What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-15 compared with 2026-02-13 · 170 added, 158 removed, 79 unchanged (81% of the section changed)

1 unchanged sentence

This information should be

read in conjunction with the interim unaudited financial statements and the notes thereto included in this Quarterly Report on Form 10-Q,

and the audited financial statements and notes thereto and “Part II.

Other Information - Item 7.

Management’s Discussion and

Analysis of Financial Condition and Results of Operations”, contained in our Annual Report on Form 10-K for the year ended June

30, 2025, filed with the Securities and Exchange Commission on September 29, 2025 (the “Annual Report”).

read in conjunction with the interim unaudited consolidated financial statements and the notes thereto included in this Quarterly Report

on Form 10-Q, and the audited financial statements and notes thereto and "Item 7.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations”, contained in our Annual Report on Form 10-K for the year ended June 30, 2025, filed with the

Securities and Exchange Commission on September 29, 2025 (the “Annual Report”).

Certain capitalized terms

used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited financial statements included

above under “Part I - Financial Information” - “Item 1.

used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited consolidated financial

statements included above under “Part I - Financial Information” - “Item 1.

Financial Statements”.

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and other commercial opportunities.

Because we are purely dedicated to energy solar systems, virtually all 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

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.

Because we are purely dedicated to energy storage systems, virtually all 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.

As further discussed below

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product portfolio, enlarge our product marketing and sales efforts, and for other general corporate purposes.

In January 2026, we formed

a joint venture with the U.S.

affiliate of a foreign entity to jointly own and operate a new utility-scale battery manufacturing facility

in the State of Georgia.

We have an 80% ownership interest in the joint venture company, with the U.S.

affiliate of the foreign entity

having a 20% ownership interest (subject to service-based vesting and forfeiture provisions).

In accordance with the joint venture agreements,

as amended in April 2026, we made our initial capital contribution to the joint venture of $7,000,000 in January 2026 and expect to make

an additional capital contribution of $8,000,000 in June 2026 as well as additional capital contributions of up to $25,000,000 through

June 30, 2027, which will require us to secure significant future infusions of equity and/or debt financing.

The plant will be constructed

in phases with the initial phase expected to be completed in the summer of 2026 leading to the commencement of limited production of batteries

for sale to customers.

Upon completion, this new

facility is anticipated to provide the capacity for us to greatly expand our line of new energy storage products as an integrated energy

solutions leader and generate substantial amounts of both customer revenues and net operating cash flows over an extended period of time.

Results of Operations

The following discussion

reflects the Company’s revenues and expenses for the three and six month periods ended December 31, 2025 and 2024, as reported in

our financial statements included in Item 1.

Comparison of three months ended December 31,

2025 versus three months ended December 31, 2024

reflects the Company’s revenues and expenses for the three and nine month periods ended March 31, 2026 and 2025, as reported in

our consolidated financial statements included in Item 1.

Comparison of three months ended March 31,

2026 versus three months ended March 31, 2025

Revenues - Revenues

from contracts with customers for the three months ended December 31, 2025 were $4,645,517 compared to $1,071,581 for the three months

ended December 31, 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 while maintaining

essentially the same price points since the engagement of our new chief executive officer in April 2024 .

from contracts with customers for the three months ended March 31, 2026 were $2,023,718 compared to $2,014,105 for the three months ended

March 31, 2025.

Such static level of revenues was primarily due to expiration of the federal solar tax credit for individuals and various

other macroeconomic factors arising in the current quarter impacting not only the domestic solar industry but the overall economy in general.

Cost of Goods Sold

- Cost of goods sold for the three months ended December 31, 2025 were $3,872,995 compared to $747,670 for the three months ended December

- Cost of goods sold for the three months ended March 31, 2026 were $1,095,895 compared to $1,499,597 for the three months ended March

The cost 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 17% and 30%, respectively, with

the decrease largely being due to the reversal in December 2024 of a prior year reserve for obsolescence on component parts of our NV-14Ks

systems that were sold in each fiscal period and resulted in gross profits on such sales of approximately 46% and 26%, respectively, with

the increase being largely due to an upward out of period adjustment reflected in the current quarter related to higher inventory cost

recognition in the immediately preceding quarter.

General and Administrative

Expense - General and administrative expenses for the three months ended December 31, 2025 were $5,081,966 compared to $1,228,517

for the three months ended December 31, 2024.

Such increase was mainly due to our engagement 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 and other equity incentives,

as well as the hiring of several other employees since April 2024.

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.

Expense - General and administrative expenses for the three months ended March 31, 2026 were $3,021,127 compared to $1,857,531 for

the three months ended March 31, 2025.

Such increase was mainly due to our continuing rapid expansion of both our marketing and other

product development expenses since the engagement of a new chief executive officer in April 2024, including the hiring of a significant

number of new employees.

