On August 14, 2025, the Company entered into inducement offer letter agreements with certain holders of the January 2025 Warrants, which reduced the exercise price of the January 2025 Warrants from $ 2.36 per share to $1.31 per share in exchange for the prompt exercise by such holders of the warrants for cash (the “Warrant Inducement”). The difference between the fair value of the warrants immediately prior to and following modification was calculated using the Black-Scholes option-pricing model and treated as a transaction cost, and resulted in $97,746 being netted against the proceeds received from the January 2025 Warrants. As a result of the Warrant Inducement, January 2025 Warrants covering an aggregate of 599,193 shares of common stock were exercised, resulting in net proceeds to the Company of approximately $0.8 million. On August 22, 2025, the Company’s board of directors took action to permanently reduce the exercise price of the January 2025 Warrants from $2.36 per share to $1.31 per share (the “Exercise Price Reduction” and, together with the Warrant Inducement, the “Warrant Adjustments”). As of December 31, 2025, January 2025 Warrants covering an aggregate of 449,193 shares of common stock remained outstanding. Reverse Stock Split Cash True-Up Payment On October 8, 2024, the Company effected a 1-for-100 reverse stock split (the “Reverse Stock Split”) of its issued and outstanding shares of common stock, which was approved by the Company’s board of directors on September 27, 2024, following stockholder approval at the Company’s annual meeting of stockholders held on September 27, 2024 (the “2024 Annual Meeting”). As a result of the lowest daily volume weighted average price (“VWAP”) of the common stock during the five trading days before and after the Reverse Stock Split being below the minimum threshold set forth in the Series A Warrants, a Reverse Stock Split cash true-up payment provision in the Series A Warrants was triggered (the “Cash True-up Payment”). The Cash True-Up Payment was capped at $5.0 million in the aggregate, but the payment was initially suspended in accordance with the terms of the Series A Warrants. See the section titled “—August 2024 Public Offering” for additional information. During the year ended December 31, 2024, $14,052 of the Cash True-up Payment was relieved in connection with the exercise of certain Series A Warrants, leaving a remaining liability of $4,985,948 as of December 31, 2024. The Company used $500,000 of the net proceeds from the January 2025 Public Offering to satisfy a portion of the Cash True-up Payment, leaving a remaining liability of $ 4,485,948 . On August 14, 2025, in connection with the Warrant Inducement, the Company entered into inducement offer letter agreements with certain holders of the Series A Warrants, which reduced the exercise price of the Series A Warrants from $5.206 per share to $1.31 per share in exchange for the prompt exercise by such holders of the warrants for cash. The Warrant Inducement had the effect of eliminating the Cash True-up Payment obligation pursuant to the terms of the Series A Warrants. As a result, the Cash True-up Payment liability of $ 4,485,948 was no longer payable, and this amount was recorded as a credit to Other income / (expense) on the Statement of Operations. As of December 31, 2025, the Cash True-up Payment liability balance was $0. F- 17 August 2024 Public Offering On August 8, 2024, the Company issued and sold in a public offering (the “August 2024 Public Offering”) (i) 33,402,000 common units (pre-Reverse Stock Split), each consisting of one share of common stock, two Series A Warrants and one Series B Warrant (collectively, the “Common Units”), and (ii) 16,598,000 pre-funded units (pre-Reverse Stock Split), each consisting of one pre-funded warrant (the “August 2024 Pre-Funded Warrant”), two Series A Warrants, and one Series B Warrant (collectively, the “Pre-Funded Units”). The Common Units were sold at a price of $0.20 per unit and the Pre-Funded Units were sold at a price of $0.199 per unit (pre-Reverse Stock Split). In addition, the Company 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 (pre-Reverse Stock Split) and 7,500,000 Series B Warrants (pre-Reverse Stock Split). The Pre-Funded Warrants were immediately exercisable at an exercise price of $ 0.001 per share (pre-Reverse Stock Split). As of December 31, 2024, all Pre-Funded Warrants had been exercised. The Company received net proceeds of approximately $8.7 million from the August 2024 Public Offering after deducting offering expenses payable by the Company. The Company used the net proceeds from the offering to satisfy its obligations pursuant to the 3i Note (as defined below), to satisfy its obligations under the Termination Agreement (as defined below), and for working capital and other general corporate purposes. Each Series A Warrant became exercisable on September 30, 2024, and will expire five years from such date. Each Series A Warrant was initially exercisable at an exercise price of $24.00 