What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-09-29 compared with 2024-09-27 · 77 added, 84 removed, 114 unchanged (59% of the section changed)

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from those expressed in these forward-looking statements.

We encourage you to review the “Cautionary Note Regarding Forward-Looking

Statements” and “Risk Factors” sections in this report.

We encourage you to review the “ Cautionary Note Regarding Forward-Looking Statements ” and “ Risk Factors ” sections in this report.

We are a designer, manufacturer,

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

a public offering of shares of our common stock pursuant to Regulation A of the Securities Act (the “IPO”).

The IPO was for

a total of 3,500,000 shares of our common stock at an offering price of $1.00 per share.

We used the proceeds of the IPO to ramp up production,

marketing, and sales of our NV14 product line.

In that regard, we have used the proceeds from the offering to fund the marketing, production

and distribution of our products, which commenced in July 2019 through a group of wholesale customers in California, as well as to provide

additional working capital for other corporate purposes.

We have expanded to include one wholesale distribution customer in Nevada.

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 and NV 24 products, while focusing on specific industry needs for our next generation

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.

As further discussed below

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from contracts with customers for the year ended June 30, 2025 were $8,426,835 compared to $2,645,072 for the year ended June 30, 2024.

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.

Such increase in our revenues was primarily due to the rapid expansion of various new sales channels

outside of our traditional focus on the local installer market in the Southern California area since the engagement of our new chief executive

officer in April 2024 .

As a result, we achieved the highest level of annual sales in our history.

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 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.

sold in each fiscal year and resulted in essentially comparable gross profits on such sales of approximately 18% and 19% in each year.

General and Administrative

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ended June 30, 2024.

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 current employment contracts.

Such increase was mainly due to our appointment of a new chief executive officer, who was engaged at an annual salary

of $350,000 and also received a 4 year amortizing equity award of $2,854,000, as well as the hiring of several other employees since April

The addition of these personnel has resulted in a higher level of both cash compensation expense and other associated expenses,

such as marketing and travel, as well as non-cash stock compensation expenses related to the Company’s equity incentive programs.

Research and Development

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.

Expense - Research and development expenses for the year ended June 30, 2025 were $157,305 compared to $19,154 for the year ended

June 30, 2024.

Such increase was largely due to a higher level of focus by our new chief executive officer on product development efforts.

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.

– Interest expense for the year ended June 30, 2025 was $320,417 compared to zero for the year ended June 30, 2024, reflecting interest

attributable to borrowings made under our line of credit and another borrowing arrangement obtained since June 30, 2024.

Interest income

for the year ended June 30, 2025 was $2,011 compared to $33,644 for the year ended June 30, 2024.

This decrease was due to our lower level

of investable cash in the year ended June 30, 2025.

Net Loss - Net loss

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Operating activities .

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,

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

Net cash used in operating activities for the year ended June 30, 2025 was $4,425,752 compared to $1,016,362 for the year ended June 30,

This increase was largely due to the current period increase in our comparative net loss, primarily resulting from an increase in

our previously noted cash operating expenses for personnel and related costs, as well as the relatively higher changes in our net working

capital needs, including recent stockpiling and prepayment of inventory, on a comparative basis.

Financing activities.

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

public offering of our equity securities in the form of Units in early August 2022.

Each Unit consisted of one share of common stock and

one warrant to purchase one share of common stock at an exercise price of $4.00 per share.

We sold a total of 1,121,250 Units in the offering

at an offering price to the public of $4.00 per Unit.

The gross proceeds of the offering, including the underwriters’ exercise of

the overallotment option, were $4,485,000 and the net proceeds, after deduction of underwriting discounts and other offering costs, were

approximately $3,780,000.

In conjunction with the public

offering, all holders of our 2018 convertible notes in the total amount of $59,251, including accrued interest, converted their debt into

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 $1,068,000 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.

Net cash provided by financing activities for the year ended June 30, 2025 was $4,234,161 compared to zero for the year ended June 30,

In February 2025, we completed a private equity offering under which we issued a total of 543,500 shares of our common stock to

investors at an offering price of $2.00 per share resulting in gross proceeds of $1,087,000.

In September 2024, we entered into an agreement

with a newly formed financing entity whereby we obtained a line of credit for borrowings of up to $5,000,000.

As of June 30, 2025, we

made net borrowings under this credit agreement in the total amount of $383,538 initially to fund a short-term loan that we made to a

customer in October 2024, in the amount of $250,000, which was fully repaid in December 2024.

Beginning in November 2024, we made short-term

borrowings from another lender in the total amount of $5,106,343, of which a portion had been repaid, leaving an outstanding balance as

of June 30, 2025 of $2,603,223.

While our increasing level of short-term borrowings from this lender have been made at a relatively high

borrowing cost in terms of interest rate and fees, we have been able to meet our rising funding needs in this period in large part due

to the timely responsiveness of this lender.

In December 2024, we also received proceeds from the exercise of warrants issued in our August

2022 public offering in the amount of $160,400.

As of June 30, 2025, we had

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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

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

approximately $1.3 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”)

Pursuant to the amendment, we assumed such responsibility for the manufacturing process surrounding our ESS units from our contract

manufacturer on June 1, 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.

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”).

over time and that, with our current credit sources, we will have sufficient cash to operate for at least the next 12 months.

Other Developments

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

Presently, our two main raw

material components, batteries and inverters, are imported from different suppliers in China and, until recently, were subject to fairly

low tariff rates that had been in effect for several years.

Beginning in April 2025, the new Trump Administration implemented a significant

increase in tariff rates on all goods imported from China, although it was temporarily suspended for 90 days in April 2025 and the suspension

has recently been extended to early November 2025.

Prior to the tariff escalation in April 2025, we had anticipated the likelihood of

facing such a tariff increase and began stockpiling our inventory of these two components.

As a result, we do not anticipate having to

purchase a significant level of such components at post-tariff prices for the next several months.

In the event, however, that

such a mutual trade agreement is not reached between the parties within the next several months and we find it necessary to begin purchasing

a significant level of our inventory components from China at post-tariff prices, we would be faced with a decision as to whether we should

attempt to pass along such tariff increases to our customers through higher prices for our products or absorbing them internally, or some

combination of those two alternatives.

Either circumstance would likely materially adversely affect our sales and/or our profitability.

Off-Balance Sheet Arrangements

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policies, particularly those related to the recognition of revenues arising from the sales of our ESS products to customers of our business,

affect our more significant judgments and estimates used in the preparation of our financial statements.

could potentially affect our judgments and estimates used in the preparation of our financial statements.

With regard to revenue recognition,

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on the following five step model:

· Identification of the contact with a customer

· Identification of the contract with a customer

· Identification of the performance obligations

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and Summary of Significant Accounting Policies” of the notes to our financial statements for the fiscal year ended June 30, 2025,

set forth below under, “Index to Financial Statements”, for a further description of our critical accounting policies and

set forth below under, “Index to Financial Statements”, for a further description of our accounting policies and estimates.

None of those policies are deemed to be critical accounting policies nor critical accounting estimates.

As reflected in Note 1, Management

has determined that the Company operates in only one reportable segment, which is the development and commercialization of energy

storage products.

Emerging Growth Company and Smaller Reporting

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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