What changed in this filing

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Item 1. Business

2023-09-22 compared with 2022-09-27 · 210 added, 135 removed, 280 unchanged (55% of the section changed)

We are a designer, manufacturer,

and seller of high-end Energy Storage Systems (or ESS), primarily our NeoVolta NV14 and NV 24, which can store and use energy via batteries

and an inverter at residential or commercial sites.

We were founded to identify new ways to leverage emerging technologies with the dynamic

changes that are taking place in the energy delivery space.

We primarily market and sell our products directly to our certified solar

installers and solar equipment distributors.

In the future, we intend to pursue residential developers, commercial developers, and other

commercial opportunities.

Because we are purely dedicated to energy solar systems, virtually all of our current resources and efforts

go into further developing our flagship NV14 and NV 24 products, while focusing on specific industry needs for our next generation of

We believe we are unique in the marketplace due to our low cost, our innovative battery chemistry, our product versatility,

and our commitment to installer service.

Because of these factors, we believe NeoVolta is uniquely equipped to establish ourselves as

a major player in the energy storage market.

and seller of high-end Energy Storage Systems (or ESS), primarily our NeoVolta NV14, NV14-K, and NV 24, which can store and use energy

via batteries and an inverter at residential or commercial sites.

We were founded to identify new ways to leverage emerging technologies

with the dynamic changes that are taking place in the energy delivery space.

We primarily market and sell our products directly to our

certified solar installers and solar equipment distributors.

In the future, we intend to expand multiple opportunities with residential

developers, commercial developers, and other commercial opportunities.

Because we are purely dedicated to energy solar systems, virtually

all of our current resources and efforts go into further developing our flagship NV14, NV14-K, and NV 24 products, while focusing on specific

industry needs for our next generation of products.

We believe we are unique in the marketplace due to our low cost, our innovative battery

chemistry, our product versatility, and our commitment to installer service.

Because of these factors, we believe NeoVolta is uniquely

equipped to establish ourselves as a major player in the energy storage market.

Our NV14 ESS contains a 7,680

W hybrid 120V / 240V and 208V inverter and a 14.4 kWh battery system power.

The NV14 is energy efficient, has a variety of operating options,

and uses Lithium Iron Phosphate (LiFe (PO4)) batteries.

The batteries we utilize are capable of 6,000 cycles at a Depth of Discharge (DoD)

of 90% and have a high thermal range (heat and cold tolerances).

Our NV14 ESS integrates all components and is NEMA Type 3R rated (indoor/outdoor).

Our NV24 provides additional energy storage capacity raising the NV14 from 14.4 KW to 24.0 KW.

Our newest update of the NV14 ESS allows

for commercial 208V 3-phase installations adding significantly to our potential customer base.

W hybrid 120V / 240V and 208V 3-phase inverter and a 14.4 kWh battery system power.

The NV14 is energy efficient, has a variety of operating

options, and uses Lithium Iron Phosphate (LiFe (PO4)) batteries.

The batteries we utilize are capable of 6,000 cycles at a Depth of Discharge

(DoD) of 90% and have a high thermal range (heat and cold tolerances).

Our NV14 ESS integrates all components and is NEMA Type 3R rated

(indoor/outdoor).

Our NV14-K variant is specifically designed for inclusion into EOS Linx Electric Vehicle charging and advertising products

named “Aurora Charge Station.” Our NV24 provides additional energy storage capacity raising the NV14 from 14.4 KW to 24.0

Our newest update of the NV14 ESS allows for commercial 208V 3-phase installations adding significantly to our potential customer

We completed the initial design

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In June 2019, we began marketing to San Diego based solar installers.

early 2020, we expanded our certified installer network to the greater Los Angeles, San Francisco, and Sacramento areas, and, importantly,

out of California to Arizona, Nevada, and Georgia.

In January 2021, we moved to a larger production facility in Poway, California to facilitate

In 2021, we increased our national distribution, which we conduct through certified wholesale dealers, and now have installs in

Utah, Florida, Puerto Rico, Oklahoma, Texas, Colorado, Wyoming, Tennessee, and Missouri.

Our Products - NeoVolta NV14 and NV24

early 2020, we expanded our certified installer network to the greater Los Angeles, San Francisco, and Sacramento areas.

At present, we

have installs in the following 14 States and Territories:

California, Nevada, Arizona, Utah, Colorado, Wyoming, Texas, Oklahoma, Missouri,

Tennessee, Alabama, Georgia, Florida, and Puerto Rico.

In January 2021, we moved to a larger production facility in Poway, California

to facilitate growth.

