What changed in this filing

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Item 1A. Risk Factors

2023-09-22 compared with 2022-09-27 · 145 added, 82 removed, 507 unchanged (31% of the section changed)

The following risks and uncertainties

should be carefully considered in addition to the other information included in this Report.

If any of the following conditions or other

unknown conditions should occur, our business, financial condition or operating results could be materially harmed.

An investment in

our securities is speculative in nature, involves a high degree of risk and should not be made by an investor who cannot bear the economic

risk of its investment for an indefinite period of time and who cannot afford the loss of its entire investment.

following risks and uncertainties should be carefully considered in addition to the other information included in this Report.

of the following conditions or other unknown conditions should occur, our business, financial condition or operating results could be

materially harmed.

An investment in our securities is speculative in nature, involves a high degree of risk and should not be made by

an investor who cannot bear the economic risk of its investment for an indefinite period of time and who cannot afford the loss of its

entire investment.

Risks Related to our Business and Industry

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the COVID-19 pandemic are uncertain and may continue to adversely affect our operations, supply chain, distribution, and demand for our

The impact of COVID-19 on

the global economy and our customers has thus far not affected us materially.

To date, we have not experienced any issues with our supply

chain, but delays through international ports have been experienced in the industry.

If we were to encounter a significant disruption

due to COVID-19 at one or more of our locations or suppliers, we may not be able to satisfy customer demand for a period of time.

While the global designation

of COVID-19 as a pandemic has recently ended, the Company is assessing any potential factors that may continue to impact its business.

Thus far, the impact of COVID-19 on the global economy and our customers has not affected us materially.

To date, we have not experienced

any issues with our supply chain, but delays through international ports have been experienced in the industry.

If we were to encounter

a significant disruption due to COVID-19 at one or more of our locations or suppliers, we may not be able to satisfy customer demand for

a period of time.

Furthermore, the impact of

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history, we depend on a relatively small number of wholesale dealers and installers, primarily in California, for our revenue.

year ended June 30, 2022, two such dealers represented approximately 20% each of the Company’s revenues whereas in the year ended

June 30, 2021, four such dealers represented approximately 18%, 15%, 13% and 10% of the Company’s revenues.

As of June 30, 2022,

one dealer represented 33% of the Company’s accounts receivable.

As of June 30, 2021, three such dealers represented an aggregate

of 54% of our accounts receivable.

Our limited customer base and concentration could expose us to the risk of substantial losses if a

single dominant customer stops purchasing, or significantly reduces orders for, our products.

Our ability to maintain close relationships

with these top customers is essential to the growth and profitability of our business.

If we fail to sell our products to one or more

of these top customers in any particular period, or if a large customer purchases fewer of our products, defers orders or fails to place

additional orders with us, or if we fail to develop additional major customers, our revenue could decline, and our results of operations

could be adversely affected.

year ended June 30, 2023, three such dealers represented approximately 25%, 15% and 13% of the Company’s revenues whereas in the

year ended June 30, 2022, two such dealers represented approximately 20% each of the Company’s revenues.

As of June 30, 2023, four

such dealers represented approximately 94% of the Company’s accounts receivable.

Our limited customer base and concentration could

expose us to the risk of substantial losses if a single dominant customer stops purchasing, or significantly reduces orders for, our products.

Our ability to maintain close relationships with these top customers is essential to the growth and profitability of our business.

we fail to sell our products to one or more of these top customers in any particular period, or if a large customer purchases fewer of

our products, defers orders or fails to place additional orders with us, or if we fail to develop additional major customers, our revenue

could decline, and our results of operations could be adversely affected.

If we fail to scale our business operations

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While we expect in the future to better

understand our manufacturing costs, there is no guarantee we will be able to achieve sufficient cost savings to reach our gross margin

and profitability goals.

We may also incur substantial costs or cost overruns in utilizing and increasing the production capability of

our energy storage system facilities.

understand and control our manufacturing costs, there is no guarantee we will be able to achieve sufficient cost savings to reach our

gross margin and profitability goals.

We may also incur substantial costs or cost overruns in utilizing and increasing the production

capability of our energy storage system facilities.

If we are unable to achieve

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dollar as our purchases for energy

storage products will be denominated in Chinese Renminbi.

Already in 2021, we have experienced five percent inflation in our cost of goods

sold because of currency valuations;

· increases in global shipping costs have gone up 70 percent in 2021 due to shipping container shortages

and delays at both shipping and receiving ports due to COVID and lack of appropriate workforce.

storage products are denominated in Chinese Renminbi.;

· potential increases in global shipping costs.

Our business is dependent

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and operating results.

Recent increases in mortgage interest rates

may result in a decrease in demand by homeowners for our residential energy storage systems.