per share of common stock (post-Reverse Stock Split). The exercise price of the Series A Warrants was subsequently reduced to $5.206 (post-Reverse Stock Split) consistent with the terms of the Series A Warrants. On August 14, 2025, in connection with the Warrant Inducement, the exercise price of the Series A Warrants was further reduced to $1.31 per share. The difference between the fair value of the warrants immediately prior to and following modification was calculated using the Black-Scholes option-pricing model and treated as a transaction cost, and resulted in $1,423,166 being netted against the proceeds received from the Series A Warrants. As a result of the Warrant Inducement, an aggregate of 95,112,212 Series A Warrants were exercised, resulting in the issuance of an aggregate of 4,384,749 shares of common stock, resulting in net proceeds to the Company of $4,918,695. On August 22, 2025, in connection with the Exercise Price Reduction, the exercise price of all of the outstanding Series A Warrants was reduced from $5.206 per share to $1.31 per share. As of December 31, 2025, Series A Warrants to purchase an aggregate of 901,943 shares of common stock remain outstanding. Each Series B Warrant was exercisable immediately upon issuance at an exercise price of $0.10 per share (post-Reverse Stock Split). In July 2025, 85,252 shares of common stock were issued upon exercise of Series B Warrants, resulting in net proceeds to the Company of $8,525. As of December 31, 2025, Series B Warrants to purchase an aggregate of 2,132 shares of common stock remain outstanding. The offer and sale of securities in the August 2024 Public Offering was made pursuant to an effective shelf registration statement on Form S-1 (File No. 333-280996), which the Company initially filed with the SEC on July 25, 2024 and was declared effective on August 6, 2025. Convertible Note Financing On December 27, 2023, the Company entered into a securities purchase agreement with 3i, LP (“3i”), pursuant to which the Company issued and sold: (i) a senior unsecured convertible note in the aggregate principal amount of $2,750,000, with a 10.0% original issue discount and an interest rate of 9.0% per annum (the “3i Note”), (ii) up to $247,500 in newly issued shares of common stock, which were payable, subject to the fulfillment of certain conditions set forth in the 3i Note, to satisfy interest payments under the 3i Note (the “Interest Shares”), and (iii) 635 shares of common stock issued to 3i as consideration for its commitment to purchase the 3i Note (collectively, the “Convertible Note Financing”). F- 18 The Company received net proceeds of approximately $1.8 million from the Convertible Note Financing after deducting related expenses payable by the Company. The Company used the net proceeds for working capital and other general corporate purposes. The offer and sale of securities in the Convertible Note Financing was made pursuant to the Shelf Registration Statement. On August 8, 2024, in connection with the closing of the August 2024 Public Offering, the Company repaid the 3i Note, and the Company’s obligations under the 3i Note were fully satisfied and discharged. Prior to the satisfaction of the amounts owed pursuant to the 3i Note, the Company issued 414 shares of common stock (post-Reverse Stock Split) for the payment of $90,839 in interest. Equity Line of Credit On December 27, 2023, the Company entered into a common stock purchase agreement with Tumim Stone Capital, LLC (“Tumim”), pursuant to which the Company had the right, but not the obligation, to sell to Tumim, and Tumim was obligated to purchase, up to the lesser of (a) $20,000,000 in aggregate gross purchase price of newly issued shares of common stock and (b) the Exchange Cap (as defined in the common stock purchase agreement) (the “Equity Line of Credit”). The offer and sale of shares to Tumim pursuant to the Equity Line of Credit was made pursuant to the exemption from the registration requirements of the Securities Act, provided by Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder. The resale of the shares sold to Tumim was registered pursuant to a Registration Statement on Form S-1 (File No. 333-276663) filed with the SEC on January 23, 2024, which was declared effective on February 9, 2024. In connection with the August 2024 Public Offering, the Company and Tumim mutually agreed to terminate the Equity Line of Credit. Prior to termination, the Company had sold 4,336 shares of common stock 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 Company’s obligations under the 3i Note. 8. Commitments and Contingencies Operating Leases The Company leases its warehouses and office space under long-term lease arrangements. All of the Company’s leases are accounted for as operating leases. For longer-term lease arrangements that are recognized on the Balance Sheets, the ROU asset and lease liability are initially measured at the commencement date based upon the present values of the lease payments. The Company does not recognize a ROU