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 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 (Mark
One)

 ANNUAL
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2024

 OR

 TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the transition period from to

 Commission
file number 001-41347

 (Exact
name of registrant as specified in its charter)

 Nevada

 81-2701049

 (State
 or other jurisdiction of incorporation or organization)

 (I.R.S.
 Employer Identification No.)

 2025 SW Deerhound Avenue, Redmond, OR

 97756

 (Address
 of principal executive offices)

 (Zip
 Code)

 (Registrant's
telephone number, including area code): ( 541) 797-6714

 Securities
registered pursuant to Section 12(b) of the Act:

 Title
 of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

 Common
 Stock, $0.001 par value per share

 XPON

 The
 Nasdaq Capital Market

 Securities
registered pursuant to Section 12(g) of the Act: None.

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes No

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes No

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large
 accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 Emerging
 growth company

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 The aggregate market
value of the registrant's common stock held by non-affiliates, based on the closing sale price as reported by The Nasdaq Capital
Market on June 28, 2024, the last business day of the registrant's most recently completed second fiscal quarter, was approximately
$ 6.0 million. Shares of common stock beneficially owned by each executive officer, director and holder of more than 10% of common stock
have been excluded in that such persons may be deemed to be affiliates.

 As of March 25, 2025, there were 3,144,468 shares of
the registrant's common stock outstanding.

 DOCUMENTS INCORPORATED BY REFERENCE: Portions
of the registrant's definitive Proxy Statement on Schedule 14A relating to its 2025 annual meeting of stockholders, to be filed
with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K
are incorporated herein by reference in Part III of this Annual Report on Form 10-K.

 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS and industry data

 ITEM 1. BUSINESS

 ITEM 1A. RISK FACTORS

 ITEM 1B. UNRESOLVED STAFF COMMENTS

 ITEM
 1C. CYBERSECURITY

 ITEM 2. PROPERTIES

 ITEM 3. LEGAL PROCEEDINGS

 ITEM 4. MINE SAFETY DISCLOSURES

 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 ITEM 6. [RESERVED]

 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 ITEM 9A. CONTROLS AND PROCEDURES

 ITEM 9B. OTHER INFORMATION

 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION

 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 ITEM 11. EXECUTIVE COMPENSATION

 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 ITEM 16. FORM 10-K SUMMARY

 SIGNATURES

 Index to Consolidated Financial Statements

 CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS and industry data

 This Annual Report on Form 10-K (this "Annual
Report") includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
All statements in this Annual Report, other than statements of historical fact, are "forward-looking statements" for purposes
of these provisions, including, without limitation, any projections regarding the markets where we operate, any statements of the plans
and objectives of our management for future operations, any statements concerning proposed new products or services, any statements regarding
expected capital expenditures, any statements regarding future economic conditions or performance, and any statements of assumptions underlying
any of the foregoing. All forward-looking statements included in this Annual Report are made as of the date hereof and are based on information
available to us as of such date. We assume no obligation to update any forward-looking statement. In some cases, forward-looking statements
can be identified by the use of terminology such as "may," "will," "expects," "plans,"
"should," "anticipates," "intends," "seeks," "believes," "estimates,"
"potential," "forecasts," "continue," or other forms of these words or similar words or expressions,
or the negative thereof or other comparable terminology. Although we believe the expectations reflected in the forward-looking statements
contained herein are reasonable, there can be no assurance that such expectations or any of the forward-looking statements will prove
to be correct. Actual results will likely differ, and could differ materially, from those projected or assumed in the forward-looking
statements. Prospective investors are cautioned not to unduly rely on any such forward-looking statements.

 Forward-looking statements are neither historical
facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding
the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions.
Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances
that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially
from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important
factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements
include, among others, the following:

 We operate in an extremely competitive industry
and are subject to pricing pressures.

 We have a history of losses. As our costs increase,
we may not be able to generate sufficient revenue to achieve and sustain profitability.

 Our audited financial statements include a statement
that there is a substantial doubt about our ability to continue as a going concern and a continuation of negative financial trends could
result in our inability to continue as a going concern.

 Our results of operations could be adversely
affected by changes in the cost and availability of raw materials and we are dependent on third-party manufacturers and suppliers.

 Increases in costs, disruption of supply or shortage
of any of our battery components, such as electronic and mechanical parts, or raw materials used in the production of such parts, could
harm our business.

 Our business and future growth depends on the
needs and success of our customers.

 We have substantial customer concentration, with
a limited number of customers accounting for a substantial portion of our sales in 2024 and 2023.

 If we fail to expand our sales and distribution
channels, our business could suffer.

 The uncertainty in global economic conditions
could negatively affect our results of operations.

 We are currently, and will likely continue to
be, dependent on our two warehouse facilities. If our facilities become inoperable for any reason, our ability to produce our products
could be negatively impacted.

 We could face potential product liability or
warranty claims relating to our products, including the components thereof, which could reduce market adoption, result in reputation damage,
and result in significant costs and liabilities, which would reduce our profitability.

 Our operations expose us to litigation, tax,
environmental, and other legal compliance risks.

 Our failure to introduce new products and product
enhancements that respond to customer and end consumer demand, and any broad market acceptance of new technologies introduced by our competitors,
could adversely affect our business.

 We may not be able to adequately protect our
proprietary intellectual property and technology and we may need to defend ourselves against intellectual property infringement claims.

 Any acquisitions that we complete may dilute
stockholder ownership interests in the Company, may have adverse effects on our financial condition and results of operations and may
cause unanticipated liabilities.

 If our electronic data is compromised, or we
experience a failure in our information technology or storage systems, our business could be significantly harmed.

 Our ability to raise capital in the future may
be limited, which could make us unable to fund our capital requirements and our stockholders may be diluted by future securities offerings.

 We depend on our senior management team and other
key employees, and significant attrition within our management team or unsuccessful succession planning could adversely affect our business.

 Our stock price may fluctuate significantly,
and you may lose all or a part of your investment.

 Sales of substantial amounts of our securities
in the public markets, or the perception that such sales might occur, could reduce the price of our securities and may dilute your voting
power and your ownership interest in us.

 The exercise of outstanding warrants may result
in a substantial increase in the number of shares of our common stock that are outstanding.

 The Series A Warrants and Series B Warrants may
have an adverse effect on the market price of our common stock and make it more difficult to effect a business combination.

 The Reverse Stock Split cash true-up payment
provision in the Series A Warrants we sold in the August 2024 Public Offering may have a material adverse impact on our financial condition,
may impede our ability to raise additional capital, and may discourage an acquisition of us by a third party.

 Our long-term lease and debt obligations could
adversely affect our ability to raise additional capital to fund operations and limit our ability to enter into certain transactions.

 All forward-looking statements attributable to us
or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Our actual results will likely
differ, and may differ materially, from anticipated results. Financial estimates are subject to change and are not intended to be relied
upon as predictions of future results of operations, and we assume no obligation to update or disclose revisions to those estimates. If
we do update or correct one or more forward-looking statements, investors and others should not conclude that we will make additional
updates or corrections.

 MARKET, INDUSTRY, AND OTHER DATA

 This Annual Report includes statistical and other
industry and market data that we obtained from industry publications and research, surveys, and studies conducted by third parties as
well as our own estimates. All of the market data used in this report involve a number of assumptions and limitations, and you are cautioned
not to give undue weight to such data. Industry publications and third-party research, surveys, and studies generally indicate that their
information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such
information. Our estimates of the potential market opportunities for our products include several key assumptions based on our industry
knowledge, industry publications, third-party research, and other surveys, which may be based on a small sample size and may fail to accurately
reflect market opportunities. While we believe our internal assumptions are reasonable, no independent source has verified such assumptions.

 NOTICE REGARDING TRADEMARKS

 This Annual Report includes trademarks, tradenames,
and service marks that are our property or the property of others. Solely for convenience, such trademarks and tradenames sometimes appear
without any " " or " " symbol. However, failure to include such symbols is not intended to suggest,
in any way, that we will not assert our rights or the rights of any applicable licensor, to these trademarks and tradenames.

 FINANCIAL INFORMATION

 Unless
otherwise noted, prior period results included in this Annual Report, including share and per share data, as well as stockholders'
equity balances, have been adjusted retroactively, as applicable, to reflect a 1-for-100 reverse stock split, which was effective
at 5:00 p.m. Pacific Time on October 8, 2024 (the "Reverse Stock Split"). See " Management's Discussion and
Analysis of Financial Condition and Results of Operations— Reverse Stock Split and Reverse
Stock Split True-Up Payment " below for additional information
about the Reverse Stock Split.

 ITEM 1. BUSINESS

 Our Company

 Expion360 focuses on the design, assembly, manufacturing,
and sale of lithium iron phosphate ("LiFePO4") batteries and supporting accessories for recreational vehicles ("RVs"),
marine applications and home energy storage products with plans to expand into industrial applications. Our high-powered, lithium battery
solutions incorporate innovative concepts and have been designed to include some of the most dense and minimal-footprint batteries in
the RV and marine industries. In addition, in January 2025 we began selling our e360 Home Energy Storage Solutions, which consist of two
LiFePO4 battery storage solutions and seek to provide consumers with a cost-effective, low barrier of entry, flexible system to power
their homes utilizing solar energy, wind, or grid back-up. We are deploying multiple intellectual property strategies with research and
products to sustain and scale our business. This includes design, development and collaboration, using our IP to bring safety, quality
and service to our customers. Our customers consist of dealers, wholesalers, private-label customers, and original equipment manufacturers
("OEMs") who then sell our products to end consumers and drive brand awareness nationally.

 Our primary target markets are currently the RV, marine,
and home energy storage industries. We believe we are well-positioned to capitalize on the rapid market conversion from lead-acid to lithium
batteries as the primary method of power sourcing in these industries. We are also focused on expanding into the home energy storage market
with the introduction of our e360 Home Energy Storage Solutions, and we hope to establish a new standard in the industry for barrier price,
flexibility, and integration with this offering. Along with the RV, marine and home energy storage markets, we aim to provide additional
capacities to the expanding electric forklift and industrial material handling markets.

 We launched our e360 product line, which is manufactured
for the RV and marine industries, in December 2020. The e360 product line, through its sales growth, has shown to be a preferred conversion
solution for lead-acid batteries. In December 2023, we announced our entrance into the home energy storage market with our introduction
of two LiFePO4 battery storage solutions that enable residential and small business customers to create their own stable micro-energy
grid and lessen the impact of increasing power fluctuations and outages. As of January 2025, we have begun shipping orders of our e360
Home Energy Storage Solutions.

 We currently operate Expion360 as one reportable business
segment, Energy Storage (ES).

 Our products provide numerous advantages for various
industries that are looking to migrate to lithium-based energy storage. They incorporate detailed-oriented design and engineering, strong
case materials, and internal and structural layouts, and are backed by responsive customer service.

 Our Market Opportunity

 The trend of vehicle electrification is expected to
be a significant growth catalyst for lithium compounds over the next decade and beyond. According to ReportLinker, the global light electric
vehicle market is growing at a 9.4% compound annual growth rate ("CAGR") and is expected to reach $122.7 billion by 2027.
Similarly, the global golf cart battery market is growing at a 5.9% CAGR and is anticipated to reach $216.5 million by 2031 according
to Allied Market Research.

 Furthermore, the global RV market was $57.3 billion
in 2021, and is anticipated to have a CAGR of 7.6% from 2022 to 2031, with an anticipated market of $117.0 billion by 2031, per Allied
Market Research.

 In addition, the global residential solar energy storage
market is expected to increase from $20.5 billion in 2023, to an anticipated $518.8 billion in 2032, a CAGR of 43.16%, according to Market
Data Forecast.

 At the intersection of both these trends lies the
rapidly expanding lithium battery market. According to IMARC, the market for lithium-ion batteries is projected to grow at 13.2% CAGR
to reach $93.3 billion by 2028.

 The vast expansion of the lithium battery market can
be attributed to global trends promoting clean energy, as well as the compact and flexible nature of lithium battery packs, which make
them easy to install in RVs and boats. Our technology, which we believe offers industry-leading battery pack flexibility for the most
efficient energy storage, is poised to be able to offer power to these large vehicles such as RVs and recreational boats.

 Expion360 is focused on expanding its position in
the deep cycle, off-grid, and stationary energy storage markets. According to the Federal Consortium for Advanced Batteries, the United
States has five goals in mind to secure battery materials and the U.S. technology supply chain. They include (i) securing access to raw
materials; (ii) support of the U.S. materials-processing base; (iii) stimulation of U.S. electrode, cell, and pack manufacturing; (iv)
enabling recycling and reuse of critical materials; and (v) support of scientific R&D, STEM education and workforce development. Expion360
is well-positioned to benefit from this national focus.

 Lithium-based batteries power our daily lives, from
consumer electronics to national defense. They enable electrification of the transportation sector and provide stationary grid storage,
critical to developing the clean-energy economy. The U.S. has a strong research community, a robust innovation infrastructure for technological
advancement of batteries, and an emerging lithium-based battery manufacturing industry, according to the U.S. Department of Energy.

 It is our objective to work closely with federal,
state and local governments, as well as private industry to help America be the leader in lithium battery technology.

 Competitive Strengths

 We believe the following strengths
differentiate Expion360 and create long-term, sustainable competitive advantages:

 Superior Capacity to Lead-Acid Competitors

 Lead-acid batteries have historically been the standard
in RV and marine transportation vehicles, but these industries are experiencing a rapid conversion from lead-acid to lithium batteries
as the primary method of power sourcing. Our lithium-ion batteries offer superior capacity to our lead-acid competitors with an expected
lifespan of approximately 12 years—three to four times the lifespan of certain lead-acid batteries—and ten times the number
of charging cycles. Furthermore, our typical battery may provide three times the power of the typical, lead-acid battery despite being
half the weight (comparing, for example, a typical lead-acid battery like the Renogy Deep Cycle AGM, which is rated at 100Ah, to our
own LFP 100Ah battery and assuming slow discharge at a 0.1C rate).

 In addition, we offer a 4.5 Ah 26650 lithium-ion phosphate
battery cell, which allows us to increase energy density by over 32% compared to traditional 3.4 Ah 26650 cells.

 Expansion into New Markets

 Our proprietary e360 SmartTalk mobile app is included
in many of our battery models and allows the seamless integration and management of e360 Bluetooth-enabled LiFePO4 batteries. The technology
enables users to wirelessly monitor and manage e360 batteries, providing a comprehensive view of both individual battery conditions and
performance, and a power bank consisting of multiple e360 batteries. The 48 Volt GC2 LiFePO4 battery was our first e360 SmartTalk Battery
for powering electric golf carts and other light electric vehicles.

 In December 2023, we entered the home energy storage
market with our introduction of two LiFePO4 battery storage solutions comprising our e360 Home Energy Storage Solution: a wall mounted
all-in-one inverter and 10kWh battery and an expandable server rack style battery cabinet system. We believe our new home energy storage
product line will benefit from a fast-growing battery energy storage market, which is forecasted by Markets and Markets to grow at a 26.4%
CAGR to reach $17.5 billion by 2028. Further, according to Clean Energy Group, approximately 3.2 million homes in the United States have
solar panels installed, but only about 6% of residential solar systems have battery storage. Our home energy storage products are currently
completing UL testing and certification, as well as other requirements for various Authorities Having Jurisdiction.

 In January 2024, we introduced our next generation
12V GC2 and Group 27 series LiFePO4 batteries. These new versions include higher amp-hour options (4.0Ah and 4.5Ah cell technology) and
the latest advancements in power technology features, including Expion360's proprietary Vertical Heat Conduction internal
heating, Bluetooth, and controller area network ("CANBus") communication. We began delivering the new 12V GC2 and Group
27 batteries to customers in the second quarter of 2024.

 In July 2024, we launched our new Edge battery, which
offers a slim design and adds greater flexibility during installation. The Edge is offered in both 12V and 48V versions. We are seeing
high customer interest and started shipping the new Edge in July 2024.

 Strong National Retail Customers and Distribution
Channels

 We have sales relationships with many major RV and
marine retailers and plan to use our strong reputation in the lithium battery space to create an even stronger distribution channel. Current
and former members of management have used their decades of experience in the energy and RV industries to cultivate relationships with
numerous retailers in the space, including Camping World, a leading national RV retailer; and Meyer Distributing, Inc., a leading national
marketer and distributor of automotive and RV specialty products.

 Home Energy Integration

 We are currently having discussions with integration
partners. This is key for the development of our home energy storage products and subsequent sales growth.

 Expion360 Products

 We have historically focused on the design, assembly,
and sales of LiFePO4 batteries and supporting accessories for RV and marine applications, and have recently expanded into home energy
storage solutions. Our batteries are designed and engineered in-house using premium lithium iron phosphate cells with quality controls
at every step. We use high-grade LiFePO4 batteries meeting the UL 1642 standard (UL File No. MH64383). We believe our materials and engineering
enhance the reliability, stability, and safety of our products relative to those of our competitors. We reimagined the standard battery
case and included built-in rubber feet, radiused corners, 96.7% larger terminal connection pads, interior molded ribs for structural security,
and the highest-grade ABS plastics with additives for fire retardancy. To maximize the power and efficiency of our batteries, we welded
our cells via thick copper/tin-machined collector plates, welded all interior pack points, added a press break flange at each end to create
a mechanical backbone for the battery monitoring system ("BMS"), used high-grade wiring and ring terminals throughout, and
treated connections with industrial epoxy for long-lasting protection. Our internal "smart" BMS design includes multiple safety
and performance features, such as low temperature discharge, auto shutoff, short circuit protection, low- and high-voltage shutoffs, and
overcurrent disconnect. Our structurally sound BMS board features a bolted design, eliminating all unnecessary solder, resulting in one
cohesive pack with a long lifespan. We hold our lithium batteries to high safety standards, which has enabled us to achieve a UL 1973
compliance. We stand by our batteries with a robust 12-year warranty.

 To enable us to provide a full range of components
to complement our battery offerings, we offer a suite of accessories and components for new installations or conversions which includes
but is not limited to chargers, monitors, inverters, and solar components from brands such as Victron Energy and RedArc.

 As of December 31, 2024, we offered the following products for sale:

 12V Batteries:

 Group 24:

 o
 e360 60Ah LiFePO4 battery

 o
 e360 80Ah LiFePO4 battery

 o
 e360 95Ah LiFePO4 battery

 Group 27:

 o
 e360 100Ah LiFePO4 battery

 o
 e360 120Ah LiFePO4 battery

 o
 e360 100Ah LiFePO4 battery with SmartTalk, CANBus, and VHS Internal Heating

 o
 e360 100Ah LiFePO4 battery with SmartTalk, CANBus, and VHS Internal Heating

 GC2:

 o
 e360 162Ah LiFePO4 battery with SmartTalk, CANBus, and VHC Internal Heating

 EX1 Custom:

 o
 e360 368Ah LiFePO4 battery

 o
 e360 368Ah LiFePO4 battery with SmartTalk

 o
 e360 450Ah LiFePO4 battery with SmartTalk

 EX2 Edge Custom:

 o
 e360 240Ah LiFePO4 battery with SmartTalk, CANBus, and VHC Internal Heating

 48V Batteries:

 GC2:

 o
 e360 36Ah LiFePO4 battery with SmartTalk and CANBus

 EX2 Edge Custom:

 o
 e360 60Ah LiFePO4 battery with SmartTalk, CANBus, and VHC Internal Heating

 3U Server Rack Home Energy Battery:

 o
 e360 100Ah Home Energy LiFePO4 battery with CANBus

 Accessories:

 Battery Monitors

 DC-DC Battery Chargers

 AC-DC Battery Chargers

 Solar Charge Controller Battery Chargers

 CANBus Communication Cables

 120W Portable Solar Panel

 Industrial Battery Mounting Kits – 10 models

 Terminal Blocks

 Bus Bars

 AURA Powercap 600W Inverter

 e360 SmartTalk mobile app

 As of December
31, 2024, we had the following products in our pipeline:

 In September 2023, we introduced a new 4.5 Ah
26650 lithium-ion phosphate battery cell and 12 Volt 450 Ah e360 SmartTalk lithium-ion battery. We have been regularly shipping
the battery to our customers, including OEMs, since March 2024.

 In December 2023, we introduced a wall mounted
all-in-one inverter and 10kW battery and an expandable server rack style battery cabinet system and begun taking orders for the new e360
Home Energy Storage Solutions, which began shipping to customers in January 2025. See the section above titled " Competitive Strengths — Expansion
into New Markets " for additional information about the new home energy storage solutions.

 Competitors

 Our competitors include lithium-ion battery manufacturers,
such as Relion (which was acquired by Brunswick Corporation in September 2021); Dragonfly Energy Holdings Corp (Nasdaq: DFLI), the manufacturer
of Battle Born Batteries; Renogy; and Dakota Lithium. Lead-acid battery manufactures also continue to have a presence in the marketplace.
We have designed custom form factors in both the industry standard Group 24 and Group 27 battery sizes allowing us to visually and structurally
differentiate Expion360 within the market space. We believe our custom 360Ah battery also provides a unique capacity to footprint ratio
compared to lead-acid and lithium battery competitors. Our batteries utilize lithium iron phosphate and therefore are expected to have
a lifespan of approximately 12 years—three to four times that of certain lead-acid batteries—and ten times the number of charging
cycles. Furthermore, our typical battery may provide three times the power of the typical lead-acid battery despite being half the weight
(comparing, for example, a typical lead-acid battery like Renogy Deep Cycle AGM, which is rated at 100Ah, to our own LFP 100Ah battery
and assuming slow discharge at a 0.1C rate).

 Manufacturing and Supply Chain

 Our batteries are manufactured by multiple third-party
manufacturers located in Asia, which also produce our battery cells. While we do not have long-term purchase agreements with these manufacturers
and our purchases are completed on a purchase-order basis, we maintain strong relationships with our manufacturers and cell suppliers,
reflected in our ability to increase our purchase order volumes (qualifying us for related volume-based discounts). The strength of these
relationships has helped us moderate increased supply-related costs associated with inflation, currency fluctuations, and U.S. government
tariffs imposed on our imports, and avoid potential shipment delays. We aim to maintain an appropriate level of inventory to satisfy our
expected supply requirements. We believe we could locate suitable alternative third-party manufacturers to fulfill our requirements if
needed.

 Our third-party manufacturers source the raw materials
and battery components required for the production of our batteries directly from third-party suppliers that meet our approval and quality
standards and, as a result, we may have limited control over the agreed pricing for these raw materials and battery components. We estimate
that raw material costs account for over half of our cost of goods sold. Lithium, which is extracted from mined ore, is a key raw material
used to produce our battery cells and, as a result, the cost of our battery cells is dependent on the price and availability of lithium,
which may be volatile and unpredictable and beyond our control. Additionally, availability of the raw materials used to manufacture our
products may be limited at times, resulting in higher prices and/or the need to find alternative suppliers. Our battery cell manufacturers
have joint venture factories outside of Asia and have secured sourcing contracts from lithium suppliers in South America and Australia.
In addition, we have a secondary source for lithium iron phosphate cells used in our batteries from a supplier in Europe, enabling us
to source materials outside of Asia in the event it becomes necessary to do so.

 In addition to increased mining and newly located
reserves, there is an industry push to provide more efficient ways to extract lithium from mined ore. Another development of the past
few years is lithium cell recycling. This process will recapture the raw lithium from the cell for reuse in future cells. However, notwithstanding
any efforts to improve the sustainability and efficiency of lithium mining, the price of lithium is volatile. We continue to monitor developments
that may adversely affect our supply chain.

 Management expects that products from our Asian third-party
manufacturers will be subject to additional tariffs in 2025. We believe that we can protect our margins through a combination of supplier
concessions, customer price increases and efficiencies gained as sales continue to grow.

 Customers

 We currently have more than 300 customers across the
United States consisting of dealers, wholesalers, private-label customers and OEMs who then sell our products to end consumers. Our sales
are completed on a purchase order basis and most are without firm, long-term revenue commitments or sales arrangements. Expion360 has
sales relationships with many major RV retailers, including Camping World, a leading national RV retailer and Meyer Distributing, Inc.,
a leading national marketer and distributor of automotive and RV specialty products. In addition, we also sell products directly to end
consumers. We intend to continue to focus on our sales and distribution channels to develop existing customer relationships and grow our
customer base. We also offer a high level of technical support to our customers before and after product sales.

 We currently derive a significant portion of our revenue
from a limited number of customers. During the year ended December 31, 2024, sales to one customer accounted for approximately 14% of
our gross sales. This customer accounted for 6% of our accounts receivable as of December 31, 2024. Sales to each of our other customers
did not exceed 10% during this period. Four other customers accounted for 60% of our accounts receivable as of December 31, 2024.

 Intellectual Property

 The success of our business and our technology leadership
is supported by our proprietary battery technology. We have filed 11 patent applications in the United States to provide protection for
our technology, including seven design patent applications and four utility patent applications. In addition, we rely upon a combination
of trademark and trade secret laws in the United States, as well as license
agreements and other contractual protections, to establish, maintain and enforce rights in our proprietary technologies. We also seek
to protect our intellectual property rights through non-disclosure and invention assignment agreements with our employees and consultants
and through non-disclosure agreements with business partners and other third parties.

 We periodically review our development efforts to
assess the existence and patentability of new intellectual property. We pursue the registration of our domain names and trademarks and
service marks in the United States and in an effort to protect our brand, as of December 31, 2024, we have 18 trademarks registered or
pending registration to cover our house marks in the United States and have 9 trademarks registered or pending registration in Canada.

 Government Regulation

 We are subject to inspections by federal, state, and
local regulators overseeing environmental health and safety, which could result in possible citations and/or fines. Lithium-ion battery
shipments are categorized as "dangerous goods" and are subject to rules governing their transportation. We have implemented
policies and procedures, trained our employees, and conducted internal audits to verify compliance with environmental health and safety
regulations.

 Our Group 24 and Group 27 batteries and our custom
360Ah battery have passed UL 1973 certification.

 Employees

 As of December 31, 2024, we had 20 employees, all
of whom worked for us full time. None of our employees are covered by collective bargaining agreements and we have never experienced an
organized work stoppage, strike, or labor dispute. We believe working conditions and compensation packages are competitive with those
offered by competitors and consider our relations with our employees to be good.

