EXPION360 INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q) | MarketScreener

2022-11-11 00:50:36 By : Ms. Flower Wen

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes thereto, which are included in Part I of this report.

We believe the following strengths differentiate Expion360 and create long-term sustainable competitive advantages. Lifepo4 150ah

EXPION360 INC.  MANAGEMENT

Superior Capacity to Lead Acid Competitors

We have a national presence with several large retail customers, such as Camping World.

Long-time RV and Marine Industry Experience and Relationship

John Yozamp, Founder of Expion360, pioneered multiple new recreational concepts in the RV industry. As the founder and previous owner of Zamp Solar, he has extensive relationships in the RV OEM industry.

Expion360 is managed by a team with a strong track record in the RV and clean energy spaces. In addition, our company insiders own significant equity in the company, signaling a strong commitment and personal investment.

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. Materially, all of our sales are within the United States.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of salaries, benefits, and sales and marketing costs. Other costs include facility and related costs, professional fees and other legal expenses, consulting, tax and accounting services, sales and marketing expenses.

Interest and Other Income, net

We have no material off-balance sheet arrangements.

Selling, General and Administrative Expenses

As of September 30, 2022 and December 31, 2021, our current assets exceeded current liabilities by approximately $12.82 million and $3.18 million respectively, and we had cash and cash equivalents of approximately $8.12 million and $773,000, respectively. On April 1, 2022, we closed our initial public offering which resulted in approximately $14.7 million of net proceeds.

Cash flows used in operating activities

· Cash provided/(used) by accounts receivable was approximately $475,000 and

($532,000), representing a decrease in accounts receivable for the nine months

ended September 30, 2022 and an increase in accounts receivable for the nine

months ended September 30, 2021, respectively. Sales are generally collected

within 30 to 45 days. The decrease during the nine months ended September 30,

2022 is primarily attributed to a decline in September sales compared to sales

in December 2021. The increase during the nine months ended September 30, 2001

· Accounts payable and accrued expenses increased by approximately $20,000 during

the nine months ended September 30, 2022 compared to approximately $8,000 for

the corresponding period in 2021. This is primarily attributed to increased

· Other significant changes include a decrease in customer deposits of

approximately $275,000 during the nine months ended September 30, 2022,

representing a use of cash that did not exist in the corresponding period in

2021. Additionally, long-term deposits increased by approximately $11,000

during the nine months ended September 30, 2022 compared to $48,000 for the

corresponding period in 2021, primarily due to new leases in 2021 and deposits

· Cash used for inventory and prepaid inventories was approximately $2.17 million

and $1.70 million for the nine months ended September 30, 2022 and 2021,

respectively. These increases are primarily due to significant purchases and

prepayments of inventory to Chinese suppliers that were made in the 3rd quarter

of 2022 in order to have sufficient inventory for projected sales in 2022 and

2023. Turnaround time for receiving inventory from foreign sources can take up

to 120 days, with prepayments required. Sales for the nine months ended

September 30, 2022 increased over sales for the nine months ended September 30,

Cash flows used in investing activities

Cash flows provided by financing activities

We have no material off-balance sheet arrangements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

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

· 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 results of operation may be negatively impacted by public health epidemics

or outbreaks, including the novel coronavirus ("COVID-19").

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

· Our ability to expend into international markets is uncertain.

· 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 delivery difficulties

could interfere with our distribution plans and reduce our revenue.

· The uncertainty in global economic conditions could negatively affect the

· Government reviews, inquiries, investigations, and actions could harm our

· Our operating results could be adversely affected by changes in the cost 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.

· We could face potential product liability claims relating to products we

assemble, manufacture, or distribute, which could result in significant costs

and liabilities, which would reduce our profitability.

· Our operations expose us to litigation, tax, environmental, and other legal

· Our failure to introduce new products and product enhancements and broad market

acceptance of new technologies introduced by our competitors could adversely

· Quality problems with our products could harm our reputation and erode our

· 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.

· 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.

· Our management team has limited experience managing a public company.

· We are an "emerging growth company" and elect to comply with certain reduced

reporting requirements applicable to emerging growth companies, which could

EXPION360 INC.  MANAGEMENT

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