asset and lease liability for short term leases, which have terms of 12 months or less. See “Note 2, Summary of Significant Accounting Policies—Leases” for additional information. In May 2025, the Company entered into a long-term, non-cancelable operating lease agreement for warehouse space next door to the existing office and warehouse space in Redmond, Oregon, resulting in the Company recognizing an additional ROU asset and corresponding lease liability of $ 198,216 , representing the present value of the lease payments discounted using an IBR of 13.49% . The lease expires in April 2028 and provides for one three-year option to renew. In January and February 2022, the Company entered into two long-term, non-cancelable operating lease agreements for office and warehouse space resulting in the Company recognizing an additional ROU asset and corresponding lease liability of $ 2,348,509 , representing the present value of the lease payments discounted using an IBR of 8.07% and 8.86% , respectively. One lease was terminated in September 2024, and the remaining lease expires in December 2026. F- 19 In January 2021, the Company entered into a long-term, non-cancelable operating lease agreement for office and warehouse space resulting in the Company recognizing an additional ROU asset and lease liability of $ 1,268,089 , representing the present value of the lease payments discounted using an IBR of 7.47% . The lease expires in January 2028 and contains one three-year option to renew. The Company had three additional leases relating to office and warehouse space that were terminated in January 2023, September 2024, and February 2025, respectively. The related ROU assets and lease liabilities were removed from the Balance Sheets at the time of termination. The Company’s operating leases generally provide for fixed annual increases and require the Company to pay real estate taxes, insurance, and repairs. The following is a summary of total lease costs for the years ending December 31, 2025 and 2024: Years Ended December 31, 2025 2024 Operating lease cost $ 359,337 $ 610,549 Short-term lease costs 3,652 1,149 Sublease income ( 7,169 ) ( 42,804 ) Total lease costs $ 355,820 $ 568,894 The weighted-average remaining lease term was 2.06 and 2.91 years as of December 31, 2025 and 2024, respectively. The weighted-average IBR was 8.99 % and 7.60 % as of December 31, 2025 and 2024, respectively. Operating cash flows from the operating leases totaled $287,409 and $455,690 for the years ended December 31, 2025 and 2024, respectively. The total lease liability as of December 31, 2025 and 2024 was $ 709,724 and $ 798,917 , respectively. The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of December 31, 2025, for years ending December 31: Total 2026 $ 387,742 2027 339,392 2028 49,233 2029 — Thereafter — Total future minimum lease payments 776,367 Less imputed interest ( 66,643 ) Total $ 709,724 Current lease liability $ 337,246 Noncurrent lease liability 372,478 Total $ 709,724 Subleases As of December 31, 2024, the Company subleased office and warehouse space under one of its operating leases with similar terms as the Company’s lease agreements. The Company’s lease and corresponding sublease for that property expired in February 2025 and were not renewed. Two additional subleases ended in February 2023. Because the Company was not relieved of its primary obligations under the original lease, the Company accounted for the subleases as a lessor. Sublease rental income was recorded based on the contractual rental payments, which were not substantially different from recognition on a straight-line basis over the lease term. Sublease rental income totaled $ 7,169 and $ 42,804 during the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, deferred sublease income and a sublease deposit totaled $ 0 and $ 4,549 , respectively, and is included in accrued expenses and other current liabilities on the Balance Sheets. The Company has no subleases as of December 31, 2025. F- 20 Litigation The Company may be involved from time to time in litigation or claims arising in the ordinary course of its business. While the ultimate liability, if any, arising from these claims cannot be determined with certainty, the Company believes that the resolution of any such matters are not reasonably likely have a material adverse effect on the Company’s financial condition, operating results or cash flows. On May 2, 2024, the Company entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”) with Alexander Capital L.P. (“Alexander”), pursuant to which the parties resolved certain disputes while not admitting any liability or wrongdoing (the “Settlement Agreement”). Pursuant to the Settlement Agreement, the Company agreed to (i) make a single cash payment of $100,000, (ii) issue 100,000 shares of common stock, and (iii) amend certain outstanding warrants held by Alexander to reduce the per share exercise price from $9.10 to $4.50. The shares of common stock were issued pursuant to the Shelf Registration Statement. The