Our Products - NeoVolta NV14, NV14-K, and NV24

The NV14 is a complete ESS

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with a 14.4 kWh lithium iron phosphate (LiFe (PO4)) battery system.

This is all incorporated in one National Electrical Manufacturer Association

(NEMA) Type 3R rated indoor/outdoor cabinet system with all United Laboratories (UL) compliant electrical certifications, and fire code

requirements.

The NV14 is capable of storing and using inverted (AC) photovoltaic, non-inverted (DC) photovoltaic, or both AC and DC photovoltaic

solar sources.

It can also accept utility grid AC power as a charging source for the integrated 14.4 kWh battery system.

The NV14 system

will charge the batteries with excess solar photovoltaic (AC, DC or both AC and DC) power during daylight conditions - a unique functionality

in the ESS industry.

The inverter will invert DC battery power into AC power during periods of darkness or higher use periods.

Once discharged,

the batteries will be idle until excess solar photovoltaic is available and will subsequently begin to recharge.

The NV14 is designed

to primarily charge from solar but can be programmed to charge from other sources of power (solar, wind turbine, generator, and grid).

It can be easily programmed by our certified installers to customer-specific use profiles, including for “rate arbitrage,”

(graph below) which allows charging from the grid during the lowest rate periods (A) if the utility company allows this activity.

recharged, the batteries will discharge once solar photovoltaic begins to wane or when the customer needs more power than available from

solar photovoltaic (B).

By doing this, customers will be consuming their own solar photovoltaic production instead of sending excess photovoltaic

power to the grid and then buying this power back later in the evening from the utility at an often significantly higher retail rate,

thereby potentially lowering their monthly electric bill depending on their local utility’s rate plan.

Our NV14 is also capable

of multi-tasking by recharging via solar photovoltaic power while also supplying power.

The NV14-K is a variant of the NV14 built to EOS Linx specifications.

This is all incorporated in one National Electrical Manufacturer Association (NEMA) Type 3R rated indoor/outdoor cabinet system with all

United Laboratories (UL) compliant electrical certifications, and fire code requirements.

The NV14 is capable of storing and using inverted

(AC) photovoltaic, non-inverted (DC) photovoltaic, or both AC and DC photovoltaic solar sources.

It can also accept utility grid AC power

as a charging source for the integrated 14.4 kWh battery system.

The NV14 system will charge the batteries with excess solar photovoltaic

(AC, DC or both AC and DC) power during daylight conditions - a unique functionality in the ESS industry.

The inverter will invert DC

battery power into AC power during periods of darkness or higher use periods.

Once discharged, the batteries will be idle until excess

solar photovoltaic is available and will subsequently begin to recharge.

The NV14 is designed to primarily charge from solar but can be

programmed to charge from other sources of power (solar, wind turbine, generator, and grid).

It can be easily programmed by our certified

installers to customer-specific use profiles, including for “rate arbitrage,” (graph below) which allows charging from the

grid during the lowest rate periods if the utility company allows this activity.

Once recharged, the batteries will discharge once solar

photovoltaic begins to wane or when the customer needs more power than available from solar photovoltaic.

By doing this, customers will

be consuming their own solar photovoltaic production instead of sending excess photovoltaic power to the grid and then buying this power

back later in the evening from the utility at an often significantly higher retail rate, thereby potentially lowering their monthly electric

bill depending on their local utility’s rate plan.

Our NV14 is also capable of multi-tasking by recharging via solar photovoltaic

power while also supplying power.

We believe our NV14 is unique

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in July 2021 certifying that they will not catch on fire and exhibit no thermal runaway characteristics.

We are aware of additional

regulatory requirements being planned in various jurisdictions for 2022 and 2023.

We expect such changes in regulatory code to be a routine

requirement as ESS is a new field that warrants scrutiny and is a major focus of our management team.

We also see the complex regulatory

environment as a significant barrier to new market entry.

We expect such changes in

regulatory code to be a routine requirement as ESS is a new field that warrants scrutiny and is a major focus of our management team.

We also see the complex regulatory environment as a significant barrier to new market entry.

Market Characteristics

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of 2020, during the height of the coronavirus pandemic with 52 megawatts and 119 megawatt-hours of new storage installed.

is expected to reach 7.5 gigawatts in 2025, which amounts to six-fold growth from 2020.

The Q3 2021 US Energy Storage Monitor estimates

that the U.S.

residential market will surpass $1 billion in 2022;

a 14% share of the estimated $7 billion total US Energy Storage market.

The report added that Q2 surpassed Q1 2021 to become the second-largest quarter for storage deployment on record in MWh terms.

is expected to reach 7.5 gigawatts in 2025, which amounts to sixfold growth from 2020.

