Expion Energy (XPON) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01We operate in an extremely competitive industry and are subject to pricing pressures
2. 02We 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
3. 03Our 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
4. 04Our 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
5. 05Increases 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
6. 06Our business and future growth depends on the needs and success of our customers
7. 07We have substantial customer concentration, with a limited number of customers accounting for a substantial portion of our sales in 2024 and 2023
8. 08We may not be able to successfully manage our growth
9. 09Our results of operations may be negatively impacted by public health epidemics or outbreaks
10. 10If we fail to expand our sales and distribution channels, our business could suffer
11. 11Our ability to expand into international markets is uncertain
12. 12the need to modify our products to comply with local requirements in each country; and
13. 13Nearly 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
14. 14The uncertainty in global economic conditions could negatively affect our results of operations
15. 15Government reviews, inquiries, investigations, and actions could harm our business or reputation
16. 16We have a warehouse location in Redmond, Oregon and another in Elkhart, Indiana
17. 17Lithium-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
18. 18We 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
19. 19Our operations expose us to litigation, tax, environmental and other legal compliance risks
20. 20Our 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
21. 21We 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
22. 22Quality problems with our products could harm our reputation and erode our competitive position
23. 23Any 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
24. 24If our electronic data is compromised, or we experience a failure in our information technology or storage systems, our business could be significantly harmed
25. 25Our 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
26. 26We 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
27. 27Changes in tax laws or tax rulings could materially affect our financial position, results of operations, and cash flows
28. 28A failure to keep pace with developments in technology could impair our operations or competitive position

Risks Related to Ownership of Our Common Stock

1. 29Our stock price may fluctuate significantly, and you may lose all or a part of your investment
2. 30We 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
3. 31If 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
4. 32You may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise
5. 33Sales 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
6. 34Although our common stock is listed on Nasdaq, the exchange could subsequently delist our common stock if we fail to comply with ongoing listing standards
7. 35The exercise of outstanding warrants may result in a substantial increase in the number of shares of our common stock that are outstanding
8. 36Provisions 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
9. 37The 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
10. 38The 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
11. 39We 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
12. 40Our management team has limited experience managing a public company
13. 41We 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
14. 42Failure 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
15. 43If our shares become subject to the penny stock rules, it would become more difficult to trade our shares

Risks Related to Our Capital Structure

1. 44Our 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
2. 45As 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