Settlement Agreement also contained other customary provisions, including a mutual release of claims and mutual non-disparagement provision. On July 1, 2024, the Company entered into a Mutual Termination Agreement (the “Termination Agreement”) with Alexander, pursuant to which the parties agreed to terminate a provision in the Underwriting Agreement, dated March 31, 2022, entered into by and between the Company and Alexander, which granted Alexander a right of first refusal to act as the Company’s financial advisor, placement agent or underwriter in connection with certain financing transactions (the “ROFR Provision”). In exchange for the termination of the ROFR Provision, and in connection with the closing of the August 2024 Public Offering, the Company made a cash payment to Alexander in the amount of $ 400,900 . Nasdaq Listing Requirement On September 6, 2024, the Company received a determination from The Nasdaq Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market (“Nasdaq”) to delist the common stock from the Nasdaq Capital Market indicating that (i) the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) because the closing bid price for the common stock had closed below $1.00 for the previous 30 consecutive business days, and (ii) the Company was subject to Nasdaq Listing Rule 5810(c)(3)(A)(iii) because, as of September 5, 2024, the common stock had a closing bid price of $0.10 or less for at least ten consecutive trading days (the “September 2024 Staff Determination”). On September 12, 2024, the Company requested an appeal hearing with respect to the September 2024 Staff Determination from the Nasdaq Hearings Panel (the “Panel”), which had the effect of staying the delisting of the common stock pending the Panel’s decision. Upon completion of the Reverse Stock Split, the Company received a letter from the Staff on October 23, 2024, advising the Company that it had regained compliance with the minimum bid price requirements and that the Company was therefore in compliance with Nasdaq’s listing requirements. Consequently, the scheduled hearing before the Panel was cancelled. On July 1, 2025, the Company received a determination from the Staff stating that the bid price of the common stock had closed below the $1.00 minimum required by Nasdaq Listing Rule 5550(a)(2) for the prior 30 consecutive business days (the “Minimum Bid Price Requirement”) and the Staff had determined to delist its securities from the Nasdaq Capital Market (the “July 2025 Staff Determination”). The Company timely requested and was granted an appeal hearing before the Panel to appeal the July 2025 Staff Determination, which had the effect of staying the delisting of the common stock pending the Panel’s decision. As of August 12, 2025, the common stock had closed above $1.00 for more than ten consecutive trading days. As a result, on August 13, 2025, the Company received a letter from the Staff advising that it had regained compliance with the Minimum Bid Price Requirement, and that it was therefore in compliance with Nasdaq’s listing requirements. Consequently, the appeal hearing before the Panel was cancelled. F- 21 On August 20, 2025, the Company received a notification letter (the “August 2025 Staff Notice”) from the Staff notifying it that the stockholders’ equity balance reported in the Quarterly Report for the three months ended June 30, 2025 was below the $2.5 million required minimum for continued listing on the Nasdaq Capital Market as set forth in Nasdaq Listing Rule 5550(b)(1). Following the Warrant Adjustments and resulting warrant exercises, and the elimination of the Cash True-up Payment liability, the Company’s stockholders’ equity balance increased above the required threshold. On September 17, 2025, the Company received a letter from the Staff confirming it had regained compliance with Nasdaq’s listing requirements. See “ Note 14, Subsequent Events ” for additional information. 9. Stockholders’ Equity The Company is authorized to issue an aggregate of 220,000,000 shares of capital stock, par value $ 0.001 per share, consisting of 200,000,000 shares of common stock and 20,000,000 shares of preferred stock. As of December 31, 2025 and 2024, 9,781,739 and 2,096,082 shares, respectively, of common stock were issued and outstanding. No shares of preferred stock have been issued. Stockholders are entitled to one vote for each share of common stock. The holders of common stock have no conversion, redemption or preemptive rights and shall be entitled to receive dividends when, as, and if declared by the board of directors. Upon dissolution, liquidation, or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, subject to the rights, if any, of the holders of any class or series of capital stock having a preference over the common stock with respect to the distribution of assets of the Company upon such dissolution, liquidation, or winding up of the Company, the holders of common stock shall be entitled to receive the remaining assets of the Company available for distribution