 Environmental, Health, and Safety

 We and our third-party manufacturers and suppliers
are, and could become, subject to a wide range of international, federal, state, provincial, and local governmental regulations directed
at preventing or mitigating environmental harm, as well as to the storage, discharge, handling, generation, disposal and labeling of toxic
or other hazardous substances. Although we outsource our manufacturing, the manufacturing of our products by our third-party manufacturers
and suppliers require the use of hazardous materials that similarly subject these third parties, and therefore our business, to such environmental
laws and regulations. Our failure or the failure of these third parties to comply with these laws or regulations can result in regulatory,
civil, or criminal penalties, fines, and legal liabilities, suspension of production, alteration of manufacturing processes, including
for our products, reputational damage, and negative impact on our operations or sales of our products and services. Increased compliance
costs by our third-party manufacturing partners may also result in increased costs to our business. Our business and operations are also
subject to health and safety laws and regulations adopted by government agencies such as the Occupational Safety and Health Administration.
Although we believe we are in material compliance with applicable laws concerning matters relating to health, safety, and the environment,
the risk of liability relating to these matters cannot be eliminated completely. To date, we have not incurred significant expenditures
relating to environmental compliance nor have we experienced any material issues relating to employee health and safety. See the section
titled " Risk Factors " for additional information.

 Implications of Being an Emerging Growth Company
and a Smaller Reporting Company

 We qualify as an "emerging growth company"
as defined in the Jumpstart Our Business Startups Act of 2012 ("JOBS Act"). As an emerging growth company, we have elected
to take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies.
These provisions include:

 the requirement that we provide only two years
of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced "Management's
Discussion and Analysis of Financial Condition and Results of Operations" disclosure;

 reduced disclosure about our executive compensation
arrangements;

 an exemption from the requirement that we hold
a non-binding advisory vote on executive compensation or golden parachute arrangements; and

 an exemption from the auditor attestation in
the assessment of our internal control over financial reporting.

 We may take advantage of these exemptions for up to
five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company on the
date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenue of $1.235 billion or more;
(ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (iii)
the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which
we are deemed to be a "large accelerated filer" under SEC rules.

 We are also a "smaller
reporting company" as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer
an emerging growth company. We may take advantage of certain of the reduced reporting requirements available to smaller reporting companies
and will be able to take advantage of these reduced reporting requirements for so long as our voting and non-voting Common Stock held
by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is
less than $100.0 million during the most recently completed fiscal year and our voting and non-voting Common Stock held by non-affiliates
is less than $700.0 million measured on the last business day of our second fiscal quarter.

 Company Information

 Expion360 Inc. was initially organized as a limited
liability company under the name Yozamp Products Company, LLC in the State of Oregon on June 16, 2016 and converted to a Nevada corporation
on November 16, 2021.

 Our website is found at expion360.com and on
the Investor Relations section of our website, we post or will post, as applicable, the following filings as soon as reasonably practicable
after they are electronically filed with or furnished to the SEC: our Annual Reports on Form 10-K, our Proxy Statement on Schedule 14A,
our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act.

 All of the information on our Investor Relations web
page is available to be viewed free of charge. Information contained on our website is not part of this Annual Report or our other filings
with the SEC. We assume no obligation to update or revise any forward-looking statements in this Annual Report whether as a result of
new information, future events or otherwise, unless we are required to do so by law.

 The SEC also maintains a website found at
that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

 ITEM 1A. RISK FACTORS

 Investing
in our common stock involves significant risk and uncertainty. Before you make a decision to buy our common stock, in addition to the
risks and uncertainties discussed below under " Cautionary Note Regarding Forward-Looking Statements, " you should
carefully consider the specific risks set forth below, as well as the other information in this Annual Report, including our consolidated
financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of
Operations." If any of these risks actually occur, it may materially and adversely affect our business, financial condition, liquidity,
results of operations, and prospects. As a result, the market price of our common stock could decline, and you could lose all or part
of your investment. Additionally, the risks and uncertainties described in this Annual Report are not the only risks and uncertainties
that we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may become material
and adversely affect our business. If any of the following risks or other risks not specified below materialize, our business, financial
condition and results of operations could be materially and adversely affected. In that case, the trading price of our shares of common
stock could decline.

 Risk Factor Summary

 The following is a summary of the most significant
risks and uncertainties that we believe could adversely affect our business, financial condition and results of operations. The summary
should be read in conjunction with the more detailed risk factors set forth in this "Risk Factors" section and the other information
contained in this Annual Report.

 Risks Related to Our Business

 We operate in an extremely competitive industry
and are subject to pricing pressures.

 We have a history of losses. As our costs increase,
we may not be able to generate sufficient revenue to achieve and sustain profitability.

 Our audited financial statements include a statement
that there is a substantial doubt about our ability to continue as a going concern and a continuation of negative financial trends could
result in our inability to continue as a going concern.

 Our results of operations could be adversely
affected by changes in the cost and availability of raw materials and we are dependent on third-party manufacturers and suppliers.

 Increases in costs, disruption of supply or shortage
of any of our battery components, such as electronic and mechanical parts, or raw materials used in the production of such parts, could
harm our business.

 Our business and future growth depends on the
needs and success of our customers.

 We have substantial customer concentration, with
a limited number of customers accounting for a substantial portion of our sales in 2024 and 2023.

 If we fail to expand our sales and distribution
channels, our business could suffer.

 The uncertainty in global economic conditions
could negatively affect our results of operations.

 We are currently, and will likely continue to
be, dependent on our two warehouse facilities. If our facilities become inoperable for any reason, our ability to produce our products
could be negatively impacted.

 We could face potential product liability or
warranty claims relating to our products, including the components thereof, which could reduce market adoption, result in reputation damage,
and result in significant costs and liabilities, which would reduce our profitability.

 Our operations expose us to litigation, tax,
environmental, and other legal compliance risks.

 Our failure to introduce new products and product
enhancements that respond to customer and end consumer demand, and any broad market acceptance of new technologies introduced by our competitors,
could adversely affect our business.

 We may not be able to adequately protect our
proprietary intellectual property and technology and we may need to defend ourselves against intellectual property infringement claims.

 Any acquisitions that we complete may dilute
stockholder ownership interests in the Company, may have adverse effects on our financial condition and results of operations and may
cause unanticipated liabilities.

 If our electronic data is compromised, or we
experience a failure in our information technology or storage systems, our business could be significantly harmed.

 Our ability to raise capital in the future may
be limited, which could make us unable to fund our capital requirements and our stockholders may be diluted by future securities offerings.

 We depend on our senior management team and other
key employees, and significant attrition within our management team or unsuccessful succession planning could adversely affect our business.

 Risks Related to
Ownership of our Common Stock

 Our stock price may fluctuate significantly,
and you may lose all or a part of your investment.

 Sales of substantial amounts of our securities
in the public markets, or the perception that such sales might occur, could reduce the price of our securities and may dilute your voting
power and your ownership interest in us.

 The exercise of outstanding warrants may result
in a substantial increase in the number of shares of our common stock that are outstanding.

 The Series A Warrants and Series B Warrants may
have an adverse effect on the market price of our common stock and make it more difficult to effect a business combination.

 The Reverse Stock Split cash true-up payment
provision in the Series A Warrants we sold in the August 2024 Public Offering may have a material adverse impact on our financial condition,
may impede our ability to raise additional capital, and may discourage an acquisition of us by a third party.

 Risk Related to Our Capital Structure

 Our long-term lease and debt obligations could
adversely affect our ability to raise additional capital to fund operations and limit our ability to enter into certain transactions.

 Risks Related to Our Business

 We operate in an extremely competitive industry
and are subject to pricing pressures.

 We compete with a number of major international and
domestic manufacturers, assemblers and distributors, as well as a large number of smaller, regional competitors. In addition, our customers
have many choices for energy storage solutions in the markets that we serve, including both traditional lead-acid products as well as
lithium-ion products. We believe our main competitive advantage in displacing incumbent lead-acid batteries is that we produce a lighter,
safer, higher performing, cost-effective battery with a longer lifespan. We believe our product offerings, proven reliability, and relationships
with dealers, private-label direct to consumer and OEMs enable us to compete effectively against other battery manufacturers and position
us favorably to expand into new addressable markets. However, OEM sales typically result in lower average selling prices and related margins,
which could result in overall margin erosion, affect our growth, or require us to raise our prices. As a result, we may be unable to our
competitive advantage.

 Our current competitors have, and future competitors
may have, greater resources than we do. Our competitors may be able to devote greater resources to the development of their current and
future technologies. For example, foreign producers may be able to employ labor at significantly lower costs than producers in the U.S.,
expand their export capacity and increase their marketing presence in major America markets. In addition, several of our competitors may
be able to devote greater resources to technical, marketing, sales, manufacturing, distribution and other resources, as well as significant
name recognition, established positions in the market and long-standing relationships with OEMs and other customers. These advantages
may afford them greater access to customers, and may be able to establish cooperative or strategic relationships amongst themselves or
with third parties that may further enhance their competitive positioning. Our failure to adapt to or address these factors could have
a material adverse effect on our business, financial condition, and results of operations.

 In addition, our ability to maintain and improve our
operating margins has depended, and continues to depend, on our ability to control and reduce our costs. We cannot assure you that we
will be able to continue to control our operating, assembly and manufacturing expenses, to raise or maintain our prices or increase our
unit volume or unit mix, in order to maintain or improve our results of operations.

 We have a history of losses. As our costs increase,
we may not be able to generate sufficient revenue to achieve and sustain profitability.

 We have experienced net losses in each period since
inception. We generated net losses of $13.5 million and $7.5 million for the years ended December 31, 2024 and 2023, respectively.

 Part of our business strategy is to focus on our long-term
growth. As a result, our profitability may be lower in the near-term than it would be if our strategy were to maximize short-term profitability.
Significant expenditures on sales and marketing efforts, expanding our platform, products, features, and functionality, and expanding
our research and development, each of which we intend to continue to invest in, may not ultimately grow our business or cause long-term
profitability. If we are ultimately unable to achieve profitability at the level anticipated by industry or financial analysts and our
stockholders, our stock price may decline.

 Our efforts to grow our business may be costlier than
we expect, or our revenue growth rate may be slower than we expect, and we may not be able to increase our revenue enough to offset the
increase in operating expenses resulting from these investments. If we are unable to continue to grow our revenue, the value of our business
and common stock may significantly decrease, which may in turn have a material adverse effect on our ability to raise capital to grow
our business.

 Our audited financial statements include a statement
that there is a substantial doubt about our ability to continue as a going concern and a continuation of negative financial trends could
result in our inability to continue as a going concern.

 Our audited financial statements as of and for the
years ended December 31, 2024 and 2023 were prepared on the assumption that we would continue as a going concern. For the years ended
December 31, 2024 and 2023, we sustained recurring losses and negative cash flows from operations. These factors raise substantial doubt
about our ability to continue as a going concern over the next 12 months and our independent auditors have included a "going concern"
explanatory paragraph in their report on our financial statements as of and for the years ended December 31, 2024 and 2023. If our results
of operations fail to improve and/or if we fail to raise additional debt or equity financing, then our financial condition could render
us unable to continue as a going concern.

 Our results of operations could be adversely
affected by changes in the cost and availability of raw materials and we are dependent on third-party manufacturers and suppliers.

 We currently rely on multiple third-party manufacturers
located in Asia to manufacture our batteries and battery cells, and we intend to continue to rely on these suppliers going forward. Lithium-ion
batteries are our most significant raw material and are used along with significant amounts of plastics, steel, copper and other materials
in our assembly and manufacturing processes. Our third-party manufacturers source the raw materials and battery components required for
the production of our batteries directly from third-party suppliers and thus we may have limited control over the agreed pricing for these
raw materials and battery components. We estimate that raw material costs account for over half of our cost of goods sold. The costs of
these raw materials, particularly lithium-ion batteries, are volatile and beyond our control. Additionally, availability of the raw materials
used to manufacture our products may be limited at times resulting in higher prices and/or the need to find alternative suppliers. Furthermore,
the cost of raw materials may also be influenced by transportation costs. Volatile raw material costs can significantly affect our results
of operations and make period-to-period comparisons extremely difficult. We cannot assure you that we will be able to either hedge the
costs or that we or our third-party manufacturers will be able to secure the availability of our raw material requirements at a reasonable
level or that we will be able to pass on to our customers the increased costs of our raw materials without affecting demand, or that limited
availability of materials will not impact our production capabilities. Our inability to raise the price of our products in response to
increases in prices of raw materials or to maintain a proper supply of raw materials could have an adverse effect on our revenue, operating
profit, and net income.

 In addition, during the years ended December 31, 2024
and 2023, approximately 82% and 70%, respectively, of inventory purchases were made from foreign suppliers in Asia. Our dependence on
a limited number of key third-party manufacturers and suppliers exposes us to challenges and risks in ensuring that we maintain adequate
supplies required to produce our batteries. We do not have long-term purchase arrangements with our third-party manufacturers and our
purchases are completed on a purchase order basis. Thus, although we carefully manage our inventory and lead times, we may experience
a delay or disruption in our supply chain and/or our current suppliers may not continue to provide us with lithium-ion batteries in our
required quantities or to our required specifications and quality levels or at attractive prices. Our close working relationships with
our foreign suppliers to date, reflected in our ability to increase our purchase order volumes (qualifying us for related volume-based
discounts) and to order and receive delivery of components in advance of required demand,
has helped us moderate or offset increased supply-related costs associated with inflation, currency fluctuations, and tariffs imposed
on our battery imports by the U.S. government. However, if we are unable to enter into or maintain commercial arrangements with these
suppliers on favorable terms, or if any of these suppliers experience unanticipated delays, disruptions or shutdowns or other difficulties
ramping up their supply of products or materials to meet our requirements, our assembly operations and customer deliveries would be seriously
impacted, potentially resulting in liquidated damages and harm to our customer relationships. Although we believe we could locate alternative
suppliers to fulfill our needs, we may be unable to find a sufficient alternative supply in a reasonable time or on commercially reasonable
terms.

 Further, our dependence on these third-party suppliers
entails additional risks, including:

 inability, failure, or unwillingness of third-party
suppliers to comply with regulatory requirements;

 breach of supply agreements by the third-party
supplies;

 misappropriation or disclosure of our proprietary
information, including our trade secrets and know-how;

 relationships that third-party suppliers may
have with others, which may include our competitors, and failure of third-party suppliers to adequately fulfill contractual duties, resulting
in the need to enter into alternative arrangements, which may not be available, desirable, or cost-effective; and

 termination or non-renewal of agreements by third-party
suppliers at times that are costly or inconvenient for us.

 Several of our key manufacturers and suppliers are
located in China, and we are exposed to the possibility of product supply disruption and increased costs in the event of changes in the
policies, laws, rules and regulations of the United States or Chinese governments, as well as political unrest or unstable economic conditions
in China. For example, trade tensions between the United States and China have been escalating in recent years. Notably, the lithium-ion
battery industry has been subjected to tariffs implemented by the United States government on goods imported from China. There is an ongoing
risk of new or additional tariffs being put in place on lithium-ion batteries or related parts which would significantly increase our
cost of goods sold, which could require us to increase prices to our customers or, if we are unable to do so, result in lower gross margins
on the products sold by us. In addition, these tariffs could make our products less competitive than those of our competitors whose inputs
are not subject to these tariffs. These U.S. tariff impositions against Chinese exports have been followed by a round of retaliatory Chinese
tariffs on U.S. exports to China. The imposition of additional tariffs by the United States could trigger the adoption of tariffs by other
countries as well. Any resulting escalation of trade tensions, including a "trade war," could have a significant adverse effect
on world trade and the world economy, as well as on our results of operations. At this time, we cannot predict how such enacted tariffs
will impact our business. We may otherwise experience supply disruptions or delays, and although we carefully manage our inventory and
lead-times, our suppliers may not continue to provide us with battery components in our required quantities, to our required specifications
and quality levels or at attractive prices.

 Further, we may be unable to control price fluctuations
for these components or negotiate supply arrangements on favorable terms to us. We may also be exposed to fluctuations in the value of
the U.S. dollar relative to the Renminbi with any appreciation in the value of the Renminbi increasing our costs for lithium-ion batteries
and other raw materials sourced from China. Substantial increases in the prices for our lithium-ion batteries and other raw materials
would increase our operating costs and negatively impact our results of operations. In addition, foreign currency fluctuations relative
to the value of the U.S. dollar could affect the price of components and materials used in our batteries and sourced from countries other
than the United States.

 Increases in costs, disruption of supply or
shortage of any of our battery components, such as electronic and mechanical parts, or raw materials used in the production of such parts,
could harm our business.

 From time to time, we may experience increases in
the cost or a sustained interruption in the supply or shortage of battery components. For example, a global shortage and component supply
disruptions of electronic battery components are currently being reported, and the full impact to us is yet unknown. Other examples of
shortages and component supply disruptions could include the supply of electronic components and raw materials (such as resins and other
raw metal materials) that go into the production of our battery components. Any such cost increase or supply interruption could materially
and negatively impact our business, prospects, financial condition and results of operations.

 The prices for our battery components fluctuate depending
on market conditions and global demand, and could adversely affect our business, prospects, financial condition and results of operations.
For instance, we are exposed to multiple risks relating to price fluctuations for battery cells. These risks include, but are not limited
to:

 supply shortages caused by the inability or unwillingness
of suppliers and their competitors to build or operate component production facilities to supply the numbers of battery components requires
to support the rapid growth of the electric RV and marine component vehicle industry and other industries in which we operate as demand
for such components increases;

 disruption in the supply of electronic circuits
due to quality issues or insufficient raw materials

 a decrease in the number of manufacturers of
battery components; and

 an increase in the cost of raw materials.

 We are dependent on the continued supply of battery
components for our products. Any disruption in the supply of battery components could temporarily disrupt production of our products by
our third-party manufacturers until a different supplier is fully qualified. The cost of our battery products depends in part upon the
prices and availability of raw materials such as lithium, nickel, cobalt, and/or other metals which are used to produce battery components.
Our third-party manufacturers source the raw materials and battery components required for the production of our batteries directly from
third-party suppliers and thus we may have limited control over the agreed pricing for these raw materials and battery components. The
prices for these materials fluctuate and their available supply may be unstable, depending on market conditions and global demand for
these materials, including as a result of increased global production of electric vehicles and energy storage products. Furthermore, fluctuations
or shortages in petroleum and other economic conditions may cause us to experience significant increases in freight charges. Any reduced
availability of these raw materials or substantial increases in the prices for such materials may increase the cost of our components
and consequently, the cost of our products. There can be no assurance that we will be able to recoup increasing costs of our components
by increasing prices, which in turn could damage our brand, business, prospects, financial condition and results of operations.

 Our business and future growth depends on the
needs and success of our customers.

 Our customers include dealers, wholesalers, private-label
customers and OEMs. The demand for our products ultimately depends on consumers in our current end markets (primarily owners of RVs and
marine vessels). These markets can be impacted by numerous factors, including, consumer spending, travel restrictions, fuel costs and
energy demands (including an increasing trend towards the use of green energy) and overall economic conditions. Increases or decreases
in these variables may significantly impact the demand for our products. If we fail to accurately predict demand, we may be unable to
meet our customers' needs, resulting in the loss of potential sales, or we may produce excess products, resulting in increased inventory
and overcapacity in our production facilities, increasing our unit production cost and decreasing our operating margins.

 We have substantial customer concentration,
with a limited number of customers accounting for a substantial portion of our sales in 2024 and 2023.

 We currently derive a significant portion of our revenue
from a limited number of customers. Sales to one customer totaled approximately 14% of our gross sales during the year ended December
31, 2024, and four other customers had accounts receivable balances representing 60% of our total accounts receivable as of December 31,
2024. During the year ended December 31, 2023, sales to two customers totaled approximately 21% of our gross sales, and four other customers
had accounts receivable balances representing 92% of total accounts receivable as of December 31, 2023. There are inherent risks whenever
a large percentage of gross sales are concentrated with a limited number of customers. In addition, our sales are completed on a purchase
order basis and most are without firm, long-term revenue commitments or sales arrangements. It is not possible for us to predict the future
level of demand for our products and services that will be generated by our customers or the future demand for the products and services
of our other customers. If any of our customers experience declining or delayed sales due to market, economic or competitive conditions,
we could be pressured to reduce the prices we charge for our products which could have an adverse effect on our margins and financial
position and could negatively affect our revenue and results of operations and/or trading price of our common stock. Furthermore, there
is inherent risk associated with accounts receivable concentration as a deterioration in the financial condition of a limited number of
account debtors, or any other factor which affects their ability or willingness to pay could in turn have a material adverse effect on
our financial condition.

 We may not be able to successfully manage our
growth.

 We have been continuously expanding our operations
since our founding in 2016. As we continue to grow, we must continue to improve our managerial, technical and operational knowledge and
allocation of resources, and to implement an effective management information system. To effectively manage our expanded operations, we
need to continue to recruit and train managerial, accounting, internal audit, engineering, assembly and manufacturing, technical, sales
and other staff to satisfy our development requirements and there are currently significant labor shortages in the market. In order to
fund our ongoing operations and our future growth, we need to have sufficient internal sources of liquidity or access to additional financing
from external sources. Furthermore, we will be required to manage relationships with a greater number of customers, suppliers, contractors,
service providers, lenders and other third parties. We will need to further strengthen our internal control and compliance functions to
ensure that we are able to comply with our legal and contractual obligations and to reduce our operational and compliance risks. We cannot
assure you that we will not experience issues such as capital constraints, construction delays, operational difficulties at new locations,
or difficulties in expanding our existing business and operations and in recruiting and training an increasing number of personnel to
manage and operate the expanded business. Our expansion plans may also adversely affect our existing operations and thereby have a material
adverse effect on our business, prospects, financial condition and results of operations.

 Our results of operations may be negatively
impacted by public health epidemics or outbreaks.

 We are exposed to risks associated with public health
crises and epidemics or pandemics. A widespread health crisis could adversely affect the global economy, resulting in an economic downturn
that could impact our operations and demand for our products and therefore have a material adverse effect on our business and results
of operations. For example, the COVID-19 global pandemic adversely impacted our operations, supply chains, and distribution systems as
well as those of our third-party suppliers and manufacturers, which are located in the United States, Asia and Europe. A future public
health epidemic or outbreak may make it more difficult for us and our third-party manufacturers to find sufficient components or raw materials
and component parts on a timely basis or at a cost-effective price. Any performance failure on the part of any of our significant suppliers
or third-party manufacturers could interrupt production of our products, which would have a material adverse effect on our business, financial
condition and results of operations. In addition, during the pandemic we experienced shortages and workforce slowdowns due to stay-at-home
mandates, illness among our workforce, delays in shipping finished products to customers, and delays in our receiving batteries and certain
components. The highly competitive labor market made it difficult to recruit and maintain a workforce properly sized and suited for our
operational and strategic needs, which further adversely impacted our business, and any future incidence of disease could similarly impact
our business. In addition, while the pandemic positively impacted our battery sales due to more consumers adopting the RV lifestyle, there
is no guarantee that any such increase would be sustained, which could cause our results of operations to fluctuate.

 If we fail to expand our sales and distribution
channels, our business could suffer.

 Our success, and our ability to increase sales and
operate profitably, depends on our ability to identify target customers and convert these customers into meaningful orders, as well as
our continued development of existing customer relationships. If we are unable to expand our sales and distribution channels, we may not
be able to increase revenue or achieve market acceptance of our products. We are expanding our direct sales force and plan to recruit
additional sales personnel. New sales personnel will require training and take time to achieve full productivity, and there is strong
competition for qualified sales personnel in our business. In addition, we believe our future success is dependent upon establishing successful
relationships with a variety of distribution partners. To date, we have entered into agreements with only a small number of these distribution
partners. We cannot be certain that we will be able to reach agreement with additional distribution partners on a timely basis or at all,
or that these distribution partners will devote adequate resources to selling our products. Furthermore, if our distribution partners
fail to adequately market or support our products, the reputation of our products in the market may suffer. In addition, we will need
to manage potential conflicts between our direct sales force and any third-party reselling efforts. There can be no assurances that any
of our efforts to expand our sales and distribution channels will be successful.

 Our ability to expand into international markets
is uncertain.

 Our strategy is to expand our operations into international
markets. In addition to general risks associated with international expansion, such as foreign currency fluctuations and political and
economic instability, we face the following risks and uncertainties any of which could prevent us from selling our products in a particular
country or harm our business operations once we have established operations in that country:

 the difficulties and costs of localizing products
for foreign markets;

 the need to modify our products to comply with
local requirements in each country; and

 our lack of a direct sales presence in other countries,
our need to establish relationships with distribution partners to sell our products in these markets and our reliance on the capabilities
and performance of these distribution partners.

 If we are unable to expand into international markets
in the manner expected, our business, financial condition, results of operations and prospects may be materially and adversely affected.

 Nearly all of our raw materials enter the United
States through a limited number of ports and we rely on third parties to store and ship some of our inventory; labor unrest at these ports
or other product deliver difficulties could interfere with our distribution plans and reduce our revenue.

 We currently rely exclusively on foreign manufacturers
to manufacture the lithium-ion batteries used as raw materials in our products, as well as certain other of our raw materials. We may
suffer delays in receiving raw materials due to work stoppages, strikes or lockouts or other bottlenecks at the ports through which our
raw materials are shipped. Likewise, we rely on trucking carriers to deliver products from the port of arrival to our distribution facilities
and from our distribution facilities to our customers. Additionally, in some cases, third parties sort, store, and direct-ship products
to our customers. Labor unrest or other disruptions could result in product shortages and delays in distributing our products to retailers,
which could materially and adversely affect our business, financial condition, results of operations, and prospects.

 The uncertainty in global economic conditions
could negatively affect our results of operations.

