View:
United States securities and exchange commission logo
January 13, 2022
John Yozamp
Chief Executive Officer
Expion360 Inc.
2025 SW Deerhound Avenue
Redmond, OR 97756
Re: Expion360 Inc.
Draft Registration
Statement on Form S-1
Filed December 17,
2021
CIK No. 0001894954
Dear Mr. Yozamp:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1
Market Data, page ii
1. We note the first
sentence of this section. In each instance throughout the prospectus
where you cite data,
please indicate the source of the data. In addition, please tell us
whether you
commissioned any of the third-party data included in your registration
statement, and if so
whether you are required to file any consents pursuant to Rule 436.
Prospectus Summary, page 1
2. Please provide
quantitative and qualitative support for the statement that you are an an
industry leader for
both lithium battery manufacturing and supporting accessories for
recreational vehicles
and your success in the industry. Also provide support for the
John Yozamp
FirstName
Expion360 LastNameJohn Yozamp
Inc.
Comapany
January 13,NameExpion360
2022 Inc.
January
Page 2 13, 2022 Page 2
FirstName LastName
assertion that you are currently positioned to lead the rapid
market conversion from
lead-acid to lithium batteries as the primary method of power
sourcing. Finally, expand to
explain how your true 12-year warranty is an industry game-changer.
3. Provide support for the assertions that your batteries have a lifespan
of 12 years three to
four times that of lead-acid batteries and with ten times the number
of charging cycles,
and that your typical battery provides three times the power than the
typical, lead-acid
battery despite being half the weight.
4. Please expand to discuss the nature of your partnerships with Camping
World, Electric
World, Patrick Distribution, and NTP-STAG. Disclose whether you have
binding
agreements with these entities, and if so discuss the terms of those
agreements and provide
an analysis of whether you should file any agreements as exhibits.
Please also clarify the
nature of your planned partnerships with Meyer Distributing and
Land n Sea, and your
plan to begin partnerships with Lewis Marine Supply, Northern
Wholesale Supply, and
Lorenz and Jones, such as whether you have binding agreements, LOIs,
MOUs or other
arrangements with these entities.
Risk Factors, page 6
5. You disclose on page 18 that you had total liabilities of $2,966,100
as of December 31,
2020; however, per your balance sheet on page F-4, you had total
liabilities of $2,984,058
as of December 31, 2020. Please revise your disclosure to address this
apparent
discrepancy.
Use of Proceeds, page 20
6. You disclose that you currently intend to use a portion of the net
proceeds for the
repayment of indebtedness. Please tell us what consideration you gave
as to whether pro
forma information, including pro forma earnings per share, should also
be provided
related to the repayment of indebtedness. Refer to Rule 11-01(a)(8) of
Regulation S-X for
further information.
Financial Information, page 25
7. Please ensure that all amounts presented on page 27 agree to the
amounts presented on
your audited statements of operations on page F-5. As currently
presented, there are
several amounts on page 27 that do not agree to the corresponding
amounts on page F-5.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 32
8. Please review all percentage changes that you have disclosed
throughout MD&A, as it
appears to us that the vast majority have not been presented
accurately. For example, you
disclose on page 33 that sales for the nine months ended September 30,
2021 increased by
278.3% compared to the nine months ended September 30, 2020. It
appears that sales for
John Yozamp
FirstName
Expion360 LastNameJohn Yozamp
Inc.
Comapany
January 13,NameExpion360
2022 Inc.
January
Page 3 13, 2022 Page 3
FirstName LastName
the nine months ended September 30, 2021 actually increased by 178.3%,
not 278.3%,
compared to the nine months ended September 30, 2020.
9. You disclose on page 35 that sales for the year ended December 31,
2020 increased
compared to the year ended December 31, 2019. Based on the amounts
presented on your
audited statements of operations on page F-5, sales for the year ended
December 31, 2020
actually decreased compared to the year ended December 31, 2019.
Please revise your
disclosure to address this apparent discrepancy.
Liquidity and Capital Resources, page 36
10. Please enhance your disclosure on page 37 to also discuss the changes
in your operating,
investing, and financing cash flows as depicted in your statements of
cash flows for the
nine months ended September 30, 2021 and 2020 in accordance with the
SEC Interpretive
Release No. 33-8350.
Competitive Strengths
Supply Chain, page 48
11. We note the statement that The following article provides more
insight into how lithium
is used across various markets Please provide the source of the
article and clarify
which parts of your prospectus constitutes the article, and which
parts are your own
disclosure. Please also clarify the two references to [t]he
following link as we could not
find the links.
Executive Compensation, page 55
12. Please update your compensation disclosure as of the fiscal year ended
December 31,
2021. See Item 402 of Regulation S-K.
Transactions With Related Persons, Promoters and Certain Control Persons, page
61
13. Please provide the disclosure required by Item 404(b) of Regulation
S-K.