to its stockholders ratably in proportion to the number of shares of common stock held. Since no shares of preferred stock have been issued, no rights and privileges of preferred stockholders have been defined. In November 2025, the Company issued 125,000 unregistered shares of common stock to a vendor in exchange for services rendered, and recorded a $ 141,250 expense in legal and professional fees. In October 2025, the Company issued 400,000 RSUs pursuant to the 2021 Plan (as defined below) that were immediately vested upon issuance and settled for 400,000 shares of common stock, and recorded $ 600,000 of stock-based compensation expenses. In addition, the Company issued an aggregate of 613,077 shares of common stock pursuant to the October 2025 Private Placement. In September 2025, the Company issued 200,000 unregistered shares of common stock to a vendor in exchange for services rendered, and recorded $ 242,000 of legal and professional fee expenses. In August 2025, 4,384,749 shares of common stock were issued upon exercise of Series A Warrants, and 599,193 shares of common stock were issued upon exercise of January 2025 Warrants. In July 2025, 85,252 shares of common stock were issued upon exercise of Series B Warrants. In April 2025, the Company issued 105,000 RSUs pursuant to the 2021 Plan that were immediately vested and settled for 105,000 shares of common stock, and 125,000 shares were granted to a vendor in exchange for services rendered, and expenses of $ 80,850 in stock-based compensation and $ 106,250 in legal and professional fees were recorded for these two transactions, respectively. In January 2025, the Company issued an aggregate of 1,048,386 shares of common stock pursuant to the January 2025 Public Offering. F- 22 See “ Note 7, Equity and Debt Financings ” for additional information. Warrants In the January 2025 Public Offering, the Company issued pre-funded warrants, which were immediately exercised for 574,193 shares of common stock at $ 2.48 per share, and 1,048,386 January 2025 Warrants at an exercise price of $ 2.36 per share. In August 2025, as part of the Warrant Inducement, the Company issued 599,193 shares of common stock upon exercise of the January 2025 Warrants for a price of $1.31 per share. As of December 31, 2025, 449,193 of the January 2025 Warrants remain outstanding. In 2024, 8,125,000 Series B Warrants exercisable for 496,232 shares at $ 0.10 per share were exercised using the cashless conversion option which resulted in the issuance of 215,678 shares of common stock (based on a $ 5.206 reset price). Another 46,300,000 Series B Warrants were exercised on a cash basis which resulted in the issuance of 1,078,689 shares of common stock (based on a $ 5.206 reset price). In July 2025, 3,000,000 warrants were exercised on a cash basis, which resulted in the issuance of 85,252 shares. In 2024, 323,203 Series A Warrants were exercised on a cash basis which resulted in the issuance of 14,900 of common stock. In August 2025, as part of the Warrant Inducement, the exercise price of the Series A Warrants was reduced to $ 1.31 per share, and 4,384,749 shares were issued upon exercise of 95,112,212 warrants. As of December 31, 2025, there were 19,564,585 Series A Warrants exercisable for 901,943 shares and 75,000 Series B Warrants exercisable for 2,132 shares outstanding. In 2023, the Company issued 25,000 warrants to purchase 250 shares of common stock, at an exercise price of $ 500.00 per share, to its investor relations firm in accordance with an engagement letter. All 25,000 warrants expired August 9, 2025 without being exercised. In 2022, the Company issued 148,005 warrants to purchase 1,490 shares of common stock, at an exercise price of $ 910.00 per share, with an expiration date of March 31, 2027 . As part of a settlement agreement on May 2, 2024, the Company agreed to modify the exercise price of 88,803 warrants convertible into 891 shares from $ 910.00 to $ 450.00 . As of December 31, 2025, all warrants with an exercise price of $ 910.00 and $ 450.00 remain outstanding. In 2021, the Company issued 559,431 warrants to purchase 5,602 shares of common stock at an exercise price of $ 332.00 per share, with an expiration date of November 22, 2031 . Warrants were exercised during 2023 and 2024, and as of December 31, 2025, there were 514,290 warrants exercisable for 5,149 shares outstanding. Below is a summary of warrants issued and outstanding as of December 31, 2025: Schedule of various warrants/options issued and outstanding Number of Warrants Issuable Shares Exercise Price per Share Weighted Average Remaining Life (Years) 75,000 (1) 2,132 $ 0.10 N/A (2) 449,193 449,193 $ 1.31 (3) 4.01 19,564,585 (4) 901,943 $ 1.31 (5) 3.74 514,290 5,149 $ 332.00 5.89 88,803 891 $ 450.00 1.25 59,202 599 $ 910.00 1.25 20,751,073 1,359,907 (1) Reflects Series B Warrants, which are subject to reset pricing to determine the number of shares issuable. (2) Series B Warrants do not have an expiration date. (3) Reflects January 2025 Warrants, which were part of the