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

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

Research and Development

Expense - Research and development expenses for the three months ended December 31, 2025 were $58,795 compared to $42,324 for the

three months ended December 31, 2024.

Such fluctuation was largely due to timing differences in the level of the Company’s recent

product development efforts.

Expense - Research and development expenses for the three months ended March 31, 2026 were $403,887 compared to $27,947 for the three

months ended March 31, 2025.

Such fluctuation was largely due to the recent acceleration of our product development efforts.

Depreciation and Amortization

Expense - Depreciation and amortization expenses for the three months ended December 31, 2025 were $108,283 compared to zero for the

three months ended December 31, 2024.

Such fluctuation was attributable to our closing of an acquisition of intangible and tangible assets

from Neubau Energy Inc., which closed in October 2025.

Expense - Depreciation and amortization expenses for the three months ended March 31, 2026 were $128,458 compared to zero for the

three months ended March 31, 2025.

Such fluctuation was primarily attributable to our closing of an acquisition of intangible and tangible

assets from Neubau Energy Inc., which closed in October 2025.

Other Income and Expense

– Loss on debt exchanges for the three months ended December 31, 2025 was $858,002 compared to zero for the three months ended December

31, 2024, and resulted from two exchange agreements entered into with one of our lenders in October and November 2025.

Interest expense

for the three months ended December 31, 2025 was $204,700 compared to $24,546 for the three months ended December 31, 2024, reflecting

interest attributable to a higher level of borrowings made under our lender credit arrangements obtained since September 30, 2024.

income for the three months ended December 31, 2025 was $425 compared to $339 for the three months ended December 31, 2024, due to a slightly

higher average level of investable cash in the three months ended December 31, 2025.

– Loss on debt exchanges for the three months ended March 31, 2026 was $408,028 compared to zero for the three months ended March

31, 2025, and resulted from an exchange agreement entered into with one of our lenders in January 2026.

Interest expense for the three

months ended March 31, 2026 was $51,810 compared to $78,499 for the three months ended March 31, 2025, reflecting interest attributable

to a lower level of borrowings made under our lender credit arrangements obtained since September 30, 2024.

Interest income for the three

months ended March 31, 2026 was $57,085 compared to $138 for the three months ended March 31, 2025, due to a higher average level of investable

cash in the three months ended March 31, 2026.

Net Loss - Net loss

for the three months ended December 31, 2025 was $5,538,799 compared to $971,137 for the three months ended December 31, 2024, representing

for the three months ended March 31, 2026 was $3,028,402 compared to $1,449,331 for the three months ended March 31, 2025, representing

the aggregate of the various revenue and expense categories indicated above.

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these net losses due to the uncertainty of its ultimate realization.

Comparison of six months ended December 31,

2025 versus six months ended December 31, 2024

Comparison of nine months ended March 31, 2026

versus nine months ended March 31, 2025

Revenues - Revenues

from contracts with customers for the six months ended December 31, 2025 were $11,295,775 compared to $1,661,817 for the six months ended

December 31, 2024.

from contracts with customers for the nine months ended March 31, 2026 were $13,319,493 compared to $3,675,922 for the nine months ended

March 31, 2025.

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

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Cost of Goods Sold

- Cost of goods sold for the six months ended December 31, 2025 were $8,946,001 compared to $1,245,059 for the six months ended December

- Cost of goods sold for the nine months ended March 31, 2026 were $10,041,896 compared to $2,744,656 for the nine months ended March

The cost 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 21% and 25%, respectively, with

the decrease partially being due to the reversal in December 2024 of a prior year reserve for obsolescence on component parts of our NV-14Ks

systems that were sold in each fiscal year and resulted in gross profits on such sales of approximately 25% in each period, in accordance

with our customary expectations.

General and Administrative

Expense - General and administrative expenses for the six months ended December 31, 2025 were $7,456,634 compared to $2,278,636 for

the six months ended December 31, 2024.

Such increase was mainly due to our engagement 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 and other equity incentives, as well

as the hiring of several other employees since April 2024.

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.

Expense - General and administrative expenses for the nine months ended March 31, 2026 were $10,474,212 compared to $4,136,167 for

the nine months ended March 31, 2025.

Such increase was mainly due to our continuing rapid expansion of both our marketing and other product

development expenses since the engagement of a new chief executive officer in April 2024, including the hiring of a significant number

of new employees.

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

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

Research and Development

Expense - Research and development expenses for the six months ended December 31, 2025 were $115,707 compared to $50,941 for the six

months ended December 31, 2024.

Such fluctuation was largely due to timing differences in the level of the Company’s recent product

development efforts.

Expense - Research and development expenses for the nine months ended March 31, 2026 were $519,594 compared to $78,888 for the nine

months ended March 31, 2025.

