Expion360 Inc.

Greetings and welcome to the Xtreon 360 First Quarter 2024 Financial Results Conference Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded and will be available in the Investor Relations section of the company's websites at investors.xtreon360.com. Before we begin the formal presentation, I would like to remind everyone that certain statements made on this call and through the webcast are forward-looking statements within the meaning of federal security laws and are subject to considerable risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements made on this call today, other than statements of historical fact, are forward-looking statements and include statements regarding the company's beliefs, plans, and expectations about the company's operations, future development plans, growth prospects, product pipeline and development, anticipated timing of commercial availability of its products, beliefs about marketing size and opportunity, including customer base and market conditions. While these forward-looking statements represent management's current judgment and expectations, they are subject to risk and uncertainties that could cause actual results to differ materially. The company has explained some of these risks and uncertainties in its SEC filings, including the risk factor section of its annual reports on Form 10-K and quarterly reports on Form 10-Q. You are cautioned not to place undue reliance on these forward-looking statements which reflects our opinions only as of the date of this presentation. Except as required by law or the NASDAQ listing standards, the company expressly disclaims any intent or obligation to update any forward-looking statements. Your hosts today, Brian Schaffner, Chief Executive Officer, and Greg Adelott, Chief Financial Officer, will present results of operations for the first quarter ended March 31, 2024. A press release detailing these results crossed the wire this afternoon at 4.05 p.m. Eastern Time and is available in the Investor Relations section of the company's website at investors.xbion360.com. At this time, I will turn the call over to XBION 360's Chief Executive Officer, Brian Schaffner. Please go ahead, sir.