 Our results of operations are directly affected by
the general global economic conditions of the industries in which our major customer groups operate. Our business is also highly dependent
on the economic and market conditions in each of the geographic areas in which we operate. Our products are heavily dependent on the end
markets that we serve and our results of operations will vary by location, depending on the economic environment in these markets. Sales
of our RV and marine power products, for example, depend significantly on demand for new electric products for RVs and marine applications,
which, in turn, depends on end-user demand for RVs and boats. The uncertainty in global economic conditions varies by geographic location
and can result in substantial volatility in global credit markets, particularly in the United States. These conditions, including levels
of consumer spending, economic recessions, slow economic growth, economic and pricing instability, inflation levels, increase of interest
rates, credit market volatility and adverse developments affecting financial institutions, could affect our business by reducing prices
that our customers may be able or willing to pay for our products or by reducing the demand for our products. In addition, the Russia-Ukraine
war and the Israel-Palestine conflict has and may continue to further exacerbate disruptions in the global supply chain. As a result of
sanctions imposed in relation to the Russia-Ukraine conflict, gas prices in the United States have risen to historic levels, and geopolitical
tensions in the Middle East have impacted global shipping routes. Any rise in the cost of fuel may cause a decrease in RV travel, which
could ultimately negatively impact sales of our batteries for RVs. We have also historically experienced increased shipping costs as a
result of increased fuel costs and shutdowns at the ports through which our lithium-ion batteries and other raw materials are shipped,
and such costs could adversely impact our results of operations in future periods. Any of the above factors could, in turn, negatively
impact our sales and earnings generation and result in a material adverse effect on our business, cash flow, results of operations and
financial position.

 Government reviews, inquiries, investigations,
and actions could harm our business or reputation.

 As we operate in various locations around the world,
our operations in certain countries are subject to significant governmental scrutiny and may be adversely impacted by the results of such
scrutiny. The regulatory environment with regard to our business is evolving, and officials often exercise broad discretion in deciding
how to interpret and apply applicable regulations. From time to time,
we receive formal and informal inquiries from various government regulatory authorities, as well as self-regulatory organizations, about
our business and compliance with local laws, regulations or standards. Any determination that our operations or activities, or the activities
of our employees, are not in compliance with existing laws, regulations or standards could result in the imposition of substantial fines,
interruptions of business, loss of supplier, vendor, customer or other third-party relationships, termination of necessary licenses and
permits, or similar results, all of which could potentially harm our business and/or reputation. Even if an inquiry does not result in
these types of determinations, regulatory authorities could cause us to incur substantial costs or require us to change our business practices
in a manner materially adverse to our business, and it potentially could create negative publicity which could harm our business and/or
reputation.

 We are currently, and will likely continue to
be, dependent on our two warehouse facilities. If our facilities become inoperable for any reason, our ability to produce our products
could be negatively impacted.

 We have a warehouse location in Redmond, Oregon and
another in Elkhart, Indiana.

 Our facilities may be harmed or rendered inoperable
by natural or man-made disasters, including earthquakes, flooding, fire and power outages, utility and transportation infrastructure disruptions,
acts of war or terrorism, or by public health crises, which may render it difficult or impossible for us to assemble our products for
an extended period of time. The inability to produce our products or the backlog that could develop if any of our facilities is inoperable
for even a short period of time may result in increased costs, harm to our reputation, a loss of customers or a material adverse effect
on our business, financial condition or results of operations. Although we maintain property damage and business interruption insurance,
this insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms,
if at all.

 Our long-term target is to onshore the manufacturing
of most of our components and assemblies, including cell manufacturing, to the United States. Our plans for expansion may experience delays,
incur additional costs, or cause disruption to our existing production lines. The costs to successfully achieve our expansion goals may
be greater than we expect, and we may fail to achieve our anticipated cost efficiencies, which could have a material adverse effect on
our business, financial condition and results of operations. Furthermore, while we are generally responsible for delivering products to
the customer, we do not maintain our own fleet of delivery vehicles and outsource this function to third parties. Any shortages in trucking
capacity, any increase in the cost thereof or any other disruption to the highway systems could limit our ability to deliver our products
in a timely manner or at all.

 Lithium-ion battery cells have been observed
to catch fire or release smoke and flame, which may have a negative impact on our reputation and business.

 Our lithium-ion batteries use LiFePO4 as the cathode
material for lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy they contain by releasing smoke and
flames in a manner that can ignite nearby materials and other lithium-ion cells. This faulty result could subject us to lawsuits, product
recalls, or redesign efforts, all of which would be time-consuming and expensive. Further, negative public perceptions regarding the suitability
or safety of lithium-ion cells or any future incident involving lithium-ion cells, such as a vehicle or other fire, even if such incident
does not involve our products, could seriously harm our business and reputation.

 To facilitate an uninterrupted supply of lithium-ion
batteries, we store a significant number of lithium-ion batteries at our facilities. Any mishandling, other safety issue or fire related
to the cells or batteries could disrupt our operations. In addition, any accident, whether occurring at our facilities or from the use
of our batteries, may result in significant production interruption, delays or claims for substantial damages caused by personal injuries
or property damage. Such damage or injury could lead to adverse publicity and potentially a product recall, which could have a material
adverse effect on our brand, business, financial condition and results of operations.

 We could face product liability or warranty
claims relating to our products, including the components thereof, which could reduce market adoption, result in reputation damage, and
result in significant costs and liabilities, which would reduce our profitability.

 Our product offerings and energy storage solutions,
which are complex, could contain design- or manufacturing-related defects, or may not operate at expected performance levels. We face
an inherent business risk of exposure to product liability claims in the event that the use of any of our products results in personal
injury or property damage.

 In the event that any of our products prove to be
defective, we may be required to recall or redesign such products, which would result in significant unexpected costs. Any insurance we
maintain may not be available on terms acceptable to us or such coverage may not be adequate for liabilities actually incurred. Further,
any claim or product recall could result in adverse publicity against us, which could adversely affect our sales or increase our costs.

 We are also exposed to potential liability and product
performance warranty risks that are inherent in the design, assemble, manufacture and sale of our products. We sell the majority of our
products to customers with conditional repair or replacement warranties. For example, our branded DC mobile chargers are warrantied for
two years from the date of sale, and our branded VPR 4EVER Classic and Platinum batteries are warrantied at gradually lesser levels over
a 12-year period from date of sale. As a result, we bear the risk of warranty claims long after we have sold the product and recognized
revenue. In addition, under real world operating conditions, which may vary by location and design, as well as environmental conditions,
our products may perform in a different way than under standard test conditions or other failure data sets. We depend significantly on
our reputation for safety and reliability and high-quality products and services, exceptional customer service, and our brand name to
attract new customers and maintain our current customers, and grow our business. If our products do not perform as anticipated or we experience
unexpected reliability problems or widespread product failures, our brand and market reputation could be significantly impaired and we
may lose, or be unable to gain or retain, customers which could impact our business and results of operations.

 We have been required to make assumptions and apply
judgments, including the durability and reliability of our products, regarding their performance over the estimated warranty period and
our anticipated rate of warranty claims. We have a relatively limited operating history and must project how our offerings will perform
over the estimated warranty period and the estimated reserve may have material changes. Historically, there have been very few claims
and costs for repairs or replacement parts have been nominal. However, warranty reserves include our management's best estimates
of the projected costs to repair or replace items under warranty, which is based on estimated failure rates. Our assumptions could prove
to be materially different from the actual performance of our products, causing us to incur substantial expense to repair or replace defective
products in the future. An increase in our estimates of future warranty obligations could cause us to increase the amount of warranty
obligations. If our warranty reserves are inadequate to cover future warranty claims on our energy storage products, our financial condition
and results of operations could be adversely affected.

 Our operations expose us to litigation, tax,
environmental and other legal compliance risks.

 We are subject to a variety of litigation, tax, environmental,
health and safety and other legal compliance risks. These risks include, among other things, possible liability relating to product liability
matters, personal injuries, intellectual property rights, contract-related claims, government contracts, taxes, health and safety liabilities,
environmental matters and compliance with competition laws and laws governing improper business practices. We could be charged with wrongdoing
as a result of such matters. If convicted or found liable, we could be subject to significant fines, penalties, repayments or other damages
(in certain cases, treble damages). In the area of taxes, changes in tax laws and regulations, as well as changes in related interpretations
and other tax guidance could materially impact our tax receivables and liabilities and our deferred tax assets and tax liabilities.

 We plan to manufacture lithium-ion batteries in the
future which involves processing, storing, disposing of and otherwise moving large amounts of hazardous materials, and federal, state,
and local regulations impose significant environmental requirements on the manufacturing, storage, transportation, and disposal of various
components of advanced energy storage systems. As a result, we will be subject to extensive and changing environmental, health and safety
laws, and regulations governing, among other things, the generation, handling, storage, use, transportation and disposal of hazardous
materials; remediation of polluted ground or water; emissions or discharges of hazardous materials into the ground, air or water; and
the health and safety of our employees. Although we believe our operations are in material compliance with applicable environmental regulations,
there can be no assurance that changes in such laws and regulations will not impose costly compliance requirements on us or otherwise
subject us to future liabilities. Our ongoing compliance with environmental, health and safety laws, regulations and permits could require
us to incur significant expenses, limit our ability to modify or expand our facilities or continue production and require us to install
additional pollution control equipment and make other capital improvements. In addition, private parties, including employees, could bring
personal injury or other claims against us due to the presence of, or exposure to, hazardous substances used, stored or disposed of by
us or contained in our products.

 Certain environmental laws assess liability on owners
or operators of real property for the cost of investigation, removal or remediation of hazardous substances at their current or former
properties or at properties at which they have disposed of hazardous substances. These laws may also assess costs to repair damage to
natural resources. We may be responsible for remediating damage to our properties caused by former owners by our existing operations or
by our future operations.

 Changes in environmental and climate laws or regulations
could lead to new or additional investment in production designs and could increase environmental compliance expenditures. For example,
the United States Environmental Protection Agency has promulgated regulations applicable to projects involving greenhouse gas emissions
above a certain threshold, and the United States and certain states within the United States have enacted, or are considering, limitations
on greenhouse gas emissions.

 Changes in climate change concerns, or in the regulation
of such concerns, including greenhouse gas emissions, could subject us to additional costs and restrictions, including increased energy
and raw materials costs. Additionally, we cannot assure you that we have been or at all times will be in compliance with environmental
laws and regulations or that we will not be required to expend significant funds to comply with, or discharge liabilities arising under,
environmental laws, regulations and permits, or that we will not be exposed to material environmental, health or safety litigation.

 We are subject to anti-corruption, anti-bribery, anti-money
laundering, financial and economic sanctions and similar laws and regulations in the jurisdictions in which we conduct or in the future
may conduct activities, including, the U.S. Foreign Corrupt Practices Act (the "FCPA"). The FCPA generally prohibits companies
and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. The FCPA
applies to companies, individual directors, officers, employees and agents. Under the FCPA, U.S. companies may be held liable for actions
taken by strategic or local partners or representatives. The FCPA also imposes accounting standards and requirements on publicly traded
U.S. corporations and their foreign affiliates, which are intended to prevent the diversion of corporate funds to the payment of bribes
and other improper payments. Our policies mandate compliance with these antibribery laws. Despite meaningful measures that we undertake
to facilitate lawful conduct, which include training and internal control policies, these measures may not always prevent reckless or
criminal acts by our employees or agents as we expand our operations from the United States domestically to abroad. As a result, we could
be subject to criminal and civil penalties, disgorgement, further changes or enhancements to our procedures, policies and controls, personnel
changes or other remedial actions. Violations of these laws, or allegations of such violations, could disrupt our operations, involve
significant management distraction and result in a material adverse effect on our competitive position, results of operations, cash flows
or financial condition.

 Our failure to introduce new products and product
enhancements that respond to customer and end consumer demand, and any broad market acceptance of new technologies introduced by our competitors,
could adversely affect our business.

 Our success will depend on our ability to develop
new products and capabilities that respond to consumer demand, industry trends, or developments by our competitors. There is no assurance
that we will be able to successfully develop new products and capabilities that adequately respond to these forces. In addition, many
new energy storage technologies have been introduced over the past several years. For certain important and growing markets, such as aerospace
and defense, lithium-based battery technologies have a large and growing market share. Our ability to achieve significant and sustained
penetration of key developing markets, including the RV marine, and home energy markets, will depend upon our success in developing or
acquiring these and other technologies, either independently, through joint ventures, or through acquisitions, which in each case may
require significant capital. In addition, new product introductions and technologies are risky, and may suffer from a lack of market acceptance,
delays in related product development and failure of new products to operate properly. Any failure by us to successfully launch new products,
or a failure by us to meet our customers criteria in order to accept such products, could adversely affect our results. If we fail to
develop or acquire, assemble and manufacture and sell, products that satisfy our customers' demands, or we fail to respond effectively
to new product announcements by our competitors by quickly introducing competitive products, then we may fail to maintain our competitive
position in our markets, and our business and financial condition could be adversely affected. We cannot assure you that our portfolio
of primarily lithium-ion products will remain competitive with products based on new technologies.

 We may not be able to adequately protect our
proprietary intellectual property and technology and we may need to defend ourselves against intellectual property infringement claims.

 We rely on a combination of copyright, trademark,
patent and trade secret laws, non-disclosure agreements and other confidentiality procedures and contractual provisions to establish,
protect and maintain our proprietary intellectual property and technology and other confidential information. Certain of these technologies,
especially battery case construction, are important to our business and are not protected by patents. Despite our efforts to protect our
proprietary intellectual property and technology and other confidential information, unauthorized parties may attempt to copy or otherwise
obtain and use our intellectual property and proprietary technologies. If we are unable to protect our intellectual property and technology,
we may lose any technological advantage we currently enjoy and may be required to take an impairment charge with respect to the carrying
value of such intellectual property or goodwill established in connection with the acquisition thereof. In either case, our results of
operations and net income may be adversely affected. In addition, entities holding intellectual property rights relating to our technology
may bring suits alleging infringement of such rights or otherwise asserting their rights and seeking licenses. Any such litigation or
claims, whether or not valid or successful, could result in substantial costs and diversion of resources and our management's attention.
If we are determined to have infringed upon a third-party's intellectual property rights, we may have to pay substantial damages,
obtain a license or cease making certain products, which in turn could have a material adverse effect on our business, results of operations
and financial condition.

 Quality problems with our products could harm
our reputation and erode our competitive position.

 The success of our business will depend upon the quality
of our products and our relationships with customers. In the event that our products fail to meet our customers' standards, our
reputation could be harmed, which would adversely affect our marketing and sales efforts. We cannot assure you that our customers will
not experience quality problems with our products.

 Any acquisitions that we complete may dilute
stockholder ownership interests in the Company, may have adverse effects on our financial condition and results of operations and may
cause unanticipated liabilities.

 As part of our growth strategy, we may make future
investments in businesses, new technologies, services and other assets that complement our business. Future acquisitions may involve the
issuance of our equity securities as payment, in part or in full, for the businesses or assets acquired. Any future issuances of equity
securities would dilute stockholder ownership interests. In addition, future acquisitions might not increase, and may even decrease, our
earnings or earnings per share and the benefits derived by us from an acquisition might not outweigh or might not exceed the dilutive
effect of the acquisition. We also may incur additional debt or suffer adverse tax and accounting consequences in connection with any
future acquisitions.

 If our electronic data is compromised, or we
experience a failure in our information technology or storage systems, our business could be significantly harmed.

 We and our business partners maintain significant
amounts of data electronically in locations around the world. This data relates to all aspects of our business, including current and
future products and services under development, and also contains certain customer, supplier, partner and employee data. Our ability to
execute our business strategy depends, in part, on the continued and uninterrupted performance of our information technology systems,
which support our operations. We maintain systems and processes designed to protect this data, but notwithstanding such protective measures,
there is a risk of intrusion, cyberattacks, tampering, theft, misplaced or lost data, programming and/or human errors that could compromise
the integrity and privacy of this data, improper use of our systems, software solutions or networks, unauthorized access, use, disclosure,
modification or destruction of information, defective products, production downtimes and operational disruptions, which in turn could
adversely affect our reputation, competitiveness, and results of operations. High-profile security breaches at other companies and in
government agencies have increased in recent years, and cyber-attacks are becoming more sophisticated and frequent, and in some cases
have caused significant harm. Computer hackers and others routinely attempt to breach the security of technology products, services and
systems, and to fraudulently induce employees, customers, or others to disclose information or unwittingly provide access to systems or
data. While we devote significant resources to security measures to protect our systems and data, these measures cannot provide absolute
security.

 In addition, we provide confidential and proprietary
information to our third-party business partners in certain cases where doing so is necessary to conduct our business. While we obtain
assurances from those parties that they have systems and processes in place to protect such data, and where applicable, that they will
take steps to assure the protections of such data by third parties, nonetheless those partners may also be subject to data intrusion or
otherwise compromise the protection of such data. Any compromise of the confidential data of our customers, suppliers, partners, employees
or ourselves, or failure to prevent or mitigate the loss of or damage to this data through breach of our information technology systems
or other means could substantially disrupt our operations, harm our customers, employees and other business partners, damage our reputation,
violate applicable laws and regulations, subject us to potentially significant costs and liabilities and result in a loss of business
that could be material. We operate a number of critical computer systems throughout our business that can fail for a variety of reasons.
If such a failure were to occur, we may not be able to sufficiently recover from the failure in time to avoid the loss of data or any
adverse impact on certain of our operations that are dependent on such systems. This could result in lost sales and the inefficient operation
of our facilities for the duration of such a failure.

 Our ability to raise capital in the future may
be limited, which could make us unable to fund our capital requirements and our stockholders may be diluted by future securities offerings.

 Our business and operations may consume resources
faster than we anticipate. In the future, we may need to raise additional funds through the issuance of new equity securities, debt or
a combination of both or by entering into credit facilities or securing other types of financing. Additional financing may not be available
on favorable terms or at all. If adequate funds are not available on acceptable terms, or at all, we may be unable to fund our capital
requirements. Further, we may be restricted in our ability to access existing sources of liquidity.

 In addition, actual events involving limited liquidity,
defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies
in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds
or other similar risks. If banks or financial institutions enter receivership or become insolvent in response to financial conditions
affecting the banking system and financial markets, our ability to raise additional financing or to access our existing cash, cash equivalents
and investments may be threatened.

 If we incur new debt, the debt holders would have
rights senior to common stockholders to make claims on our assets, and the terms of any debt could restrict our operations, including
our ability to pay dividends on our common stock. If we issue additional equity securities, existing stockholders may experience dilution,
and the new equity securities could have rights senior to those of our common stock. Because our decision to issue securities in any future
offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature
of our future offerings. Thus, our stockholders bear the risk of our future securities offerings reducing the market price of our common
stock and diluting their interest.

 We depend on our senior management team and
other key employees, and significant attrition within our management team or unsuccessful succession planning could adversely affect our
business.

 Our success depends in part on our ability to attract,
retain and motivate senior management and other key employees. Achieving this objective may be difficult due to many factors, including
fluctuations in global economic and industry conditions, competitors' hiring practices, cost reduction activities, and the effectiveness
of our compensation programs. Competition for qualified personnel can be very intense. We must continue to recruit, retain and motivate
senior management and other key employees sufficient to maintain our current business and support our future projects. We are vulnerable
to attrition among our current senior management team and other key employees. A loss of any such personnel, or the inability to recruit
and retain qualified personnel in the future, could have an adverse effect on our business, financial condition and results of operations.
For example, John Yozamp, our co-founder, former Chief Business Development Officer, and former Chief Executive Officer, pioneered multiple
new recreational concepts in the RV industry and leveraged extensive relationships in the RV OEM business to establish our company. Mr.
Yozamp retired as Chief Business Development Officer as of December 31, 2023. In addition, Greg Aydelott, our Chief Financial Officer,
resigned from his role as of December 31, 2024. While we believe we have successfully transitioned from these departures and have sufficient
experience among our management team, any additional attrition among senior management or key employees could adversely impact us. The
board has commenced a search for a new Chief Financial Officer. If we are unsuccessful
in our succession planning efforts, the continuity of our business and results of operations could be adversely affected.

 Changes in tax laws or tax rulings could materially
affect our financial position, results of operations, and cash flows.

 The income and non-income tax regimes we are subject
to or operate under are unsettled and may be subject to significant change. Changes in tax laws or tax rulings, or changes in interpretations
of existing laws, could materially affect our financial position, results of operations, and cash flows. The overall tax environment remains
uncertain and increasingly complex. Future changes in tax laws, treaties or regulations, and their interpretation or enforcement, may
be unpredictable, particularly as taxing jurisdictions face an increasing number of political, budgetary, and other fiscal challenges.
In the U.S., various proposals to change corporate income taxes are periodically considered. Tax rates in the jurisdictions in which we
operate may change as a result of macroeconomic and other factors outside of our control, making it increasingly difficult to operate
with certainty about taxation. For example, changes to U.S. tax laws enacted in December 2017 had a significant impact on our tax obligations
and effective tax rate beginning 2018, and the full consequences of the significant changes to U.S. tax laws as a result of the Tax Cuts
and Jobs Act of 2017 (the "Tax Cuts and Jobs Act") have not yet been fully determined. These enactments and future possible
guidance from the applicable taxing authorities may have a material impact on our results of operations. In addition, regulatory or legislative
developments may arise from various U.S. tax reform proposals, some of which include proposed changes to the U.S. tax laws, which, if
adopted, could result in increased taxation of our business operations. We closely monitor these proposals as they arise in the countries
where it operates. Changes to the statutory tax rate may occur at any time, and any related expense or benefit recorded may be material
to the fiscal quarter and year in which the law change is enacted. We regularly assess the likely outcomes of our tax audits and disputes
to determine the appropriateness of our tax reserves. However, any tax authority could take a position on tax treatment that is contrary
to our expectations, which could result in tax liabilities in excess of reserves. In addition, the foregoing items, as well as any future
changes in tax laws, could have a material adverse effect on our business, cash flow, financial condition, or results of operations.

 A failure to keep pace with developments in
technology could impair our operations or competitive position.

 Our business continues to demand the use of sophisticated
systems and technology. These systems and technologies must be refined, updated and replaced with more advanced systems on a regular basis
in order for us to meet our customers' demands and expectations. If we are unable to do so on a timely basis or within reasonable
cost parameters, or if we are unable to appropriately and timely train our employees to operate any of these new systems, our business
could suffer. We also may not achieve the benefits that we anticipate from any new system or technology, such as fuel abatement technologies,
and a failure to do so could result in higher than anticipated costs or could impair our results of operations.

 Risks Related to Ownership of Our Common Stock

 Our stock price may fluctuate significantly,
and you may lose all or a part of your investment.

 The trading price of our securities may be volatile
and subject to wide price fluctuations in response to various factors, including:

 market conditions in the broader stock market;

 actual or anticipated fluctuations in our quarterly
financial condition and results of operations, or those of other companies in our industry;

 actual or anticipated strategic, technological,
or regulatory threats, whether or not warranted by actual events;

 whether any securities analysts cover our stock;

 issuance of new or changed securities analysts'
reports or recommendations, if any;

 investor perceptions of our Company, the lithium
battery and accessory industry;

 the volume of trading in our stock;

 changes in accounting standards, policies, guidance,
interpretations, or principles;

 sales, or anticipated sales, of large blocks
of our stock;

 additions or departures of key management personnel,
creative, or other talent;

 regulatory or political developments, including
changes in laws or regulations that are applicable to our business;

 litigation and governmental investigations;

 sales or distributions of our common stock by
significant stockholders, the entity through which our controlling stockholder holds its investment, or other insiders;

 natural disasters and other calamities; and

 macroeconomic conditions.

 Furthermore, the stock market has experienced extreme
volatility that in some cases has been unrelated or disproportionate to the operating performance of particular companies. These and other
factors may cause the market price and demand for our securities to fluctuate substantially, which may limit or prevent investors from
readily selling their securities and it may otherwise negatively affect the liquidity of our securities. In addition, in the past, when
the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against
the company that issued the stock. If any of our stockholders were to bring a lawsuit against us, we could incur substantial costs defending
the lawsuit. Such a lawsuit could also divert the time and attention of our management from our business.

 We do not anticipate paying dividends on our
common stock in the foreseeable future, and you may not receive any return on investment unless you sell your common stock for a price
greater than that which you paid for it.

 We do not anticipate paying any dividends in the foreseeable
future on our common stock. We intend to retain all future earnings for the operation and expansion of our business and the repayment
of outstanding debt. Any future debt facilities we may enter into may contain restrictions on our ability to pay dividends or make distributions,
and any new credit facilities we may enter into may contain similar restrictions. As a result, capital appreciation, if any, of our common
stock may be your major source of gain for the foreseeable future. While we may change this policy at some point in the future, we cannot
assure you that we will make such a change.

 If securities or industry analysts do not publish
research or reports about our business, if they adversely change their recommendations regarding our stock, or if our results of operations
do not meet their expectations, our stock price and trading volume could decline.

 The trading market for our securities may be influenced
by the research and reports that securities or industry analysts publish about us or our business (or the absence of such research or
reports). If one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, we could lose visibility
in the financial markets, which in turn could cause our stock prices or trading volume to decline. Moreover, if one or more of the analysts
who cover us downgrade recommendations regarding our stock, or if our results of operations do not meet their expectations, our stock
prices could decline and such decline could be material.

 You may be diluted by the future issuance of
additional common stock in connection with our incentive plans, acquisitions or otherwise.

 You will experience additional dilution upon the exercise
of options and warrants to purchase our common stock, including those options currently outstanding and possibly those granted in the
future, and the issuance of restricted stock or other equity awards under our stock incentive plans. As of December 31, 2024, we had 200,000,000
shares of common stock authorized, of which 2,096,082 were issued. Subsequent to December 31, 2024, we issued to certain institutional
investors in connection with a registered direct offering (i) 474,193 shares of common stock; and (ii) 574,193 pre-funded warrants (the
"January 2025 Pre-Funded Warrants") to purchase up to 574,193 shares of common stock (the "January 2025 Pre-Funded Warrant
Shares"). The January 2025 Pre-Funded Warrants were all exercised immediately upon issuance. In a concurrent private placement that
closed January 3, 2025, the Company also issued to the institutional investors unregistered warrants (the "January 2025 Warrants")
to purchase up to an aggregate of 1,048,386 shares of common stock. See " Management's Discussion and Analysis of Financial
Condition and Results of Operations—January 2025 Registered Direct Offering and Warrant Private Placement " for additional
information regarding the offering.

