Expion360 Inc.
For the period ended Mar 31, 2026. Filed May 15, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 15, 2026
XPON$2.45-8.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-13.
0001903596-25-000532
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-15.
0001903596-26-000230
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 130 previous paragraphs and 119 current paragraphs.
61 unchanged; 36 reworded; 22 added; 32 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Our primary target markets include the RV, marine, industrial, and commercial energy storage industries. Within the industrial sector, we participate in applications such as electric material handling and forklift equipment, where lithium battery adoption continues to increase as an alternative to traditional lead-acid systems. We believe the broader transition from lead-acid to lithium batteries presents growth opportunities across these markets.
Current report
In addition to our current focus areas, we are evaluating opportunities to expand further into industrial and mission-critical commercial applications that require integrated battery energy storage solutions. These may include mobile and stationary systems supporting remote operations, security infrastructure, and other environments that require a high degree of reliability. While we continue to assess these industrial and adjacent markets, our current commercial activities remain concentrated in our established RV, marine, and industrial segments.
Current report
In February 2026, we announced plans to release three next-generation lithium-ion battery models expected to be commercially available in the second half of 2026. The new models include upgraded Group 27 (12.8V 140Ah), GC2H (12.8V 180Ah), and EX1 (12.8V 420Ah) batteries, each designed to increase capacity relative to prior generations. These platforms incorporate our VHC™ internal heating technology, SmartTalk™ Bluetooth connectivity, and CANBus communication, and are engineered to meet UL 1973 safety standards. The redesigned batteries are also intended to support manufacturing efficiencies and margin improvement initiatives.
Current report
Also in February 2026, we entered into a strategic partnership with Dealer Accessory Supply (“DAS”) related to the launch of the DASGen Hybrid Energy Storage System, representing our entry into the industrial energy storage market. DASGen is designed to function as an energy buffer between diesel generators and jobsite electrical loads and is intended to support reduced generator runtime, subject to site conditions and usage. Under the partnership, DAS serves as the final system assembler, while we supply the battery technology and lead sales and marketing efforts. The system utilizes our lithium iron phosphate battery platform and is integrated with industrial power electronics. Initial field deployments have been completed, with performance dependent on site-specific operating conditions.
Current report
We have recently added several new distributors and OEM customers in RV and marine markets. These relationships contributed to incremental order volume during 2025 and are expected to support order volume and revenue opportunities during the latter part of 2026, although the timing and magnitude of future orders will continue to remain subject to customer demand and overall market conditions.
Current report
Management expects that products sourced from our Asian third-party manufacturers may be subject to additional tariffs in 2026. U.S. trade policy has been subject to significant legal and regulatory developments, and tariffs or other trade measures may continue to be imposed, modified, suspended, or challenged under various statutory authorities. We intend to mitigate the potential impact on margins through a combination of supplier negotiations, selective customer price adjustments, ongoing cost optimization initiatives, and the development of lower-cost product configurations designed to improve manufacturing efficiency and overall unit economics as sales volumes increase. The effectiveness of these measures will depend on market conditions, sales volume, product mix, and future tariff developments.
Current report
We continue to invest in research and development to enhance the performance, reliability, and integration capabilities of our LiFePO4 battery systems. Our research and development efforts focus on battery management systems, thermal management, product durability, system integration, and application-specific configurations for the RV, marine, industrial, and specialty vehicle markets.
Current report
As electrification trends evolve across mobile and stationary applications, customer requirements continue to develop, including demand for improved energy density, communication protocols, remote monitoring capabilities, and system-level integration. Our development initiatives are intended to address these evolving requirements and support competitiveness within our core markets.
Current report
We also evaluate emerging technologies and broader industry developments that may influence future product design, including advancements in cell chemistry, system architecture, and energy management software. Artificial intelligence (“AI”) and data-driven analytics are increasingly being incorporated into energy management, predictive maintenance, and supply chain optimization across the battery industry. While AI is not currently a primary driver of our product offerings, we monitor developments in this area and assess potential applications that may enhance system diagnostics, performance monitoring, and operational efficiency over time.
Current report
Our research and development spending may fluctuate depending on product development cycles, customer requirements, and broader market conditions.
Current report
Net sales for the three months ended March 31, 2026 decreased by $0.5 million, or 24%, compared to the three months ended March 31, 2025. Net sales were $1.6 million for the three months ended March 31, 2026 and $2.0 million for the three months ended March 31, 2025. The decrease was primarily due to discontinuing resale of certain low-margin accessories in order to increase our profit margins. Additionally, certain OEM customers entered the period carrying elevated battery inventory levels built up through year-end, which tempered order volume in the quarter. We anticipate demand from these customers to normalize in the second quarter of 2026 and beyond as their inventory levels return to standard operating levels.