Such fluctuation was largely due to the recent acceleration of our product development efforts.

Depreciation and Amortization

Expense - Depreciation and amortization expenses for the six months ended December 31, 2025 were $108,283 compared to zero for the

six months ended December 31, 2024.

Such fluctuation was attributable to our closing of an acquisition of intangible and tangible assets

Expense - Depreciation and amortization expenses for the nine months ended March 31, 2026 were $240,290 compared to zero for the nine

months ended March 31, 2025.

Such fluctuation was primarily attributable to our closing of an acquisition of intangible and tangible assets

from Neubau Energy Inc., which closed in October 2025.

Other Income and Expense

- Loss on debt exchange for the six months ended December 31, 2025 was $858,002 compared to zero for the six months ended December 31,

2024, and resulted from two exchange agreements entered into with one of our lenders in October and November 2025.

Interest expense for

the six months ended December 31, 2025 was $593,834 compared to $24,546 for the six months ended December 31, 2024, reflecting interest

attributable to a higher level of borrowings made under our lender credit arrangements obtained since September 30, 2024.

Interest income

for the six months ended December 31, 2025 was $565 compared to $1,734 for the six months ended December 31, 2024 due to a lower average

level of investable cash in the six months ended December 31, 2025.

– Loss on debt exchanges for the nine months ended March 31, 2026 was $1,266,030 compared to zero for the nine months ended March

31, 2025, and resulted from three exchange agreements entered into with one of our lenders since October 2025.

Interest expense for the

nine months ended March 31, 2026 was $645,644 compared to $103,045 for the nine months ended March 31, 2025, reflecting interest attributable

to a higher level of borrowings made under our lender credit arrangements obtained since September 30, 2024.

Interest income for the nine

months ended March 31, 2026 was $57,650 compared to $1,872 for the nine months ended March 31, 2025, due to a higher average level of

investable cash in the nine months ended March 31, 2026.

Net Loss - Net loss

for the six months ended December 31, 2025 was $6,782,121 compared to $1,935,631 for the six months ended December 31, 2024, representing

for the nine months ended March 31, 2026 was $9,810,523 compared to $3,384,962 for the nine months ended March 31, 2025, representing

the aggregate of the various revenue and expense categories indicated above.

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Operating activities.

Net cash used in operating activities in the six months ended December 31, 2025 was $4,578,069 compared to $1,451,330 in the six months

ended December 31, 2024.

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.

Net cash used in operating activities in the nine months ended March 31, 2026 was $8,156,853 compared to $3,501,515 in the nine months

ended March 31, 2025.

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 a recent increase in our outstanding accounts receivable.

Investing activities.

Net cash used in investing activities in the six months ended December 31, 2025 was $500,000, compared to zero in the six months ended

December 31, 2024.

Such fluctuation was entirely due to the cash portion of our purchase price of an acquisition of intangible and tangible

assets from Neubau Energy Inc., which closed in October 2025.

Net cash used in investing activities in the nine months ended March 31, 2026 was $2,785,375, compared to zero in the nine months ended

March 31, 2025.

Such fluctuation was due to our initial capital expenditures on a jointly owned utility-scale battery manufacturing facility

currently under construction in the State of Georgia (see “Other Developments” below) as well as the cash portion of our purchase

price of an acquisition of intangible and tangible assets from Neubau Energy Inc., which closed

in October 2025.

Financing activities.

Net cash provided by financing activities in the six months ended December 31, 2025 was $4,525,667, compared to $793,649 in the six months

ended December 31, 2024.

Beginning in November 2024, we have made short-term borrowings from two private lenders, primarily to finance

inventory purchases.

In the six months ended December 31, 2025, we made borrowings from these lenders in the total amount of $6,698,725

and repayments in the amount of $5,173,058.

In December 2025, we also partially closed a private equity offering pursuant to agreements

entered into in November 2025 with an accredited investor group under which we issued a total of 1,200,000 shares of our common stock

to the investor group at an offering price of $2.50 per share resulting in gross proceeds of $3,000,000.

In the six months ended December

31, 2024, we made borrowings from these lenders in the total amount of $889,732 and repayments in the amount of $256,483.

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 December 31, 2025, we

had a cash balance of approximately $0.2 million and net working capital of approximately $4.1 million, an increase of approximately $1.4

million in the recent quarter.

Currently, we are not generating a break-even level of net operating cash flow from our net sales.

we anticipate that demand for our products will ultimately increase over time and that, with our current credit sources and the proceeds

of our registered direct offering in January 2026 (see “Other Developments ”) , we will have sufficient cash to operate

for at least the next 12 months.

Net cash provided by financing activities in the nine months ended March 31, 2026 was $21,628,221 compared to $3,051,054 in the nine months

ended March 31, 2025.