Warrant Inducement, and their exercise price was reduced from $2.36 to $1.31 per share. (4) Reflects Series A Warrants, which are subject to reset pricing to determine the number of shares issuable. (5) The Series A Warrants were part of the Warrant Inducement, and their exercise price was reduced from $5.206 to $1.31 per share. F- 23 Warrant Inducement and Repricing On August 14, 2025, the Company entered into an inducement offer letter agreements with certain holders of the Series A Warrants and the January 2025 Warrants, which reduced the exercise price of the Series A Warrants from $ 5.206 to $1.31 per share, and the January 2025 Warrants from 2.36 to $1.31 per share. The difference between the fair value of the warrants immediately prior to and following modification was treated as a transaction cost, which is netted against proceeds received. The difference in fair value for the Series A Warrants was $1,423,166 , and the difference in fair value for the January 2025 Warrants was $97,746. Both were calculated using the Black-Scholes option-pricing model and were based on the following assumptions: Warrant Stock Price Remaining Life (Years) Volatility Risk-Free Rate Dividend Series A $ 2.02 4.12 129.9 % 3.78 % — January 2025 $ 2.02 4.39 129.9 % 3.77 % — During August 2025, 4,384,749 shares were issued upon exercise of Series A Warrants, and 599,193 shares were issued upon exercise of January 2025 Warrants, and the difference in fair value was netted against the gross proceeds along with other issuance costs. Equity Plans As of December 31, 2024, the Company had adopted two stock-based compensation plans, the 2021 Incentive Award Plan (the “2021 Plan”) and the 2021 Employee Stock Purchase Plan (the “2021 ESPP”). 2021 Incentive Award Plan The purpose of the 2021 Plan is to enhance the Company’s ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing these individuals with equity ownership opportunities. Various stock-based awards may be granted under the 2021 Plan to eligible employees, consultants, and non-employee directors, including options and RSUs. The number of shares issued under the 2021 Plan is subject to an initial limit and is adjusted annually pursuant to an evergreen provision. No more than 1,000,000 shares may be issued pursuant to the exercise of incentive stock options. The aggregate share limit will be subject to an annual increase on the first day of each calendar year ending on and including January 1, 2031, by a number of shares equal to the lesser of (i) a number equal to 5% of the aggregate number of shares of the Company's common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as is determined by the Company's board or committee. The type of award, number of shares subject to the award, exercise price (if any), vesting provisions (if any), and other terms of the awards will be determined at date of grant; however, the exercise price of options shall not be less than 100% of the fair value on the grant date and the term of options shall not exceed ten years. As of December 31, 2025, awards covering an aggregate of 872,762 shares were eligible to be issued under the 2021 Plan, of which 215,079 shares underlying options and 560,649 shares underlying RSUs had been granted. On January 1, 2026, an aggregate of 489,086 shares were added to the plan reserve pursuant to the evergreen provision based on the number of shares outstanding as of December 31, 2025. During the year ended December 31, 2025, the Company granted RSUs covering an aggregate of 560,000 shares and options covering an aggregate of 203,278 shares, and canceled options covering an aggregate of 104 shares under the 2021 Plan. The stock-based compensation expenses incurred during the years ended December 31, 2025 and 2024 were $ 1,163,654 and $ 581,504 , respectively. 2021 Employee Stock Purchase Plan The purpose of the 2021 ESPP is to assist eligible employees of the Company in acquiring stock ownership in the Company and to help such employees provide for their future security and to encourage them to remain in the employment of the Company. The 2021 ESPP consists of a Section 423 Component and Non-Section 423 Component. The Section 423 Component is intended to qualify as an employee stock purchase plan and also authorizes the grant of options. Options granted under the Non-Section 423 Component shall be granted pursuant to separate offerings containing sub-plans. The Company may make one or more offerings under the 2021 ESPP. The duration and timing of each offering period may be established or changed by the board, but in no event may an offering period exceed 27 months and in no event may the purchase period for the option exceed the duration of the offering period under which it is established. On each exercise date for an offering period, each participant shall automatically be deemed to have exercised the option to purchase the largest number of whole shares which can be purchased under the offering. Option awards are generally granted with an exercise price equal to 85% of the