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Item 1. Financial Statements

2026-02-13 compared with 2025-11-10 · 382 added, 170 removed, 296 unchanged (65% of the section changed)

FINANCIAL STATEMENTS

NEOVOLTA, INC.

Balance Sheets

September 30,

Current assets:

4 unchanged sentences

Total current assets

Property and equipment

Accumulated depreciation

Net property and equipment

Intellectual property (net of accumulated amortization of $ 101,733 )

Other assets:

Lease right-of-use asset, net

Miscellaneous assets

Liabilities and Stockholders' Equity

4 unchanged sentences

Short-term notes payable

Advance received for Stock Subscription

Total current liabilities

Payable to line of credit lender

Lease liability

Total liabilities

12 unchanged sentences

Three Months Ended

September 30,

Revenues from contracts with customers

3 unchanged sentences

Research and development

Depreciation and amortization

Total operating expenses

Loss from operations

( 4,476,522 )

Other income (expense):

Loss on debt exchanges

Interest expense

3 unchanged sentences

$ ( 5,538,799 )

$ ( 971,137 )

Weighted average shares outstanding - basic and diluted

2 unchanged sentences

NEOVOLTA, INC.

Statements of Operations

Six Months Ended

Revenues from contracts with customers

Cost of goods sold

Operating expenses:

General and administrative

Research and development

Depreciation and amortization

Total operating expenses

Loss from operations

( 5,330,850 )

( 1,912,819 )

Other income (expense):

Loss on debt exchanges

Interest expense

Interest income

Total other income (expense)

( 1,451,271 )

$ ( 6,782,121 )

$ ( 1,935,631 )

Weighted average shares outstanding - basic and diluted

Net loss per share - basic and diluted

See accompanying notes to unaudited financial

NEOVOLTA, INC.

Statements of Stockholders' Equity

Three Months Ended September 30, 2025 and 2024

Six Months Ended December 31, 2025 and 2024

Stockholders'

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( 27,020,456 )

Stock compensation expense

Issuance of common stock for asset acquisition

Issuance of common stock for debt exchanges

Issuance of common stock in private offering

( 5,538,799 )

Balance at December 31, 2025

$ ( 32,559,255 )

Stockholders'

4 unchanged sentences

( 21,707,032 )

Stock compensation expense

Exercise of common stock warrants

Balance at December 31, 2024

$ ( 22,678,169 )

See accompanying notes to unaudited financial statements.

1 unchanged sentence

Statements of Cash Flows

Three Months Ended

September 30,

Six Months Ended

Cash flows from operating activities:

3 unchanged sentences

Stock compensation expense

Amortization of ROU asset

Loss on debt exchanges

Depreciation and other amortization expense

Amortization of right-of-use asset

Provision for expected credit losses/bad debt expense

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( 2,596,872 )

Other long term assets

Prepaid insurance and other current assets

Operating lease obligation

Accounts payable

Accrued expenses

Operating lease obligation

Net cash flows used in operating activities

( 4,578,069 )

( 1,451,330 )

Cash flows used in investing activities:

Addition of assets for cash

Net cash flows used in investing activities

Cash flows from financing activities:

Issuance of common stock in private offering

Borrowings under line of credit

Repayments of line of credit

Borrowings under short-term notes payable

1 unchanged sentence

( 5,173,058 )

Advance received for Stock Subscription

Proceeds from exercise of common stock warrants

Net cash flows provided by financing activities

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Cash paid for income taxes

Cash paid for amounts included in operating lease liabilities

Supplemental disclosures of financing and investing activities

Issuance of common stock for debt exchanges

Addition of assets for common stock

Right-of-use assets obtained for operating lease liabilities

See accompanying notes to unaudited financial statements.

1 unchanged sentence

Notes to Financial Statements

( 1) Business and Summary of Significant

Accounting Policies

( 1) Business

and Summary of Significant Accounting Policies

Description of Business

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In the opinion of management, these financial statements contain all adjustments, consisting

only of normal recurring adjustments, necessary to fairly state the Company’s financial position as of September 30, 2025, the results

of its operations for the three month periods ended September 30, 2025 and 2024, the changes in its stockholders’ equity for the

three month periods ended September 30, 2025 and 2024, and cash flows for the three month periods ended September 30, 2025 and 2024.

balance sheet as of June 30, 2025 has been derived from the Company’s June 30, 2025 financial statements that were audited by an

independent registered public accounting firm but does not include all of the information and footnotes required for complete annual financial

The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full

These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended June 30, 2025, as

filed with the SEC on September 29, 2025.

only of normal recurring adjustments, necessary to fairly state the Company’s financial position as of December 31, 2025, the results

of its operations for the three and six month periods ended December 31, 2025 and 2024, the changes in its stockholders’ equity

for the three and six month periods ended December 31, 2025 and 2024, and cash flows for the six month periods ended December 31, 2025

The balance sheet as of June 30, 2025 has been derived from the Company’s June 30, 2025 financial statements that were

audited by an independent registered public accounting firm but does not include all of the information and footnotes required for complete

annual financial statements.