Market Drivers

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by $4,500 to $6,000.

This will become even more beneficial with the enactment of The Inflation Reduction Act, increasing the credit to

This has become even more beneficial with the enactment of The Inflation Reduction Act, increasing the credit to

30% for all ESS.

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We anticipate more of these programs being put in place in the

In November 2022, the California Public Energy Commission (CPUC) passed Net Energy Metering 3 (NEM3) with phase in date of April

NEM3 significantly reduces the value to “excess” solar that a customer sends to the Utility during the day.

NEM2, customer typically achieved a pay back period of 5-6 years.

Under NEM3, solar pay back is 10-12 years depending on the Utility.

As a result, most solar installers focused on installing as much solar as possible prior to the April 14, 2023 deadline.

This resulted

in a delay of battery and ESS installations since adding these capabilities do not affect NEM status, however, the impact of the temporary

market distortion has been largely reversed since that date.

Utilities can also impact

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The direct result of this was seen in California after the PSPS events

of late 2019 (below)

of late 2019.

Consumer Perception .

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expanding the application of our product into various commercial applications through development partnerships.

We plan to do this through

an increase in targeted direct sales and marketing to installers in ripe regional markets, concentrating efforts on adding to our national

distributor partners, and marketing in ESS industry circles to identify new potential applications of our systems.

Our growth thus far

has been through word of mouth and networking mainly in Southern California.

We have been successful in consistently growing both our

installer base and our number of installs through these means, but recognize that to succeed in the national marketplace, we will need

to bring on a team of sales and marketing professionals to reach our goals.

We have plans to start to build out this team utilizing the

proceeds from our recent offering.

Sungage Financial and

GoodLeap finance NeoVolta installations with or without solar.

We are working to add additional financing and leasing options.

to do this through an increase in targeted direct sales and marketing to installers in ripe regional markets, concentrating efforts on

adding to our national distributor partners, and marketing in ESS industry circles to identify new potential applications of our systems.

Our growth thus far has been through word of mouth and networking mainly in Southern California.

We have been successful in consistently

growing both our installer base and our number of installs through these means, but recognize that to succeed in the national marketplace,

we will need to bring on a team of sales and marketing professionals to reach our goals.

We have plans to start to build out this team

relatively soon.

Non-Residential / Commercial

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along with our ability to handle commercial 208V 3-phse power, have opened up a number of new opportunities for us.

These customers sought

us out to create an energy storage system for their unique needs specifically because others would not or could not accept the challenge.

NeoVolta was and continues to be open to customizing our products for energy storage contracts should they meet our volume, profitability,

and system requirements.

This strategy of flexibility in R&D is affording NeoVolta access into markets that would normally be closed

to companies of our size.

In that regard, various

stakeholders have sought us out to create an energy storage system for their unique needs specifically because others would not or could

not accept the challenge.

NeoVolta was and continues to be open to customizing our products for energy storage contracts should they meet

our volume, profitability, and system requirements.

This strategy of flexibility in R&D is affording NeoVolta access into markets

that would normally be closed to companies of our size.

We will continue to leverage this customer-driven approach in the future.

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We intend to take advantage of our adaptability and the nascent industry to fill these diverse and complicated needs.

previously announced partnerships with PMP Energy, EOS Linx, and American Development Partners.

We continue to explore other than residential

opportunities that NeoVolta is uniquely suited for.

We compete with several large

competitors already successfully selling in the ESS space.

Notable competitors include Tesla, LG Chem, Sonnen, and SMA America, among

Some of our competitors have significantly greater financial, product development, manufacturing, marketing resources, and name

In addition to competitors in the ESS space, we compete with companies in power generation equipment and other engine powered

products industries.

We face competition from a variety of large diversified industrial companies as well as smaller generator manufacturers,

along with mobile equipment, engine powered tools, solar inverter, battery storage and grid services providers, both domestic and internationally.

In addition, as energy storage becomes a necessary component for residential customers to realize better value/savings from their solar

PV installation, we believe new competitors will emerge in this field.

There is no assurance that we will be able to successfully compete

in this market.

Notable competitors include Tesla, LG Chem, Sonnen, Enphase, SunPower, and

SMA America, among others.

Some of our competitors have significantly greater financial, product development, manufacturing, marketing

resources, and name recognition.

In addition to competitors in the ESS space, we compete with companies in power generation equipment

and other engine powered products industries.

We face competition from a variety of large diversified industrial companies as well as

smaller generator manufacturers, along with mobile equipment, engine powered tools, solar inverter, battery storage and grid services

providers, both domestic and internationally.