Current report
Total cost of sales for the three months ended March 31, 2026 decreased by $0.4 million, or 24%, compared to the three months ended March 31, 2025. Cost of sales as a percent of sales decreased by 0.8 percentage points compared to the prior year period, from 75.5% to 74.7%. Cost of sales was $1.2 million for the three months ended March 31, 2026 and $1.5 million for the three months ended March 31, 2025. The decrease in cost of sales was primarily related to the decrease in net sales, while the decrease in cost of sales as a percentage of net sales was primarily related to changing our product mix to exclude low-margin items and maintaining healthy pricing models across our core battery product lines.
Current report
Selling, general, and administrative expenses for the three months ended March 31, 2026 increased by $0.5 million, or 31%, compared to the three months ended March 31, 2025. Selling, general, and administrative expenses were $2.2 million for the three months ended March 31, 2026 and $1.6 million for the three months ended March 31, 2025. The increase in selling, general, and administrative expense was primarily due to increases in legal and professional fees and salaries and benefits, which increased by approximately $289,000 and $142,000, respectively.
Current report
Other income for the three months ended March 31, 2026 was $9,000 and other expense for the three months ended March 31, 2025 was $4,000. Other income for the three months ended March 31, 2026 was primarily attributable to interest income, partially offset by interest expense. Other expense for the three months ended March 31, 2025 was made up almost entirely of interest expense, partially offset by a gain on sale of property and equipment.
Current report
During the three months ended March 31, 2026 and 2025, interest income totaled $14,000 and $0, respectively, from the cash invested in U.S. treasury securities, while interest expense totaled $6,000 in both periods, related to our notes payable and short-term insurance financing.
Current report
Net Loss
Current report
Our net loss for the three months ended March 31, 2026 and 2025 was $1.8 million and $1.2 million, respectively. The increase in net loss was primarily the result of higher selling, general, and administrative expenses and lower net sales for the period ended March 31, 2026.
Current report
There was no cash provided by or used in investing activities for the three months ended March 31, 2026, compared to cash provided by investing activities of $3,000 for the three months ended March 31, 2025. We did not purchase or dispose of any fixed assets in the three months ended March 31, 2026, and sold one vehicle in the three months ended March 31, 2025.
Current report
Inventory
Current report
Inventory is stated at the lower of cost or net realizable value. Cost is determined using first-in, first-out method. Net realizable value represents the estimated selling price in the ordinary course of business less reasonably predictable costs of sales.
Current report
Although our products have long shelf lives when stored properly, inventory may become obsolete due to technological changes, product redesigns, or shifts in consumer demand. Management regularly evaluates inventory quantities on hand relative to forecasted demand, product life cycles, and market conditions, and records adjustments to the valuation of inventory using the allowance method when necessary.
Current report
Critical accounting estimates involved in determining our ROU asset and lease liabilities include the estimated value of the underlying asset at lease inception, the reasonably certain lease term for renewable leases, and the discount rate to apply to future payments. Variations from any of these estimates could have a material effect on the carrying value of our ROU assets and lease liabilities as reported on the balance sheet.
Removed paragraphs (32)
Previous report
Unless otherwise noted, all references to shares and per share amounts 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” in the Annual Report for additional information about the Reverse Stock Split.
Previous report
In January 2025 we began selling our e360 Home Energy Storage Solutions, which consist of two LiFePO4 battery storage solutions and are designed to provide consumers with a cost-effective, flexible system with low barrier of entry to power their homes utilizing solar energy, wind, or grid back-up. We are deploying multiple intellectual property strategies with research and product development 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 direct consumers, dealers, wholesalers, private-label customers, and original equipment manufacturers (“OEMs”) who sell our products to end consumers and drive brand awareness nationally.
Previous report
Our primary target markets are currently the RV, marine, and home energy storage industries. We believe we are well-positioned to capitalize on the continued market transition from lead-acid to lithium batteries as the primary method of power sourcing in these industries. We remain focused on expanding within the home energy storage market through the introduction of our e360 Home Energy Storage Solutions, and we believe we have established a new standard in the industry for price, flexibility, and integration with this offering. In addition, we are evaluating opportunities to extend our technology into adjacent applications, including the expanding electric forklift and industrial material handling markets.
Previous report
In recent months, we have undertaken a leadership transition designed to support our next phase of operational and strategic growth. In September 2025, the board of directors appointed Shawna Bowin, the Company’s previous Controller, as Chief Financial Officer, and in October 2025, the board of directors appointed Joseph Hammer, a veteran financial executive and director as Chief Executive Officer and Chairman of the Board of Directors, and appointed Scott Burell, a veteran financial executive and director, to the Board of Directors. These changes reflect management’s intent to strengthen our financial, operational, and strategic execution capabilities. Under the direction of this new leadership, we intend to build upon our existing foundation in lithium-ion battery technology to pursue selective growth initiatives. Management is focused on increasing OEM market penetration, advancing product development for home energy storage solutions, and exploring potential expansion into related energy storage or adjacent markets, or into areas beyond energy, where our design, manufacturing, and distribution capabilities may be leveraged.