 Our Articles of Incorporation authorizes us to issue
shares of common stock and options, rights, warrants and appreciation rights relating to common stock for the consideration and on the
terms and conditions established by our Board in its sole discretion, whether in connection with our incentive plans, acquisitions or
otherwise. We have reserved 10,000 shares of common stock for issuance upon the exercise of outstanding stock options under the 2021 Incentive
Award Plan and 25,000 shares of common stock for issuance pursuant to our 2021 Employee Stock Purchase Plan. In addition, as of December
31, 2024, there were outstanding warrants to purchase up to 5,380,965 shares of common stock. In addition, there are 11,430 shares of
common stock issuable upon the exercise of equity incentive awards outstanding under our 2021 Incentive Award Plan as of December 31,
2024. Any common stock that we issue, including stock issued under our 2021 Incentive Award Plan or other equity incentive plans that
we may adopt in the future, as well as under outstanding options or warrants would dilute the percentage ownership held by our common
stockholders. To the extent we raise additional capital by issuing equity securities, our stockholders may also experience substantial
additional dilution.

 Sales of substantial amounts of our securities
in the public markets, or the perception that such sales might occur, could reduce the price of our securities and may dilute your voting
power and your ownership interest in us.

 If our existing stockholders sell substantial amounts
of our securities in the public market, including the shares of common stock issued or issuable upon the exercise of the August 2024 Pre-Funded
Warrants, Series A Warrants and Series B Warrants issued in the August 2024 Public Offering, as well as shares of common stock issued
in the January 2025 Registered Direct Offering (including the January 2025 Pre-Funded Warrant Shares) and upon the issuance of shares
of common stock upon the exercise, if any, of the January 2025 Warrants, and shares issued as consideration in any future acquisitions,
or the market perceives that such sales may occur, the market price of our securities could fall and we may be unable to sell our securities
in the future. See the section titled " Management's Discussion and Analysis of Financial Condition and Results of Operations—August
2024 Public Offering and Subsequent Warrant Exercises and Adjustments to Warrant Exercise and Reset Prices " and " —January
2025 Registered Direct Offering and Warrant Private Placement " for additional information regarding the August 2024 Public Offering
and January 2025 Registered Direct Offering, respectively. The perception in the public market that our stockholders might sell securities
could also depress our market price. As of March 25, 2025, we had 3,144,468 shares of common stock outstanding. Pursuant to the terms
of the warrants issued to the underwriters (or their designees) in connection with our initial public offering (the "Underwriter
Warrants"), the holders of the Underwriter Warrants have the right, subject to certain conditions, to require us to register the
sale of the shares of our common stock underlying their Underwriter Warrants under the Securities Act.

 If the holders of the Underwriter Warrants exercise
their registration rights, the market price of shares of our securities may drop significantly. In addition, all of the shares of common
stock issuable upon exercise of outstanding stock options under the 2021 Incentive Award Plan and all of the shares of common stock issuable
pursuant to the 2021 Employee Stock Purchase Plan have been registered for public resale under the Securities Act. A decline in the price
of shares of our securities might impede our ability to raise capital through the issuance of additional shares of our common stock or
other equity securities.

 Although our common stock is listed on Nasdaq,
the exchange could subsequently delist our common stock if we fail to comply with ongoing listing standards.

 Our common stock currently is listed on Nasdaq. We
are required to meet specified financial requirements in order to maintain such listing, including a requirement that the bid price for
our common stock remain above $1.00. On September 6, 2024, as expected, we received a staff determination from The Nasdaq Listing Qualifications
Department of The Nasdaq Stock Market ("Nasdaq") to delist our common stock from Nasdaq. On September 12, 2024, we requested
an appeal hearing, staying the delisting of the common stock pending a decision from a hearings panel. Upon successful completion of the
Reverse Stock Split, we received a letter from Nasdaq staff on October 23, 2024, advising us that we had regained compliance with the
continued listing requirements in Listing Rule 5550(a)(2) and that we are therefore in compliance with Nasdaq's listing requirements.
Consequently, the scheduled hearing before the hearings panel on October 24, 2024, was cancelled. See the section titled " Legal
Proceedings " for further information on the delisting notice.

 While shares of our common stock continue to be listed
and traded on Nasdaq, there can be no assurance that we will continue to meet Nasdaq listing standards. Any potential delisting of our
common stock from Nasdaq may have materially adverse consequences to our stockholders, including:

 a reduced market price and liquidity with respect
to our shares of common stock, which could make our ability to raise new investment capital more difficult;

 limited dissemination of the market price of our
common stock;

 limited news coverage;

 limited interest by investors in our common stock;

 volatility of the prices of our common stock due
to low trading volume;

 our common stock being considered a "penny
stock," which would result in broker-dealers participating in sales of our common stock being subject to the regulations set forth
in Rules 15g-2 through 15g-0 promulgated under the Exchange Act;

 increased difficulty in selling our common stock
in certain states due to "blue sky" restrictions; and

 limited ability to issue additional securities
or secure additional financing.

 The exercise of outstanding warrants may result
in a substantial increase in the number of shares of our common stock that are outstanding.

 As of December 31, 2024, 114,676,797 Series A Warrants,
exercisable for 5,286,692 shares of common stock, at $5.206 per share (post-Adjustment), and 3,075,000 Series B Warrants exercisable for
87,384 shares of common stock, at $0.10 per share (post-Adjustment) were outstanding. In addition, subsequent to December 31, 2024, we
issued to certain institutional investors the January 2025 Warrants to purchase up to an aggregate of 1,048,386 shares of common stock
at an exercise price of $2.36 per share, subject to adjustment for reverse stock splits, recapitalizations, and reorganizations. The exercise
of the Series A Warrants and, to a lesser extent, the Series B Warrants and January 2025 Warrants could result and have resulted in a
substantial increase in the number of shares of common stock outstanding and therefore materially dilute the ownership percentage of currently
outstanding shares of common stock. See the section titled " Management's Discussion and Analysis of Financial Condition
and Results of Operations—January 2025 Registered Direct Offering and Warrant Private Placement " and " —August
2024 Public Offering and Subsequent Warrant Exercises and Adjustments to Warrant Exercise and Reset Prices " for additional information
regarding the January 2025 Registered Direct Offering and August 2024 Public Offering, respectively.

 Provisions of the Series A Warrants and Series
B Warrants we sold in the August 2024 Public Offering may discourage an acquisition of us by a third party.

 Certain provisions of the Series A Warrants and Series
B Warrants we sold in the August 2024 Public Offering could make it more difficult or expensive for a third-party to acquire us. The Series
A Warrants and Series B Warrants each prohibit us from engaging in certain transactions constituting "fundamental transactions"
unless, among other things, the surviving entity assumes our obligations under the applicable warrants. These and other provisions of
the Series A Warrants and Series B Warrants could prevent or deter a third-party from acquiring us even where the acquisition could be
beneficial to our investors.

 The Series A Warrants and Series B Warrants
may have an adverse effect on the market price of our common stock and make it more difficult to effect a business combination.

 To the extent we issue shares of common stock to affect
a future business combination, the potential for the issuance of a substantial number of additional shares of common stock upon exercise
of the Series A Warrants and, to a lesser extent, the Series B Warrants could make us a less attractive acquisition vehicle in the eyes
of a target business. Such Series A Warrants and Series B Warrants, when exercised, will increase the number of issued and outstanding
shares of common stock and reduce the value of the shares issued to complete the business combination. Accordingly, the Series A and Series
B Warrants may make it more difficult to effectuate a business combination or increase the cost of acquiring a target business. Additionally,
the sale, or even the possibility of a sale, of the shares of common stock underlying the August 2024 Pre-Funded Warrants, Series A Warrants,
and Series B Warrants could have an adverse effect on the market price for our securities or on our ability to obtain future financing.
If and to the extent the Series A Warrants and Series B Warrants are exercised, our investors may experience dilution to their holdings.

 The Reverse Stock Split cash true-up payment
provision in the Series A Warrants we sold in the August 2024 Public Offering may have a material adverse impact on our financial condition,
may impede our ability to raise additional capital, and may discourage an acquisition of us by a third party.

 As a result of the daily volume weighted average price
("VWAP") of the common stock during the five trading days before and after the Reverse Stock Split, the Reverse Stock Split
cash true-up payment provision in the Series A Warrants, which is capped at $5.0 million in the aggregate under all Series A Warrants,
was triggered, but the payment of the Reverse Stock Split cash true-up payment is currently suspended in accordance with the terms of
the Series A Warrants. However, in connection with the January 2025 Registered Direct Offering, we used approximately $500,000
of the $2.2 million in net proceeds to satisfy a portion of amounts owed to our Series A Warrant holders pursuant to the terms of the
outstanding Series A Warrants. The obligation to make the Reverse Stock Split cash true-up payment could impede our ability to
raise additional capital and could prevent or deter a third party from acquiring us even where the acquisition could be beneficial to
our investors. In the event that the conditions for suspension of the Reverse Stock Split cash true-up payment under the terms of the
Series A Warrants become no longer applicable, the payment of the Reverse Stock Split cash true-up payment could have a material adverse
impact on our financial condition.

 We continue to incur considerable legal costs
as a result of operating as a public company, and our management will be required to devote substantial time to comply with public company
regulations.

 As a public company, and particularly after we cease
to be an "emerging growth company," as defined in the JOBS Act, we will continue to incur significant legal, accounting and
other expenses. In addition, the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"), as well as rules promulgated by the SEC and
Nasdaq require us to adopt corporate governance practices applicable to U.S. public companies. Compliance with these rules and regulations
will continue to increase our legal and financial compliance costs.

 Sarbanes-Oxley, as well as rules and regulations subsequently
implemented by the SEC and Nasdaq, have imposed increased disclosure and enhanced corporate governance practices for public companies.
Our efforts to continue to comply with evolving laws, regulations and standards are likely to result in increased expenses and a diversion
of management's time and attention from revenue-generating activities to compliance activities. We may not be successful in continuing
to implement these requirements and implementing them could adversely affect our business, results of operations and financial condition.
In addition, if we fail to implement the requirements with respect to our internal accounting and audit functions, our ability to report
our financial results on a timely and accurate basis could be impaired.

 Our management team has limited experience managing
a public company.

 Most members of our management team have limited experience
managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining
to public companies. These obligations and constituents require significant attention from our senior management and can divert their
attention away from the day-to-day management of our business, which can harm our business, results of operations and financial condition.

 We are an "emerging growth company"
and elect to comply with certain reduced reporting requirements applicable to emerging growth companies, which could make our securities
less attractive to investors.

 As an "emerging growth company," we take
advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging
growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404
of Sarbanes-Oxley, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. We cannot predict if investors will find our securities less attractive because we chose to rely on
these exemptions. If some investors find our securities less attractive as a result, there may be a less active trading market for our
securities and the prices of our securities may be more volatile.

 Section 107 of the JOBS Act also provides that an
"emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities
Act for complying with new or revised accounting standards. We choose to avail ourselves of this extended transition period and defer
adoption of certain changes in accounting standards.

 As described in Section 101 of the JOBS Act, the "emerging
growth company" classification can be retained for up to five years following our initial public offering or until the earlier occurrence
of the following: the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which
we have total annual gross revenue of at least $1.235 billion, or (c) in which we deemed to be a large accelerated filer, which means
the market value of our common stock that is held by non-affiliates exceeded $700.0 million as of the prior June 30; or the date on which
we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

 If some investors find our
securities less attractive as a result of any choices to reduce future disclosure, there may be a less active market for our securities
and our stock price may be more volatile.

 Failure to maintain effective internal control
over financial reporting in accordance with Section 404 of Sarbanes-Oxley could have a material adverse effect on our business and stock
price.

 We are required to comply
with certain SEC rules that implement Sections 302 and 404 of Sarbanes-Oxley, which require management to certify financial and other
information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over
financial reporting. Though we are required to disclose changes made in our internal control procedures on a quarterly basis, we take
advantage of certain exceptions from reporting requirements that are available to "emerging growth companies" under the JOBS
Act. For example, each independent registered public accounting firm that performs an audit for us has not been required to attest to
and report on our annual assessment of our internal controls over financial reporting pursuant to Section 404 and will not be required
to do so until we are no longer an "emerging growth company" as defined in the JOBS Act and a non-accelerated filer in accordance
with Rule 12b-2 under the Exchange Act. While we expect to be ready to comply with Section 404 of Sarbanes-Oxley by the applicable deadline,
we cannot assure you that this will be the case. Furthermore, we may identify material weaknesses that we may be unable to remediate in
time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404 of Sarbanes-Oxley. In addition,
if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from
time to time, we may be unable to conclude that we have effective internal controls over financial reporting in accordance with Section
404 of Sarbanes-Oxley. If we are unable to implement the requirements of Section 404 of Sarbanes-Oxley in a timely manner or with adequate
compliance, our independent registered public accounting firm may issue an adverse opinion due to ineffective internal controls over financial
reporting and we may be subject to sanctions or investigation by regulatory authorities, such as the SEC. As a result, there could be
a negative reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition,
we may be required to incur costs in improving our internal control system and the hiring of additional personnel. Any such action could
have a material adverse effect on our business, prospects, results of operations, and financial condition.

 If our shares become subject to the penny stock
rules, it would become more difficult to trade our shares.

 The SEC has adopted
rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity
securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized
for quotation on certain automated quotation systems, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system. If we do not retain a listing on Nasdaq or another national
securities exchange and if the price of our common stock is less than $5.00, our common stock could be deemed a penny stock. The
penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a
standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before
effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser and receive: (i) the purchaser's written
acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and
(iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity
in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares.

 Risks Related to Our Capital Structure

 Our long-term lease and debt obligations could
adversely affect our ability to raise additional capital to fund operations and limit our ability to enter into certain transactions.

 As of December 31, 2024, we had total liabilities
of $6.6 million, of which $5.0 million is the suspended liability for the true-up payment related to the August 8, 2024 capital raise,
$799,000 was related to operating lease liabilities, and $230,000 was related to debt obligations.

 If we cannot generate sufficient cash flow from operations
to service our lease and debt obligations or the Reverse Stock Split cash true-up payment, we may need to further refinance our debt,
dispose of assets or issue equity to obtain necessary funds. We do not know whether we will be able to do any of this on a timely basis
or on terms satisfactory to us, or at all. Our substantial lease and debt obligations could have important consequences, including:

 our ability to obtain additional debt or equity
financing for working capital, capital expenditures, debt service requirements, acquisitions, and general corporate or other purposes
may be limited;

 a portion of our cash flows from operations will
be dedicated to payments on our lease and debt obligations and will not be available for other purposes, including operations, capital
expenditures and future business opportunities;

 we may be vulnerable in a downturn in general
economic conditions or in business or may be unable to carry on capital spending that is important to our growth;

 restrictive covenants in our debt documents may
impose significant operating and financial restrictions on us, including our ability to pay dividends and make other restricted payments
or sell our collateral (other than inventory in the ordinary course of business);

 our ability to introduce new products or new
technologies or exploit business opportunities may be restricted; and

 we may be placed at a disadvantage compared with
competitors that have proportionately less lease and debt obligations.

 Our Articles of Incorporation provide that the
Nevada Eighth Judicial District Court of Clark County, Nevada shall be the exclusive forum for certain litigation that may be initiated
by our stockholders, including claims under the Securities Act, which could limit our stockholders' ability to obtain a favorable
judicial forum for disputes with us or our directors, officers, or employees.

 Our Articles of Incorporation provides that, subject
to limited exceptions, the Nevada Eighth Judicial District Court of Clark County, Nevada shall be, to the fullest extent permitted by
law, be the sole and exclusive forum for: (i) any derivative action or proceeding brought in the name or right of the Corporation or on
its behalf, (ii) any action asserting a claim for breach of a fiduciary duty owed by any of our directors, officers, employees or agents
to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of Nevada Revised Statutes Chapters 78
or 92A, our Articles of incorporation or our Bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our Articles
of Incorporation or Bylaws, or (v) any action asserting a claim governed by the internal affairs doctrine.

 Although these choice of forum provisions would not
apply to suits brought to enforce any duty or liability created by the Exchange Act or rules and regulations thereunder, and suits brought
to enforce the Securities Act or rules and regulations thereunder are granted concurrent jurisdiction in federal and state courts pursuant
to preemptive federal law, these choice of forum provisions may otherwise limit a stockholder's ability to bring a claim in a judicial
forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits
against us and our directors, officers, employees and agents. Stockholders who do bring a claim in the Nevada Eighth Judicial District
Court of Clark County, Nevada could face additional litigation costs in pursuing any such claim, particularly if they do not reside in
or near the State of Nevada. The Nevada Eighth Judicial District Court of Clark County, Nevada may also reach different judgments or results
than would other courts, including courts where a stockholder considering an action may be located
or would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders. Alternatively,
if a court were to find the choice of forum provision contained in our Articles of Incorporation to be inapplicable or unenforceable in
an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our
business and financial condition.

 I TEM 1B.
UNRESOLVED STAFF COMMENTS

 None.

 Item
1c. cybersecurity

 Risk Management and Strategy

 We maintain an information security and cybersecurity
program, as well as a cybersecurity governance framework, which are designed to protect our information systems against operational risks
related to cybersecurity.

 Cybersecurity Risk Management and Strategy

 We recognize the importance of assessing, identifying,
and managing material risks associated with cybersecurity threats which include, among other things, operational risks, intellectual property
theft, fraud or extortion, harm to employees or customers, violation of privacy or security laws and related litigation and legal risk,
and reputational risks.

 We have developed and implemented a cybersecurity
risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information,
and detect and contain any cybersecurity incidents that impact us. We regularly engage with third-party consultants in connection with
our cybersecurity risk management program, which is overseen by our Chief Operating Officer. The program is integrated into our overall
risk management systems and processes, and includes a cybersecurity risk assessment process that routinely evaluates potential impacts
of cybersecurity risks on our business, including our operations, financial stability, and reputation. The Audit Committee also reviews
with management the implementation and effectiveness of the Company's controls to monitor and mitigate cybersecurity risks.

 Our cybersecurity risk management program also includes
processes to triage, assess the severity of, escalate, contain, investigate, and remediate an incident, as well as to comply with potentially
applicable legal obligations and mitigate brand and reputational damage. If a cybersecurity incident is determined to be a potentially
material cybersecurity incident, our disclosure controls and procedures define the steps to determine materiality and disclose such a
material cybersecurity incident.

 While we do not believe that our business strategy,
results of operations or financial condition have been materially adversely affected by any cybersecurity incidents, cybersecurity threats
are pervasive and, similar to other global financial institutions, we, as well as our employees, customers, regulators, service providers,
and other third parties have experienced a significant increase in information security and cybersecurity risk in recent years and will
likely continue to be the target of cyber attacks. We continue to assess the risks and changes in the cyber environment, invest in enhancements
to our cybersecurity capabilities, and engage in industry and government forums to promote advancements in our cybersecurity capabilities,
as well as the broader financial services cybersecurity ecosystem. For more information on risks to us from cybersecurity threats, see
the section titled " Risk Factors—If our electronic data is compromised, or we experience a failure in our information technology
or storage systems, our business could be significantly harmed " included within this Annual Report.

 Cybersecurity Governance

 Our Board is actively involved in overseeing risks
from cybersecurity threats. At least once a year, our Board discusses our programs and policies related to cybersecurity and risk initiatives
and considers them closely both from a risk management perspective and as part of our business strategy. Our Audit Committee has the authority
to oversee and review the adequacy of our cybersecurity, information and technology security, and data privacy programs, procedures, and
policies.

 The Audit Committee regularly receives updates from
management with respect to our efforts to manage data protection, cybersecurity, and information and technology risks, and assesses the
results of reviews from internal audits. Materials presented to our Audit Committee include updates on our data security posture, results
from internal audit and third-party assessments, our incident response plan, and certain cybersecurity threat risks or incidents and developments,
as well as the steps management has taken to respond to such risks. The Audit Committee also regularly engages with Management on technology
risk-related topics.

 Our processes also allow for our Board and the Audit
Committee to be informed of key cybersecurity risks outside the regular reporting schedule. While regular meetings of the Audit Committee
are scheduled on a quarterly cadence, the Audit Committee is authorized to meet with management or individual directors at any time it
deems appropriate to discuss matters relevant to the committee. Our policy is for the Board and the Audit Committee to receive prompt
and timely information regarding any significant cybersecurity incidents, as well as ongoing updates regarding any such incidents.

 ITEM 2. PROPERTIES

 Our corporate headquarters are in
Redmond, Oregon, and house our engineering, sales, accounting, and operations staff. Our primary product warehouse is also located there.
Our headquarters is approximately 15,000 square feet, leased at a base rent that increases 3.0% annually on January 31st of each year.
From January 31, 2024 to January 30, 2025, the rental cost of our headquarters was approximately $19,600 per month.

 We previously leased a facility
in Redmond, Oregon, which was primarily used for warehousing. The square footage of this facility is approximately 33,770 square feet,
and from February 1, 2024 to September 30, 2024, the rental cost of this facility was approximately $33,340 per month. On September 24,
2024, we voluntarily terminated the lease, effective as of October 1, 2024 as part of an effort to identify cost reduction opportunities.
We plan to continue operating our warehousing out of its Redmond, Oregon headquarters and Elkhart, Indiana locations. In connection with
the termination of the lease, we paid one extra month's rent, a $30,000 fee, and a broker commission of approximately $89,000. The
lease termination is expected to result in approximately $40,000 of cost savings per month over the 51 months following its termination.

 We also lease a property in Elkhart,
Indiana. In 2024, it served to provide a stocking location for several large manufacturers in the area. Elkhart is a hub for RV manufacturing
in the United States. Currently, it is primarily used for office space and as a backup location for warehousing and distribution to local
customers. The square footage of this facility is approximately 7,000 square feet, leased at a cost of $4,900 per month.

 We believe these facilities are
sufficient to meet our current and anticipated needs in the near term and that additional space can be obtained on commercially reasonable
terms as needed.

 ITEM 3. LEGAL PROCEEDINGS

 We may become, from time to time,
involved in routine litigation or subject to disputes or claims related to our business activities. We are not currently party to any
pending legal proceedings that we believe would, individually or in the aggregate, have a material adverse effect on our financial condition,
cash flows or results of operations.

 On September 6, 2024, we
received a staff determination from The Nasdaq Listing Qualifications Department of Nasdaq to delist our Common Stock from Nasdaq indicating
that (i) we were not in compliance with Nasdaq Listing Rule 5550(a)(2) because the closing bid price per share for our Common Stock had
closed below $1.00 for the previous 30 consecutive business days, and (ii) we are subject to the provisions contemplated under Nasdaq
Listing Rule 5810(c)(3)(A)(iii) because, as of September 5, 2024, our Common Stock had a closing bid price of $0.10 or less for at least
ten consecutive trading days (the "Staff Determination").

 On September 12, 2024, the
Company requested an appeal hearing on the Staff Determination from a Hearings Panel (the "Panel") by filing a hearing request
with Nasdaq pursuant to the procedures set forth in the Nasdaq Listing Rules, staying the delisting of the Company's common stock
pending the Panel's decision Upon successful completion of the Reverse Stock Split, we received a letter from the Nasdaq Office
of General Counsel on October 23, 2024, advising us that we had regained compliance with the minimum bid price continued listing requirements
in Listing Rule 5550(a)(2) and that we are therefore in compliance with Nasdaq's listing requirements. Consequently, the scheduled
hearing before the Panel on October 24, 2024 was cancelled. Our Common Stock continues to be listed and traded on Nasdaq.

 ITEM 4. MINE SAFETY DISCLOSURES

 Not applicable.

 ITEM 5. MARKET FOR REGISTRANT'S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 Market Information

 Our common stock began trading on
Nasdaq on April 1, 2022 under the symbol "XPON." As of March 25, 2025, there were approximately 16 registered holders of our
common stock, which does not include beneficial owners of our common stock whose shares are held in the names of various securities brokers,
dealers, and registered clearing agencies.

 Dividend Policy

 We have never declared or paid cash
dividends on our common stock. We do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future.
We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development
of our business. Any future determination related to our dividend policy will be made at the discretion of our Board and will depend upon,
among other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects,
and other factors our Board may deem relevant. Further, any future debt facilities we may enter into may contain restrictions on our ability
to pay dividends or make distributions, and any new credit facilities we may enter into may contain similar restrictions.

 Stock Performance Graph

 As a smaller reporting company (as
defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by Item 201(e) of Regulation S-K.

 Recent Sales of Unregistered Securities from
Registered Securities

 There were no sales of unregistered
equity securities during the fiscal year ended December 31, 2024 that were not previously reported in a Quarterly Report on Form 10-Q
or Current Report on Form 8-K.

 Purchases of Equity Securities by the Issuer
and Affiliated Purchasers

 None.

 ITEM 6. [RESERVED]

 ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 The following discussion and
analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and
related notes for the fiscal years ended December 31, 2024 and 2023, included in this Annual Report. Our future financial condition and
results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties that may adversely impact
our operations and financial results. These risks and uncertainties are discussed in this Annual Report, including in Item 1A. "Risk
Factors" and "Cautionary Note Concerning Forward-Looking Statements and Industry Data." Percentage amounts included
in this section have not in all cases been calculated on the basis of rounded figures, but on the basis of such amounts prior to rounding.
For this reason, percentage amounts in this section may vary from those obtained by performing the same calculations using the figures
in our consolidated financial statements included elsewhere in this Annual Report. Certain other amounts that appear in this section may
not sum due to rounding.

 Unless otherwise noted, all references to shares and per
share amounts for the years ended December 31, 2024 and 2023 presented in this section have been adjusted retroactively to reflect a
1-for-100 reverse stock split, which was effective at 5:00 p.m. Pacific Time on October 8, 2024 (the "Reverse Stock Split").
See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Reverse Stock Split and Reverse
Stock Split True-Up Payment" below for additional information about the Reverse Stock Split.

 Overview

 Expion360 focuses on the design, assembly, manufacturing,
and sale of lithium iron phosphate ("LiFePO4") batteries and supporting accessories for recreational vehicles ("RVs"),
marine applications and home energy storage products with plans to expand into industrial applications. Our high-powered, lithium battery
solutions incorporate innovative concepts and have been designed to include some of the most dense and minimal-footprint batteries in
the RV and marine industries. In addition, in January 2025 we began selling our e360 Home Energy Storage Solutions, which consist of two
LiFePO4 battery storage solutions and seek to provide consumers with a cost-effective, low barrier of entry, flexible system to power
their homes utilizing solar energy, wind, or grid back-up. We are deploying multiple intellectual property strategies with research and
products to sustain and scale our business. This includes design, development and collaboration, using our IP to bring safety, quality
and service to our customers. Our customers consist of dealers, wholesalers, private-label customers, and original equipment manufacturers
("OEMs") who then sell our products to end consumers and drive brand awareness nationally.