The results of operations for the interim periods are not necessarily indicative of the results to be expected

for the full year.

These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended June

30, 2025, as filed with the SEC on September 29, 2025.

Acquisitions –

The Company evaluates acquisitions to first determine whether a set of assets acquired constitutes a business and should be accounted

for as a business combination.

If the assets acquired are not a business, the transaction is accounted as an asset acquisition in accordance

with Accounting Standards Codification (“ASC”) 805-50, Asset Acquisitions (“ASC 805-50”), which requires

the acquiring entity to recognize assets acquired and liabilities assumed based on the cost to the acquiring entity on a relative fair

value basis, except for non-qualifying assets including financial assets such as inventory.

Cash and Cash Equivalents

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limit of $250,000, per bank.

At September 30, 2025, the Company maintained all of its accounts at one bank and the combined balances of

all accounts at this bank was in excess of the FDIC insurance limit by $ 639,819 .

At December 31, 2025, the Company maintained all of its accounts at one bank and the combined balances of

all accounts was less than the FDIC insurance limit.

– Inventory consists of batteries and inverters purchased from Asian suppliers and delivered to a location near the Company’s

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The following table presents the components

of inventory as of September 30, 2025 and June 30, 2025:

of inventory as of December 31, 2025 and June 30, 2025:

Schedule of inventory

September 30,

Raw materials, consisting of assembly parts, batteries and inverters

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The Company generates revenues

from contracts with customers, consisting of a relatively small number of wholesale dealers and installers, in California and several

other states.

Four such dealers represented approximately 35 %, 18 %, 11 % and 11 % of the Company’s revenues in the three months ended

September 30, 2025, however, no other dealers accounted for more than 10% of the revenues in such period.

Three dealers represented approximately

22 %, 15 % and 15 % of the Company’s accounts receivable as of September 30, 2025.

Three dealers represented approximately 37 %, 26 %

and 13 % of the Company’s revenues in the three months ended September 30, 2024.

Since all of the Company’s revenue is currently

generated from the sales of similar products, no further disaggregation of revenue information for the three months ended September 30,

from contracts with customers, consisting of a relatively small number of wholesale dealers and distributors, in California, Texas and

several other states.

Two such customers represented approximately 61 % and 15 % of the Company’s revenues in the three months ended

December 31, 2025, however, no other dealers accounted for more than 10% of the revenues in such period.

Those same two customers represented

approximately 46 % and 12 % of the Company’s revenues in the six months ended December 31, 2025.

Those same two customers also represented

approximately 54 % and 20 % of the Company’s accounts receivable as of December 31, 2025.

Two customers represented approximately

37 % and 34 % of the Company’s revenues in the three months ended December 31, 2024.

Two customers represented approximately 35 % and

33 % of the Company’s revenues in the six months ended December 31, 2024.

Since all of the Company’s revenue is currently generated

from the sales of similar products, no further disaggregation of revenue information for the three and six months ended December 31, 2025

and 2024 is provided.

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customer's account, reflecting the net amount expected to be collected.

As of September 30, 2025 and June 30, 2025, our allowance for

expected credit losses was $ 450,000 and $ 314,200 , respectively.

As of December 31, 2025 and June 30, 2025, our allowance for expected

credit losses was $ 186,000 and $ 314,200 , respectively.

Depreciation Expense

– Depreciation expense applicable to property and equipment acquired in an acquisition of assets in October 2025 is recognized on

a straight-line basis over their estimated useful lives ranging from 1 to 7 years (see Note 4).

Amortization Expense

– Amortization expense applicable to intellectual property acquired in an acquisition of assets in October 2025 is recognized on

a straight-line basis over their estimated useful lives ranging from an average of 5 years for licensed technology to 10 years for owned

technology (see Note 4).