Previous report
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 6.0% 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. Shipments of our two LiFePO4 battery solutions comprising our home energy storage product line began in January 2025.
Previous report
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 experiencing high customer interest and are actively shipping Edge batteries.
Previous report
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.
Previous report
Over the past year, Expion360 has added several new distributors and OEM customers in RV and marine markets, which contributed to the sales growth during the first nine months of 2025. Management believes that orders resulting from these new relationships will continue to result in significant new revenue streams for the remainder of 2025.
Previous report
Management anticipates that products sourced from the Company’s third-party manufacturers in Asia may be subject to additional tariff exposure during 2025. Although recent developments in November 2025 have been favorable, the Company has timed certain inventory purchases to coincide with the period of reduced tariff rates. Management believes that any potential impact on gross margins can be mitigated through a combination of supplier pricing concessions, product redesign initiatives, selective customer pricing adjustments, and ongoing operational efficiencies realized through increased sales volumes.
Previous report
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.
Previous report
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.
Previous report
Net sales for the three months ended September 30, 2025 increased by $1.0 million, or 72.2%, compared to the three months ended September 30, 2024. Sales were $2.4 million for the three months ended September 30, 2025 and $1.4 million for the three months ended September 30, 2024.
Previous report
Net sales for the nine months ended September 30, 2025 increased by $3.8 million, or 104.2%, compared to the nine months ended September 30, 2024. Sales were $7.4 million for the nine months ended September 30, 2025 and $3.6 million for the nine months ended September 30, 2024.
Previous report
The increase in net sales was primarily attributable to the RV market recovering from its previous slowdown, but also to enhanced sales efforts, including expanded outreach to OEM partners, strategic marketing initiatives, and the successful onboarding of new customers during this period.
Previous report
Total cost of sales for the three months ended September 30, 2025 increased by $600,000, or 51.6%, compared to the three months ended September 30, 2024. Cost of sales were $1.8 million for the three months ended September 30, 2025 and $1.2 million for the three months ended September 30, 2024. Cost of sales as a percentage of net sales decreased by 10.5% in that period.
Previous report
Total cost of sales for the nine months ended September 30, 2025 increased by $2.9 million, or 97.3%, compared to the nine months ended September 30, 2024. Cost of sales were $5.8 million for the nine months ended September 30, 2025 and $2.9 million for the nine months ended September 30, 2024. Cost of sales as a percentage of net sales decreased by 2.7% in that period.
Previous report
The year-to-year changes in cost of sales are primarily related to the product mix sold in different periods.
Previous report
Our gross profit for the nine months ended September 30, 2025 increased by $950,000, or 132.6%, compared to the nine months ended September 30, 2024. Gross profit was $1,667,000 for the nine months ended September 30, 2025 and $717,000 for the nine months ended September 30, 2024. Gross profit as a percentage of net sales increased by 2.7% for that period, from 19.7% for the nine months ended September 30, 2024 to 22.4% for the nine months ended September 30, 2024.
Previous report
The increase in gross profit percentage for both periods was primarily attributable to the product mix sold in different periods.
Previous report
Selling, general and administrative expenses for the three months ended September 30, 2025 increased by $1.4 million, or 69.1%, compared to the three months ended September 30, 2024. Selling, general and administrative expenses were $3.5 million for the three months ended September 30, 2025 and $2.1 million for the three months ended September 30, 2024. As a percentage of net sales, selling, general and administrative expenses were 148.1% for the three months ended September 30, 2025 compared to 150.9% for the same period in the prior year, a decrease of 2.8 percentage points. For the three months ended September 30, 2025, increases in salaries and benefits as well as legal and professional fees made up the majority of the increase.
Previous report
Selling, general and administrative expenses for the nine months ended September 30, 2025 increased by $877,000, or 13.9%, compared to the nine months ended September 30, 2024. Selling, general and administrative expenses were $7.2 million for the nine months ended September 30, 2025 and $6.3 million for the nine months ended September 30, 2024. As a percentage of net sales, selling, general and administrative expenses were 96.4% for the nine months ended September 30, 2025 compared to 172.8% for the same period in the prior year, a decrease of 76.4 percentage points. For the nine months ended September 30, 2025, increases in salaries and benefits and legal and professional fees were slightly offset by an decrease in rent and associates expenses.