Thank you, Operator, and good afternoon, everyone. I'm pleased to welcome you to today's first quarter 2024 Financial Results Conference Call. For those of you who might be new to our story, I'd like to start by giving a brief overview of who we are and what we do. Xpeon 360 focuses on the design, assembly, and sales of lithium iron phosphate or LiPo4 batteries and supporting accessories for RV, marine applications, and as recently announced, our expansion into light electric vehicle and home energy storage markets, with plans to expand into industrial applications in the future. We design, assemble, and distribute high-powered lithium battery solutions using groundbreaking concepts with creative sales and marketing approaches. We believe that our product offerings include some of the most dense and minimal footprint batteries in the RV and marine industries. We are developing the E360 home energy storage system, which we expect to bring positive change to the industry in barrier price, flexibility, and integration. We are deploying multiple intellectual property strategies with cutting edge research and innovative products to sustain and scale the business. We currently have customers consisting of dealers, wholesalers, private label customers, and original equipment manufacturers, or OEMs, who are driving revenue and brand awareness nationally and complement our wholesale channel and direct-to-consumer sales. We have a management team and board experienced across engineering, technology, and finance, and we believe the confluence of these factors positions us to execute our long-term growth strategies. I'm proud of the progress that we've made in the first quarter and remain excited about our future prospects. Our E360 product line, which is manufactured for RV and marine industries, has shown to be the preferred conversion solution for lead-acid batteries through its sales growth. We currently have more than 300 customers across the United States, consisting of dealers, wholesalers, private label customers, and OEMs. We then sell our products to end consumers. In addition, we also sell products directly to those consumers. We have sales relationships with major RV retailers, including Camping World, a leading national RV retailer, as well as Meijer Distributing Inc., a leading national marketer and distributor of automotive and RV specialty projects. We believe we have a strong reputation in the lithium battery space. which we plan to continue leveraging to broaden our distribution channels as we expand into adjacent verticals, such as LEDs and home energy storage. To highlight some of our accomplishments and milestones in the first quarter, in January 2024, we launched our next generation Group 27 and GC2 series lithium iron phosphate batteries, designed for use in a variety of applications. but now offer higher amp hour options and the latest advancements in power technology features, including Xeon 360's proprietary vertical heat conduction, internal heating, Bluetooth, and CAN bus communication. In March of 2024, we announced that our EX1 SmartTalk Bluetooth batteries had achieved UL 1973 compliance. The UL 1973 compliance ensures that Xpeon 360's EX Smart Talk Bluetooth batteries meet safety standards required by our customers for energy storage systems. This certification not only underscores our unwavering commitment to safety, but also our dedication to innovation and excellence in a growing industry. In April 2024, we announced substantial pre-orders for our next generation Group 27 GC2 series batteries now include our proprietary vertical heat conduction technology driven by customer demand. The new versions also include higher amp hour 4.0 and 4.5 amp hour cell technology, Bluetooth, and CAN bus communication. Expeon shipments for these orders have begun in May. This month, May 2024, we launched the Edge battery, now available for pre-order. which utilizes a modular design for off-grid power solutions. It is available in 12.8 volt and 51.2 volt configurations, featuring a slim profile that maximizes available space without compromising performance. With dimensions of just 4.2 inches in height, 17.5 inches in width, and 21.9 inches in length, the Edge offers flexibility for installation in a variety of applications, from mounting on the walls of vans to fitting into tight spaces in RVs. The Edge's slim design maximizes available space without compromising performance. The Edge incorporates vertical heat conduction, smart talk Bluetooth, and CAN bus communication. We plan to begin shipping the Edge in the third quarter of this year. Lastly, on April 30th, we released specifications for our home energy storage solution DC-coupled home energy battery, expandable in 5-kilowatt increments up to 80 kilowatts in most jurisdictions, and for our AC-coupled all-in-one home energy battery featuring 10-kilowatt battery paired with a built-in 5-kilowatt inverter and expandable in 10-kilowatt increments up to a total of 40 kilowatts. We have strategically positioned our battery portfolio across both established market segments and future premium market segments, each of which I will quickly touch on. The recreational vehicle and overland segment continues to grow driven by interest in outdoor activities and the demand for vehicles that depend on batteries to power systems. Our lithium batteries support these systems and the appliances while replacing noisy generators for off-grid power and are charged by the engine or by solar. As previously mentioned, we recently launched the Edge battery. This custom form factor includes many applied-for patents and other IP that we have been developing in the past couple of years, and we plan to begin shipping that product in Q3 this year. The Edge incorporates vertical heat conduction, SmartTalk Bluetooth, and CAN bus communication, and we are currently wrapping up UL testing. Our solutions are also employed in the boating and marine segment to support trolling motors and operating cabin electronics. The third established market we serve is light electric vehicle, or LED, such as golf carts, which are also undergoing a transition to lithium from lead acid. These LEDs require sufficient power generation and reliability to which Xpeon batteries deliver. Our newest market segment we recently announced is our plans to enter the home energy storage market, including new home and commercial solar power storage solutions. I will expand on that opportunity when we get to the home energy section. And finally, we see industrial applications as a future growth vertical for Xpeon. driven by demand for additional capacities for electric forklifts and industrial material handling. We are building a robust IP moat across all five of these market segments in which we have 11 patents pending. Now for a shift to some more detail about our market expansion with E360 Home Energy. With the December 2023 introduction of our two LiFePO4 battery solutions to support home energy storage, for which I just mentioned, the recently released specifications, which you can see on our website, we are targeting home and small commercial solar users, installers who are interested in the high-performance modular system with straightforward installation. We are mobilizing quickly with The launch and plan on accepting pre-orders for the new home energy systems commencing in the second quarter of 2024 with shipments to begin in the second half of 2024. We believe the home energy market provides complementary economics to our business model with an opportunity to generate recurring revenue streams while enabling margin expansions. Our solutions provide scalability and versatility across market channels. Some of these channels include solar installers, electrical contractors, retailers, and wholesalers, big box stores, and franchise hardware retailers, residential and commercial builders, along with energy service providers. We believe the launch into the home energy segment will support the company's strategic objectives. A view of our home energy systems and specifications and pricing can be found on our website. Future home energy announcements will include identification of strategic implementation and installation partners. I will now turn the call over to Chief Financial Officer Greg Adelot to discuss our first quarter 2024 financial results. Thanks, Brian.

For the first quarter of 2024, revenue totaled $1 million, decreasing 35.5% from $1.5 million in the prior year period. The decrease was primarily attributable to the lingering effects of the downturn in the RV market, combined with some customers limiting orders in anticipation of the availability of our new products with enhanced features. Gross profit for the first quarter of 2024 totaled two hundred thousand dollars or twenty two point nine percent of revenue as compared to four hundred thousand dollars or twenty nine point four percent of revenue in the prior year period the decrease in gross profit as a percentage of revenue was primarily attributed both to decreases in sales which drove higher fixed overhead costs per unit selling general and administrative expenses increased to 2.2 million dollars compared to 2.1 million dollars in the prior year period the increase was primarily due to salaries and benefits which included non-cash stock-based compensation and sales and marketing increases offset by significant reductions in legal and professional fees net loss for the first quarter of 2024 totaled 2.2 million or 31 cents per share and net loss of $2 million or 29 cents per share in this prior year period. The increase in net loss was primarily a result of lower net sales for the period and non-cash stock-based compensation expense.