Impairment Expense

– The Company accounts for impairment expense in accordance with the provisions of ASC 350-30, General Intangibles Other Than

Goodwill, for intellectual property and ASC 360-10-35, Property, Plant and Equipment – Subsequent Measurement, for other

property and equipment.

Stock Compensation Expense

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and is recognized as an expense over the requisite service period.

Long Term Leases –

The Company accounts for long term operating leases in excess of 12 months in accordance with the provisions of ASU 2016-02, Leases

(Topic 842) .

Accordingly, the Company capitalizes the present value of the future lease obligations while recognizing an offsetting

lease liability and amortizes the related right-of-use asset each month over the term of the lease.

Loss Per Common Share

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weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.

As of September 30, 2025, the Company had total outstanding common stock equivalents of 2,948,150 shares as follows:

As of December 31, 2025, the Company had total outstanding common stock equivalents of 4,297,803 shares as follows:

(i) 3,019,653 shares

related to restricted stock units granted to three officers since April 2024;

related to restricted stock units granted to five officers since April 2024;

(ii) 1,081,150 shares related to warrants issued to investors

4 unchanged sentences

Costs – Research and development costs are expensed as incurred.

Value Measurement - Fair value is defined as the price that would be received for an asset or paid

to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly

transaction between market participants on the measurement date .

Assets and liabilities that are carried at fair

value are classified and disclosed in one of the following three categories:

Level 1 - Inputs

represent unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 - Inputs

include quoted prices for similar assets and liabilities in active markets that are either directly or indirectly observable;

Level 3 - Inputs

are unobservable and considered significant to fair value measurement.

As more fully described in

Note 4, we have accounted for our acquisition of tangible and intangible assets from another company in October 2025 by allocating the

total purchase price paid at closing to the fair value of the assets acquired.

Use of Estimates –

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Actual results could differ from those estimates.

Accounting Pronouncements – From time to time, new accounting pronouncements are issued by the Financial Accounting

Standards Board, (“FASB”), or other standard setting bodies and adopted by us as of the specified effective date.

otherwise discussed, the impact of recently issued standards, including ASU 2023-07, Segment Reporting (Topic 280):

Improvements to

Reportable Segment Disclosures, and prospective standards that are not yet effective, including ASU 2024-03, Income Statement

– Reporting Comprehensive Income – Expense disaggregation disclosures (Topic 220-40):

Disaggregation of Income Statement

Expenses, are not expected to have a significant impact on the Company’s financial statement disclosures upon adoption.

Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will

have a material impact on its financial statements.

Segment Information

– Management has determined that the Company operates in one reportable segment, which is the development and commercialization

of energy storage products.

The Company's chief operating decision maker (CODM) is its Chief Executive Officer, who reviews financial

information presented on a company-wide basis.

The CODM primarily uses net loss, which is reported in the Statements of Operations, to

assess financial performance and allocate resources.

These financial metrics are used by the CODM to make key operating decisions, such

as the assessment of segment performance and allocation of resources.

The significant categories within net loss that the CODM regularly

reviews are revenues from customers, cost of goods sold, and general and administrative expenses.

Other expenses reported in the Company’s

net loss include interest expense and research and development expenses.

Recent Accounting Pronouncements

– From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, (“FASB”),

or other standard setting bodies and adopted by us as of the specified effective date.

Unless otherwise discussed, the impact of recently

issued standards, including ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, and prospective

standards that are not yet effective, including ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense

disaggregation disclosures (Topic 220-40):

Disaggregation of Income Statement Expenses, are not expected to have a significant impact

on the Company’s financial statement disclosures upon adoption.

The Company has considered all other recently issued accounting

pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements.

Liquidity – These

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$ 5,000,000 , in order to meet any near-term borrowing needs.

As a result, we believe that we will have sufficient financial resources available

to us in order to operate our business for at least the next 12 months from the date these financial statements are issued.

As a result, we believe that we will have sufficient financial availability

between our current credit sources and our recent private equity offering in December 2025 (see Note 3), in order to operate our business

for at least the next 12 months from the date these financial statements are issued.

On September 3, 2024, we entered

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such borrowings, we have granted a security interest in all of our assets to the lender.

As a condition of receiving this line of credit

from the lender, we have agreed not to issue any securities pursuant to the Company’s Form S-3 (file number 333-280400), without

the lender’s consent, so long as any borrowing remains outstanding.

As of September 30, 2025, we had made net borrowings under this

credit agreement in the amount of $ 633,538 , leaving an available balance of $ 4,366,462 .