Previous report
Other (income) / expense for the three months ended September 30, 2025 decreased $10.6 million, or 154.1%, compared to the three months ended September 30, 2024, primarily due to writing off the suspended liability from the Series A Warrants in 2025, and not incurring the expenses for change in fair value of warrants or legal settlements that were recognized in 2024, slightly offset by obsolete inventory expense in 2025. Other income was $3.7 million for the three months ended September 30, 2025 and other expense was $6.9 million for the three months ended September 30, 2024. Other income for the three months ended September 30, 2025 was made up of the write-off of the suspended liability, and other expense for the three months ended September 30, 2025 was primarily made up of the write-off of obsolete inventory. Other expense for the three months ended September 30, 2024 was primarily made up of the change in fair value of the warrants issued as part of the August 2024 financing, along with interest expense and settlement expense.
Previous report
Other (income) / expense for the nine months ended September 30, 2025 decreased $11.4 million, or 148.4%, compared to the nine months ended September 30, 2024, primarily due to writing off the suspended liability from the Series A Warrants in 2025, and not incurring the expenses for change in fair value of warrants or legal settlements that were recognized in 2024, as well as significantly lower interest expense in 2025, slightly offset by obsolete inventory expense in 2025. Other income was $3.7 million for the nine months ended September 30, 2025 and other expense was $7.7 million for the nine months ended September 30, 2024. Other income for the nine months ended September 30, 2025 was primarily made up of the write-off of the suspended liability. Other expense for the nine months ended September 30, 2024 was primarily made up of the change in fair value of the warrants issued as part of the August 2024 financing, along with interest expense and settlement expense.
Previous report
During the three months ended September 30, 2025 and 2024, expense for the change in fair value of warrants was $0 and $5.9 million, income from the write-off of suspended liability totaled $4.5 million and $0, obsolete inventory expense totaled $757,000 and $0, interest expense totaled $4,000 and $468,000, settlement expense totaled $0 and $401,000, loss on sale of property and equipment totaled $0 and $146,000, interest income totaled $0 and $15,000, and workers comp dividends totaled $0 and $1,000, respectively. During the nine months ended September 30, 2025 and 2024, expense for the change in fair value of warrants was $0 and $5.9 million, income from the write-off of suspended liability totaled $4.5 million and $0, interest expense was $14,000 and $972,000, obsolete inventory expense totaled $757,000 and $0, settlement expense totaled $0 and $710,000, loss on sale of property and equipment totaled $13,000 and $147,000, interest income totaled $0 and $60,000, miscellaneous income from sale of a non-capitalized asset was $0 and $1,000, dividend from a workers compensation policy was $0 and $1,000, respectively, and penalties and late fees totaled less than $100 each period.
Previous report
Net Income / (Loss)
Previous report
Our net income / (loss) for the three months ended September 30, 2025 and 2024 was $723,000 and $(8.8 million), respectively. Our net loss for the nine months ended September 30, 2025 and 2024 was $(1.8 million) and $(13.2 million), respectively. The improvement for both periods was driven by increased sales and proportional decreases in cost of sales resulting in improved gross profit, as well as improvements in other income and expense.
Previous report
For the nine months ended September 30, 2025, we recognized a net of $3.6 million in non-cash operating income, including $4.5 million for write-off of suspended liability, $452,000 for stock-based compensation, and $348,000 for common stock issued for services. For the nine months ended September 30, 2024, we recognized $7.5 million in non-cash operating costs, including $5.9 million for change in fair value of warrants, $667,000 in amortization of convertible note costs, and $546,000 for stock-based compensation.
Previous report
Cash provided by investing activities was $4,000 and $122,000 for the nine months ended September 30, 2025 and 2024, respectively. We sold three vehicles in the nine months ended September 30, 2025, one of which was traded for services rendered and no cash was exchanged. For the nine months ended September 30, 2024, we purchased quality assurance equipment for $11,000, and we sold three vehicles as well as fixed assets associated with the property for which we terminated the lease.
Previous report
Convertible Note Financing
Previous report
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 414 shares of common stock (post-Reverse Stock Split) for the payment of $90,839 in interest.
Previous report
Equity Line of Credit
Previous report
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*.*
Reworded paragraphs (36)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited interim financial statements and related notes for the three and nine months ended September 30, 2025 and 2024 included elsewhere in this Quarterly Report, as well as our audited financial statements and related notes for the fiscal years ended December 31, 2024 and 2023, included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 31, 2025 (the “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 Quarterly Report, including in Part II, Item 1A “Risk Factors” of this Quarterly Report and “Cautionary Note Regarding Forward-Looking Statements and Industry Data,” as well as in Part I, Item 1A, “Risk Factors” of the Annual Report. Percentage amounts included in this section have not in all cases been calculated on the basis of rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary from those obtained by performing the same calculations using the figures in our financial statements included elsewhere in this Quarterly Report. Certain other amounts that appear in this section may not sum due to rounding.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited interim financial statements and related notes for the three months ended March 31, 2026 and 2025 included elsewhere in this Quarterly Report, as well as our audited financial statements and related notes for the fiscal years ended December 31, 2025 and 2024, included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 17, 2026 (the “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 Quarterly Report, including in Part II, Item 1A, “Risk Factors” of this Quarterly Report and “Cautionary Note Regarding Forward-Looking Statements and Industry Data,” as well as in Part I, Item 1A, “Risk Factors” of the Annual Report. Percentage amounts included in this section have not in all cases been calculated on the basis of rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary from those obtained by performing the same calculations using the figures in our financial statements included elsewhere in this Quarterly Report. Certain other amounts that appear in this section may not sum due to rounding.