In the nine months ended March 31, 2026, we completed the following equity financings:

(i) in November 2025, we

entered into a private equity offering with accredited investors group under which we issued a total of 5,200,000 shares of our common

stock at an offering price of $2.50 per share for gross proceeds of $13,000,000, which closed in two tranches in December 2025 and February

and (ii) in January 2026, we closed a registered direct offering of a total of 2,100,841 shares of our common stock at an offering

price of $4.76 per share resulting in net proceeds of $9,301,844.

Beginning in November 2024, we also made short-term borrowings from

two private lenders, primarily to finance inventory purchases.

In the nine months ended March 31, 2026, we made borrowings from these

lenders in the total amount of $6,936,891 and repayments in the amount of $ 7,610,514.

In the nine months ended March

31, 2025, we made borrowings from our two private lenders in the total amount of $2,581,845 and repayments in the amount of $778,191.

In February 2025, we closed a private equity offering with accredited investors under which we issued a total of 543,500 shares of our

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

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 March 31, 2026, we had

a consolidated cash balance of approximately $11.5 million and consolidated net working capital of approximately $19.5 million, an increase

of approximately $15.4 million in the recent quarter.

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, with our current credit

sources and the proceeds of our three equity financings in the nine months ended March 31, 2026, we will have sufficient cash to operate

for at least the next 12 months (see “Other Developments ” below).

Other Developments

In January 2026, we closed

a securities purchase agreement with a group of purchasers, pursuant to which we 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 Company.

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

In January 2026, we also executed

In January 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.

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

company to jointly own and operate a planned utility-scale battery manufacturing facility in the State of Georgia.

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.

In January and February, we

closed the remainder of our November 2025 private equity offering, and issued a total of 4,000,000 shares of our common stock at an offering

price of $2.50 per share resulting in gross proceeds of $10,000,000.

We utilized $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, and the remainder for general corporate

Further, we are expected to

make additional capital contributions to the joint venture company through June 30, 2027 in total amounts of up to $33,000,000, pursuant

to the joint venture agreements.

The next scheduled capital contribution we will be required to make will be in the amount of $8.0 million

on or before April 30, 2026.

We presently anticipate funding those additional capital contributions from the proceeds of one or more 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 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.

the Company has an 80% ownership interest in the joint venture company, and the U.S.

affiliate of the foreign entity has a 20% ownership

In accordance with the joint

venture agreements, we made our initial capital contribution of $7,000,000 in January 2026 and expect to make an additional capital contribution

of $8,000,000 in June 2026, which is primarily to fund the purchase of equipment.

Further, we are expected to make additional capital

contributions to the joint venture company through June 30, 2027 in total amounts of up to $25,000,000, pursuant to the joint venture

We presently anticipate funding those additional capital contributions from the proceeds of one or more equity and/or debt

financings, subject to market conditions.

However, there can be no assurance that we will be successful in raising sufficient proceeds

from such 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 or more new

members of the joint venture company to fund such additional capital contributions which would dilute our present 80% majority ownership

of the joint venture company.

We continue to monitor current

international developments occurring in Ukraine and Israel.

international developments occurring in Iran and Ukraine.

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

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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 tariff

rate was lowered in 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.

increase in tariff rates based on the authority of the International Emergency Economic Powers Act (“IEEPA”) on all goods

imported from China, although it was temporarily suspended for 90 days in April 2025 and the tariff rate was lowered in November 2025,

subject to judicial review.

In February 2026, the Supreme Court declared the tariffs to be unconstitutional based on the authority of

IEEPA, therefore, the Administration is considering alternative approaches to implementing tariffs that it believes would be sustained

in a 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 in order to reduce the impact of the tariffs.

Off-Balance Sheet Arrangements

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Our discussion and analysis

of our financial condition and results of operations are based on financial statements which have been prepared in accordance with generally

accepted accounting principles in the United States.

The preparation of these financial statements requires us to make estimates and judgments

that affect the reported amounts of assets, liabilities, revenues and expenses.

We believe that certain accounting policies affect our

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

Business and Summary

of Significant Accounting Policies” of the Notes to Financial Statements set forth above and under “Item 8.

Financial Statements

and Supplementary Data” of our Annual Report on Form 10-K for the year ended June 30, 2025, as filed with the SEC on September 29,

2025, for a further description of our critical accounting policies and estimates.

None of those policies are deemed to be critical accounting

policies nor critical accounting estimates.

of our financial condition and results of operations are based on consolidated financial statements which have been prepared in accordance

with generally accepted accounting principles in the United States.

The preparation of these consolidated financial statements requires

us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.

We believe that certain

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

Business and Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements set

forth above and under “Item 8.

Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year

ended June 30, 2025, as filed with the SEC on September 29, 2025, for a further description of our critical accounting policies and estimates.

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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-Q

Item 2. Management’s Discussion and Analysis