lesser of the fair market value of a share on (a) the applicable grant date and (b) the applicable exercise date, or such other price as designated by the administrator. The maximum number of shares granted under the 2021 ESPP shall not exceed 25,000 shares. F- 24 As of December 31, 2025, an aggregate of 524,051 shares were eligible to be issued under the 2021 ESPP. On January 1, 2026, an aggregate of 97,817 shares were added to the plan reserve pursuant to the evergreen provision based on the number of shares outstanding as of December 31, 2025. No shares have been issued under the 2021 ESPP. The Company has computed the fair value of options granted during the year ended December 31, 2025 using the following assumptions: Schedule of fair value of assumptions Expected volatility 124.35 % Expected dividends None Expected term (in years) 5.42 Risk free rate 4.08 % The Company has computed the fair value of options granted during the year ended December 31, 2024 using the following assumptions: Expected volatility 124.35 % Expected dividends None Expected term (in years) 5.42 Risk free rate 4.08 % The Company uses the “simplified method” to estimate expected term. Under the simplified method, an option’s expected term is calculated as the time until expiration. The following table summarizes the option activity under the 2021 Plan during the year ended December 31, 2025: Schedule of stock option activity Number of options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value Outstanding at December 31, 2024 11,430 $ 372.16 — $ — Granted 203,278 0.78 — — Exercised — — — — Canceled 104 345.00 — — Outstanding at December 31, 2025 214,604 $ 20.39 9.41 $ — Exercisable at December 31, 2025 214,217 $ 19.66 9.41 $ — During the years ended December 31, 2025 and 2024, the weighted-average grant-date fair value of the options granted to employees and non-employees was $ 197,444 and $ 312,873 , respectively. The options granted in July 2025 were vested as to 100% of the underlying shares at the time of grant. The options granted in March 2024 vested as to 50% of the underlying shares at the time of grant and the remaining shares are F- 25 subject to vesting in 12 equal consecutive quarterly installments commencing September 30, 2024 such that the option will become fully vested on March 31, 2027. The following table summarizes the RSU activity under the 2021 Plan during the year ended December 31, 2025: Number of RSUs Weighted average grant-date fair value Nonvested at December 31, 2024 — $ — Granted 560,000 0.18 Vested 15,000 1.17 Forfeited — — Nonvested at December 31, 2025 40,000 $ — There was no unrecognized compensation cost related to non-vested RSUs as of December 31, 2025. Common Stock Reserved for Future Issuance The following is a summary of shares of common stock reserved for future issuance as of December 31, 2025: Exercise of Warrants 6,639 Exercise of Stock Options – 2021 Plan 214,217 Exercise of Series A Warrants 901,943 Exercise of Series B Warrants 2,132 Exercise of January 2025 Warrants 449,193 Exercise of Pre-Funded Warrants 144,498 Settlement of RSUs 55,000 Total shares of common stock reserved for future issuances 1,773,622 10. Segment Reporting The Company focuses on the design, assembly, manufacturing, and sale of LiFePO4 batteries and supporting accessories for RVs, marine, and industrial applications. The Company sells to wholesalers, distributors, and OEMs, as well as directly to consumers. The Company has identified one reportable segment: Energy Storage (ES). This segment generates revenue in North America, and the Company manages its product sales and associated expenses on a total basis. The accounting policies for this segment align with those outlined in the summary of significant accounting policies. The Chief Operating Decision Maker (CODM) is the Chief Executive Officer. The CODM assesses the performance of this segment and allocates resources based on net income or loss, which is reflected on the Statements of Operations. The measure of segment assets is total assets, which is reflected on the Balance Sheets. The CODM evaluates the net income or loss from our one reportable segment. Net income or loss is also utilized to monitor the difference between budgeted and actual results. Additionally, the CODM employs net income or loss for competitive analysis by comparing its financial performance with other competitors in the Energy Storage (ES) space. 