Previous wording
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.
Current wording
Expion360 focuses on the design, assembly, manufacturing, and sale of lithium iron phosphate (“LiFePO4”) batteries and supporting accessories for recreational vehicles (“RVs”), marine applications, and industrial energy storage products. Our high-powered lithium battery solutions incorporate innovative concepts and have been designed to include some of the most dense and minimal-footprint batteries in the RV and marine industries. We deploy intellectual property strategies to support product development, enhance safety and performance, and strengthen relationships across our target markets. This includes design, development, and collaboration, using our IP to bring safety, quality, and service to our customers. Our customers consist of dealers, wholesalers, private-label customers, and original equipment manufacturers (“OEMs”) who then sell our products to end consumers and drive brand awareness nationally.
Previous wording
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. We began shipping orders of our e360 Home Energy Storage Solutions in early 2025.
Current wording
We launched our e360 product line in December 2020, initially targeting the RV and marine industries. The line, through its sales growth, has shown to be a preferred conversion solution for lead-acid batteries.
Previous wording
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.
Current wording
Our products provide numerous advantages for various industries that are looking to migrate to lithium-based energy storage. They incorporate detailed design and engineering, strong case materials, optimized internal structural layouts, and are supported by responsive customer service.
Previous wording
We currently operate Expion360 as one reportable business segment, Energy Storage.
Current wording
We currently operate Expion360 as one reportable business segment, Energy Storage (ES).
Previous wording
We believe the following strengths differentiate Expion360 and create long-term, sustainable competitive advantages:
Current wording
We believe the following strengths differentiate Expion360 and create long-term competitive advantages:
Previous wording
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 1C rate).
Current wording
Lead-acid batteries have historically been the standard in RV and marine transportation vehicles, but these industries are experiencing a rapid conversion from lead-acid to lithium batteries as the primary method of power sourcing. Our lithium-ion batteries are designed to offer superior capacity to traditional lead-acid batteries, with an expected lifespan of approximately 12 years under standard operating conditions—three to four times that of certain lead-acid batteries—and ten times the number of charge cycles. Furthermore, our typical battery may provide three times the power of the typical, lead-acid battery despite being half the weight (comparing, for example, a typical lead-acid battery like the Renogy Deep Cycle AGM, which is rated at 100Ah, to our own LFP 100Ah battery and assuming slow discharge at a 1C rate).
Previous wording
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.
Current wording
Our proprietary e360 SmartTalk mobile app is included in many of our battery models and allows the seamless integration and management of e360 Bluetooth-enabled LiFePO4 batteries. The technology enables users to wirelessly monitor and manage e360 batteries, providing a comprehensive view of both individual battery conditions and performance as well as information about a power bank consisting of multiple e360 batteries. Our 48 Volt GC2 LiFePO4 battery was our first model to incorporate e360 SmartTalk for electric golf carts and other light electric vehicle applications.
Previous wording
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.
Current wording
In 2024, we introduced our next generation 12V GC2 and Group 27 series LiFePO4 batteries incorporating higher amp-hour cell options (4.0Ah and 4.5Ah) and the latest technology, including our proprietary Vertical Heat Conduction™ internal heating, Bluetooth®, and controller area network (“CANBus”) communication. We also launched the Edge battery in 2024, which offers a slim design designed to provide installation flexibility. The Edge is offered in both 12V and 48V configurations.
Previous wording
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.
Current wording
We maintain sales relationships with major RV and marine retailers and plan to use our strong reputation in the lithium battery space to create an even stronger distribution channel. We have decades of experience in the energy and RV industries and cultivate relationships with numerous retailers in the space, including Camping World, a leading national RV retailer; and Keystone Automotive, a leading national marketer and distributor of automotive and RV specialty products.
Previous wording
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 affected our industry as a whole. In addition, we expect continuing 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.
Current wording
Our sales are primarily generated from dealers, wholesalers, private-label customers, and OEMs serving the RV, marine, and industrial markets. Because our sales are generally made on a purchase order basis and are not supported by long-term revenue commitments, the demand for our products from these customers depends on consumer demand, and our results of operations are sensitive to changes in customer purchasing patterns.
Previous wording
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.