Accrued interest as of September 30, 2025 was

As of December 31, 2025, we had made net borrowings

under this credit agreement in the amount of $ 633,538 , leaving an available balance of $ 4,366,462 .

Accrued interest as of December 31,

2025 was $ 74,195 .

In the month of November 2024,

1 unchanged sentence

by certain property interests, of up to a principal amount of $ 4,000,000 .

In the three months ended September 30, 2025, we made borrowings

In the six months ended December 31, 2025, we made borrowings

from this lender to finance customer shipments and related costs in the total amount of $ 6,448,725 .

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is assessed at the default rate of 1% per 7 days.

In the three months ended September 30, 2025, we repaid $ 2,660,497 of such borrowings,

including accrued interest and fees, leaving an outstanding balance as of that date, including accrued interest and fees, of $ 4,142,275

(see Note 5).

In the six months ended December 31, 2025, we repaid $ 5,173,058 of such borrowings,

including accrued interest and fees, and converted a total of $ 1,000,000 of loan principal into equity (see Note 3), leaving an outstanding

balance as of that date, including accrued interest and fees, of $ 2,878,890 .

Based on the fair value of our common stock at the time of

the two conversions, we recognized non-operating losses on the debt exchanges during the six months ended December 31, 2025 in the total

amount of $ 858,002 .

Common Stock –

In September 2025, the Company commenced plans for a private equity offering of shares of its common stock to accredited investors.

of September 30, 2025, the Company had received a cash deposit from a potential investor in the amount of $ 800,000 .

Pending the subsequent

closing of the offering, of which there is no assurance, the Company has accounted for it as an advance received for stock subscription

under current liabilities on its balance sheet as of September 30, 2025.

In November 2025, the Company entered into subscription agreements for a private equity offering with an accredited investor group under

which the Company issued in December 2025 a total of 1,200,000 shares of its common stock to the investor group at an offering price of

$ 2.50 per share resulting in gross proceeds to the Company in the amount of $ 3,000,000 .

The Company is using the proceeds of this private

offering to meet working capital needs and for other general corporate purposes.

In the six months ended December

31, 2025, the Company entered into two voluntary exchange agreements with the commercial lender providing short-term financing for customer

shipments and related costs whereby we issued a total of 366,667 shares of its common stock having a fair value of $ 1,858,002 to the lender

in exchange for total reductions in its outstanding principal loan balance amounting to $ 1,000,000 .

The Company recognized non-operating

losses on these two exchanges in the total amount of $ 858,002 (see Note 2).

In August 2022, the Company

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Warrants – As

of September 30, 2025, there were outstanding Warrants for a total of 1,081,150 shares of common stock issued to investors which are exercisable

of December 31, 2025, there were outstanding Warrants for a total of 1,081,150 shares of common stock issued to investors which are exercisable

at any time up to August 1, 2027 .

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The following table presents

activity with respect to the Company’s warrants for the three months ended September 30, 2025:

activity with respect to the Company’s warrants for the six months ended December 31, 2025:

Schedule of warrant activity

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Warrants exercised/forfeited

Outstanding at September 30, 2025

Exercisable at September 30, 2025

Outstanding at December 31, 2025

Exercisable at December 31, 2025

These warrants were issued

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The following table presents

activity with respect to our Non-Qualified Stock Options for the three months ended September 30, 2025:

activity with respect to our Non-Qualified Stock Options for the six months ended December 31, 2025:

Schedule of non qualified stock options

2 unchanged sentences

Options exercised/forfeited

Outstanding at September 30, 2025

Exercisable at September 30, 2025

Outstanding at December 31, 2025

Exercisable at December 31, 2025

In April 2024, we entered

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Pursuant to the

agreement, our new CEO received an initial equity grant equal to 1,280,000 restricted stock units (“RSU’s”), with a

grant date value of $ 2,854,000 , which will vest over a four-year period, subject to his continued employment with the Company, and will

be entitled to earn additional RSU’s on each anniversary in the form of three annual performance-based equity grants, beginning

in the year ending June 30, 2025, with a target value of up to $660,000 each.

However, our Compensation Committee has not set any definitive

targets, therefore, no additional grants have been made as of September 30, 2025.

agreement, our new CEO received an initial equity grant equal to 1,280,000 restricted stock units (“RSUs”), with a grant date

value of $ 2,854,000 , which will vest over a four-year period, subject to his continued employment with the Company, and will be entitled

to earn additional RSUs on each anniversary in the form of three annual performance-based equity grants, beginning in the year ending

June 30, 2025, with a target value of up to $660,000 each.