 Our primary target markets are currently the RV, marine,
and home energy storage industries. We believe we are well-positioned to capitalize on the rapid market conversion from lead-acid to lithium
batteries as the primary method of power sourcing in these industries. We are also focused on expanding into the home energy storage market
with the introduction of our e360 Home Energy Storage Solutions, and we hope to establish a new standard in the industry for barrier price,
flexibility, and integration with this offering. Along with the RV, marine and home energy storage markets, we aim to provide additional
capacities to the expanding electric forklift and industrial material handling markets.

 We launched our e360 product line, which is manufactured
for the RV and marine industries, in December 2020. The e360 product line, through its sales growth, has shown to be a preferred conversion
solution for lead-acid batteries. In December 2023, we announced our entrance into the home energy storage market with our introduction
of two LiFePO4 battery storage solutions that enable residential and small business customers to create their own stable micro-energy
grid and lessen the impact of increasing power fluctuations and outages. As of January 2025, we have begun shipping orders of our e360
Home Energy Storage Solutions.

 We currently operate Expion360 as one reportable business
segment, Energy Storage (ES).

 Our products provide numerous advantages for various
industries that are looking to migrate to lithium-based energy storage. They incorporate detailed-oriented design and engineering, strong
case materials, and internal and structural layouts, and are backed by responsive customer service.

 Recent Developments

 January
2025 Registered Direct Offering and Warrant Private Placement

 On January 3, 2025, we sold
to certain institutional investors, in a registered direct offering, an aggregate of (i) 474,193 shares of common stock; and (ii) 574,193
pre-funded warrants (the "January 2025 Pre-Funded Warrants") to purchase up to 574,193 shares of common stock (the "January
2025 Pre-Funded Warrant Shares"). The offering price per share was $2.48 and the offering price per January 2025 Pre-Funded Warrant
was $2.479. Each January 2025 Pre-Funded Warrant was exercisable for one share of common stock for $0.001 immediately and the January
2025 Pre-Funded Warrants were all exercised immediately upon issuance. The number of January 2025 Pre-Funded Warrant Shares are subject
to adjustments for stock splits, recapitalizations, and reorganizations.

 In a concurrent private placement
that closed January 3, 2025, we also issued to the institutional investors unregistered warrants (the "January 2025 Warrants")
to purchase up to an aggregate of 1,048,386 shares of common stock (the "January 2025 Warrant Shares") at an exercise price
of $2.36 per share, subject to adjustment for reverse stock splits, recapitalizations, and reorganizations. The January 2025 Warrants
were immediately exercisable and can be exercised until January 3, 2030. In connection with the private placement, we filed a registration
statement on Form S-1 (File No. 333-284354), which was
declared effective by the SEC on February 11, 2025, covering the resale of the January 2025 Warrant Shares.

 We received net proceeds of approximately $2.2 million
from the offering and used approximately $500,000 of the net proceeds to satisfy a portion of certain amounts
owed to our Series A Warrant holders pursuant to the terms of the outstanding Series A Warrants.

 Chief
Operating Officer Medical Leave of Absence

 On November
16, 2024, Paul Shoun, our Co-Founder, President, Chief Operating Officer, and Chairman of the Board, commenced a temporary medical leave
of absence from his duties as Chief Operating Officer. During his leave, Mr. Shoun continued to perform his duties as President and Chairman
of the Board during his leave. Mr. Shoun resumed his duties as Chief Operating Officer in February 2025. In connection with Mr. Shoun's
return to his full responsibilities, Carson Heagen, our Vice President of Operations, who temporarily assumed the role of Chief Operating
Officer, ceased serving in that capacity.

 Resignation of Chief Financial Officer
and Appointment of Interim Chief Financial Officer

 On
December 16, 2024, Greg Aydelott, our Chief Financial Officer, notified us of his resignation effective December 31, 2024, due to family
health concerns. Mr. Aydelott is remaining with the Company in a consulting role on an ongoing basis. In
connection with Mr. Aydelott's resignation, on December 20, 2024, our Board appointed Brian Schaffner, who serves as our Chief Executive
Officer and as a member of the Board, to serve as our interim Chief Financial Officer effective immediately upon Mr. Aydelott's
resignation. The Board has commenced a search for a new Chief Financial Officer.

 Reverse
Stock Split and Reverse Stock Split True-Up Payment

 Effective
as of 5:00 p.m. Pacific Time on October 8, 2024 (the "Effective Date"), we effected a 1-for-100 reverse stock split of our
common stock (the "Reverse Stock Split"), which was approved by the Board on September 27, 2024, following stockholder approval
at our annual meeting of stockholders held on September 27, 2024. No fractional shares of common stock were issued as a result of the
Reverse Stock Split and instead each holder of Common Stock who was otherwise entitled to receive a fractional share as a result of the
Reverse Stock Split received one whole share of common stock in lieu of such fractional share. As a result of this, 210,668 shares were
issued on or before October 17, 2024. In addition, the Reverse Stock Split effected a reduction in the number of shares issuable pursuant
to our equity awards, warrants and non-plan options outstanding as of the Effective Date, and a corresponding increase in the respective
exercise prices, conversion prices, reset prices and the like thereunder.

 As a result
of the daily VWAP of the common stock during the five trading days before and after the Reverse Stock Split, a Reverse Stock Split cash
true-up payment provision in the Series A Warrants, which is capped at $5.0 million in the aggregate under all Series A Warrants, was
triggered, but the payment of the Reverse Stock Split cash true-up payment was suspended in accordance with the terms of the Series A
Warrants. In connection with the closing of the January 3, 2025 offering, we used $500,000 of the net proceeds from the offering to satisfy
a portion of certain amounts owed to the holders of the Series A Warrants pursuant to the terms thereof.

 August 2024 Public Offering and Subsequent
Warrant Exercises and Adjustments to Warrant Exercise and Reset Prices

 On August
8, 2024, we sold in a public offering (the "August 2024 Public Offering") (i) 33,402,000 common units (the "Common Units,"
pre-Reverse Stock Split), each consisting of one share of common stock, two Series A warrants each to purchase one share of common stock
(pre-Reverse Stock Split and pre-Adjustment (as defined below) and each, a "Series A Warrant") and one Series B warrant to
purchase such number of shares of common stock as determined in the Series B warrant (each, a "Series B Warrant"), and (ii)
16,598,000 pre-funded units (the "Pre-Funded Units," and together with the Common Units, the "Units," pre-Reverse
Stock Split), each consisting of one pre-funded warrant to purchase one share of common stock (each, an "August 2024 Pre-Funded
Warrant"), two Series A Warrants, and one Series B Warrant, through Aegis Capital Corp. serving as underwriter (in its capacity
as such, the "Underwriter").
The Common Units were sold at a price of $0.20 per unit and the August 2024 Pre-Funded Warrants were sold at a price of $0.199 per unit
(pre-Reverse Stock Split).

 In addition,
we granted the Underwriter a 45-day option to purchase additional shares of common stock and/or August 2024 Pre-Funded Warrants and/or
Series A Warrants and/or Series B Warrants, representing up to 15% of the number of the respective securities sold in the August 2024
Public Offering, solely to cover over-allotments, if any. The Underwriter partially exercised its over-allotment option with respect to
15,000,000 Series A Warrants and 7,500,000 Series B Warrants (pre-Reverse Stock Split).

 The August
2024 Pre-Funded Warrants were immediately exercisable at an exercise price of $0.001 per share (pre-Reverse Stock Split) and could be
exercised at any time until exercised in full. All August 2024 Pre-Funded Warrants have been exercised.

 Each Series
A Warrant is exercisable at any time or times beginning on September 30, 2024, which was the first trading day following our notice to
the Series A Warrant holders of stockholder approval received at the 2024 Annual Meeting, and will expire five years from such date. 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 subject to reduction on the 11th trading day after the stockholder approval to the greater of
the lowest daily VWAP during the ten-trading-day period following the stockholder approval and the floor price of $5.206 (representing
20% of the lower of our common stock's closing price on Nasdaq on the date that we priced the August 2024 Public Offering, post-Reverse
Stock Split) or our common stock's average closing price on Nasdaq for the five trading days ending on such date (such lower price,
without giving effect to such 20% reduction, the "Nasdaq Minimum Price"), and the number of shares issuable upon exercise
would be proportionately adjusted such that the aggregate exercise price would remain unchanged. As of September 30, 2024, there
would have been 5,301,592 shares of common stock (post-Reverse Stock Split and assuming the Adjustment had occurred on September 30, 2024)
issuable upon exercise of the Series A Warrants as of that date. Subsequent to September 30, 2024, the exercise price under the Series
A Warrants was reduced to the floor price of $5.206 (representing 20% of the Nasdaq Minimum Price, post-Reverse Stock Split), beginning
on October 14, 2024, the 11th trading day following stockholder approval. As of December 31, 2024, 14,900 shares of common stock
have been issued upon exercise of Series A Warrants and 5,286,692 shares of common stock remain issuable upon exercise of Series A Warrants.

 Each Series
B Warrant was exercisable immediately upon issuance at an exercise price of $0.10 per share (post-Reverse Stock Split). The number of
shares of common stock issuable under the Series B Warrants were subject to adjustment using
a reset price based on the weighted average price of common stock over a rolling five-trading-day period between the issuance date of
the Class B Warrants and the close of trading on the tenth trading day following stockholder approval, subject to certain floor prices.
As of December 31, 2024, 1,294,367 shares of common stock (post-Reverse Stock Split) had been issued upon exercise of Series B Warrants
and there were 1,032,198 shares of common stock (post-Reverse Stock Split) issuable upon exercise of Series B Warrants based on the reset
price of $5.45 (representing the lowest arithmetic average of the daily VWAP during the five-trading-day period from September 12, 2024
through September 18, 2024). Effective October 8, 2024, after market close, the Reverse Stock Split occurred and as of December 31, 2024,
87,384 shares of common stock remain issuable upon exercise of Series B Warrants using the
reset price, which was reduced to the floor price of $5.206 (representing 20% of the Nasdaq Minimum Price (post-Reverse Stock Split and
post-Adjustment).

 Key Factors Affecting Our Results of Operations

 Our results of operations and financial performance
are significantly dependent on the following factors:

 Consumer Demand

 Although our sales are primarily generated from dealers,
wholesalers, private-label customers and OEMs focused on the RV, marine, and home energy markets, the demand for our products from these
customers depends on consumer demand. Our sales are completed on a purchase order basis, and most are without firm, long-term revenue
commitments or sales arrangements, which we expect to continue going forward. Accordingly, our growth prospects and future sales are
subject to risks and uncertainties related in part to consumer demand for our products, which is affected by a number of factors, including
fuel costs, discretionary spending, macroeconomic conditions, including inflation, changes in tariffs and interest rates, geopolitical
pressures, and volatility in the RV, marine, and home energy markets. In recent years we have seen a rise in fuel costs, higher interest
rates, and other changes in macroeconomic conditions, which have resulted in decreased consumer spending decisions and affecting our
industry as a whole. In addition, we expect escalating tensions between the U.S. and China, where several of our key manufacturers and
suppliers are located, as well as the ongoing risk of new or additional tariffs impacting lithium-ion batteries or related parts, to
increase our cost of goods sold, which could require us to increase prices to our customers or result in lower gross margins on our products.
These conditions have had, and may continue to have, a negative effect on our business, financial condition, and results of operations.

 While RV and marine applications have historically
driven our revenue, in January 2025, we began shipping orders of our e360 Home Energy Storage Solution, comprised of two LiFePO4 battery
storage solutions. Our e360 Home Energy Storage Solutions aim to provide consumers with a cost-effective, low barrier of entry, flexible
system to power their homes utilizing solar energy, wind, or grid back-up. The success of our strategy depends on (i) the continued growth
of these addressable markets in line with our expectations, and (ii) our ability to successfully enter and maintain a competitive position
in the RV, marine, and home energy markets with commercially viable products. We expect to incur significant marketing costs understanding
and growing our presence within these markets, and researching and targeting customers in these markets, and our efforts may not be successful
in generating sales. If we fail to execute on this growth strategy in accordance with our expectations, our sales growth could be limited
to the growth of existing products and existing end markets.

 Expion360 has recently added several new distributors
and OEM customers in RV and marine markets. Management believes that orders resulting from these new relationships will result in significant
new revenue streams in the year ending December 31, 2025. In addition, Expion360 began shipping Home Energy Storage Systems in January
2025.

 Manufacturing and Supply Chain

 Our batteries are manufactured by multiple third-party
manufacturers located in Asia, which also produce our battery cells. While we do not have long-term purchase agreements with these manufacturers
and our purchases are completed on a purchase-order basis, we maintain strong relationships with our manufacturers and cell suppliers,
reflected in our ability to increase our purchase order volumes (qualifying us for related volume-based discounts). The strength of these
relationships has helped us moderate increased supply-related costs associated with inflation, currency fluctuations, and U.S. government
tariffs imposed on our imports, and avoid potential shipment delays. We aim to maintain an appropriate level of inventory to satisfy our
expected supply requirements. We believe we could locate suitable alternative third-party manufacturers to fulfill our requirements if
needed.

 Our third-party manufacturers source the raw materials
and battery components required for the production of our batteries directly from third-party suppliers that meet our approval and quality
standards and, as a result, we may have limited control over the agreed pricing for these raw materials and battery components. We estimate
that raw material costs account for over half of our cost of goods sold. Lithium, which is extracted from mined ore, is a key raw material
used to produce our battery cells and, as a result, the cost of our battery cells is dependent on the price and availability of lithium,
which may be volatile and unpredictable and beyond our control. Additionally, availability of the raw materials used to manufacture our
products may be limited at times, resulting in higher prices and/or the need to find alternative suppliers. Our battery cell manufacturers
have joint venture factories outside of Asia and have secured sourcing contracts from lithium suppliers in South America and Australia.
In addition, we have a secondary source for lithium iron phosphate cells used in our batteries from a supplier in Europe, enabling us
to source materials outside of Asia in the event it becomes necessary to do so.

 In addition to increased mining and newly located
reserves, there is an industry push to provide more efficient ways to extract lithium from mined ore. Another development of the past
few years is lithium cell recycling. This process will recapture the raw lithium from the cell for reuse in future cells. However, notwithstanding
efforts to improve the sustainability and efficiency of lithium mining, the price of lithium is volatile. We continue to monitor developments
that may adversely affect our supply chain.

 Management expects that products from our Asian third-party
manufacturers will be subject to additional tariffs in 2025. We believe that we can protect our margins through a combination of supplier
concessions, customer price increases and efficiencies gained as sales continue to grow.

 For additional information regarding, see the section
titled " Risk Factors—Our results of operations could be adversely affected by changes in the cost and availability of raw
materials and we are dependent on third-party manufacturers and suppliers " and " Risk Factors—Increases in costs,
disruption of supply or shortage of any of our battery components, such as electronic and mechanical parts, or raw materials used in the
production of such parts could harm our business."

 Product and Customer Mix

 As of December 31, 2024, we sell 15 models of LiFEPO4
batteries, the Aura 600, and various individual or bundled accessories for battery systems. Our products are sold to different customers
(i.e., dealers, wholesalers, private-label customers, OEMs, etc.) at differing prices and have varying costs. The average selling price
and costs of goods sold for a particular product will vary with changes in the sales channel mix, volume of products sold, and the prices
of such products sold relative to other products. While we work with our suppliers to limit price and supply cost increases, our products
may see price increases resulting from a rise in supply costs due to currency fluctuations, inflation, and tariffs. Accessory and OEM
sales typically have lower average selling prices and resulting margins, which could decrease our margins and negatively affect our growth
or require us to increase the prices of our products. However, the benefits of increased sales volumes typically offset these reductions.
The relative margins of products sold also impact our results of operations. As we introduce new products, we may see a change in product
and sales channel mix, which could result in period-to-period fluctuations in our overall gross margin.

 Competition

 We compete with both traditional lead-acid and lithium-ion
battery manufacturers that primarily either import their products and/or components or manufacture their products and/or components under
a private label. As we develop new products and expand into new markets, we may experience competition with a broader range of companies.
These companies may have more resources than us and be able to allocate more resources to their current and future products. Our competitors
may source products or components at lower costs than us, which may require us to evaluate our own costs, lower our product prices, or
increase our sales volume to maintain our expected profitability levels.

 Research and Development

 We anticipate that additional investments in our infrastructure
and research and development spending will be required to scale our operations and increase productivity, address the needs of our customers,
further develop and enhance our products and services, and expand into new geographic areas and market segments.

 New technologies are rapidly emerging in the markets
where we conduct business and many new energy storage technologies have been introduced over the past several years. Our ability to achieve
significant and sustained penetration of key developing markets, including the RV, marine, residential energy storage, and small commercial
energy storage markets, will depend upon our success in developing these and other technologies, either independently, through joint ventures,
or through acquisitions, which in each case may require significant capital and commitment of resources to research and development. Accordingly,
we may need to seek additional debt and equity financing to fund our research and development efforts and planned growth.

 Certifications

 We have completed the final requirements
to obtain UL Safety Certifications on our new 12V Group 27 100Ah and 132Ah batteries, and on our 12V GC2 battery. Now that these certifications
have been completed, all of the batteries produced by us will have a UL Safety Certification, emphasizing our commitment to quality, safety
and service for our customers.

 Key Line Items

 Net Sales

 Our revenue is generated from the sale of products
consisting primarily of batteries and accessories. We recognize revenue when control of goods or services is transferred to our customers
in an amount that reflects the consideration it is expected to be entitled to in exchange for those goods or services. All of our sales
are primarily within the United States.

 Cost of Sales

 Our primary cost of sales as a percentage of sales
is related to our direct product and landing costs. Direct labor costs consist of payroll costs (including taxes and benefits) of employees
directly engaged in assembly activities. Per full absorption cost accounting, overhead related to our cost of sales is added, consisting
primarily of warehouse rent and utilities. The costs can increase or decrease based on costs of product and assembly parts (purchased
at market pricing), customer supply requirements, and the amount of labor required to assemble a product, along with the allocation of
fixed overhead.

 Selling, General, and Administrative Expenses

 Selling, general, and administrative expenses consist
primarily of salaries and benefits, legal and professional fees, and sales and marketing costs. Other costs include facility and related
costs, research and development, software and information technology, and insurance.

 Interest and Other Income, net

 Interest expense consists of interest costs on loans
with interest rates ranging from 3.75% to 10.0% and amortization of convertible note costs. The amortized convertible note costs were
$667,000 and $0 for the years ended December 31, 2024 and 2023, respectively.

 Provision for Income Taxes

 We are subject to corporate federal and state income
taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets, including tax loss
and credit carryforwards, and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that included the enactment date. Deferred income tax expense represents the change
during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

 We have adopted the provisions in ASC 740, Income
Taxes, related to accounting for uncertain tax positions, which require recognition of the impact of a tax position in the financial
statements if the position is more likely than not to be sustained upon examination and on the technical merits of the position. We have
concluded there were no material unrecognized tax benefits as of December 31, 2024 or December 31, 2023.

 Our practice is to recognize interest and/or penalties
related to income tax matters as income tax expense. We had no accrual for interest or penalties on our balance sheet at December 31,
2024 or December 31, 2023, and did not recognize any interest or penalties in our statement of operations for the years ended December
31, 2024 or 2023, since there are no material unrecognized tax benefits. We do not expect any material change to the amount of unrecognized
tax benefits to occur within the next 12 months.

 Off-Balance Sheet Arrangements

 We do not have any material off-balance
sheet arrangements.

 Use of Non-GAAP Financial Measures

 We disclose financial
measures calculated and presented in accordance with generally accepted accounting principles in the United States (US GAAP); however,
we provide certain financial information on a non-GAAP basis (non-GAAP financial measures). We provide non-GAAP financial measures to
provide information that may assist investors in understanding our results of operations and assessing our prospects for future performance,
which consist of adjusted cost of sales. We believe evaluating certain financial and operating measures on an adjusted basis is important
as it excludes liquidation costs that are not indicative of our core results of operations and are largely outside of our control. However,
our non-GAAP financial measures are not intended to represent and should not be considered more meaningful measures than, or alternatives
to, measures of financial or operating performance as determined in accordance with US GAAP.

 We calculate our
adjusted cost of sales non-GAAP financial measures for current period financial information by excluding the effect of liquidation of
non-core product in the consolidated financial statements. The information presented on an adjusted cost of sales basis, as we present
such information, may not necessarily be comparable to similarly titled information presented by other companies, and may not be appropriate
measures for comparing our performance relative to other companies.

 Results of Operations

 Year Ended December 31, 2024, Compared to the
Year Ended December 31, 2023

 The following table sets forth certain operational
data as a percentage of sales:

 Fiscal Years Ended December 31,

 2024

 2023

 $

 % of Net sales

 $

 % of Net sales

 Net sales

 $
 5,624,939

 100.0
 %

 $
 5,981,134

 100.0
 %

 Cost of sales

 4,469,711

 79.5

 4,405,611

 73.7

 Gross profit

 1,155,228

 20.5

 1,575,523

 26.3

 Selling, general, and administrative expenses

 7,909,219

 140.6

 8,745,135

 146.2

 Loss from operations

 (6,753,991
)

 (120.1
)

 (7,169,612
)

 (119.9
)

 Other expense - net

 6,727,032

 119.6

 283,369

 4.7

 Loss before income taxes

 (13,481,023
)

 (239.7
)

 (7,452,981
)

 (124.6
)

 (13,479,475
)

 (239.6
)

 (7,456,274
)

 (124.7
)

 Net Sales

 Net sales for the year ended December
31, 2024 decreased by $356,000, or 6.0%, compared to the year ended December 31, 2023. Sales were $5.6 million for the year ended December
31, 2024 and $6.0 million for the year ended December 31, 2023. The year-over-year decrease was primarily attributable to decreases in
the consumer market, driving decreases in OEM sales. Our net sales for the three months ended December 31, 2024, however, increased by
$1.1 million, or 131%, compared to the three months ended December 31, 2023. Sales were $2.0 million for the three months ended December
31, 2024 and $859,000 for the three months ended December 31, 2023.

 Cost of Sales

 Cost of sales for the year ended
December 31, 2024 increased by $64,000, or 1.5%, compared to the year ended December 31, 2023. Cost of sales were $4.5 million for the
year ended December 31, 2024 and $4.4 million for the year ended December 31, 2023. Cost of sales as a percentage of sales increased by
5.8% in 2024. The change in cost of sales was primarily related to a decrease in overall sales, resulting in a decrease in economies of
scale pertaining to fixed costs, as well as the liquidation of some non-core product in 2024 increasing our cost of sales above what they
would have been without the liquidation.

 During the year ended December 31,
2024, we liquidated some non-core product, which was a factor in reducing leased warehouse space. If we had not done the liquidation,
cost of sales for the year ended December 31, 2024 would have decreased by $42,000, or 0.9%, compared to the year ended December 31, 2023.
Cost of sales would have been $4.4 million for the year ended December 31, 2024 and $4.4 million for the year ended December 31, 2023.
Cost of sales as a percentage of sales would have increased by 4.5% in the year ended December 31, 2024 compared to the prior year.

 Gross Profit

 Our gross profit for the year ended
December 31, 2024 decreased by $420,000, or 26.7%, compared to the year ended December 31, 2023. Gross profit was $1.2 million for the
year ended December 31, 2024 and $1.6 million for the year ended December 31, 2023. Gross profit as a percentage of sales decreased by
5.8% for the year ended December 31, 2024, to 20.5% compared to 26.3% for the year ended December 31, 2023. The decrease in gross profit
for the year ended December 31, 2024 was primarily attributable to lower sales volumes due to the slowdown in the RV industry resulting
in lower economies of scale on our fixed costs, as well as the liquidation of non-core product increasing our cost of sales above what
they would have been without the liquidation.

 Selling, General, and Administrative Expenses

 Selling, general, and administrative
expenses for the year ended December 31, 2024 decreased by $836,000, or 9.6%, compared to the year ended December 31, 2023. Selling, general,
and administrative expenses were $7.9 million for the year ended December 31, 2024 and $8.7 million for the year ended December 31, 2023.
The decrease in selling, general, and administrative expenses was primarily due to decreases in legal and professional fees as well as
salaries and benefits, which was partially offset by an increase in licenses and fees, due to cash premium fees paid when making repayment
on our convertible note as well as fees for exiting the warehouse lease.

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

 Fiscal Years Ended December 31,

 2024

 2023

 Salaries and benefits

 $
 3,260,866

 $
 3,681,410

 Legal and professional

 1,584,589

 2,034,374

 Sales and marketing

 926,430

 929,220

 Rents, maintenance, utilities

 449,997

 573,652

 Research and development

 295,292

 397,662

 Software, fees, tech support

 274,780

 234,285

 Insurance

 263,930

 179,989

 Depreciation

 155,315

 182,825

 Travel expenses

 137,298

 199,845

 Supplies, office

 23,876

 58,049

 Other

 536,846

 273,824

 Total

 $
 7,909,219

 $
 8,745,135

 Other Expense

 Other expense for the years ended
December 31, 2024 and 2023 was $6.7 million and $283,000, respectively. Other expense for the year ended December 31, 2024 was made up
of $5.0 million in suspended liability expense due to the Reverse Stock Split cash true-up payment provision in the Series A Warrants
we sold in the August 2024 Public Offering, as well as $977,000 in interest expense and $709,000 in settlement expense. Other expense
for the year ended December 31, 2023 was made up almost entirely of settlement expense, with interest income and interest expense offsetting
each other at $126,000 and $125,000, respectively.

 Net Loss

 Our net loss for the years ended
December 31, 2024 and 2023 was $13.5 million and $7.5 million, respectively. The net loss in the year ended December 31, 2024 was primarily
the result of the $5.0 million in suspended liability expense due to the Reverse Stock Split cash true-up payment provision in the Series
A Warrants we sold in the August 2024 Public Offering, as well as the increased interest due to the 3i Note (as defined in Note 7, " Equity
and Debt Financings—Convertible Note Financing ") and increased settlement expense.