Current wording
Our batteries are manufactured by multiple third-party manufacturers located in Asia, which also produce our battery cells. While we do not have long-term purchase agreements with these manufacturers and generally transact on a purchase order basis, we maintain strong relationships with our manufacturers and cell suppliers, which have historically enabled us to increase our purchase volumes and qualify for volume-based discounts. The strength of these relationships, together with ongoing supplier negotiations and purchasing strategies, have supported our efforts to manage supply-related costs associated with inflation, currency fluctuations, and U.S. government tariffs imposed on our imports, as well as to mitigate potential shipment delays. We aim to maintain an appropriate level of inventory to satisfy our expected supply requirements. While we believe we could locate suitable alternative third-party manufacturers to fulfill our requirements if needed, transitioning suppliers could require time and result in additional costs.
Previous wording
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.
Current wording
Our third-party manufacturers source the raw materials and battery components required for the production of our batteries directly from third-party suppliers that meet our approval and quality standards. Accordingly, pricing for certain raw materials and components is influenced by market conditions and supplier negotiations. We estimate that raw material costs account for over half of our cost of goods sold. Lithium, which is extracted from mined ore, is a key raw material used to produce our battery cells and fluctuations in lithium pricing can affect our battery cell costs. From time to time, changes in raw material availability may influence pricing dynamics or sourcing strategies. Certain of our battery cell manufacturers have factories outside of Asia and have secured sourcing contracts from lithium suppliers in South America and Australia. In addition, we have a secondary source for lithium iron phosphate cells from a supplier in Europe, providing additional geographic diversification and sourcing flexibility.
Previous wording
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 recaptures raw lithium from the cell for reuse in future cells. However, notwithstanding efforts to improve the sustainability and efficiency of lithium mining, the price of lithium is volatile. We continue to monitor developments that may adversely affect our supply chain.
Current wording
Industry initiatives to expand lithium production capacity and lithium cell recycling may affect long-term supply dynamics. For example, there is an industry push to provide more efficient ways to extract lithium from mined ore. Another development of the past few years is lithium cell recycling, which recaptures raw lithium from the cell for reuse in future cells. However, notwithstanding efforts to improve the sustainability and efficiency of lithium mining, the price of lithium remains subject to market volatility. We continue to monitor developments that may affect our supply chain.
Previous wording
For additional information regarding supply chain risks, refer to Part I, Item 1A of the Annual Report, “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 “—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.”
Current wording
For additional information regarding supply chain risks, see the information in Part I, Item 1A of the Annual Report 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 “—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.”
Previous wording
As of September 30, 2025, 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 (e.g., 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.
Current wording
As of March 31, 2026, we sell 14 models of LiFEPO4 batteries, the Aura 600, and various individual or bundled accessories for battery systems. Our products are sold to dealers, wholesalers, private-label customers, and OEMs at differing prices and with varying cost structures. 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, which may affect pricing and gross margins. Accessory and OEM sales typically have lower average selling prices and resulting margins relative to other distribution channels. As a result, shifts in customer mix could decrease our margins and negatively affect our growth or require us to increase the prices of our products. However, the benefits of increased sales volumes and broader customer penetration typically have offset, and may continue to offset, the impact of lower-margin product and customer mix. The relative margins of products sold also impact our results of operations. As we introduce new products, we may see a change in product and sales channel mix, which could result in period-to-period fluctuations in our overall gross margin.
Previous wording
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.
Current wording
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.
Previous wording
We 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 have a UL Safety Certification, emphasizing our commitment to quality, safety and service for our customers.
Current wording
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 currently produced by us will have a UL Safety Certification, emphasizing our commitment to quality, safety and service for our customers.
Previous wording
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.
Current wording
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. Our sales are primarily within the United States.
Previous wording
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.
Current wording
Our primary cost of sales as a percentage of sales is related to our direct product and landing costs. 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.
Previous wording
Selling, general and administrative expenses consist primarily of salaries and benefits, legal and professional fees, and sales and marketing costs. Other costs include research and development, insurance, and software and tech support expenses.
Current wording
Selling, general, and administrative expenses consist primarily of salaries and benefits, legal and professional fees, and sales and marketing costs. Other significant costs include research and development, software and information technology, insurance, and facility and related costs.
Previous wording
Our other (income) and expense typically consist of interest expense, interest income, and gain or loss on sale of property and equipment. See “Results of Operations – Other (Income) / Expense” below for more information.
Current wording
Our other (income) and expense typically consist of interest income, interest expense, and gain or loss on sale of property and equipment.
Previous wording
Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. We had no accrual for interest or penalties on our balance sheets at September 30, 2025 or December 31, 2024 and did not recognize interest and/or penalties in the statement of operations for the three months ended September 30, 2025 and 2024, since there are no material unrecognized tax benefits. Management believes no material change to the amount of unrecognized tax benefits will occur within the next twelve months.
Current wording
Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. We had no accrual for interest or penalties on our balance sheets at March 31, 2026 or December 31, 2025 and did not recognize interest and/or penalties in the statement of operations for the three months ended March 31, 2026 and 2025, since there are no material unrecognized tax benefits. Management believes no material change to the amount of unrecognized tax benefits will occur within the next 12 months.