Effective December 31, 2025, our Compensation Committee approved the issuance

of the first such annual performance grant of RSUs and one-half of the second annual performance grant with a total value of $ 990,000 ,

however, issuance of the RSUs is currently pending.

In February 2025, we

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The second milestone was achieved as

of January 1, 2024, and the underlying 50,000 shares of common stock are expected to be issued to our CFO at a later date.

of January 1, 2024, and the underlying 50,000 shares of common stock are expected to be issued to our CFO at a later date (see Note 6).

In January 2025, we entered

into an employment agreement with our former Chief Operating Officer and current Chief Business Officer (“CBO”).

term of the employment agreement ends on December 31, 2027 and will be automatically renewable for additional one-year terms unless either

party chooses not to renew the agreement.

Pursuant to the agreement, we issued our CBO an award of 150,000 RSUs vesting in three annual

installments.

As a result, we presently have a total of 1,670,000 RSUs that have been issued to our three officers.

For all of these awards,

we have calculated the grant date value of such awards and are amortizing it as stock compensation expense over the underlying vesting

We have recognized stock compensation expense applicable to such RSU awards in the three months ended September 30, 2025 and

2024 in the amounts of $ 293,025 and $ 221,524 , respectively (see Note 5).

into an employment agreement with our former Chief Operating Officer (“COO”) and former Chief Business Officer (“CBO”),

which individual resigned from the Company on January 31, 2026.

Pursuant to the agreement, we issued an award of 150,000 RSUs vesting

in three annual installments.

In October 2025, we entered into employment agreements with our new COO and our new Chief Technology Officer.

Pursuant to their employment agreements, we granted each of the two new officers an award of 450,000 RSUs ( 900,000 RSUs in total), vesting

in three annual installments (see Note 4).

For all of these awards, we have calculated the grant date value of such awards and are amortizing

it as stock compensation expense over the underlying vesting periods.

We have recognized stock compensation expense applicable to all

RSU awards in the six months ended December 31, 2025 and 2024 in the amounts of $ 1,987,813 and $ 392,339 , respectively (see Note 6).

In February 2025, we entered

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by each director.

As of September 30, 2025 and 2024, we booked an accrual of $ 48,750 of compensation expense (of which $43,875 will be

As of December 31, 2025 and 2024, we booked an accrual of $ 97,500 of compensation expense (of which $87,750 will be

settled through the issuance of shares) for our three independent directors under this plan.

In the three months ended

September 30, 2025, we recognized total non-cash stock compensation expense of $ 466,765 as follows:

(i) $ 293,025 for the amortized value

of the RSUs granted to our three executive officers;

(ii) $ 43,875 for the amortized value of the portion of the new compensation plan

for our independent directors that is attributable to stock;

(iii) $ 117,418 for the value of the shares issuable to a distribution company

pursuant to a April 2025 distribution agreement;

and (iv) $ 12,447 for the amortized value of the Non-Qualified Stock Options issued to

non-executive employees in August 2025.

There was a total of 88,965 shares of our common stock that were issued to various grantees for

services in the three months ended September 30, 2025, all of which were previously expensed in the year ended June 30, 2025.

In the three months ended

September 30, 2024, we recognized total non-cash stock compensation expense of $ 265,399 as follows:

(i) $ 221,524 for the amortized value

of the RSUs granted to our chief executive officer, as previously described, plus a non-executive recipient of another RSU award granted

in June 2024;

and (ii) $ 43,875 for the amortized value of the portion of the new compensation plan for our independent directors that

is attributable to stock.

There were a total of 9,776 shares of our common stock that were issued to two grantees in the three months

ended September 30, 2024, which were previously expensed in the year ended June 30, 2024.

In the six months ended December

31, 2025, we recognized total non-cash stock compensation expense of $ 3,019,034 as follows:

(i) $ 1,987,813 for the amortized value of

the RSUs granted to our executive officers and key employees ;

(ii) $ 87,750 for the amortized value of the portion of the new compensation

plan for our independent directors that is attributable to stock;

(iii) $ 227,993 for the value of the shares issuable to a distribution

company pursuant to a April 2025 distribution agreement;

(iv) $ 673,668 for the value of the shares issuable to various consultants;

(v) $ 41,810 for the amortized value of the Non-Qualified Stock Options issued to non-executive employees in August 2025.