 Liquidity and Capital Resources

 Overview

 Our operations have been financed primarily through
net proceeds from sales of our common stock and equity and debt financings. As of December 31, 2024 and 2023, our current assets exceeded
current liabilities by $2.0 million and $4.3 million, respectively, and we had cash and cash equivalents of $548,000 and $3.9 million,
respectively.

 We generally consider our short-term liquidity requirements
to consist of those items that are expected to be incurred within the next 12 months and believe those requirements to consist primarily
of funds necessary to pay operating expenses, interest and principal payments on our debt.

 As of December 31, 2024, our short-term liquidity
requirements included (a) principal debt payments totaling approximately $32,000 net of amortization, (b) lease obligation payments of
approximately $256,000, including imputed interest, and (c) $5.0 million in suspended
liability expense due to the Reverse Stock Split cash true-up payment provision in the Series A Warrants we sold in the August 2024 Public
Offering.

 We generally consider our long-term liquidity requirements
to consist of those items that are expected to be incurred beyond the next 12 months. Our activities are subject to significant risks
and uncertainties, including failing to secure additional funding before we achieve sustainable revenue and profit from operations. We
expect to continue to incur additional losses for the foreseeable future, and we may need to raise additional debt or equity financing
to expand our presence in the marketplace, develop new products, achieve operating efficiencies, and accomplish our long-term business
plans over the next several years. There can be no assurance as to the availability or terms upon which such financing and capital might
be available to us. For the years ended December 31, 2024 and 2023, we sustained recurring losses and negative cash flows from operations.
These factors raise substantial doubt about our ability to continue as a going concern within 12 months after the date the financial statements
for the year ended December 31, 2024 are issued. However, management is working to address its cash flow challenges, including by raising
additional capital, managing inventory levels, identifying alternative supply chain resources, and managing operational expenses. For
additional information regarding risks associated with our ability to continue as a going concern, please see the risk factor titled " Our
audited financial statements include a statement that there is a substantial doubt about our ability to continue as a going concern and
a continuation of negative financial trends could result in our inability to continue as a going concern " in Item 1A, " Risk
Factors " of this Annual Report.

 Financing Obligations

 As of December 31, 2024, our long-term
debt totaled $230,000, comprised of $143,000 outstanding under a COVID-19 Economic Injury Disaster Loan, $84,000 outstanding under vehicle
financing arrangements, and an equipment loan for $3,000. In January 2024, we repaid $62,500 in principal on a stockholder promissory
note with an interest rate of 10.0%, and in August 2024, we repaid two shareholder loans with principal of $500,000 and $200,000, respectively,
both with interest rates of 10.0%. In February and March 2024, we sold three vehicles including repayment of the related vehicle loans
with interest rates of 5.5%-5.9% in the total amount of approximately $88,000, which included principal and interest. In August 2024,
we repaid a short-term convertible note for a total of $2.7 million including principal, interest, and fees.

 Stockholder Promissory Notes

 Stockholder promissory notes had
an outstanding principal balance of $0 as of December 31, 2024, as they were repaid in August 2024. See Note 6 - Stockholder Promissory
Notes for further information on stockholder promissory notes.

 Vehicle Financing Arrangements

 As of December 31, 2024, the Company has three notes
payable to GM Financial for vehicles. In addition, in April 2022, the Company secured a commercial line of up to $300,000 to be used to
finance vehicle purchases, which was increased to $350,000 in April 2023, renewed in April 2024 for the same amount, and expires in April
2025, which we plan to renew again. The notes are payable in aggregate monthly installments of approximately $2,560, including interest
at rates ranging from 6.1% to 7.3% per annum, mature at various dates from October 2027 to May 2028, and are secured by the related vehicles.
Two of the notes are personally guaranteed by a co-founder of the Company. A separate vehicle financing note has been repaid in connection
with the sale of the related vehicle. See Note 5, Long-Term Debt.

 Convertible Note Financing

 On December 27, 2023, we entered
into a securities purchase agreement with 3i, LP ("3i") pursuant to which we sold, and 3i purchased, the 3i Note in the aggregate
original principal amount of $2,750,000, for gross proceeds of $2.5 million. On August 8, 2024, in connection with the closing of the
August 2024 Public Offering, we repaid the 3i Note, and our obligations under the 3i Note were fully satisfied and discharged. Prior to
the closing of the August 2024 Public Offering, we had issued 415 shares of common stock (post-Reverse Stock Split) for the payment of
$90,839 in interest.

 Equity Line of Credit

 On December 27, 2023, we
entered into the Common Stock Purchase Agreement, pursuant to which we had the right, but not the obligation, to sell to Tumim Stone Capital,
LLC ("Tumim"), and Tumim was obligated to purchase, up to the lesser of (a) $20,000,000 in aggregate gross purchase price
of newly issued common stock and (b) the Exchange Cap (as defined in the purchase agreement) (the "Equity Line of Credit").
In connection with the August 2024 Public Offering, we mutually agreed with Tumim to terminate the Equity Line of Credit, effective immediately
upon the closing of the August 2024 Public Offering. Prior to the closing of the August 2024 Public Offering, we had sold 4,336 shares
of common stock (post-Reverse Stock Split) under the Equity Line of Credit for an aggregate amount of $828,491, of which $434,958 was
used to repay a portion of the balance under the 3i Note, consisting of $380,042 to the loan principal, $34,204 to interest, and $20,712
as a redemption premium.

 Operating Lease Liabilities

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

 Other Indebtedness

 As of December 31, 2024, our long-term debt totaled
$230,170, including the current portion, which consists of $31,758.

 Cash Flows

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

 Years Ended
 December 31,

 2024

 2023

 Net cash used in operating activities

 $
 (9,562,545
)

 $
 (5,531,232
)

 Net cash provided by investing activities

 $
 113,408

 $
 16,578

 Net cash provided by financing activities

 $
 6,064,004

 $
 2,246,108

 Cash flows used in operating activities

 Our largest source of operating
cash is cash collection from sales of our products. Our primary use of cash for operating activities are related to legal and professional
fees, sales and marketing expenses, and research and development. In the last several years, we have generated negative cash flows from
operating activities and have supplemented working capital requirements through net proceeds from sales of our common stock.

 We generated negative cash flows
from operating activities of $9.6 million for the year ended December 31, 2024, compared to negative cash flows of $5.5 million for the
corresponding period in 2023. Factors affecting operating cash flows during the periods included:

 For the year ended December 31, 2024, our net loss of $13.5 million was
reduced by non-cash transactions including approximately $5.0 million in suspended liability expense due to the Reverse Stock Split cash
true-up payment provision in the Series A Warrants we sold in the August 2024 Public Offering, amortization of convertible note costs
of approximately $667,000, stock-based compensation of $617,000, stock-based settlement of $209,000, and depreciation of $174,000. For
the year ended December 31, 2023, our net loss of $7.5 million was reduced by non-cash transactions including stock-based compensation
of $560,000, stock-based settlement of $252,000, and depreciation of $206,000.

 Cash provided / (used) by accounts receivable was ($458,000) and $162,000
for the years ended December 31, 2024 and 2023, respectively, representing an increase in accounts receivable for the year ended December
31, 2024 and a decrease in accounts receivable for the year ended December 31, 2023. Sales are generally collected within 30 to 45 days.
These changes are mainly due to timing between sales being recognized and payment being received.

 Cash used for increases in (or provided by decreases in) inventory and
prepaid inventories were $2.5 million and ($682,000) for the years ended December 31, 2024 and 2023, respectively. These changes are primarily
due to the timing of significant purchases and prepayments of inventory. Turnaround time for receiving inventory from foreign sources
can take up to 120 days, with prepayments required.

 Cash flows provided by / (used in) investing
activities

 Cash provided by investing activities
was $113,000 for the year ended December 31, 2024. Cash used for capital purchases of property and equipment for quality assurance and
leasehold improvements to our testing lab totaled $19,000 during the year ended December 31, 2023. This was offset by net proceeds of
$132,000 received for the sale and disposal of property and equipment during the year ended December 31, 2024, which included property
and equipment and leasehold improvements related to the warehouse lease terminated in September 2024, as well as the sale of three vehicles.

 Cash provided by investing activities
was $17,000 for the year ended December 31, 2023. Cash used for capital purchases of property and equipment related to research and development,
quality assurance, and logistics equipment was $20,000 during the year ended December 31, 2023. This was offset by net proceeds of $37,000
received for the sale and disposal of property and equipment during the year ended December 31, 2023.

 Cash flows provided by financing activities

 Cash provided by financing activities
was $6.1 million for the year ended December 31, 2024. For the year ended December 31, 2024, we paid down debt principal of $3.6 million,
which was offset by net cash proceeds of $9.5 million from issuance of common stock and $185,000 net cash proceeds from exercise of warrants.

 Cash provided by financing activities
was $2.2 million for the year ended December 31, 2023. For the year ended December 31, 2023, we paid down debt principal of $224,000,
which was offset by net cash proceeds of $2.4 million from incurrence of short-term debt and net cash proceeds of $50,000 from the exercise
of warrants.

 Critical Accounting Estimates

 The above discussion and analysis
of our financial condition and results of operations is based upon our financial statements. The preparation of financial statements in
conformity with the generally accepted accounting principles in the United States ("GAAP") requires management to make estimates
and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosures of contingent assets and
liabilities. We base our estimates on historical experience, known trends and events, and various other factors that we believe are reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.
On a recurring basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. The effects
of material revisions in an estimate, if any, will be reflected in the consolidated financial statements prospectively from the date of
the change in the estimate.

 Critical accounting estimates are
those that we consider to be the most important in portraying our financial condition and results of operations and also require the greatest
number of judgments by management. Judgments or uncertainties regarding the application of these policies may result in materially different
amounts being reported under different conditions or using different assumptions. We consider the following policies to be the most critical
in understanding the judgments that are involved in preparing the financial statements.

 Property and Equipment

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

 Vehicles and transportation equipment

 5 – 7 years

 Office furniture and equipment

 3 – 7 years

 Manufacturing equipment

 3 – 10 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.

 Useful life is estimated for each item at the time
of purchase based on the typical useful life in our experience and best judgment, and remaining useful life of existing assets is evaluated
regularly. If an estimated useful life were to be inaccurate, there would not be a material effect on our financials, and the estimated
depreciation would be trued up at the time of disposal or impairment. It is our experience that the estimated useful lives of our assets
are generally materially accurate.

 Leases

 We determine if an arrangement is a lease at inception.
Operating lease right-of-use ("ROU") assets represent our right to use an underlying asset during the lease term, and operating
lease liabilities represent our obligation to make lease payments arising from the lease. Operating leases are included in ROU assets,
current operating lease liabilities, and long-term operating lease liabilities on our balance sheets. We do not have any finance leases.

 We recognize operating lease assets and lease liabilities
in the consolidated balance sheets on the lease commencement date, based on the present value of the outstanding lease payments over the
reasonably certain lease term. The lease term includes the non-cancelable period at the lease commencement date, plus any additional periods
covered by an option to extend (or not to terminate) the lease that is reasonably certain to be exercised, or an option to extend (or
not to terminate) a lease that is controlled by the lessor.

 We discount unpaid lease payments using the interest
rate implicit in the lease or, if the rate cannot be readily determined, our incremental borrowing rate (IBR).

 See Note 8, "Commitments and Contingencies,"
of our consolidated financial statements within this Annual Report for further information, including more details of our accounting policy
elections and disclosures and remaining minimum operating lease commitments.

 Revenue Recognition

 Our revenue is generated from the sale of products
consisting primarily of batteries and accessories. We recognize revenue when control of goods or services is transferred to our customers
in an amount that reflects the consideration we are expected to be entitled to in exchange for those goods or services. Revenue is recognized
upon shipment or delivery to the customer, as that is when the customer obtains control of the promised goods and our performance obligation
is considered satisfied.

 Warrants

 Warrants are measured at fair value upon issuance
and are not subsequently remeasured unless they are required to be reclassified. See " Note 7—Equity and Debt Financings "
and "Note 9—Stockholders' Equity" in our accompanying consolidated financial statements for information
on the warrants. Changes in assumptions used to estimate fair value could occur from stock pricing volatility depending on our performance
and our position in the industry and changes in market interest rates which can result in materially different results.

 Stock-Based Compensation

 We use the Black-Scholes option-pricing model to determine
the fair value of option grants. In estimating fair value, management is required to make certain assumptions and estimates such as the
expected life of units, volatility of our future share price, risk-free rates, future dividend yields and estimated forfeitures at the
initial grant date. Restricted stock unit awards are valued based on the closing trading price of our common stock on the date of grant.
Changes in assumptions used to estimate fair value could occur from stock pricing volatility depending on our performance and our position
in the industry and changes in market interest rates which can result in materially different results.

 Income Taxes

 Effective November 1, 2021, the Company converted
from an LLC to a C corporation and, as a result, became subject to corporate federal and state income taxes. Income taxes are accounted
for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates that will be in effect for the years in which those tax
assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce deferred tax assets to the amount
that is believed more likely than not to be realized. We believe it is more likely than not that forecasted income, together with future
reversals of existing taxable temporary differences, will be sufficient to recover our deferred tax assets. In the event that we determine
all, or part of our net deferred tax assets are not realizable in the future, we will record an adjustment to the valuation allowance
and a corresponding charge to earnings in the period such determination is made.

 The calculation of tax liabilities involves significant
judgment in estimating the impact of uncertainties in the application of US GAAP and complex tax laws. Resolution of these uncertainties
in a manner inconsistent with our expectations could have a material impact on our financial condition and results of operations. We recognize
tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by
the taxing authorities, based on the technical merits of the position. The tax benefits recorded in the consolidated financial statements
from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate
settlement.

 On March 27, 2020, the United States enacted the Coronavirus
Aid, Relief and Economic Security Act (the "CARES Act"). As of December 31, 2024 and 2023, we have not recorded any income
tax provision/(benefit) resulting from the CARES Act, mainly due to our history of net operating losses.

 See "Note 11—Income Taxes"
of our consolidated financial statements within this Annual Report for further information on our income taxes.

 ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA

 The information called for by this
Item 8 is found in a separate section of this Annual Report starting on page F-1. See the "Index to Financial Statements"
on page F-1.

 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 None.

 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, 2024. 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, 2024.

 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, 2024.

 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.

 Changes in Internal Control Over Financial Reporting

 During the three months
ended December 31, 2024, 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, 2024, 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.

 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE

 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 for this item will be included
in our definitive proxy statement for our 2025 annual meeting of stockholders (the "2025 Proxy Statement"), to be filed with
the SEC no later than 120 days after December 31, 2024, and is incorporated herein by reference.

 ITEM 11. EXECUTIVE COMPENSATION

 The information required by this item will be included
in the 2025 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 2025 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 2025 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 2025 Proxy Statement and is incorporated herein by reference.

 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

 3.2

 Certificate
 of Amendment of Articles of Incorporation, effective as of October 8, 2024

 3.1

 10/7/2024

 3.3

 Amended
 and Restated Bylaws of the Company, dated August 21, 2024

 3.1

 8/27/2024

 4.1

 Form
 of the Company's Common Stock Certificate

 S-1

 4.1

 4.2

 Form
 of Representative's Warrant Agreement

 S-1

 4.4

 4.3

 Form
 of Senior Secured Promissory Note issued to bridge loan investors

 S-1

 4.5

 4.4

 Description
 of Capital Stock

 -

 -

 -

 4.5

 Form
 of Warrant with an Exercise Price of $2.90

 10.15

 3/30/2023

 4.6

 Form
 of Warrant with an Exercise Price of $3.32

 10.16

 3/30/2023

 4.7

 Form
 of Convertible Note

 4.1

 12/29/2023

 4.8

 Form
 of Pre-Funded Warrant

 4.1

 8/9/2024

 4.9

 Form
 of Series A Warrant

 4.2

 8/9/2024

 4.10

 Form
 of Series B Warrant

 4.3

 8/9/2024

 10.1

 Form
 of Common Stock Warrant Issued to Selling Stockholders

 S-1

 10.1

 10.2

 Expion360
 Inc. 2021 Incentive Award Plan

 S-1

 10.2

 10.3

 Amendment
 to Expion360 Inc. 2021 Incentive Award Plan

 10.3

 3/28/2024

 10.4

 Expion360
 Inc. 2021 Employee Stock Purchase Plan

 S-1

 10.3

 10.5

 Form
 of Security Agreement Issued to Bridge Loan Investors

 S-1

 10.7

 10.6

 Commercial
 Lease of premises at 2045 SW Deerhound Avenue Redmond, OR

 S-1

 10.8

 10.7

 Commercial
 Lease of premises at 1266 SW Lake Blvd., Redmond, OR

 S-1

 10.11

 10.8

 Amended
 and Restated Employment Agreement, between Brian Schaffner and Expion360 Inc., dated January 26, 2023

 10.2

 2/01/2023

 10.9

 Amended
 and Restated Employment Agreement, between Paul Shoun and Expion360 Inc., dated January 26, 2023

 10.3

 2/01/2023

 10.10

 Amended
 and Restated Employment Agreement, between Greg Aydelott and Expion360 Inc., dated January 26, 2023

 10.4

 2/01/2023

 10.11*

 Securities
 Purchase Agreement, dated December 27, 2023, between Expion360 Inc. and 3i, LP

 10.1

 12/29/2023

 10.12*

 Common
 Stock Purchase Agreement, dated December 27, 2023, between Expion360 Inc. and Tumim Stone Capital, LLC

 10.2

 12/29/2023

 10.13*

 Registration Rights Agreement, dated December 27, 2023, between Expion360 Inc. and Tumim Stone Capital, LLC

 10.3

 12/29/2023

 10.14*

 Underwriting Agreement, dated August 7, 2024, between Expion360 Inc. and Aegis Capital Corp.

 1.1

 8/9/2024

 21.1

 Subsidiaries of the Company

 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 and 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 and 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

 97.1

 3/28/2024

 101.INS

 -

 -

 -

 101.SCH

 -

 -

 -

 101.CAL

 -

 -

 -

 101.DEF

 -

 -

 -

 101.LAB

 -

 -

 -

 101.PRE

 -

 -

 -

 -

 -

 -

 Indicates a management
contract or compensatory plan or arrangement.

 #
 This certification is deemed not filed for purpose of Section 18 of the Exchange Act or otherwise subject
to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange
Act.

 *
 The schedules and exhibits to this agreement have been omitted pursuant
to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.

 ITEM 16. FORM 10-K SUMMARY

 None.

 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.

 By:

 /s/ Brian Schaffner

 Brian Schaffner

 Chief Executive Officer and Interim Chief Financial Officer

 ( Principal Executive, Financial and Accounting Officer)

 Date:

 POWER OF ATTORNEY

 Each person whose signature appears
below constitutes and appoints Brian Schaffner 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/ Brian Schaffner

 Chief Executive Officer, Interim Chief Financial Officer and Director

 Brian Schaffner

 (Principal Executive, Financial and Accounting Officer)

 /s/ George Lefevre

 Director

 George Lefevre

 /s/ Steven M Shum

 Director

 Steven M. Shum

 /s/ Tien Q. Nguyen

 Director

 Tien Q. Nguyen

 /s/ Paul Shoun

 Chief Operating Officer, President and Chairman of the Board of Directors

 Paul Shoun

 Index to Consolidated
Financial Statements

 Report of Independent Registered Public Accounting Firm (PCAOB ID # 2738)

 Balance Sheets

 Statements of Operations

 Statements of Stockholders' Equity (Deficit)

 Statements of Cash Flows

 Notes to the Consolidated Financial Statements

 FINANCIAL INFORMATION

 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, 2024 and 2023, and the related statements of operations and comprehensive loss,
stockholders' equity, and cash flows for each of the years in the two-year period ended December 31, 2024, 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, 2024 and 2023, and the results of its operations and its cash
flows for each of the years in the two-year period ended December 31, 2024, 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 has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern.
Management's plans regarding those matters 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 matters
communicated below are matters arising from the current period audit of the financial statements that were 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 matters 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 matters below,
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 Going Concern

 Due to the recurring net loss for the year and net
cash used in operating activities, the Company evaluated the need for a going concern. See discussion in Note 2.

 Auditing management's evaluation of a going
concern can be a significant judgement given the fact that the Company uses management estimates on future revenues and expenses which
are not able to be substantiated.

 To evaluate the appropriateness of the lack of going
concern, we examined and evaluated the financial information that was the initial cause along with management's plans to mitigate
the going concern and managements lack of disclosure on going concern.

 /s/ M&K CPAS, PLLC

 We have served as the Company's auditor since 2021.

 The Woodlands, TX

 F- 2

 Balance Sheets

 As of December 31, 2024

 As of December 31, 2023

 Assets

 Current Assets

 Cash and cash equivalents

 $
 547,565

 $
 3,932,698

 Accounts receivable, net

 613,022

 154,935

 Inventory

 4,831,461

 3,825,390

 Prepaid/in-transit inventory

 1,612,686

 163,948

 Prepaid expenses and other current assets

 236,461

 189,418

 Total current assets

 7,841,195

 8,266,389

 Property and equipment

 914,081

 1,348,326

 Accumulated depreciation

 ( 430,191
)

 ( 430,295
)

 Property and equipment, net

 483,890

 918,031

 Other Assets

 Operating leases – right-of-use asset

 754,832

 2,662,015

 Deposits

 27,471

 58,896

 Total other assets

 782,303

 2,720,911

 Total assets

 $
 9,107,388

 $
 11,905,331

 Liabilities and stockholders' equity

 Current liabilities

 Accounts payable

 $
 338,091

 $
 286,985

 Customer deposits

 48,474

 17,423

 Accrued expenses and other current liabilities

 187,464

 292,515

 Convertible note

 —

 2,082,856

 Current portion of operating lease liability

 256,153

 522,764

 Current portion of stockholder promissory notes

 —

 762,500

 Current portion of long-term debt

 31,758

 50,839

 Suspended Liability

 4,985,948

 —

 Total current liabilities

 5,847,888

 4,015,882

 Long-term debt, net of current portion and discount

 198,412

 298,442

 Operating lease liability, net of current portion

 542,764

 2,241,325

 Total liabilities

 $
 6,589,064

 $
 6,555,649

 Stockholders' equity

 Preferred stock, par value $.001; 20,000,000
 shares authorized; zero 0 shares issued and outstanding

 —

 —

 Common stock, par value $.001; 200,000,000 shares authorized; 2,096,082 and 69,230 issued and outstanding as of December 31, 2024 and 2023, respectively

 2,096

 Additional paid-in capital

 37,091,468

 26,445,378

 Accumulated deficit

 ( 34,575,240
)

 ( 21,095,765
)

 Total stockholders' equity

 2,518,324

 5,349,682

 Total liabilities and stockholders' equity

 $
 9,107,388

 $
 11,905,331

 The accompanying notes are an integral part of these financial statements.

 F- 3

 Statements of Operations

 For the Years Ended December 31,

 2024

 2023

 Net sales

 $
 5,624,939

 $
 5,981,134

 Cost of sales

 4,469,711

 4,405,611

 Gross profit

 1,155,228

 1,575,523

 Selling, general and administrative

 7,909,219

 8,745,135

 Loss from operations

 ( 6,753,991
)

 ( 7,169,612
)

 Other (Income) / Expense

 Interest income

 ( 86,121
)

 ( 125,854
)

 Interest expense

 976,618

 124,511

 Loss on sale of property and equipment

 146,760

 3,426

 Settlement expense

 709,900

 281,680

 Suspended liability expense

 4,985,948

 —

 Other income

 ( 6,073
)

 ( 394
)

 Total other expense

 6,727,032

 283,369

 Loss before taxes

 ( 13,481,023
)

 ( 7,452,981
)

 Tax (income) / expense

 ( 1,548
)

 3,293

 $
)

 $
)

 Net loss per share (basic and diluted)

 $
 ( 21.03
)

 $
 ( 108.25
)

 Weighted-average number of common shares outstanding

 641,011

 68,882

 The accompanying notes are an integral part of these financial statements.

 F- 4

 Statements of Stockholders' Equity (Deficit)
for Years Ended December 31, 2024 and 2023

 Common Stock

 Additional Paid-in Capital

 Accumulated Deficit

 Total Stockholders' Equity (Deficit)

 Shares

 Amount

 Balance at December 31, 2022

 68,025

 $

 $
 25,246,388

 $
 ( 13,639,491
)

 $
 11,606,965

 Proceeds received from cashless exercise of warrants

 —

 ( 24
)

 —

 ( 24
)

 Proceeds received from cash exercise of warrants

 —

 49,800

 —

 49,800

 Stock issued as a result of litigation settlement

 251,679

 —

 251,680

 Issuance of warrants

 —

 —

 65,046

 —

 65,046

 Issuance of stock options

 —

 —

 371,071

 —

 371,071

 Issuance of RSUs

 —

 —

 124,249

 —

 124,249

 Settlement of vested RSUs

 —

 —

 —

 —

 Issuance of common stock in exchange for short-term loan costs

 —

 —

 337,169

 —

 337,169

 —

 —

 —

)

)

 Balance at December 31, 2023

 69,230

 $

 $
 26,445,378

 $
 ( 21,095,765
)

 $
 5,349,682

 Stock issued for ELOC

 4,336

 828,487

 —

 828,491

 Proceeds received from cashless exercise of warrants

 —

 ( 4
)

 —

 ( 4
)

 Proceeds received from cash exercise of warrants

 —

 —

 —

 Stock issued for interest payment

 —

 90,839

 —

 90,839

 Issuance of stock options

 —

 —

 464,328

 —

 464,328

 Issuance of RSUs

 —

 —

 141,417

 —

 141,417

 Settlement of vested RSUs

 —

 46,889

 —

 46,889

 Settlement of commitment shares

 ( 1
)

 —

 —

 Stock issued as a result of litigation settlement

 1,000

 208,999

 —

 209,000

 Issuance shares and pre-funded warrants, follow-on offering, net of issuance costs

 500,000

 8,681,190

 —

 8,681,690

 Proceeds from exercise of Series A warrants

 14,900

 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 reverse stock split

 210,659

 ( 210
)

 —

 —

 —

 —

 —

)

)

 Balance at December 31, 2023

 2,096,082

 $
 2,096

 $
 37,091,468

 $
 ( 34,575,240
)

 $
 2,518,324

 The accompanying notes are an integral part of these financial statements.