Previous wording
Our gross profit for the three months ended September 30, 2025 increased by $373,000, or 221.6%, compared to the three months ended September 30, 2024. Gross profit was $542,000 for the three months ended September 30, 2025 and $169,000 for the three months ended September 30, 2024. Gross profit as a percentage of net sales increased by 10.5% for that period, from 12.1% for the three months ended September 30, 2024 to 22.7% for the three months ended September 30, 2025.
Current wording
Our gross profit for the three months ended March 31, 2026 decreased by $0.1 million, or 21%, compared to the three months ended March 31, 2025. Gross profit was $0.4 million for the three months ended March 31, 2026 and $0.5 million for the three months ended March 31, 2025. Gross profit as a percentage of sales increased by 0.8 percentage points compared to the prior year period. The decrease in gross profit for the three months ended March 31, 2026 was primarily attributable to the decrease in net sales, partially offset by the increase in gross profit as a percentage of sales.
Previous wording
We primarily use cash in operating activities for inventory purchases, salaries and benefits, legal and professional services, and sales and marketing. In the last several years, we have generated negative cash flows from operating activities and have supplemented working capital requirements through net proceeds from the sales of common stock.
Current wording
Our largest source of operating cash is cash collected from sales of our products. Our primary uses of cash for operating activities include inventory purchases and selling, general, and administrative expenses, including salaries and benefits, legal and professional fees, and sales and marketing expenses. In the last several years, we have generated negative cash flows from operating activities and have supplemented working capital requirements through net proceeds from the sales of common stock.
Previous wording
Net cash used in operating activities was $3.7 million for the nine months ended September 30, 2025, compared to $6.6 million for the prior year period. The decrease in cash used was primarily driven by reduced inventory and prepaid inventory levels:
Current wording
Net cash used in operating activities was $1.1 million for the three months ended March 31, 2026, compared to $1.2 million for the prior year period. The decrease in cash used was primarily attributable to the timing of our inventory purchases, timing of prepaid expenses, and timing of accounts receivable and included the following:
Previous wording
Cash provided by financing activities in the nine months ended September 30, 2025 and 2024 was $7.5 million and $5.9 million, respectively. For the nine months ended September 30, 2025, we received net proceeds of $5.7 million from the exercise of warrants and $1.8 million for issuance of common stock, offset by payments of $25,000 toward principal on long-term debt. For the nine months ended September 30, 2024, we received net proceeds from issuance of common stock of $9.5 million and from issuance of warrants of $31,000, offset by principal payments on the convertible note of $2.8 million, principal payments on stockholder promissory notes of $763,000, and principal payments on long-term debt of $109,000.
Current wording
For the three months ended March 31, 2026, net proceeds from the issuance of common stock were $1.2 million, slightly offset by principal payments on long-term debt of $8,000. For the three months ended March 31, 2025, we received net proceeds of $1.8 million from the issuance of common stock, offset by principal payments on long-term debt totaling $8,000.
Previous wording
Our operations have been financed primarily through net proceeds from the sale of securities and from borrowings. As of September 30, 2025, our working capital was $8.5 million compared to $2.0 million as of December 31, 2024, and we had cash and cash equivalents of $4.3 million and $548,000 as of September 30, 2025 and December 31, 2024, respectively.
Current wording
Our operations have been financed primarily through net proceeds from the sale of securities. On December 12, 2025, we entered into an at-the-market issuance sales agreement. We commenced sales under the agreement in January 2026 and have sold an aggregate of 1,656,559 shares for net proceeds of approximately $1.2 million during the three months ended March 31, 2026. As of March 31, 2026, our working capital was $5.6 million compared to $6.0 million as of December 31, 2025, and we had cash and cash equivalents of $3.1 million and $3.0 million as of March 31, 2026 and December 31, 2025, respectively. During the three months ended March 31, 2026, we received net proceeds of approximately $1.2 million from the issuance of common stock.
Previous wording
As of September 30, 2025, we expect our short-term liquidity requirements to include (a) accounts payable of $523,000, (b) scheduled principal debt payments of approximately $31,000, and (c) lease obligation payments of approximately $328,000, including imputed interest.
Current wording
As of March 31, 2026, we expect our short-term liquidity requirements to include scheduled principal debt payments of approximately $32,000 and lease obligation payments of approximately $332,000, including imputed interest.