There was a total

of 304,144 shares of our common stock that were issued to various grantees for services in the six months ended December 31, 2025, of

which 176,322 shares were previously expensed in the year ended June 30, 2025.

In the six months ended December

31, 2024, we recognized total non-cash stock compensation expense of $ 480,089 as follows:

(i) $ 392,339 for the amortized value of the

RSUs granted to our chief executive officer, as previously described, and two other non-executive recipients of RSU awards granted since

and (ii) $ 87,750 for the amortized value of the portion of the new compensation plan for our independent directors that is

attributable to stock.

There were a total of 125,620 shares of our common stock that were issued to various grantees in the six months

ended December 31, 2024, which were previously expensed in the year ended June 30, 2024.

Other Matters –

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of stock options, stock awards and stock unit awards to key employees, consultants, advisors, and non-employee directors.

As of September

As of December

31, 2025, we have made total awards of 3,770,671 shares under the Plan as follows:

(i) RSUs for 3,156,362 shares granted to our executive

officers, as noted above;

(ii) 197,335 shares for the initial services of our three independent directors in the years ended June 30,

2025, 2024 and 2023, pursuant to the compensation plan adopted in August 2022 for independent directors;

(iii) 204,884 shares granted

to various consultants for their services and to wholesale dealers under an incentive sales program;

and (iv) Non-Qualified Stock Options

to purchase 147,000 shares granted to employees in August 2025.

(4) Commitments and Contingencies

officers and key employees, as noted above;

(ii) 201,565 shares for the initial services of our three independent directors in the years

ended June 30, 2025, 2024 and 2023, pursuant to the compensation plan adopted in August 2022 for independent directors;

(iii) 265,744

shares granted to various consultants for their contracted services;

and (iv) 147,000 shares for Non-Qualified Stock Options to purchase

common stock granted to employees in August 2025.

Preferred Stock –

The Company is authorized to issue up to 5,000,000 shares of preferred stock.

Our articles of incorporation authorize the board to issue

these shares in one or more series, to determine the designations and the powers, preferences and relative, participating, optional or

other special rights and the qualifications, limitations and restrictions thereof.

No such preferred stock has been issued to date.

Purchase Agreement

In October 2025, we closed

an Asset Purchase Agreement with Neubau Energy Inc.

(“Neubau”), a privately-owned company

based in California, and its shareholders, whereby the Company acquired substantially all of Neubau’s assets consisting mostly

of intellectual property and other intangible assets along with a smaller amount of tangible fixed assets.

Neubau has developed

a proprietary battery storage module but has not had any commercial sales of the product.

With this acquisition, the Company is able to

produce and sell Neubau’s proprietary module, which is complementary to the Company’s products.

Sales of the proprietary battery

storage module by the Company are expected to begin in calendar year 2026.

The total consideration paid

at closing was approximately $ 1.5 million consisting of cash in the amount of $ 500,000 and 200,000 shares of the Company’s common

stock with a fair market value of $ 998,000 .

The Company will also pay Neubau a royalty of $ 10.00

per unit of Neubau’s proprietary module sold by the Company for a period of three years

following the closing, to be accounted for as a period expense as there is currently no reliable estimate of the future sales of this

Additionally, Neubau has the right to receive contingent consideration of up to 4,000,000 additional shares of the

Company’s common stock if certain sales milestones related to Neubau’s proprietary product are met within specified time periods

through December 31, 2028 , to be accounted for as a period expense as there is currently no reliable

estimate of the future sales of this new product .

The Company is accounting

for this transaction as an acquisition of assets and has assigned the total purchase price paid at closing, taking into account the probability

assessment of the contingent consideration noted above, to the fair value of the assets acquired, as summarized in the table below.

the tangible property and equipment acquired, we began recognizing depreciation expense from the acquisition date and have recorded depreciation

expense in the amount of $ 7,123 as of December 31,

For the intellectual property acquired, we began recognizing amortization expense from the acquisition date and have recorded amortization

expense in the amount of $ 101,160

as of December 31, 2025.

Shown below is a summary by Balance Sheet classification of the allocated fair values that we assigned to the

acquired assets as of the acquisition date based upon an independent valuation performed by a professional valuation consulting firm:

Schedule of acquired assets

Property and equipment

Tooling and manufacturing equipment

Intellectual property

Owned technology

Licensed technology

Software and information technology

In conjunction with

closing the asset purchase, we entered into employment agreements with the two principals of Neubau covering a three year period ending

September 30, 2028.