Sales volume in our homeowner

channel is partially dependent on the construction of new homes and the sale of existing homes in our residential markets.

Many customers

of our installation partners rely on mortgage loans from banks and other lenders in order to finance a substantial portion of the purchase

price for their home, including any related improvements.

Increased mortgage interest rates may lead to lower demand for new homes and

a reduced number of homes available for solar origination through our homeowner channel.

Additionally, increased interest rates may result

in fewer secondary home sales, a reduction in the number of customers refinancing their mortgages and uncertainty about the economy.

We are currently operating in a period of

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Russia and Ukraine.

On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported.

Although the length

and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including

significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

We are continuing to monitor

the situation in Ukraine and globally and assessing its potential impact on our business.

In addition, Russian military actions and the

resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital

markets, potentially making it more difficult for us to obtain additional funds.

On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported and the conflict is

continuing at an intense level.

Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict

in Ukraine could lead to further market disruptions, including significant volatility in commodity prices, credit and capital markets,

as well as supply chain interruptions.

We are continuing to monitor the situation in Ukraine and globally and assessing its potential

impact on our business.

In addition, Russian military actions and the resulting sanctions could adversely affect the global economy and

financial markets and lead to instability and lack of liquidity in capital markets, potentially making it more difficult for us to obtain

additional funds.

Any of the above mentioned

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financial condition and results of operations.

In particular, the California

Public Energy Commission (“CPUC”) passed Net Energy Metering 3 (“NEM3”) in November 2022 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

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

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

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

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.

Our business and

operations would suffer in the event of third-party computer system failures, cyber-attacks on third-party systems or deficiency in our

cyber security.

rely on information technology (“IT”) systems, including third-party “cloud based” service providers, to keep

financial records, maintain product support data, and corporate records, to communicate with staff and external parties and to operate

other critical functions.

This includes critical systems such as email, other communication tools, electronic document repositories and

If any of these third-party information technology providers are compromised due to computer viruses, unauthorized access, malware,

natural disasters, fire, terrorism, war and telecommunication failures, electrical failures, cyber-attacks or cyber-intrusions over the

internet, then sensitive emails or documents could be exposed or deleted.

Similarly, we could incur business disruption if our access

to the internet is compromised, and we are unable to connect with third-party IT providers.

The risk of a security breach or disruption,

particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally

increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.

extent that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure

of confidential or proprietary information, we could incur liability and delay of our product development and support efforts.

We may need to assert intellectual property-related

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In August 2021, we entered

into an exclusive supply agreement with our Asian supplier pertaining to our NV7600 product.

This agreement contains provisions that address

the ownership and use of intellectual property rights.

While we are unaware of any present dispute concerning this agreement or our other

agreements that concern ownership of or use of intellectual property rights , future disputes may arise concerning this or other agreements

we have entered into that concern ownership of or use of intellectual property rights.

into an exclusive long term supply agreement with our Asian supplier pertaining to our inverter component.

This agreement contains provisions

that address the ownership and use of intellectual property rights.

While we are unaware of any present dispute concerning this agreement

or our other agreements that concern ownership of or use of intellectual property rights, future disputes may arise concerning this or

other agreements we have entered into that concern ownership of or use of intellectual property rights.

Our business could be negatively impacted

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rules subsequently implemented by the SEC have required changes in corporate governance practices of public companies.

As a public company,

we expect these rules and regulations to increase our compliance costs in 2022 and beyond and to make certain activities more time consuming

As a public company, we also expect that these rules and regulations may make it more difficult and expensive for us to obtain

director and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially

higher costs to obtain the same or similar coverage.

As a result, it may be more difficult for us to attract and retain qualified persons

to serve on our Board of Directors or as executive officers.

As a recent Nasdaq

listed public company, we expect these rules and regulations to increase our compliance costs and to make certain activities more time

consuming and costly.

As a public company, we also expect that these rules and regulations may make it more difficult and expensive for

us to obtain director and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage

or incur substantially higher costs to obtain the same or similar coverage.

As a result, it may be more difficult for us to attract and

retain qualified persons to serve on our Board of Directors or as executive officers.

Confidentiality agreements with employees

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and could delay or prevent a change in corporate control.

As of the closing of our recent

underwritten public offering, our executive officers and directors currently hold or have the right to acquire, in the aggregate, up to

approximately 13.9% of our outstanding common stock.

As a result, these stockholders will be able to influence our management and affairs

and heavily influence the outcome of matters submitted to our stockholders for approval, including the election of directors and any sale,

merger, consolidation, or sale of all or substantially all of our assets.

Our executive officers and

directors currently hold or have the right to acquire, in the aggregate, up to approximately 15.0 % of our outstanding common stock.

a result, these stockholders will be able to influence our management and affairs and heavily influence the outcome of matters submitted

to our stockholders for approval, including the election of directors and any sale, merger, consolidation, or sale of all or substantially

all of our assets.

