What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-09-27 compared with 2023-09-22 · 54 added, 60 removed, 144 unchanged (44% of the section changed)

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We are a designer, manufacturer,

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.

We are also pursuing agreements 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 itself

as a major player in the energy storage market.

and seller of high-end Energy Storage Systems (or ESS), primarily our NeoVolta NV14, NV 24 and, to a lesser extent, our NV14-K, 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.

We are also pursuing agreements 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 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 itself as a major player in the energy storage market.

In May 2019, we completed

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from contracts with customers for the year ended June 30, 2024 were $2,645,072 compared to $3,455,813 for the year ended June 30, 2023.

Such decrease was primarily due to the pendency of the April 2023 effective date of new utility

regulations in the State of California that we believe caused an economic disincentive for residential utility customers to acquire our

energy storage systems prior to the effective date of those regulations (see “Item 1.

Business - Regulatory Environment”

for a discussion of the new utility regulations).

Such decrease was primarily due to various macroeconomic and regulatory factors including the negative impact of new utility regulations

in the State of California that we believe has caused an extended economic disincentive for residential utility customers to acquire our

energy storage systems since the December 2022 enactment date and continuing through the year ended June 30, 2024.

Cost of Goods Sold

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of goods sold in both periods reflected the cost of procuring and assembling the component parts of the energy storage systems that were

sold in each fiscal year and resulted in gross profits on such sales of approximately 20% and 15%, respectively, with such increase largely

being due to transitional factors related to the recent assumption of manufacturing operations from our contract operator which are not

expected to be recurring in the future.

sold in each fiscal year and resulted in gross profits on such sales of approximately 19% and 20%, respectively, with such decrease largely

being due to a partial reserve for obsolescence on component parts of our NV-14K’s of $90,000 in the year ended June 30, 2024, which

was offset in part by efficiencies that we have realized from taking over responsibility for manufacturing of our products from a contract

operator since last year.

General and Administrative

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Such decrease was primarily due to the reduction in the expense recorded for the fair value of incentive shares of

common stock earned by our executive officers under their new employment contracts, effective in March 2022.

common stock earned by our executive officers under their current employment contracts.

Research and Development

Expense - Research and development expenses for year ended June 30, 2023 were $29,936 compared to $68,503 for year ended June 30,

Expense - Research and development expenses for the year ended June 30, 2024 were $19,154 compared to $29,936 for the year ended June

Such fluctuation was due to a modest decrease in the level of our product development efforts.

Interest Expense -

Interest expense for the year ended June 30, 2023 was $4,134 compared to $49,544 for the year ended June 30, 2022.

This decrease resulted

from the conversion of our 2018 and 2021 convertible notes in conjunction with the closing of our public equity offering in August 2022.

Other Income and Expense

- Interest income for the year ended June 30, 2024 was $33,644 compared to zero for the year ended June 30, 2023.

This increase was due

to rising money market rates which have enabled the Company to earn interest on its investable cash in the year ended June 30, 2024.

expense for the year ended June 30, 2024 was zero compared to $4,134 for the year ended June 30, 2023, reflecting the conversion of our

2018 and 2021 convertible notes in conjunction with the closing of our public equity offering in August 2022.

Net Loss - Net loss

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Net cash used in operating activities in the year ended June 30, 2024 was $1,016,362, compared to $2,108,001 in the year ended June 30,

2022, reflecting a significant increase in net working capital requirements for operations of approximately $800,000 in the current fiscal

2023, reflecting a significant decrease in net working capital requirements in the current fiscal year period.

Financing activities .

Net cash provided by financing activities in the year ended June 30, 2023 was $3,780,405, compared to $1,068,000 in the year ended June

As further discussed below, our net cash provided by financing activities in the year ended June 30, 2023 was entirely attributable

to the successful completion of an underwritten public offering of our equity securities in early August 2022.

Our net cash provided by

financing activities in the year ended June 30, 2022 resulted from the issuance of our convertible notes payable to a group of accredited

investors in October 2021 in the amount of $1,068,000.

Such notes were ultimately converted into common stock in conjunction with the

closing of our public offering in August 2022.

Net cash provided by financing activities in the year ended June 30, 2024 was zero compared to $3,780,405 in the year ended June 30, 2023.

As further discussed below, our net cash provided by financing activities in the year ended June 30, 2023 was entirely attributable to

the successful completion of an underwritten public offering of our equity securities in early August 2022.

We completed an underwritten

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a total of 9,404,867 shares of common stock at the stated conversion rate, and all holders of our 2021 convertible notes in the total

amount of $1,120,035, including accrued interest, converted their debt into a total of 267,000 shares of common stock at the stated conversion

As a result of the simultaneous conversion of both sets of convertible notes, we fully eliminated our convertible debt.

amount of $1,068,000 converted their debt into a total of 267,000 shares of common stock at the stated conversion rate.

As a result of

the simultaneous conversion of both sets of convertible notes, we fully eliminated our convertible debt.

As of June 30, 2024, we had

a cash balance of $2.0 million and net working capital of approximately $6.5 million.

Currently, we are not generating a break-even level

of net operating cash flow from our net sales.

However, we anticipate that demand for our products will ultimately increase over time

and that we will have sufficient cash to operate for at least the next 12 months.

Recent Assembly Inventory Purchase

a cash balance of approximately $1.0 million and net working capital of approximately $4.6 million.

Currently, we are not generating a

break-even level of net operating cash flow from our net sales.

However, we anticipate that demand for our products will ultimately increase

over time and that we will have sufficient cash to operate for at least the next 12 months.

Assembly Inventory Purchase

In April 2023, we closed the

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manufacturer on June 1, 2023.

In 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 second half of 2023.

In conjunction with assuming this responsibility, we hired the employees of our contract manufacturer who

previously performed contract manufacturing services for us.

We plan to hire additional

“assemblers” as necessary.

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”).

The amended agreement in April

2023 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”).

Other Developments

As a result of the continued

spread of the COVID-19 coronavirus since early 2020, economic uncertainties have arisen which could impact business operations, supply

chains, energy demand, and commodity prices that are beyond our control.

In early 2022, we experienced some negative impact of the COVID-19

pandemic on the sales of our assembled energy storage systems, primarily through a group of wholesale dealers and installers located in

We continue to monitor COVID-19, but do not believe it will have a material unfavorable impact to our future financial performance

at this time.

We continue to monitor current

international developments occurring in Ukraine and Israel.

However, we do not believe that they will have a significant impact on either

the domestic markets for our products or the international supply chains for our product components, which are largely sourced from Asia.

Off-Balance Sheet Arrangements

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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 7. Management’s Discussion and Analysis