 F- 5

Statements of Cash Flows

 For the Years Ended December 31,

 2024

 2023

 Cash flows from operating activities

 $
)

 $
)

 Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 Depreciation

 173,973

 205,723

 Amortization of convertible note costs

 667,144

 —

 Loss on sale of property and equipment

 146,760

 3,426

 Decrease in allowance for doubtful accounts

 —

 ( 18,804
)

 Stock-based settlement

 209,000

 251,680

 Stock-based compensation

 616,632

 560,365

 Decrease in right-of-use assets and lease liabilities

 ( 67,778
)

 —

 Increase in suspended liability

 4,985,948

 —

 Changes in operating assets and liabilities:

 (Increase) / Decrease in accounts receivable

 ( 458,087
)

 161,904

 (Increase) / Decrease in inventory

 ( 1,006,071
)

 704,746

 Increase in prepaid/in-transit inventory

 ( 1,448,738
)

 ( 22,338
)

 Increase in prepaid expenses and other current assets

 ( 47,043
)

 ( 17,626
)

 Decrease in deposits

 31,425

 5,005

 Increase in accounts payable

 51,106

 56,735

 Increase in customer deposits

 31,051

 17,365

 Increase / (Decrease) in accrued expenses and other current liabilities

 21,819

 ( 13,649
)

 Increase in right-of-use assets and lease liabilities

 9,789

 30,510

 Net cash used in operating activities

 ( 9,562,545
)

 ( 5,531,232
)

 Cash flows from investing activities

 Purchases of property and equipment

 ( 19,203
)

 ( 20,170
)

 Net proceeds from sale of property and equipment

 132,611

 36,748

 Net cash provided by investing activities

 113,408

 16,578

 Cash flows from financing activities

 Proceed from / (Principal payment on) convertible note

 ( 2,750,000
)

 2,420,025

 Principal payments on long-term debt

 ( 119,111
)

 ( 161,194
)

 Principal payments on stockholder promissory notes

 ( 762,500
)

 ( 62,500
)

 Proceeds from exercise of warrants

 185,434

 49,800

 Settlement of fractional shares for cashless warrant exercise

 —

 ( 23
)

 Net proceeds from issuance of common stock

 9,510,181

 —

 Net cash provided by financing activities

 6,064,004

 2,246,108

 Net change in cash and cash equivalents

 ( 3,385,133
)

 ( 3,268,546
)

 Cash and cash equivalents, beginning

 3,932,698

 7,201,244

 Cash and cash equivalents, ending

 547,565

 3,932,698

 F- 6

 Statements of Cash Flows - Continued

 For the Years Ended December 31,

 Supplemental disclosure of cash flow information:

 2024

 2023

 Cash paid for interest

 $
 220,714

 $
 121,894

 Cash paid / (received) for franchise taxes

 $
 ( 258
)

 $
 1,853

 Non-cash financing activities:

 Acquisition/modification of operating lease right-of-use asset and lease liability

 $
 —

 $
 ( 13,993
)

 Issuance of common stock for payment on accrued interest

 $
 90,839

 $
 —

 Issuance of common stock for payment on accrued compensation

 $
 36,029

 $
 —

 Issuance of common stock in exchange for short-term loan costs

 $
 —

 $
 ( 337,169
)

 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. (formerly Yozamp Products Company,
LLC dba Expion360) (the "Company") was incorporated in the state of Nevada in November 2021. Effective November 1, 2021, the
Company converted to a C corporation. Prior to conversion, the Company was a limited liability company ("LLC") with an indefinite
life organized in the State of Oregon in June 2016. The LLC elected to be treated as a Subchapter S corporation effective January 1, 2017.
Net profits and losses of the LLC and all distributions were allocated among the members in proportion to the ownership units held. The
Original LLC Agreement was amended and restated on January 1, 2021 to add additional members and a non-voting class of member units. Upon
conversion to a C corporation, all existing LLC members at the time of conversion were issued shares of the Company's common stock,
par value $0.001 per share and became stockholders of the Company.

 The Company designs, assembles, and distributes premium
lithium batteries for RV, Marine, Golf, Industrial, Residential, and Off-The-Grid needs. The Company uses lithium iron phosphate ("LiFePO4")
batteries. LiFePO4 batteries are considered a top choice for high energy density, dependability, longevity, and safety, providing the
ability to power anything, anywhere.

 2. Summary of Significant
Accounting Policies

 Basis of Presentation

 The accompanying audited financial statements have
been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("U.S.
GAAP") for interim financial information, and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated
by the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required
by U.S. GAAP for complete financial statement presentation. However, the Company believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of management, all adjustments (consisting primarily of normal recurring accruals)
considered necessary for a fair presentation have been included.

 Unless otherwise noted, all references to shares and
stockholders in the accompanying financial statements have been restated retroactively, to reflect the equity structure of the C corporation
as of the beginning of the first period presented.

 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, Liquidity and Capital Resources

 The Company's activities are subject to significant
risks and uncertainties, including failing to secure additional funding before the Company achieves sustainable revenue and profit from
operations. The Company expects to continue to incur additional losses for the foreseeable future, and the Company may need to raise additional
debt or equity financing to expand its presence in the marketplace, develop new products, achieve operating efficiencies, and accomplish
its long-term business plan over the next several years. There can be no assurance as to the availability or terms upon which such financing
and capital might be available.

 As presented in the accompanying financial statements,
the Company has sustained recurring losses and negative cash flows from operations. 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,
2024 are issued. However, management is working to address its cash flow challenges, including raising additional capital, managing inventory
levels, identifying alternative supply chain resources, and managing operational expenses.

 F- 8

 Historically, the Company's growth has been
funded through a combination of sales of equity interests, third party debt, and working capital loans. The Company's sales for
2024 decreased 6.0 % compared to sales for 2023, as the overall RV market experienced a severe slowdown. For the year ended December 31,
2024, we received net proceeds of $ 9,510,181 from issuance of common stock and an additional $ 185,434 from exercise of warrants. For the
year ended December 31, 2023, we received net proceeds of $ 2,420,025 from issuing commitment shares in exchange for a short-term convertible
note, and $ 49,777 from warrant exercises. On April 1, 2022, the Company completed an initial public offering and listing of its shares
on the Nasdaq Stock Market (IPO).

 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.

 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. Actual results could vary materially from the estimates that were used. The Company's significant accounting estimates
include the carrying value of accounts receivable and inventory, the depreciable lives of fixed assets, and stock-based compensation.

 Future events, including the extent and the duration
of the COVID-19-related economic impacts and their effects, cannot be predicted with certainty and, accordingly, the Company's accounting
estimates require the exercise of judgment.

 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 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. Investment accounts are placed in funds consisting of US Treasury-related
ultra-short paper, which earned $86,121 and $125,755 during the years ended December 31, 2024 and 2023, respectively. 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. As of December 31, 2024, cash balances exceeded FDIC limits by $277,522 and investment accounts
totaling $712 are invested in US Treasury-related ultra-short paper.

 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 was no allowance for doubtful accounts as of December 31, 2024 or December
31, 2023, as management believed all outstanding amounts to be fully collectible.

 Customer Deposits

 As of December 31, 2024 and December 31, 2023, the
Company had customer deposits totaling $ 48,474 and $ 17,423, respectively.

 F- 9

 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, 2024 and December 31, 2023, the Company had inventory that consisted of finished assemblies totaling $ 4,077,013 and $ 2,967,021,
respectively, and raw materials (inventory components, parts, and packaging) totaling $ 754,448 $ 858,369, 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. The Company determined that no
such reserve was necessary as of December 31, 2024 or December 31, 2023. The Company prepays for inventory purchases from foreign suppliers.
Prepaid inventory totaled $ 1,612,686 and $ 163,948 at December 31, 2024 and December 31, 2023, 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, 2024 and 2023,
approximately 82 % and 70 %, 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 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.

 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.

 Leases

 The Company determines if an arrangement is a lease
at inception. Operating lease right-of-use ("ROU") assets represent the Company's right to use an underlying asset during
the lease term, and operating lease liabilities represent

 the Company's obligation to make lease payments
arising from the lease. Operating leases are included in ROU assets, current operating lease liabilities, and long-term operating lease
liabilities on the Company's Balance Sheets. The Company does not have any finance leases.

 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 applicable to the lease asset, unless the implicit rate is readily determinable. ROU assets
also include any lease payments made at or before lease commencement and exclude any lease incentives 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 Company's Balance Sheet. 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.

 F- 10

 The Company accounts for lease and non-lease components
as a single lease component for all its leases.

 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, 2024
or 2023.

 Product Warranties

 The Company sells the majority of its products to
customers along with conditional repair or replacement warranties. The Company's branded DC mobile chargers are warrantied for two
years from the date of sale and its branded VPR 4EVER Classic and Platinum batteries are warrantied at gradually lesser levels over a
twelve-year period from date of sale. The Company determines its estimated liability for warranty claims based on the Company's
experience of the amount of claims actually made. Management estimates no liability as of December 31, 2024 and 2023 because, historically,
there have been very few claims and costs for repairs or replacement parts have been nominal. It is possible that the Company's
estimate of liability for product liability claims will change in the near term.

 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. No refund liability was recognized in the year
ended December 31, 2023 or December 31, 2024. Revenue is recorded net of this amount. Any returns of discontinued product are not added
back to inventory and therefore related costs are nominal and not recorded as an asset.

 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 or services is
transferred to its customers in an amount that reflects the consideration it is expected to be entitled to in exchange for those goods
or services. To determine revenue recognition, the Company performs the following five 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.

 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 outstanding receivable balances exceed 10% of total
receivables.

 During the year ended December 31, 2024, sales to
one customer totaled $ 726,292, or approximately 14 % of our total sales and had 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 this period. During the year ended December 31, 2023, sales to
two customers totaled $ 1,237,232, or approximately 21 % of our total sales, and these customers did not have any outstanding accounts receivable at December 31,
2023. While these customers did not have accounts receivable balances as of December 31, 2023, four other customers had accounts receivable
balances totaling $ 142,255, representing 91 % of total accounts receivable as of December 31, 2023. Sales to each of our other customers
did not exceed 10% during this period.

 F- 11

 Shipping and Handling Costs

 Shipping and handling fees billed to customers are
classified on the Statement of Operations as "Net sales" and totaled $ 99,201 and $ 70,712 during the years ended December 31,
2024 and 2023, respectively. Shipping and handling costs for shipping product to customers totaled $ 260,946 and $ 199,288 during the years
ended December 31, 2024 and 2023, respectively, and are classified in selling, general and administrative expense in the accompanying
Statements of Operations.

 Advertising and Marketing Costs

 The Company expenses advertising and marketing costs
as incurred. Advertising and marketing expense totaled $ 926,430 and $ 929,220 for the years ended December 31, 2024 and 2023, respectively,
and is included in selling, general and administrative expense in the accompanying Statements of Operations.

 Research and Development

 Research and development costs are expensed as incurred.
Research and development costs charged to expense amounted to $ 295,292 and $ 397,662 for the years ended December 31, 2024 and 2023, respectively,
and are included in selling, general and administrative expenses in the accompanying Statements of Operations.

 Income Taxes

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

 On March 27, 2020, the United States enacted the Coronavirus
Aid, Relief and Economic Security Act (the "CARES Act"). The CARES Act is an emergency economic stimulus package that includes
spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effect of COVID-19. The CARES
Act provides sweeping tax changes in response to the COVID-19 pandemic. Some of the more significant provisions are removal of certain
limitations on utilization of net operating losses, increasing the loss carryback period for certain losses to five years, and increasing
the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and JOBS Act. As of
December 31, 2024 and December 31, 2023, the Company has not recorded any income tax provision/(benefit) resulting from the CARES Act,
mainly due to the Company's history of net operating losses.

 On December 27, 2020, the United States enacted the
Consolidated Appropriations Act of 2021 (the "CAA"). The CAA includes provisions extending certain CARES Act provisions and
adds coronavirus relief, tax and health extenders. The Company will continue to evaluate the impact of the CAA and its impact on its financial
statements in 2024 and beyond.

 F- 12

 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. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining fair value,
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 Company's financial instruments consist
principally of cash and cash equivalents, accounts receivable, accounts payable, short-term revolving loans, stockholder promissory notes,
and long-term debt. The fair value of cash and cash equivalents, accounts receivable, accounts payable, and short-term revolving loans
approximates their respective carrying values because of the short-term nature of those instruments. The fair value of the stockholder
promissory notes, convertible notes, and 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

 The basic net loss per share is calculated by dividing
the net loss by the weighted average number of shares outstanding during the period. Diluted earnings or loss per share adjusts the basic
earnings or loss per share for the potentially dilutive impact of securities (e.g., options and warrants).

 We calculate basic and diluted net loss per share
using the weighted average number of common shares outstanding during the periods presented. In periods of a net loss position, basic
and diluted weighted average common shares are the same. For the diluted earnings per share calculation, we adjust the weighted average
number of common shares outstanding to include dilutive stock options, warrants, unvested restricted stock units and shares associated
with the conversion of any convertible notes or preferred stock, when applicable. We use the if-converted method for calculating any potential
dilutive effect of convertible notes and convertible preferred stock on diluted net loss per share.

 The following shows the amounts used in computing
net loss per share:

 Schedule of net loss per share

 2024

 2023

 $
)

 $
)

 Weighted average common shares outstanding – basic and diluted

 641,011

 68,882

 Basic and diluted net loss per share

 $
 ( 21.03
)

 $
 ( 108.25
)

 As of December 31, 2024 and 2023, the Company has
outstanding warrants, options, and restricted stock units ("RSUs") convertible into 5,392,395 and 19,167 shares of common
stock, respectively. The following table sets forth the number of shares excluded from the computation of diluted loss per share, as their
inclusion would have been anti-dilutive.

 Schedule of anti-dilutive share

 Years ended December 31,

 2024

 2023

 Warrants

 6,889

 8,045

 Warrants – Series A

 5,286,692

 —

 Warrants – Series B

 87,384

 —

 Stock options

 11,430

 10,756

 RSUs

 —

 5,392,395

 19,167

 F- 13

 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.

 The fair value of stock options is determined using
the Black-Scholes-Merton option pricing model. In order to calculate the fair value of the options, certain assumptions are made regarding
the components of the model, including risk-free interest rate, volatility, expected dividend yield and expected life. Changes to assumptions
could cause significant adjustments to the valuation.

 New Accounting Pronouncements

 In November 2023, the FASB issued ASU 2023-07, "Segment
Reporting (Topic 280): Improvements to Reportable Segment Disclosures." This ASU was issued to clarify reporting requirements for
public entities that are required to report segment information in accordance with Topic 280, Segment Reporting. The Company will adopt
this standard effective January 1, 2024, but does not anticipate an impact on the Company's financial statements or disclosures
in this Report, as we currently have one reportable segment.

 In March 2023, the FASB issued ASU 2023-02, "Investments—Equity
Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method."
This ASU was issued to allow reporting entities to consistently account for equity investments made primarily for the purpose of receiving
income tax credits and other income tax benefits. ASU 2023-02 is effective for the Company for fiscal years beginning after December 15,
2023, including interim periods within those fiscal years. The Company will adopt this standard effective January 1, 2024, but does not
anticipate an impact on the Company's financial statements or disclosures.

 In June 2022, the FASB issued ASU 2022-03, "Fair
Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions," which amends
the guidance in Topic 820, Fair Value Measurement, to clarify that a contractual restriction on the sale of an equity security
is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments
also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. In addition,
the ASU introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair
value. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years
for public business entities. The Company will adopt this standard effective January 1, 2024, but does not anticipate an impact on the
Company's financial statements or disclosures.

 In July 2023, the FASB issued ASU 2023-03, amending
"Presentation of Financial Statements (Topic 205)," "Income Statement – Reporting Comprehensive Income (Topic
220)," "Distinguishing Liabilities from Equity (Topic 480)," "Equity (Topic 505)," and "Compensation
– Stock Compensation (Topic 718)." The company adopted this standard effective December 15, 2023.

 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. The Company
is currently evaluating the impact of this standard on its financial statement.

 F- 14

 In March 2024, the FASB issued ASU 2024-02, "Codification
Improvements—Amendments to Remove References to the Concepts Statements," to address suggestions received from stakeholders.
The Company is currently evaluating the impact of this standard on its financial statements.

 In March 2024, the FASB issued ASU 2024-01, "Compensation—Stock
Compensation," which adds an illustrative example to demonstrate how to apply the guidance in paragraph 718-10-15-3. The Company
is currently evaluating the impact of this standard on its financial statements.

 In October 2023, the FASB issued ASU 2023-06, "Disclosure
Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative," which affects
a variety of Topics in the Codification. The company is currently evaluating the impact of this standard on our financial statements.

 3. Property and Equipment,
Net

 Property and equipment consist of the following:

 Schedule of property and equipment

 2024

 2023

 Vehicles and transportation equipment

 $
 406,013

 $
 551,906

 Manufacturing equipment

 168,099

 179,274

 Office furniture and equipment

 153,698

 188,131

 Warehouse equipment

 72,964

 81,164

 Leasehold improvements

 69,725

 314,819

 QA equipment

 43,582

 33,032

 914,081

 1,348,326

 Less: accumulated depreciation

 ( 430,191
)

 ( 430,295
)

 Property and equipment, net

 $
 483,890

 $
 918,031

 Depreciation expense was $ 173,973 and $ 205,723 for
the years ended December 31, 2024 and 2023, respectively. There were disposals and sales of fixed assets during the years ended December
31, 2024 and 2023 resulting in the net cash received of $ 132,611 and $ 36,748, respectively. As a result of disposals and sales of fixed
assets we recognized losses during the year ended December 31, 2024 and 2023 of $ 146,760 and $ 3,426, respectively. The majority of the
disposals in the year ending December 31, 2024 were for equipment and leasehold improvements when we terminated the lease of our second
warehouse in Redmond, Oregon in order to reduce ongoing monthly expenses.

 4. Accrued Expenses and Other
Current Liabilities

 Accrued expenses and other current liabilities consist
of the following:

 Schedule of accrued expenses and other current liabilities

 2024

 2023

 Accrued salaries and payroll liabilities

 $
 145,686

 $
 225,685

 Rebate liability

 —

 31,411

 Commissions

 30,913

 12,608

 Deferred income and deposit (sublease)

 4,549

 4,445

 Accrued interest

 2,839

 Franchise tax

 1,840

 Other

 5,406

 13,687

 Accrued expenses and other current liabilities

 $
 187,464

 $
 292,515

 F- 15

 5. Long-Term Debt

 Long-term debt consisted of the following at December
31, 2024 and 2023:

 Schedule of long term debt payment

 December 31, 2024

 December 31, 2023

 Note payable – bank. Payable in monthly installments of $ 332, including interest at 5.8 % per annum, due August 2025, secured by equipment and personally guaranteed by a co-founder.

 2,657

 6,317

 Note payable – credit union. Payable in monthly installments of $ 508, including interest at 5.45 % per annum, due July 2026, secured by a vehicle and personally guaranteed by a co-founder. This note was paid in full in March 2024.

 —

 14,196

 Note payable – SBA. Economic Injury Disaster Loan payable in monthly installments of $ 731, including interest at 3.75 % per annum, due May 2050, and personally guaranteed by a co-founder.

 143,144

 146,926

 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 agreement expired in April 2023 but was renewed for a commercial line up to $350,000 and prevailing GM Financial existing term notes will remain. The new agreement expires in April 2024. One note was paid off when the corresponding vehicle was sold in May 2023, so there are five notes remaining at December 31, 2024. The notes are currently payable in aggregate monthly installments of $ 4,084, including interest at rates ranging from 5.89% to 7.29% per annum, mature at various dates from October 2027 to May of 2028, and are secured by the related vehicles. Two of the notes are personally guaranteed by a co-founder. Two of the notes were paid in full in February 2024; these notes had a combined principal balance of $ 72,115 as of December 31, 2024.

 84,369

 181,842

 Total

 $
 230,170

 $
 349,281

 Less current portion

 ( 31,758
)

 ( 50,839
)

 Long-term debt, net of unamortized debt discount and current portion

 $
 198,412

 $
 298,442

 Future maturities of long-term debt are as follows:

 Schedule of maturities of long-term debt

 Years ending December 31,

 2025

 $

 31,758

 2026

 31,058

 2027

 30,590

 2028

 8,212

 2029

 4,002

 Thereafter

 124,550

 Total

 $

 230,170

 6. Stockholder
Promissory Notes

 As of December 31, 2024 and December 31, 2023, the
Company had an outstanding principal balance of $ 0 and $ 762,500 due to stockholders under unsecured Promissory Notes Agreements ("Notes").
The Notes require monthly interest-only payments at 10 % per annum. The Notes would have matured in September 2024 and December 2024 as
follows: September 2024 - $500,000 (this Note would have matured in August 2023, but in June 2023, an agreement was signed extending the
maturity date to August 2024, and in June 2024, an agreement was signed further extending the maturity date to September 2024); and December
2024 - $200,000. A note for $62,500 that matured in January 2024 was paid in January 2024, and Notes for $500,000 that matured in September
2024 and $200,000 that matured in December 2024 were both paid in August 2024. As of December 31, 2024, there were no Notes outstanding.

 F- 16

 Interest paid to the stockholders under the Notes
totaled $ 42,862 and $ 82,508 during the years ended December 31, 2024 and 2023, respectively. There was no accrued interest as of December
31, 2024 or 2023 related to these Notes.

 7. Equity and Debt Financings

 August 2024 Public Offering

 On August 8, 2024, the Company sold
in 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, and (ii) 16,598,000 Pre-Funded Units (pre-Reverse Stock Split), each consisting of one
Pre-Funded Warrant, two Series A Warrants, and one Series B Warrant, through the Underwriter.

 In addition, the Company granted
the Underwriter a 45-day option to purchase additional shares of common stock and/or Pre-Funded Warrants and/or Series A Warrants and/or
Series B Warrants, representing up to 15% of the number of the respective securities sold in the August 2024 Public Offering, solely to
cover over-allotments, if any. The Underwriter partially exercised its over-allotment option with respect to 15,000,000 Series A Warrants
and 7,500,000 Series B Warrants (pre-Reverse Stock Split).

 The Common Units were sold at a
price of $ 0.20 per unit and the Pre-Funded Warrants were sold at a price of $ 0.199 per unit (pre-Reverse Stock Split).

 The Pre-Funded Warrants were immediately
exercisable at an exercise price of $ 0.001 per share (Pre-Reverse Stock Split) and could be exercised at any time until all Pre-Funded
Warrants are exercised in full. As of December 31, 2024, all Pre-Funded Warrants have been exercised.

 Each Series A Warrant is exercisable
at any time or times beginning on September 30, 2024, which was the first trading day following the Company's notice to the Series
A Warrant holders of stockholder approval received at the Company's annual meeting of stockholders held on September 27, 2024 (the
"2024 Annual Meeting"), 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 subject to reduction
on the 11 th trading day after the stockholder approval to the greater of the lowest daily volume weighted average price ("VWAP")
during the ten trading day period following the stockholder approval and the floor price of $ 5.206 (representing 20% of the lower of our
common stock's closing price on The Nasdaq Capital Market on the date that we priced the August 2024 Public Offering (post-Reverse
Stock Split) or our common stock's average closing price on The Nasdaq Capital Market for the five trading days ending on such date
(such lower price, without giving effect to such 20% reduction, the "Nasdaq Minimum Price"), and the number of shares issuable
upon exercise would be proportionately adjusted such that the aggregate exercise price would remain unchanged. As of September 30, 2024, there
would have been 5,301,592 shares of common stock (post-Reverse Stock Split and assuming the Adjustment had occurred on September
30, 2024) issuable upon exercise of the Series A Warrants. Subsequent to September 30, 2024, the exercise price under the Series A Warrants
was reduced to the floor price of $ 5.206 (representing 20% of the Nasdaq Minimum Price, post-Reverse Stock Split), beginning on October
14, 2024, the 11 th trading day following stockholder approval. As of December 31, 2024, 14,900 shares of common stock have
been issued upon exercise of Series A Warrants and 5,286,692 shares of Common stock remain issuable upon exercise of Series A Warrants.

 Each Series B Warrant was exercisable
immediately upon issuance at an exercise price of $0.10 per share (post-Reverse Stock Split). The number of shares of common stock issuable
under the Series B Warrants were subject to adjustment using a reset price based on the weighted average price of common stock over a
rolling five-trading-day period between the issuance date of the Class B Warrants and the close of trading on the tenth trading day following
stockholder approval, subject to certain floor prices. As of September 30, 2024, 342,588 shares of Common stock (post-Reverse Stock Split)
had been issued upon exercise of Series B Warrants and there were 1,032,198 shares of Common stock (post-Reverse Stock Split) issuable
upon exercise of Series B Warrants based on the reset price of $ 5.45 (representing the lowest arithmetic average
of the daily VWAP during the 5 trading day period from September 12, 2024 through September 18, 2024. Effective October 8, 2024, after
market close, a reverse stock split occurred and as of November 12, 2024, 87,384 shares of common stock remain issuable upon exercise
of Series B Warrants using the reset price, which was reduced to the floor price of $ 5.206 (representing 20% of the Nasdaq Minimum Price
(post-Reverse Stock Split and post-Adjustment).

 F- 17

 Pursuant to an underwriting agreement
by and between the Company and the Underwriter, the Company paid the Underwriter a total cash underwriting discount of $ 700,000, equal
to 7% of gross proceeds received in the August 2024 Public Offering, reimbursement for Underwriter expenses of $ 100,000, equal to 1% of
gross proceeds received, and reimbursement for road show, diligence, legal fees and disbursements of $ 100,000, equal to 1% of gross proceeds
received, as well as $ 5,000 for investor counsel fee, totaling $ 905,000 in cash fees deducted from cash proceeds.