One of the principals was appointed as the Company’s Chief Operating Officer replacing our former Chief Operating

Officer engaged in January 2025 in that capacity, and our former Chief Operating Officer has now been re-designated as our Chief Product

The other principal was appointed as our Chief Technology Officer.

Pursuant to their employment agreements, we granted each

of the two new officers an award of 450,000 RSUs ( 900,000 RSUs in total), vesting in three annual installments (see Note 4).

(5) Commitments

and Contingencies

Effective February 1, 2025,

4 unchanged sentences

Accordingly, the Company has capitalized the present value of the future lease obligations

and is amortizing the related right-of-use asset on a straight-line basis each month over the term of the lease.

and is amortizing the related right-of-use asset each month over the term of the lease.

Effective October 1, 2025, we entered into an

extension of our sublease agreement with the sublandlord whereby we extended the terms of the sublease agreement for an additional five

years and one month from the original expiration date of February 28, 2026 to the extended expiration date of March 31, 2031.

of the extension, which was accounted for as a modification, we remeasured the lease liability using a discount rate as of October 1,

2025, and recorded increases to the Company’s operating lease liability and right-of-use asset of $ 787,862 during the three months

ended December 31, 2025.

The rate implicit in the extended sublease agreement was not readily determinable and, as such, we used the Company’s

incremental borrowing rate as the discount rate to remeasure the lease liability.

The incremental borrowing rate was determined to be

13.75 % based on the Company’s borrowing capability over a similar term of the extended sublease agreement utilizing the effects

of full collateralization.

Future undiscounted lease

payments under the extended lease agreement are approximately $ 1.2

million, exclusive of operating expenses and obligations under the existing lease agreement.

Future operating lease minimum payments,

together with their present value as of December 31, 2025, are summarized as follows:

Schedule of future operating lease minimum payments

Year ending June 30, 2026

Year ending June 30, 2027

Year ending June 30, 2028

Year ending June 30, 2029

Year ending June 30, 2030

Total future minimum lease payments

Less amounts representing interest

Present value of lease liability

Current portion of operating lease liability

Long-term portion of operating lease liability

We are dependent on our two

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Beginning in April 2025, the 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 been extended to November 2025, subject

to judicial review.

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.

China, although it was temporarily suspended for 90 days in April 2025 and the tariff rate was lowered in November 2025, subject to judicial

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.

In conjunction with the closing

of our Asset Purchase Agreement with Neubau Energy Inc.

in October 2025, we granted the sellers

the right to receive contingent consideration of up to 4,000,000 additional shares of our common stock if certain sales milestones

related to Neubau’s proprietary battery storage product are met within specified time periods through December 31, 2028 (see Note

From time to time in the ordinary

8 unchanged sentences

matters for which losses are not probable and estimable.

(5) Subsequent Events

Asset Purchase Agreement

On October 15, 2025, we closed

an Asset Purchase Agreement (the “Agreement”) with Neubau Energy Inc.

a privately-owned company based in California, and its shareholders, whereby the Company acquired substantially all of Neubau’s

assets consisting mostly of intellectual property and other intangible assets along with a relatively small amount of tangible inventory

and fixed assets.

Neubau has developed a proprietary battery storage module but has not had any commercial sales of the product.

With this acquisition, the Company is able to produce and sell Neubau’s proprietary module, which is a complement to the Company’s

The total consideration paid

at closing was approximately $1.5 million consisting of cash in the amount of $500,000 and 200,000 shares of the Company’s common

The Company will also pay Neubau a royalty of $10.00 per unit of Neubau’s proprietary

module sold by the Company for a period of three years following the closing.

Additionally,

Neubau has the right to receive up to 4,000,000 additional shares of the Company’s common stock if certain sales milestones related

to Neubau’s proprietary product are met within specified time periods through December 31, 2028.

The Company is planning to account

for this transaction as an acquisition of assets and plans to assign the total purchase price paid at closing to the fair value of the

assets acquired.

In conjunction with closing

the asset purchase, we entered into employment agreements with the two principals of Neubau covering a three year period ending September

One of the principals was appointed as the Company’s Chief Operating Officer replacing our former Chief Operating Officer

engaged in January 2025 in that capacity (see Note 3), and our former Chief Operating Officer has now been re-designated as our Chief

Product Officer.

The other principal was appointed as our Chief Technology Officer.

Pursuant to their employment agreements, we granted

each of the two new officers an award of 450,000 RSUs (900,000 RSUs in total), vesting in three annual installments.

