| Summary of Significant Accounting Policies | 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 retrospectively,
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 revenues 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, 2023 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. 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 2023 decreased 16.5% compared to sales for 2022, as the overall RV market experienced a severe slowdown.
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). Proceeds from the IPO, net of costs, totaled $14,772,487, of which approximately $2,464,000
was used to pay down principal and accrued interest on high interest-bearing debt. The remaining proceeds have thus far and will continue
to be used, in part, to stock inventory to keep up with demand and to build in-house assembly lines to improve the cash-flow cycle
and help reduce the four-month turnaround that the Company currently experiences from suppliers in Asia. In the first half of 2022, a
distribution warehouse was set up in Indiana to better service customers throughout the U.S. and an assembly facility was leased in Redmond,
Oregon for future expansion of the in-house assembly lines. Additionally, management has secured a secondary source for lithium iron
phosphate cells used in its batteries that is based in Europe, should supply disruption issues with Asia arise. Management believes that
these factors will contribute to achieving operating efficiency and profitability. However, there can be no assurance that the Company
will be successful in achieving its objectives, including achieving operating efficiency and profitability. 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 revenues 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 $125,854 during the year ended December 31, 2023.
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, 2023, cash balances exceeded FDIC limits by $2,280,856
and investment accounts totaling $1,125,100 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, 2023, as management believed all outstanding amounts to be fully collectible. The allowance
for doubtful accounts totaled $ 18,804
as of December 31, 2022. Customer
Deposits As
of December 31, 2023 and December 31, 2022, the Company had customer deposits totaling $ 17,423
and $ 58 ,
respectively. 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, 2023 and December 31, 2022, the Company had inventory that consisted of finished
assemblies totaling $2,967,021 and $3,243,485, respectively, and raw materials (inventory components, parts, and packaging) totaling
$858,369 and $1,286,651, 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, 2023 or December 31, 2022. The Company prepays
for inventory purchases from foreign suppliers. Prepaid inventory totaled $163,948 and $141,611 at December 31, 2023 and December 31,
2022, 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, 2023 and 2022, approximately 70% and 85%, 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
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. 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. 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, 2023 or 2022. 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, 2023 and 2022 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, 2022 or December 31, 2023. 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, 2023, sales to two customers totaled $1.2 million, comprising approximately 21% of total sales. These customers
did not have accounts receivable balances as of December 31, 2023, but four other customers had accounts receivable balances totaling
$140,000, representing 90% of total accounts receivable as of December 31, 2023. During the year ended December 31, 2022, sales to three
customers totaled $2.9 million, comprising approximately 41% of total sales. One of the customers did not have an accounts receivable
balance as of December 31, 2022, and the other two customers had accounts receivable balances representing 43% of total accounts receivable
as of December 31, 2022. Shipping
and Handling Costs Shipping
and handling fees billed to customers are classified on the Statement of Operations as “Sales, net” and totaled $70,712 and
$23,188 during the years ended December 31, 2023 and 2022, respectively. Shipping and handling costs for shipping product to customers
totaled $199,288 and $169,335 during the years ended December 31, 2023 and 2022, 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 $559,099 and $239,814 for the
years ended December 31, 2023 and 2022, 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 $391,148 and $270,054 for
the years ended December 31, 2023 and 2022, 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 September 30, 2023 and December 31, 2022, 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 2023 and beyond. Fair
Value of Financial Instruments The
Company accounts for its financial assets and liabilities in accordance with ASC Topic 820, Fair Value Measurement Level
1: Level
2: Level
3: 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. Segment
Reporting The
Company currently operates in one reportable segment. An operating segment is defined as a component of an enterprise for which discrete
financial information is available and is reviewed regularly by the Chief Operating Decision Maker (“CODM”) to evaluate performance
and make operating decisions. The Company has identified its CODM as the Chief Executive Officer. 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
Years
Ended December 31,
2023 2022
Net loss $ (7,456,274 ) $ (7,536,540 )
Weighted average common shares outstanding –
basic and diluted 6,887,985 6,135,938
Basic and diluted net loss per share $ (1.08 ) $ (1.23 ) As
of December 31, 2023 and 2022, the Company has outstanding warrants, options, and restricted stock units (“RSUs”) convertible
into 1,914,415 and 1,717,936 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,
2023 2022
Warrants 802,830 888,436
Stock options 1,075,000 829,500
RSUs 36,585 —
1,914,415 1,717,936 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
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 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
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. |