26 11. Income Taxes Our losses before income taxes for the years ended December 31, 2025 and 2024 were generated primarily from U.S. operations. We have no current or deferred provision for income taxes from continuing operations for the years ended December 31, 2025 and 2024. The significant differences between the U.S. Federal statutory rate and our effective rate for financial reporting purposes are as follows: Schedule of significant differences between the U.S. Federal statutory rate and our effective rate Years Ended December 31, 2025 2024 Federal statutory tax rate ( 21.0 ) % ( 21.0 ) % State taxes, net of federal tax benefit ( 5.3 ) ( 5.1 ) Change in valuation allowance 31.4 22.6 NQSO Comp – Other — 2.1 EQ Comp – Other — 0.0 Permanent difference ( 0.2 ) — True-up Adjustment ( 4.9 ) 1.5 Effective tax rate — % — % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows for the year ended December 31, 2025 and 2024. Deferred income tax assets and liabilities consist of the following: As of December 31, 2025 2024 Deferred tax assets: Net Operating Losses $ 8,112,158 $ 6,274,519 Stock-based compensation 528,359 170,064 Inventory reserve 143,468 — Depreciation 12,784 138,334 Other — 256,179 Subtotal 8,796,769 6,839,096 Valuation allowance ( 8,796,769 ) ( 6,839,096 ) Deferred tax liabilities: — — Net deferred tax asset $ — $ — For financial reporting purposes, the Company incurred losses for the years ended December 31, 2025 and 2024 and for each period since inception. Accordingly, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At December 31, 2025, the Company had approximately $ 30,945,899 of federal and state net operating losses. Accrued income taxes as of the end of each year as follows: As of December 31, 2025 2024 Current: Federal $ — $ — State Franchise Fees 150 150 A reconciliation between the amount of income tax benefit determined by applying the U.S statutory income tax rate to pre-tax loss is as follows: F- 27 Schedule of reconciliation As of December 31, 2025 2024 Income tax provision at federal statutory rate $ ( 1,309,389 ) 21.0 % $ ( 2,839,422 ) 21.0 % State taxes ( 328,013 ) 5.3 % ( 689,421 ) 5.1 % Stock-based compensation — — % 278,572 ( 2.1 )% Permanent difference ( 12,326 ) 0.2 % — — % Other ( 307,795 ) 4.9 % 196,608 - 1.5 % Change in valuation allowance 1,957,673 ( 31.4 )% 3,053,661 ( 22.7 )% Effective tax $ 150 0.0 % $ — — % Tax positions are evaluated in a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The aggregate changes in the balance of gross unrecognized tax benefits, which excludes penalties and interest, for the year ended December 31, 2025 is zero. The Company is subject to taxation in the United States and Oregon. There are no ongoing examinations by taxing authorities at this time. The Company’s various tax years 2019 through 2025 remain open for examination by various taxing jurisdictions. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2025, the Company has not accrued any penalties or interest related to uncertain tax positions. In anticipation of an initial public offering, the Company converted from a limited liability company to a C corporation, a taxable entity, effective November 1, 2021. For the years ended December 31, 2025 and 2024, the Company accrued $ 150 for state minimum income taxes each year, and did not accrue federal income taxes due to net losses in both years. Since converting to a C corporation, the Company has incurred losses and consequently recorded no provision for state or federal income taxes for the years ended December 31, 2025 and 2024. The Company maintains a full valuation allowance on all deferred tax assets, as it has concluded that it is more likely than not that these assets will not be realized. As of December 31, 2025 and 2024, there were no material unrecognized tax benefits included in the accompanying balance sheets that would, if recognized, affect the effective tax rate. 12. 401(k) Plan The Company adopted a 401(k) Plan (“Plan”) for the benefit of its employees. Employees may contribute to the Plan within defined limits as defined by the Internal Revenue Service. Substantially all employees are eligible to participate in the Plan. The Company has the option to make profit-sharing contributions at its discretion. No profit-sharing contributions have been made. 13. Related-Party Transactions As of December 31, 2025 and 2024, there were no related-party transactions requiring disclosure under SEC rules and no such transactions were contemplated. 14. Subsequent Events The Company evaluated its financial statements for the year ended December 31, 2025 for subsequent events through the date the financial statements were available to be issued. The following subsequent events are noted: December 2025 At-The-Market Issuance Sales Agreement On December 12, 2025 the Company entered into 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 as of March 11, 2026. January 2026 Nasdaq Staff Determination Letter On January 29, 2026, the Company received a determination from the Staff stating that it did not meet the Minimum Bid Price Requirement and that the Staff had determined to delist its securities from the Nasdaq Capital Market subject to a compliance period. Nasdaq provided the Company with a 180-calendar day compliance period, or until July 28, 2026, to regain compliance with the listing rule. The Company is currently evaluating options to regain compliance and intends to timely regain compliance with the Minimum Bid Price Requirement. Under Nasdaq rules, the Company is currently eligible to conduct a reverse stock split of its common stock to regain compliance if necessary. F- 28