(6) Subsequent

Joint Venture Agreement

On January 13, 2026, we executed

a series of joint venture agreements with the U.S.

affiliates of a foreign entity for the formation of a new domestic limited liability

company to jointly own and operate a planned battery manufacturing facility in the southeastern United States.

Pursuant to these agreements,

the Company has a 60% ownership interest in the joint venture company, and the two U.S.

affiliates of the foreign entity each have a 20%

ownership interest.

conjunction with the formation of this new company, we completed a private offering in early February 2026 of

a total of 4,000,000 shares of our common stock at an offering price of $2.50 per share with the U.S.

investment arm of the same foreign

entity resulting in gross proceeds to the Company in the amount of $10,000,000.

We have invested $7,000,000 of those proceeds in the joint

venture company in order to satisfy our initial capital contribution, as required under the joint venture agreements.

the terms of the agreement, the Company agreed to contribute capital contributions up to $40,000,000, in exchange for 60 Class A Membership

Interests in the Company, of which $7,000,000 was provided in January 2026.

We presently anticipate funding our additional capital contributions

from the proceeds of one or more public or private offerings of our common stock, subject to market conditions.

However, there can be

no assurance that we will be successful in raising sufficient proceeds from such public or private offerings in order to fully satisfy

our obligations for the additional capital contributions to the joint venture company.

To the extent that we may be unable to raise sufficient

proceeds in order to fully satisfy our obligations for the additional capital contributions to the joint venture company, the parent company

of the same foreign entity will be permitted to bring in one of more new members of the joint venture company to fund such additional

capital contributions which would dilute our present 60% majority ownership of the joint venture company.

Other Reportable Events

Effective October 1, 2025,

we entered into an extension of our sublease agreement with the sublandlord on our corporate and manufacturing office space from an expiration

date of February 28, 2026 to March 31, 2031.

Future undiscounted lease payments under the extended lease agreement are approximately $1.2

million, exclusive of operating expenses and obligations under the existing lease agreement.

We will capitalize the present value of the

future lease obligations under the extended sublease agreement and amortize the related right-of-use asset on a straight-line basis over

the term of the extended lease (see Note 4).

On October 15, 2025, we entered

into an Exchange Agreement with our commercial lender who has provided short-term financing to us for customer shipments and related costs

under a loan agreement beginning in November 2024.

Pursuant to a negotiated exchange ratio in the Exchange Agreement, we issued 200,000

shares of our common stock to the lender in exchange for reducing the outstanding principal loan balance that we owed to the lender in

the amount of $500,000 (see Note 2).

On October 16, 2025, we issued

a total of 47,757 shares of our common stock to the three independent members of our Board of Directors as consideration for their services

rendered in the year ended June 30, 2025.

We recognized the underlying expense for such services in the year ended June 30, 2025.

On January 26, 2026, we closed

a securities purchase agreement with a group of purchasers, pursuant to which the Company sold to the purchasers, in a registered direct

offering, a total of 2,100,841 shares of our common stock at an offering price of $4.76 per share.

The gross proceeds to the Company from

the registered direct offering were $10,000,000 and the net proceeds were $9,350,000, after deducting offering expenses payable by the

We intend to use the net proceeds from this offering for working capital and general corporate purposes.

In January 2026, we entered

into another Exchange Agreement with our commercial lender providing short-term financing for customer shipments and related costs whereby

we issued a total of 281,398 shares of our common stock having a fair value of $1,111,522 to the lender in exchange for total reductions

in our outstanding principal loan balance amounting to $703,494.

Based on the fair value of our common stock at the time of the exchange,

we will recognize a non-operating loss on this exchange in the three months ending March 31, 2026 in the total amount of $408,028 (see

In January 2026, we made a

loan in the amount of $1,500,000 to a private solar project development company.

The loan is in the form of a convertible promissory note

bearing interest at the rate of 6% per annum with the principal and accrued interest being due on demand on or after December 5, 2026.

On February 6, 2026, the Company

entered into a Severance Agreement and General Release (the “Severance Agreement”) with Michael Mendik, its Chief Product

Under the Severance Agreement, in exchange for the covenants and releases in the agreement, the Company agreed to pay Mr.

Mendik a lump-sum severance payment of $50,000, less applicable withholdings and deductions.

In addition, the Company will reimburse

an amount equal to four full months of COBRA premiums to continue health coverage.

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-Q

Item 1. Financial Statements