Previous wording
We generally consider our long-term liquidity requirements to consist of those items that are expected to be incurred beyond the next 12 months. We continue to experience recurring operating losses and negative cash flows from operations, with $3.7 million used in operating activities during the nine months ended September 30, 2025. While management has implemented cost containment measures and 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, material uncertainty remains. Without additional funding or a material increase in revenue generation, we may not be able to meet our obligations as they become due. These factors raise substantial doubt about our ability to continue as a going concern within 12 months after the date that the financial statements for the year ended December 31, 2024 are issued. Our activities are subject to significant risks and uncertainties, including failing to secure additional funding before the Company achieves sustainable revenues and profit from operations. We expect to continue to incur additional losses for the foreseeable future, and we may need to raise additional debt or equity financing to expand our presence in the marketplace, develop new products, achieve operating efficiencies, and accomplish its long-term business plan over the next several years. There can be no assurance as to the availability or terms upon which such financing and capital might be available. See also the risk factor entitled “Our audited financial statements include a statement that there is a substantial doubt about our ability to continue as a going concern and a continuation of negative financial trends could result in our inability to continue as a going concern” in Part I, Item 1A, “Risk Factors” of the Annual Report.
Current wording
We generally consider our long-term liquidity requirements to consist of those items that are expected to be incurred beyond the next 12 months. We continue to experience recurring operating losses and negative cash flows from operations, with $1.1 million used in operating activities during the three months ended March 31, 2026. While management has implemented cost containment measures and is working to address its cash flow challenges, including by raising additional capital, expanding into new sales channels, managing inventory levels, identifying alternative supply chain resources, and managing operational expenses, material uncertainty remains. Without additional funding or a material increase in revenue generation, we may not be able to meet our obligations as they become due. These factors raise substantial doubt about our ability to continue as a going concern within 12 months after the date that the financial statements included in this Quarterly Report are issued. Our activities are subject to significant risks and uncertainties, including failing to secure additional funding before we achieve sustainable revenues and profit from operations. We expect to continue to incur additional losses for the foreseeable future, and we may need to raise additional debt or equity financing to expand our presence in the marketplace, develop new products, achieve operating efficiencies, and accomplish our 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. See also the risk factor entitled “Our audited financial statements include a statement that there is a substantial doubt about our ability to continue as a going concern and a continuation of negative financial trends could result in our inability to continue as a going concern” in Part I, Item 1A, “Risk Factors” of the Annual Report.
Previous wording
As of September 30, 2025, our long-term debt was approximately $206,000, of which $31,000 is due within the next 12 months. This balance includes $140,000 outstanding under a COVID-19 Economic Injury Disaster Loan and $65,000 outstanding under vehicle financing arrangements.
Current wording
As of March 31, 2026, our long-term debt was approximately $190,000, of which $32,000 is due within the next 12 months. This balance includes $138,000 outstanding under a COVID-19 Economic Injury Disaster Loan and $52,000 outstanding under vehicle financing arrangements.
Previous wording
As of September 30, 2025, we had three notes payable to GM Financial for vehicles. In addition, a commercial line secured in April 2022 for $300,000 was renewed in April 2023 and increased to $350,000, and renewed again in April 2024 and April 2025 for $350,000 each time. This commercial line may be used to finance vehicle purchases and expires in April 2026. The notes are payable in aggregate monthly installments of $2,560, including interest at rates ranging from 6.14% to 7.29% per annum, mature at various dates from October 2027 to May 2028, and are secured by the related vehicles.
Current wording
As of March 31, 2026, we had three notes payable to GM Financial for vehicles. In addition, a commercial line secured in April 2022 for $300,000 was renewed in April 2023 and increased to $350,000, and renewed again each April from 2024 through 2026 for the same amount of $350,000. This commercial line may be used to finance vehicle purchases and expires in April 2027. The notes are payable in aggregate monthly installments of $2,560, including interest at rates ranging from 6.14% to 7.29% per annum, mature at various dates from October 2027 to May 2028, and are secured by the related vehicles.
Previous wording
Our estimated future obligations consist of long-term operating lease liabilities. As of September 30, 2025, the Company had $788,000 in long-term operating lease liabilities.
Current wording
Our estimated future obligations include long-term operating lease liabilities. As of March 31, 2026, we had $629,000 in operating lease liabilities.
Previous wording
We recognize operating lease assets and lease liabilities on the 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.
Current wording
We recognize operating lease assets and lease liabilities in the balance sheet on the lease commencement date, based on the present value of the outstanding lease payments over the reasonably certain lease term. The lease term includes the non-cancelable period at the lease commencement date, plus any additional periods covered by an option to extend (or not to terminate) the lease that is reasonably certain to be exercised, or an option to extend (or not to terminate) a lease that is controlled by the lessor.
Previous wording
See “Note 8—Commitments and Contingencies” of our financial statements within the Annual Report for further information.
Current wording
See “Note 7, Commitments and Contingencies,” to our financial statements within the Annual Report for additional information, including more details of our accounting policy elections and disclosures and remaining minimum operating lease commitments.
Previous wording
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.
Current wording
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, the related depreciation expense would be adjusted, if necessary, at the time of disposal or impairment. It is our experience that the estimated useful lives of our assets are generally accurate.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.