In addition, as energy storage becomes a necessary component for residential customers to

realize better value/savings from their solar PV installation, we believe new competitors will emerge in this field.

There is no assurance

that we will be able to successfully compete in this market.

NeoVolta Competitive Advantages:

Availability .

recent back-order times for competitive products have been as long as 9-months in 2021.

Smaller installers rely on quick sales to install

to payment to keep their business going, and the lack of availability of competitive products is often the reason they are introduced

Since December 2021, NeoVolta has been delivering on orders in under two weeks, very often the same day.

We achieve this

by maintaining a high level of inventory relative to projected sales, component consolidation prior to shipment, and a small lot, recurring

freight strategy, which we believe allows for more flexibility in getting through the supply chain.

Our strategy of maintaining higher

levels of inventory based on projected sales means that to the extent our sales expectations in any periods are incorrect we may suffer

cash flow constraints for such periods.

LG Chem recently experienced a large recall of their older systems due to fire risk and product

defects associated with their lithium-ion chemistry.

Inability to secure reliable product delivery, fire risk, and recalls have harmed

reputations of our competitors.

recent back-order times for competitive products have been as long as 9-months in recent years.

Smaller installers rely on quick sales

to install to payment to keep their business going, and the lack of availability of competitive products is often the reason they are

introduced to NeoVolta.

Since December 2021, NeoVolta has been delivering on orders in under one week, very often the same day.

this by maintaining a high level of inventory relative to projected sales, component consolidation prior to shipment, and a small lot,

recurring freight strategy, which we believe allows for more flexibility in getting through the supply chain.

Our strategy of maintaining

higher levels of inventory based on projected sales means that to the extent our sales expectations in any periods are incorrect we may

suffer cash flow constraints for such periods.

LG Chem recently experienced a large recall of their older systems due to fire risk and

product defects associated with their lithium-ion chemistry.

Inability to secure reliable product delivery, fire risk, and recalls have

harmed reputations of our competitors.

Installer Service .

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thermal risk (UL 9540A)

· Higher 6,000 cycle batteries

· Compatible with generators

· Can support off grid

· Capable of adding additional battery storage

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IP & Product Development

We currently have one issued

utility patent (US Patent No.

10,998,730) that is directed to NeoVolta’s solar power inverter system.

This patent expires on November

A continuing utility application was also filed directed to the ‘730 patent, which is currently pending.

patent application was filed directed to supply circuitry that is implemented as part of NeoVolta’s solar power inverter

system (the “supply circuitry patent application”), which is also currently pending.

A Patent Cooperation Treaty (PCT) application

has also been filed claiming priority to the supply circuitry patent application, which is also pending.

The PCT application affords NeoVolta

the opportunity to file a foreign application in any PCT-member country by the deadline of August 12, 2023.

We also intend to further

broaden our product portfolio to pursue new and diverse markets.

We believe investment in our operations and engineering teams in the

first quarter will accelerate these improvements.

We currently have three issued

US utility patents.

US Patent No.

10,998,730 B1 is directed to NeoVolta’s solar power inverter system.

US Patent No.

B2 relates to NeoVolta’s generators.

US Patent No.

11,605,952 B1.

which is an expansion of our first Patent, relates to NeoVolta’s

solar power inverter system.

We will continue to expand our Patent portfolio when appropriate.

We rely on a combination of

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involved in the ESS space.

In the past two years, California regulators have implemented major requirements, including CSIP and CPUC “rapid

shutdown,” garage safety, non-ferrous cabinet, and more are being planned.

We have a track record of understanding, adapting, and

deploying our products in this ever-changing world.

In the past three years, California regulators have implemented major requirements, including CSIP and CPUC

“rapid shutdown,” garage safety, non-ferrous cabinet, and more are being planned.

We have a track record of understanding,

adapting, and deploying our products in this ever-changing world.

California, via the California

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quickly met the requirements for indoor installations and DC solar.

In June 2022, California adopted

several requirements for inside garage installations and disallowed any installs inside residential living spaces to include most basements.

These changes affect where a system can be installed and may prevent installation in colder climates.

NeoVolta’s other certifications

· Underwriters Laboratories (UL) 9540, 9540A, 1973, 1741SA, 1642, and 1699B Arc Fault Circuit Protection

UL 1741 third edition

(including UL 1741 Supplemental SB)

· UL 9540A Battery Energy Storage System (ANSI/CAN/UL

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· Electrical Codes:

National Fire Codes (NEC) 2017

National Fire Protection Association’s NFPA 70 National Fire Codes (NEC) 2023

· California Public Utilities Commission (CPUC) Rule 21 Interconnection

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(NEMA) Type 3R

· California Energy Commission (CEC) off-grid and on-grid R-F38

· California Energy Commission (CEC) on-grid R-F58

· California Energy Commission (CEC):

Grid Support Utility, Utility Interactive, Energy Storage System NV14

NeoVolta has established a

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in California - where regulatory standards in energy are generally set.