Registration Rights, page 64
14. Please disclose whether there are any maximum cash penalties under the
registration
rights agreement, if applicable. Please also disclose any additional
penalties resulting
from delays in registering your common stock. Refer to ASC
825-20-50-1.
Experts, page 74
15. Given the fact that your financial statements as of and for the nine
months ended
September 30, 2021 have actually not been included in reliance upon
the report of M&K
CPAS PLLC, please revise your disclosure to only make reference to
your financial
statements as of and for the years ended December 31, 2019 and 2020.
John Yozamp
FirstName
Expion360 LastNameJohn Yozamp
Inc.
Comapany
January 13,NameExpion360
2022 Inc.
January
Page 4 13, 2022 Page 4
FirstName LastName
Balance Sheets, page F-4
16. We note, per your audited balance sheet as of December 31, 2019, that
you had total
current liabilities of $-204,154. Please confirm, if true, that you
actually had a contra
current liability balance of $-204,154 as you indicate on page F-4;
otherwise, revise your
presentation to state that you had total current liabilities of
$204,154 as of December 31,
2019.
Statements of Operations, page F-5
17. We note that your audited statements of operations for the years ended
December 31,
2020 and 2019 do not sum to the correct amounts. As currently
presented, the amounts
for gross profit, loss from operations, loss before taxes, franchise
taxes, net loss, and net
loss per membership unit all appear to be inaccurately presented.
Please perform a
comprehensive review and correct your audited statements of operations
as needed. In
doing so, please ensure that you also correct all related disclosures
presented in MD&A
and the footnotes to your financial statements, as applicable.
Statements of Cash Flows, page F-7
18. You appear to have presented borrowings on your line of credit and
short-term revolving
loans net of payments on pages F-7 and F-31. Please tell us how such a
presentation is
consistent with ASC 230-10-45-7 through 9 or revise your presentation
accordingly.
Note 2. Summary of Significant Accounting Policies
Concentration of Major Customers, page F-12
19. We note your disclosure that sales to four customers comprised
approximately 57% of
total sales for the year ended December 31, 2020. We further note that
sales to two
customers comprised approximately 30% of total sales for the year
ended December 31,
2019. With reference to ASC 280-10-50-42, please disclose here and on
page F-37 the
total amount of revenue from each customer who represented more than
ten percent of
revenue for each period presented in the notes to your financial
statements.
Note 12. Commitments and Contingencies, page F-20
20. You disclose on page F-21 that your total lease liability was $221,248
as of December 31,
2020; however, you also disclose on page F-21 that your total lease
liability was $248,470
as of December 31, 2020. Please revise your disclosure to address this
apparent
discrepancy.
Note 15. Subsequent Events, page F-22
21. We note that you revoked your election to be taxed as an S Corporation
and converted to a
C Corporation effective November 16, 2021. As such, please tell us
what consideration
you gave to SAB Topic 1:B.2.
John Yozamp
Expion360 Inc.
January 13, 2022
Page 5
Recent Sales of Unregistered Securities, page Item15
22. Indicate the section of the Securities Act or the rule of the
Commission under which
exemption from registration was claimed and state briefly the facts
relied upon to make
the exemption available. See Item 701(d) of Regulation S-K.
General
23. We note that your forum selection provision in Article X of your
Articles of Incorporated
filed as Exhibit 3.1 identifies the Nevada Eighth Judicial District
Court of Clark County
Nevada as the exclusive forum for certain litigation, including any
"derivative action."
Please disclose whether this provision applies to actions arising
under the Securities Act
or Exchange Act. In that regard, we note that Section 27 of the
Exchange Act creates
exclusive federal jurisdiction over all suits brought to enforce any
duty or liability created
by the Exchange Act or the rules and regulations thereunder, and
Section 22 of the
Securities Act creates concurrent jurisdiction for federal and state
courts over all suits
brought to enforce any duty or liability created by the Securities Act
or the rules and
regulations thereunder. If the provision applies to Securities Act
claims, please also revise
your prospectus to state that there is uncertainty as to whether a
court would enforce such
provision and that investors cannot waive compliance with the federal
securities laws and
the rules and regulations thereunder. If this provision does not apply
to actions arising
under the Securities Act or Exchange Act, please also ensure that the
exclusive forum
provision in the governing documents states this clearly, or tell us
how you will inform
investors in future filings that the provision does not apply to any
actions arising under the
Securities Act or Exchange Act.
24. In the Alternate Pages for the Resale Prospectus, please revise to
disclose a fixed price (or
a range) at which the selling stockholders will sell their shares
until the securities are
quoted on the Nasdaq, after which the securities can be offered and
sold at prevailing
market prices or at negotiated prices.
You may contact Jeff Gordon at 202-551-3866 or Kevin Stertzel at
202-551-3723 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Erin Donahue at 202-551-6001 or Anne Parker at 202-551-3611 with any
other
questions.
FirstName LastNameJohn Yozamp Sincerely,
Comapany NameExpion360 Inc.
Division of
Corporation Finance
January 13, 2022 Page 5 Office of
Manufacturing
FirstName LastName