 Convertible Note Financing

 On December 27, 2023, the Company entered into a securities
purchase agreement with 3i, LP ("3i"), pursuant to which the Company sold and 3i purchased: (i) a senior unsecured convertible
note issued in the aggregate principal amount of $2,750,000, with an 10.0% original issue discount and an interest rate of 9.0% per annum
(the "3i Note"), (ii) up to $247,500 in newly issued shares of Common stock (the "Interest Shares"), which may
be payable, subject to the fulfillment of certain conditions set forth in the 3i Note, to satisfy interest payments under the 3i Note,
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"). The gross proceeds to the Company from the Convertible Note Financing were $2.5 million prior to the payment of
legal fees and transaction expenses. The offering of securities in the Convertible Note Financing was made pursuant to an effective shelf
registration statement on Form S-3 (File No. 333-272956), which the Company filed with the SEC on June 27, 2023 and was declared effective
on July 10, 2023.

 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 closing of the August 2024 Public Offering, the Company had 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 has the right, but not the
obligation, to sell to Tumim, and Tumim is obligated to purchase, up to the lesser of (a) $20,000,000 in aggregate gross purchase price
of newly issued Common stock and (b) the Exchange Cap (as defined in the purchase agreement) (the "Equity Line of Credit").
In connection with the Equity Line of Credit, the Company filed a Registration Statement on Form S-1 (File No. 333-276663) with the SEC
on January 23, 2024, which was declared effective on February 9, 2024.

 In connection with the August 2024 Public Offering,
the Company and Tumim mutually agreed to terminate the Equity Line of Credit, effective immediately upon the closing of the August 2024
Public Offering. Prior to the closing of the August 2024 Public Offering, the Company had sold 4,336 shares of common stock (post-Reverse
Stock Split) under the Equity Line of Credit for an aggregate amount of $ 828,491, of which $ 434,958 was used to repay a portion of the
balance under the 3i Note, consisting of $ 380,042 to the loan principal, $ 34,204 to interest, and $ 20,712 as a redemption premium.

 Reverse
Stock Split True-Up Payment

 Effective
as of 5:00 p.m. Pacific Time on October 8, 2024 (the "Effective Date"), The Company effected a 1-for-100 reverse stock split
of our common stock (the "Reverse Stock Split"), which was approved by the Board on September 27, 2024, following stockholder
approval at our annual meeting of stockholders held on September 27, 2024.

 As a result
of the daily VWAP of the common stock during the five trading days before and after the Reverse Stock Split, a Reverse Stock Split cash
true-up payment provision in the Series A Warrants, which is capped at $5.0 million in the aggregate under all Series A Warrants, was
triggered, but the payment of the Reverse Stock Split cash true-up payment was suspended in accordance with the terms of the Series A
Warrants.

 F- 18

 During the
year ended December 31, 2024, $14,052 of this liability was relieved in connection with the exercise of Series A Warrants, leaving a remaining
liability of $ 4,985,948 as of December 31, 2024. We used $ 500,000 of the net proceeds from the registered direct offering and warrant
private placement that closed on January 3, 2025 to satisfy a portion of certain amounts owed to the holders of the Series A Warrants
pursuant to the terms thereof.

 8. Commitments and Contingencies

 Operating Leases

 The Company leases its warehouses and office space
under long-term lease arrangements. None of its leases include characteristics specified in ASC 842, Leases, that require classification
as financing leases, and accordingly, these leases are accounted for as operating leases. The Company does not recognize a right-of-use
asset and lease liability for short term leases, which have terms of 12 months or less. For longer-term lease arrangements that are recognized
on the Company's Balance Sheet, the right-of-use asset and lease liability are initially measured at the commencement date based
upon the present values of the lease payments due under the leases.

 The implicit interest rates of the Company's
lease arrangements are generally not readily determinable and as such, the Company applies an incremental borrowing rate, which is established
based upon the information available at the lease commencement date, to determine the present value of lease payments due under the arrangement.
Under ASC 842, the incremental borrowing rate ("IBR") for leases must be (1) a rate of interest over a similar term, and (2)
for an amount that is equal to the lease payments. The Company uses both the Federal Reserve Economic Data U.S. corporate debt effective
yield and the U.S. Treasury rates adjusted for credit spread as the primary data points for purposes of determining the IBR.

 In the first quarter of 2022, the Company entered
into two new long-term, non-cancelable operating lease agreements for office and warehouse space resulting in the Company recognizing
an additional lease liability of $ 2,348,509, representing the present value of the lease payments discounted using an effective interest
rate of 8.07% and 8.86%, and corresponding ROU assets of $ 2,348,509. The leases expire in December 2026 and December 2028, the latter
of which contains one three-year option to renew.

 In the first quarter of 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
lease liability totaling of $ 1,268,089, representing the present value of the lease payments discounted using an effective interest rate
of 7.47% and a corresponding ROU asset of $ 1,268,089. The lease expires in January 2028 and contains one three-year option to renew.

 The Company had another lease that expired in January
2023 and was terminated at that time. The relating right of use asset and lease liability were written off at that time. The company has
one further lease that expires in February 2025. The leases generally provide for annual increases based on a fixed amount and generally
require the Company to pay real estate taxes, insurance, and repairs.

 On September 19, 2024, the Company signed a Termination
of Commercial Lease Agreement regarding the lease previously contracted to end in December 2028. The cancelation was effective September
30, 2024. The corresponding ROU asset and lease liability were therefore removed from the Company's balance sheet effective September
30, 2024.

 The following is a summary of total lease costs for
the years ending December 31, 2024 and 2023:

 Schedule of lease cost

 2024

 2023

 Operating lease cost

 $
 610,549

 $
 749,975

 Short-term lease costs

 1,149

 Variable lease costs

 —

 —

 Sublease income

 ( 42,804
)

 ( 49,916
)

 Total lease costs

 $
 568,894

 $
 700,209

 F- 19

 The weighted-average remaining lease term was 2.91
and 4.54 years as of December 31, 2024 and 2023, respectively. The weighted average discount rate was 7.60 % and 8.47 % as of December 31,
2024 and 2023, respectively. Operating cash flows from the operating leases totaled $ 455,690 and $ 469,923 for the years ended December
31, 2024 and 2023, respectively.

 The total lease liability as of December 31, 2024
and 2023 was $ 798,917 and $ 2,764,089, respectively.

 The following is a maturity analysis of the annual
undiscounted cash flows of the operating lease liabilities as of December 31, 2024, for years ending December 31:

 Schedule of future minimum lease payment

 Total

 2025

 $

 307,536

 2026

 307,632

 2027

 256,878

 2028

 21,458

 2029

 —

 Thereafter

 —

 Total future minimum lease payments

 893,504

 Less imputed interest

 ( 94,587

 Total

 $

 798,917

 Current lease liability

 $

 256,153

 Noncurrent lease liability

 542,764

 Total

 $

 798,917

 Subleases

 As of December 31, 2024, the Company subleases office
and warehouse space under one of its existing operating leases with similar terms as the Company's lease agreements. Two additional
leases ended in February, 2023. Because the Company is not relieved of its primary obligations under the original lease, the Company accounts
for the subleases as a lessor. Sublease rental income is recorded based on the contractual rental payments which are not substantially
different from recognition on a straight-line basis over the lease term and totaled $ 42,804 and $ 49,916 during the years ended December
31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, deferred income and a sublease deposit totaled $ 4,549 and $ 4,445, respectively,
and is included in accrued expenses and other current liabilities on the accompanying Balance Sheets.

 The total future minimum sublease payments are $ 7,169,
all due in the year ending December 31, 2025.

 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 will not likely have a material adverse effect on the Company's
financial statements.

 On November 22, 2022, the Company received
notice of a complaint (the "Complaint") filed against it in Oregon state court by Ravi Sinha. The Complaint alleged, inter
alia, that Mr. Sinha was entitled to 282,284 shares of the Company's common stock, or
in the alternative, $300,000 plus interest in connection with services he previously rendered the Company as its chief executive officer.
On March 21, 2023, the Company entered into a settlement agreement with Mr. Sinha and the matter has been resolved with $ 30,000 cash and
the issuance of 52,000 shares of common stock at the closing price of $ 4.84 per share on March 31, 2023, for a total settlement value
of $ 281,680. (see Note 11, Stockholders' Equity).

 F- 20

 On May 2, 2024,
the Company entered into a Settlement and Mutual Release with Alexander Capital L.P. ("Alexander"), pursuant to which the
parties resolved certain disputes while not admitting any liability or wrongdoing (the "Settlement Agreement"). We 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
to reduce the per share exercise price from $9.10 to $4.50. The shares of Common Stock were issued pursuant to an effective Registration
Statement on Form S-3 (File No. 333-272956). The Settlement Agreement also contains 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 with Alexander (the "Termination Agreement"), pursuant to which the
parties agreed to terminate a certain provision in that certain underwriting agreement, dated March 31, 2022, between the Company and
Alexander, as representative of the underwriters, which granted Alexander a right of first refusal to act as the Company's financial
advisor, book-runner, book-running manager, manager, placement agent, or underwriter in connection with any transaction contemplated or
consummated by us (the "ROFR Provision"). In exchange for the termination of the ROFR Provision, and in connection with the
closing of the 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 staff
determination from The Nasdaq Listing Qualifications Department of The Nasdaq Stock Market ("Nasdaq") to delist the Company's
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 per share for the Company's common stock had closed below $1.00 for the previous 30 consecutive business
days, and (ii) the Company is subject to the provisions contemplated under Nasdaq Listing Rule 5810(c)(3)(A)(iii) because, as of September
5, 2024, the Company's common stock had a closing bid price of $0.10 or less for at least ten consecutive trading days (the "Staff
Determination").

 On September 12, 2024, the Company requested an appeal
hearing on the Staff Determination from a Hearings Panel (the "Panel") by filing a hearing request with Nasdaq pursuant to
the procedures set forth in the Nasdaq Listing Rules, staying the delisting of the common stock pending the Panel's decision.

 Upon successful completion of the Reverse Stock Split,
the Company received a letter from the Nasdaq Office of General Counsel on October 23, 2024, advising the Company that it had regained
compliance with the minimum bid price continued listing requirements in Listing Rule 5550(a)(2) and that the Company is therefore in compliance
with Nasdaq's listing requirements. Consequently, the scheduled hearing before the Panel on October 24, 2024, was cancelled.
The Company's common stock continues to be listed and traded on The Nasdaq Capital Market.

 See Note 14 – "Subsequent Events"
in this Quarterly Report for additional information about the Reverse Stock Split and the Nasdaq Listing Requirement.

 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, 2024 and December 31, 2023, 2,096,082 and 69,230 shares, respectively, of common stock were issued
and outstanding. No shares of preferred stock have been issued.

 As of December 31, 2024, of the 50,000,000 Units sold
in the August 2024 Public Offering at $ 0.20 per unit (Pre-Reverse Stock Split), 500,000 shares of common stock (post-Reverse Stock Split)
were issued, as all 16,598,000 Pre-Funded Warrants have been exercised.

 Prior to the Company's payoff of the 3i Note
in connection with the closing of the August 2024 Public Offering, the Company had issued 414 shares of common stock for the payment of
$ 90,839 in interest. As of December 31, 2024, the Company has sold 4,336 shares of common stock for an aggregate amount of $ 828,491, of
which $ 434,958 was used to repay a portion of the balance under the 3i Note, consisting of $ 380,042 to the loan principal, $ 34,204 to
interest and $ 20,712 as a redemption premium.

 F- 21

 On May 2, 2024, at the closing price of $ 209.00 per
share, the Company agreed to issue 1,000 shares of common stock valued at $ 209,000 as well as $ 100,000 in cash as part of a settlement
agreement for a total value of $ 309,000.

 On March 31, 2023, at the closing price of $ 484.00
per share, the Company issued 520 shares of common as part of a settlement agreement for a total value of $ 251,680.

 On January 16, 2023, at the closing price of $ 454
per share, the Company issued 79 shares of common stock for stock-based compensation that had been accrued in 2023, for a total value
of $ 36,029.

 As of December 31, 2024 and December 31, 2023, 2,096,082
and 69,230 shares, respectively, of common stock were issued and outstanding. No shares of preferred stock have been issued.

 A holder of common stock is 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 stock having a preference over the right to participate with 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.

 Initial Public Offering

 On April 1, 2022, the Company completed an initial
public offering ("IPO"). A total of 24,668 shares of common stock were sold at $ 700.00 per share in the IPO, for total gross
proceeds of $ 17,267,250.

 Warrants/Options

 During the year ended December 31, 2023, 73,000 warrants
exercisable for 730 shares at $ 290.00 per share were exercised using the cashless conversion option which resulted in the issuance of
 311 shares of common stock (post-Reverse Stock Split). This left 78,000 warrants remaining, which expired on November 9, 2024, without
being exercised, and there are no warrants remaining at $ 290.00 per share as of December 31, 2024.

 During the year ended December 31, 2023, 22,606 warrants
exercisable for 226 shares of common stock at $ 332.00 per share were exercised using the cashless conversion option, which resulted in
the issuance of 102 shares of common stock, and 15,000 warrants exercisable for 150 shares of common stock at $ 332.00 per share were exercised
on a cash basis, which resulted in the issuance of 150 shares of common stock. During the year ended December 31, 2024, 7,535 warrants
exercisable for 75 shares of common stock at $ 332.00 per share were exercised using the cashless conversion option which resulted in the
issuance of 16 shares of common stock. This leaves 514,290 warrants remaining convertible into 5,149 shares of common stock with an exercise
price of $ 332.00 per share as of December 31, 2024.

 On August 10, 2023, the Company issued 25,000 warrants
to their investor relations firm in accordance with a letter of engagement signed July 22, 2022, to purchase 250 shares of common stock
at an exercise price of $500.00 per share. The warrants expire two years from the date of grant on August 9, 2025. The fair value of the
warrants was determined at date of issuance using the Black-Scholes option-pricing model and following assumptions: per share price of
common stock on date of grant $ 5.20, expected dividend yield of 0 %, expected volatility of 88 %, risk-free interest rate of 4.82 % and expected
life based on contractual life of two years. The fair value of $ 65,045 was recorded as an increase in additional paid-in capital
and expensed to Legal and Professional Services.

 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.

 F- 22

 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). This leaves 3,075,000 Series B warrants remaining, which are exercisable
for 87,384 shares (post-Adjustment), as of December 31, 2024. In addition, 323,203 Series A Warrants were exercised on a cash basis which
resulted in the issuance of 14,900 of common stock. This leaves 114,676,797 Series A Warrants remaining, which are exercisable for 5,286,692
shares of common stock, as of December 31, 2024.

 As of December 31, 2024 and December 31, 2023, a total
of 687,295 and 772,830 regular warrants to purchase 6,889 and 7,745 shares of common stock, respectively, were issued and outstanding.
As of December 31, 2023, a total of 30,000 options, which were not issued under a specified plan, were outstanding. However, all 30,000
non-plan options expired on November 8, 2024, and there are no non-plan options outstanding as of December 31, 2024.

 Below is a summary of warrants and stock options issued
and outstanding as of December 31, 2024:

 Schedule of various warrants/options issued and outstanding

 Number of Warrants

 Issuable Shares

 Exercise Price per share

 Weighted Average Remaining Life (Years)

 3,075,000
 (1)

 87,384

 $
 0.10

 N/A
 (3)

 114,676,797
 (2)

 5,286,692

 $
 5.206

 4.74

 514,290

 5,149

 $
 332.00

 6.89

 88,803

 $
 450.00

 2.25

 25,000

 $
 500.00

 0.61

 59,202

 $
 910.00

 2.25

 118,439,092

 5,380,965

 (1)

 Series B Warrants are subject to reset pricing to determine the number of shares issuable.

 (2)

 Series A Warrants are subject to reset pricing to determine the number of shares issuable.

 (3)

 Series B warrants do not have an expiration date.

 Equity Plans

 As of December 31, 2024, the Company had adopted two
stock-based compensation plans, the 2021 Incentive Award Plan and the 2021 Employee Stock Purchase Plan.

 During the year ended December 31, 2024, the Company
granted 161 RSUs, granted 1,045 options, and canceled 100 options (post-Reverse Stock Split) under the 2021 Incentive Award Plan. The
compensation costs that have been charged against operations were $ 581,504 and $ 495,320 for the years ended December 31, 2024 and 2023.

 No shares have been issued to date under the 2021
Employee Stock Purchase Plan.

 2021 Incentive Award Plan

 The purpose of the Company's 2021 Incentive
Award 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 Incentive Award Plan to eligible employees, consultants, and non-employee directors. The number of shares issued under
the 2021 Incentive Award Plan is subject to limits and is adjusted annually. 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. As of December 31, 2024, the aggregate number of shares that can
be issued under the 2021 Incentive Award Plan is 17,958, of which 11,430 options and 649 RSUs have been granted. The number of shares granted, the exercise price, and the terms
will be determined at date of grant; however, the exercise price shall not be less than 100% of the fair value on the grant date (110%
for options granted to greater than 10% stockholders, except for options granted to Mr. Yozamp in August 2023, which were at 100%) and
the term shall not exceed ten years.

 F- 23

 2021 Employee Stock Purchase Plan

 The purpose of the Company's 2021 Employee Stock
Purchase Plan is to assist eligible employees of the Company in acquiring a 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 Employee Stock Purchase Plan
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 Employee Stock Purchase Plan. 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, provided that in no event shall the option price be less that the per share par
value price. The maximum number of shares granted under the 2021 Employee Stock Purchase Plan shall not exceed 25,000 shares.

 The fair value of each option is estimated on the
date of grant using the Black-Scholes option pricing model. The option-pricing model requires a number of assumptions, of which the most
significant are the expected stock price volatility and the expected option term. Expected volatility was calculated based upon similar
traded companies' historical share price movements as adequate historical experience is not available to provide a reasonable estimate.
Expected term is calculated based on the simplified method as adequate historical experience is not available to provide a reasonable
estimate. The simplified method will continue to apply until enough historical experience is available to provide a reasonable estimate
of the expected term. The risk-free interest rate is calculated based on the yield from U.S. Treasury zero-coupon bonds with an equivalent
term. The Company has historically not paid dividends and have no foreseeable plans to pay dividends.

 The Company has computed the fair value of the 2,455
options granted during the year ended December 31, 2023 using the following assumptions:

 Schedule of fair value of assumptions

 Expected volatility

 105.27

 %

 Expected dividends

 None

 Expected term (in years)

 6.0

 Risk free rate

 4.33 %

 The Company has computed the fair value of the 1,045
options granted during the year ended December 31, 2023 using the following assumptions:

 Expected volatility

 124.35

 %

 Expected dividends

 None

 Expected term (in years)

 5.42

 Risk free rate

 4.08 %

 F- 24

 The following table summarizes the Company's
stock option activity under the 2021 Incentive Award Plan:

 Schedule of stock option activity

 (in thousands except number of options and per options data)

 Number of options

 Weighted average exercise price

 Weighted average remaining contractual term (in years)

 Aggregate intrinsic value

 Outstanding at beginning of period

 10,756

 $

 377.28

 —

 $

 —

 Granted

 1,045

 345.00

 —

 —

 Exercised

 —

 —

 —

 —

 Canceled

 444.06

 —

 —

 Outstanding at end of period

 11,430

 $

 372.16

 7.36

 $

 —

 Exercisable at end of period

 10,463

 $

 365.88

 7.23

 $

 —

 During the years ended December 31, 2024 and 2023,
the weighted-average grant-date fair value of the options granted to employees and non-employees was $ 312,873 and $ 998,915, respectively.
Unrecognized compensation expense related to employees and non-employees was $ 101,970 as of December 31, 2024. The options granted in
May 2022 were vested 100% at time of grant. The options granted in August 2023 began to vest in equal quarterly installments beginning
September 30, 2023 and ending June 30, 2026. The options granted in March 2024 were vested 50% at the time of grant, then the remainder
continues to vest in 12 equal quarterly installments thereafter, beginning June 30, 2024.

 The following table summarizes the Company's
RSU activity under the 2021 Incentive Award Plan:

 Schedule of RSU activity

 (in thousands except number of options and per options data)

 Number of restricted stock awards

 Weighted average grant-date fair value

 Nonvested at beginning of year

 $

 180,072

 Granted

 73,094

 Vested

 253,166

 Forfeited

 —

 —

 Nonvested at end of year

 —

 $

 —

 There was no unrecognized compensation cost related
to non-vested RSUs as of December 31, 2024.

 Common Stock Reserved for Future Issuance

 The following is a summary of common stock shares
reserved for future issuance as of December 31, 2024:

 Schedule of common stock shares reserved for future issuance

 Exercise of warrants

 6,889

 Exercise of stock options – 2021 Incentive Award Plan

 11,430

 Exercise of restricted stock units – 2021 Incentive Award Plan

 —

 Exercise of Series A warrants

 5,286,692

 Exercise of Series B warrants

 87,384

 Total shares of common stock reserved for future issuances

 5,392,395

 10. Segment Reporting

 The Company focuses on the design, assembly, manufacturing,
and sale of lithium iron phosphate ("LiFePO4") batteries and supporting accessories for recreational vehicles ("RVs"),
marine applications and home energy storage products with plans to expand into industrial applications. We sell to wholesalers, distributors,
and OEMs, as well as directly to consumers, and cannot always determine which application our batteries are ultimately used in.

 F- 25

 The accounting policies for this segment aligns with
those outlined in the summary of significant accounting policies. The Chief Executive Officer is the Chief Operating Decision Maker (CODM)
and assesses the performance of this segment and allocates resources based on net income or loss, which is reflected on the Statements
of Operations, and the measure of segment assets is represented as total assets on the Balance Sheet, included in the Financial Statements
section of this Annual Report.

 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, offering insights
into financial performance and guiding any necessary corrective actions. 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.

 The Company does not engage in any intra-entity sales
or transfers.

 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.

 11. Income Taxes

 Our losses before income taxes for the years ended
December 31, 2024 and 2023 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, 2024 and 2023.

 The significant differences between the U.S. Federal
statutory rate and our effective rate for financial reporting purposes are as follows:

 Schedule
of income before income tax, domestic and foreign

 2024

 2023

 Federal statutory tax rate

 ( 21.0
)
 %

 ( 21.0
)%

 State taxes, net of federal tax benefit

 ( 5.1
)

 ( 4.9
)

 Change in valuation allowance

 22.6

 19.9

 NQSO Comp – Other

 2.1

 2.2

 EQ Comp – Other

 0.0

 0.0

 True-up Adjustment

 1.5

 3.8

 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, 2024 and 2023.

 Deferred income tax assets and liabilities consist
of the following:

 Schedule
of components of income tax expense

 As of December 31,

 2024

 2023

 Deferred tax assets:

 Net Operating Losses

 $
 6,274,519

 $
 3,434,559

 Stock-based compensation

 170,064

 153,692

 Depreciation

 138,334

 61,547

 Other

 256,179

 120,072

 Subtotal

 6,839,096

 3,769,870

 Valuation allowance

 ( 6,839,096
)

 ( 3,769,870
)

 Deferred tax liabilities:

 —

 —

 Net deferred tax asset

 $
 —

 $
 —

 F- 26

 For financial reporting purposes, the Company incurred
losses for the year ended December 31, 2024 and December 31, 2023 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, 2024, the Company had approximately
$ 29,036,703 of federal and state net operating losses.

 Accrued income taxes as of the end of each year as
follows:

 Schedule
of accrued income taxes

 As of December 31,

 2024

 2023

 Current:

 Federal

 $
 —

 $
 —

 State Franchise Fees

 1,840

 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:

 Summary
of operating loss carryforward

 As of December 31,

 2024

 2023

 Income tax provision at federal statutory rate

 $
 ( 2,839,422
)

 $
 ( 1,565,126
)

 State taxes

 ( 689,421
)

 ( 361,328
)

 Stock-based compensation

 278,572

 163,170

 Penalties and Fines

 —

 Other

 196,608

 283,876

 Valuation allowance

 3,053,661

 1,479,386

 Net deferred tax asset

 $
 —

 $
 —

 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, 2024 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 2018 through 2024
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, 2024, 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 year ended December 31, 2023, the Company
accrued $ 1,840 for state minimum income taxes, and did not accrue federal income taxes due to net losses in 2023. For the year ended December
31, 2024 the Company adjusted the accrual to $ 150 for state income taxes, as we do not anticipate owing more than the minimum state income
taxes for 2024.

 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, 2024 and 2023.
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, 2024 and December 31, 2023, there were no material unrecognized tax benefits included
in the accompanying balance sheets that would, if recognized, affect the effective tax rate.

 F- 27

 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. 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, 2023, related party transactions
consisted of the Notes (see Note 6, Stockholder Promissory Notes).

 As of December 31, 2024, there were no outstanding
related-party transactions, as all Stockholder Promissory Notes had been repaid.

 14. Subsequent Events

 January 2025 Registered Direct Offering and Warrant
Private Placement

 On January 3, 2025, the Company
sold to certain institutional investors, in a registered direct offering, an aggregate of (i) 474,193 shares of common stock; and (ii)
574,193 pre-funded warrants (the "January 2025 Pre-Funded Warrants") to purchase up to 574,193 shares of common stock (the
"January 2025 Pre-Funded Warrant Shares"). The offering price per share was $2.48 and the offering price per January 2025
Pre-Funded Warrant was $2.479. Each January 2025 Pre-Funded Warrant was exercisable for one share of common stock for $0.001 immediately
upon issuance and the January 2025 Pre-Funded Warrants were all exercised immediately upon issuance. The number of January 2025 Pre-Funded
Warrant Shares are subject to adjustments for stock splits, recapitalizations, and reorganizations. The January 2025 Pre-Funded Warrants
were exercised in full on January 3, 2025.

 In a concurrent private placement
that closed January 3, 2025, the Company also issued to the institutional investors unregistered warrants (the "January 2025 Warrants")
to purchase up to an aggregate of 1,048,386 shares of common stock (the "January 2025 Warrant Shares") at an exercise price
of $ 2.36 per share, subject to adjustment for reverse stock splits, recapitalizations, and reorganizations. In connection with the private
placement, the Company filed a registration statement on Form S-1 (File No. 333-284354), which was declared effective by the SEC on February
11, 2025, covering the resale of the January 2025 Warrant Shares.

 The Company received net proceeds of approximately
$ 2.2 million from the offering and used approximately $ 500,000 of the net proceeds to satisfy a portion of
certain amounts owed to our Series A Warrant holders pursuant to the terms of the outstanding Series A Warrants.

 F- 28