These stockholders may have

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Certain of our stockholders

holding an aggregate of 13,907,867 shares and our officers and directors, have agreed not to offer, sell, dispose of or hedge such shares

of our common stock, subject to specified limited exceptions, during the period continuing through the date that is 180 days after the

date of our IPO, or January 23, 2023.

Upon the expiration of the lock-up agreements, all such shares will be eligible for resale in the

public market, subject to applicable securities laws, including the Securities Act.

Upon expiration of each of these lock-up periods or

upon the ability to sell shares pursuant to Rule 144, the trading price of our common stock could be adversely impacted if these stockholders

sell, or indicate an intention to sell, substantial amounts of our common stock in the public market.

holding an aggregate of 13,907,867 shares at the time of our July 2022 public offering and our officers and directors, agreed not to offer,

sell, dispose of or hedge such shares of our common stock through January 23, 2023.

Upon the expiration of the lock-up agreements, all

such shares became eligible for resale in the public market, subject to applicable securities laws, including the Securities Act.

ability to sell shares pursuant to Rule 144, the trading price of our common stock could be adversely impacted if these stockholders sell,

or indicate an intention to sell, substantial amounts of our common stock in the public market.

Nevada law and provisions in our articles

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the exercise.

Although our securities recently became

listed on Nasdaq, there can be no assurance that we will be able to comply with the continued listing standards of Nasdaq, a failure of

which could result in a de-listing of our common stock .

Although our securities became listed on

Nasdaq in August 2022, there can be no assurance that we will be able to comply with the continued listing standards of Nasdaq, a failure

of which could result in a de-listing of our common stock .

The Nasdaq Capital Market

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director independence and independent committee requirements, minimum stockholders’ equity, and certain corporate governance requirements.

If we are able to maintain the listing of our securities on Nasdaq, we may be unable to satisfy these requirements or standards and we

could subject our securities to delisting, which would have a negative effect on the price of our common stock and would impair our security

holders’ ability to sell or purchase our common stock or Warrants when they wish to do so.

In the event of a delisting, we would

expect to take actions to restore our compliance with the listing requirements, but we can provide no assurance that any such action taken

by us would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent

our securities from dropping below the minimum bid price requirement, or prevent future non-compliance with the listing requirements.

Additionally, we may become subject to an evolving set of compliance regulations pertaining to environmental, social and governance (“ESG”)

matters as well as cybersecurity standards that are promulgated by Nasdaq or other regulatory bodies.

If we are able to maintain the listing

of our securities on Nasdaq, we may be unable to satisfy these requirements or standards and we could subject our securities to delisting,

which would have a negative effect on the price of our common stock and would impair our security holders’ ability to sell or purchase

our common stock or Warrants when they wish to do so.

In the event of a delisting, we would expect to take actions to restore our compliance

with the listing requirements, but we can provide no assurance that any such action taken by us would allow our securities to become listed

again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the minimum bid

price requirement, or prevent future non-compliance with the listing requirements.

The price of our common stock and Warrants

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These market fluctuations may also materially and adversely affect the market price of our common stock and Warrants.

Negative research about our business published

by analysts or journalists could cause our stock price to decline.

A lack of regularly published research about our business could cause

trading volume or our stock price to decline.

The trading market for our

common stock depends in part on the research and reports that analysts and journalists publish about us or our business.

If analysts or

journalists publish inaccurate or unfavorable research about our business, our stock price would likely decline.

If we fail to meet the

expectations of analysts for our operating results, or if the analysts who covers us downgrade our stock, our stock price would likely

If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could

decrease, which could cause our stock price and trading volume to decline.

Claims for indemnification by our directors

and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available

Our articles of incorporation

and bylaws contain provisions that eliminate, to the maximum extent permitted by the corporation law of the State of Nevada, the personal

liability of our directors and executive officers for monetary damages for breach of their fiduciary duties as a director or officer.

Our articles of incorporation and bylaws also provide that we will indemnify our directors and executive officers and may indemnify our

employees and other agents to the fullest extent permitted by the corporation law of the State of Nevada.

Any claims for indemnification

made by our directors or officers could impact our cash resources and our ability to fund the business.

Shareholder activism could cause material

disruption to our business.

Publicly traded companies

have increasingly become subject to campaigns by activist investors advocating corporate actions such as actions related to environment,

social and governance (ESG) matters, among other issues.

Responding to proxy contests and other actions by such activist investors or

others in the future could be costly and time-consuming, disrupt our operations and divert the attention of our Board of Directors and

senior management from the pursuit of our business strategies, which could adversely affect our results of operations and financial condition.

UNRESOLVED STAFF COMMENTS

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 1A. Risk Factors