In fact, most states default their own regulations to California’s

standards for energy solar systems.

In November 2022, the CPUC

passed Net Energy Metering 3 (“NEM3”) with a phase in date of April 14, 2023.

NEM3 significantly reduces the value to “excess”

solar that a customer sends to the Utility during the day.

Under NEM2, customer typically achieved a pay back period of 5-6 years.

NEM3, solar pay back is 10-12 years depending on the Utility.

As a result, most solar installers focused on installing as much solar as

possible prior to the April 14, 2023 deadline.

This resulted in a delay of battery and ESS installations since adding these capabilities

do not affect NEM status.

The full impact of NEM3 to both the solar and ESS industry will not be known for several months.

Manufacturing

All of NeoVolta’s products

are manufactured in-house at our Poway, CA facility.

We manufacture our products in an efficient build-to-order model, keeping very little

finished-goods inventory.

We sublease and share our facility with our former contract manufacturer under a physical arrangement.

Pursuant to an amendment to

our supply agreement with our former contract manufacturer in April 2023, we took over direct responsibility for the manufacturing process

surrounding our ESS units from our contract manufacturer on June 1, 2023.

Accordingly, we now issue customer build orders to our two new

employees that we hired from our former contract manufacturer, they pull the raw materials from the warehouse, assemble the final units

and prepare them for shipment or pick-up.

Our timeline from order to delivery is usually less than two weeks.

The end-product is then picked

up or shipped from our docks, signed off by our installer and logged into our system when installed for system monitoring.

We run multiple quality checks

throughout the process and have systems to track components and end-units from Asia to San Diego to the end-user’s location.

record all component serial numbers, all torque settings, and annotates all required item numbers and functionality prior to packaging.

Recent Assembly Inventory Purchase

In April 2023, we closed the

bulk purchase of raw materials inventory from our contract manufacturer by making a cash payment to that company in the net amount of

$1.3 million, after considering credits for prepayments and other items of approximately $0.1 million.

This transaction was completed

pursuant to an amendment of our Master Supply Agreement with our contract manufacturer.

In addition to the purchase of the raw materials

inventory from our contract manufacturer, this amendment provided for the eventual assumption by us of full responsibility from our contract

manufacturer for the manufacturing of our proprietary Energy Storage Systems (“ESS”) units.

Pursuant to the amendment, we

assumed such responsibility for the manufacturing process surrounding our ESS units from our contract manufacturer on June 1, 2023.

conjunction with assuming this responsibility, we hired the two employees of our contract manufacturer who previously performed contract

manufacturing services for us.

We plan to hire three additional “assemblers” in the near future.

All of our manufacturing

certifications are listed under NeoVolta.

This amended agreement had no effect on our present Sublease Agreement with our contract manufacturer,

pertaining to our existing manufacturing location in Poway, CA (see “Item 2 – Properties”).

As of June 30, 2023, we have

five full-time employees.

seven full-time employees.

Our CEO manages all Company strategy, sales and R&D, our CFO manages all finance and administration.

balance of the staff manages supply chain, technical support and marketing/sales support.

manufacturing operations are performed by the four new employees that we recently hired from our former contract operator, as noted above.

The balance of the staff manages supply chain, technical support and marketing/sales support.

We also contract for hire with four outside

consultants and contractors on an ongoing basis.

Also, specific contracts for non-recurring R&D.

Our intent is to hire up to three

executive level leaders early in the new fiscal year to head up sales & marketing, operations and product development and build out

Also, we enter into specific contracts for non-recurring R&D projects, as needed.

Our intent is to hire any new executive level leaders in the coming year as necessary.

Access to Information

Our website is at www.neovolta.com.

We make available, free of charge, on our corporate website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports

on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934,

as amended (the “Exchange Act”), as soon as reasonably practicable after they are electronically filed with the Securities

and Exchange Commission (SEC).

The SEC maintains an internet site that contains reports, proxy and information statements and other information

regarding issuers that file electronically with the SEC at www.sec.gov.

Information contained on our website does not, and shall not be

deemed to, constitute part of this Annual Report on Form 10-K.

Our reference to the URL for our website is intended to be an inactive

textual reference only.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business