NeoVolta Inc
For the period ended Sep 30, 2024. Filed Nov 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 8, 2024
NEOV$2.61+23.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0001683168-24-003236
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001683168-24-007816
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 41 previous paragraphs and 30 current paragraphs.
16 unchanged; 11 reworded; 3 added; 10 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
General and Administrative Expense - General and administrative expenses for the three months ended September 30, 2024 were $1,050,119 compared to $555,160 for the three months ended September 30, 2023. 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, as well as several other employees since April 2024. The addition of these personnel 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.
Current report
Operating activities. Net cash used in operating activities in the three months ended September 30, 2024 was $593,031 compared to $179,089 in the three months ended September 30, 2023. This increase was largely due to the current period increase in our comparative net loss, largely due to the decline in our gross profit and the increase in our other cash operating expenses. The fluctuations in our working capital components had only a de minimis impact on net operating cash flow on a comparative basis.
Current report
Financing activities. As indicated in Note 2, we entered into an agreement with a newly formed financing entity in September 2024 whereby we obtained a line of credit for borrowings of up to $5,000,000. Under this agreement, we will be required to make monthly payments to the lender of accrued interest, at the rate of 16% per annum, on any outstanding borrowings that we make, with the principal and any unpaid accrued interest being due at maturity in September 2026. In order to secure such borrowings, we have granted a security interest in all of our assets to the lender. As of September 30, 2024, we had made no borrowings under this credit agreement.
Removed paragraphs (10)
Previous report
Three months ended March 31, 2024 versus three months ended March 31, 2023
Previous report
General and Administrative Expense - General and administrative expenses for the three months ended March 31, 2024 were $756,118 compared to $723,271 for the three months ended March 31, 2023. Such increase was primarily due to a higher allowance for expected credit losses in the three months ended March 31, 2024 of $340,000, compared to $300,000 in the three months ended March 31, 2023, partially offset by a decrease in stock compensation expense related to the Company’s equity incentive programs.
Previous report
Nine months ended March 31, 2024 versus nine months ended March 31, 2023
Previous report
Revenues - Revenues from contracts with customers for the nine months ended March 31, 2024 were $2,065,858 compared to $2,733,951 for the nine months ended March 31, 2023. Such decrease was primarily due tovarious macroeconomic and regulatory factors including the negative impact of new utility regulations in the State of California that we believe has caused a temporary economic disincentive for residential utility customers to acquire ourenergy storage systems since the December 2022 enactment date and continuing through the nine months ended March 31, 2024.
Previous report
General and Administrative Expense - General and administrative expenses for the nine months ended March 31, 2024 were $2,085,976 compared to $2,716,428 for the nine months ended March 31, 2023. Such decrease was due to a reduction in stock compensation expense related to the Company’s equity incentive programs, partially offset by a higher allowance for expected credit losses in the nine months ended March 31, 2024 of $670,000, compared to $380,000 in the nine months ended March 31, 2023.
Previous report
Other Income and Expense - Interest income for the nine months ended March 31, 2024 was $28,946 compared to zero for the nine months ended March 31, 2023. This increase was due to rising money market rates which have enabled the Company to earn interest on its investable cash in the nine months ended March 31, 2024. Interest expense for the nine months ended March 31, 2024 was zero compared to $4,134 for the nine months ended March 31, 2023. This decrease resulted from the conversion of our 2018 and 2021 convertible notes in conjunction with the closing of our public equity offering in August 2022.
Previous report
Operating activities. Net cash used in operating activities in the nine months ended March 31, 2024 was $988,827 compared to $650,600 in the nine months ended, March 31, 2023, reflecting a modest decrease in the impact of changes in working capital on net operating cash flow in the current fiscal year period.
Previous report
Financing activities. Net cash provided by financing activities in the nine months ended March 31, 2024 was zero, compared to $3,780,405 in the nine months ended March 31, 2023. As further discussed below, our net cash provided by financing activities in the nine months ended March 31, 2023 was entirely attributable to the successful completion of an underwritten public offering of our equity securities in early August 2022.
Previous report
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 $1,120,035, including accrued interest, automatically 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, the Company fully eliminated its convertible debt.
Previous report
In calendar year 2022, we experienced some negative impact of the COVID-19 pandemic on the sales of our assembled energy storage systems, primarily through a group of wholesale dealers and installers located in California. We continue to monitor COVID-19, but do not believe it will have a material unfavorable impact to our future financial performance at this time.
Reworded paragraphs (11)
Previous wording
In May 2019, we completed a public offering of 3,500,000 shares of our common stock at an offering price of $1.00 per share for gross proceeds of $3.5 million pursuant to Regulation A of the Securities Act. We used the proceeds of the offering to ramp up production, marketing, and sales of our NV14 product line. In that regard, we 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. As of the current date, we have had successful installations of our products in the additional States of Arizona, Utah, Colorado, Wyoming, Texas, Oklahoma, Missouri, Tennessee, Alabama, Georgia, Florida, and Puerto Rico.
Current wording
In May 2019, we completed a public offering of 3,500,000 shares of our common stock at an offering price of $1.00 per share for gross proceeds of $3.5 million pursuant to Regulation A of the Securities Act. We used the proceeds of the offering 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. As of the current date, we have had successful installations of our products in the additional States of Arizona, Utah, Colorado, Wyoming, Texas, Oklahoma, Missouri, Tennessee, Alabama, Georgia, Florida, and Puerto Rico.
Previous wording
On April 14, 2023, California implemented Net Energy Metering 3 (NEM3) for subsequent new solar installations. NEM3 reduces the amount of NEM credit for each kilowatt (KW) of solar power sent to the utility from a rate of approximately $0.20 per KW to $0.09 per KW (each Utility varies). NEM3 effectively increases the average solar Return of Investment (ROI) from 5-6 years to 10-12 years (each Utility varies). Effectively, the Company believes that solar installation in California currently makes little financial sense without also including a battery system. Installing NeoVolta nets a ROI of 4-6 years. We estimate that NEM3 reduced our sales from the enactment date in December 2022 continuing through the recently competed quarter ended March 31, 2024, as solar installers worked off their permitted NEM2 installs. We expect our sales to gradually increase going forward.
Current wording
On April 14, 2023, California implemented Net Energy Metering 3 (NEM3) for subsequent new solar installations. NEM3 reduces the amount of NEM credit for each kilowatt (KW) of solar power sent to the utility from a rate of approximately $0.20 per KW to $0.09 per KW (each Utility varies). NEM3 effectively increases the average solar Return of Investment (ROI) from 5-6 years to 10-12 years (each Utility varies). Effectively, the Company believes that solar installation in California currently makes little financial sense without also including a battery system. Installing NeoVolta nets a ROI of 4-6 years. NEM3 reduced our sales from December 2022 until very recently as solar installers worked off their permitted NEM2 installs. We expect our sales to ultimately increase going forward.
Previous wording
The following discussion reflects the Company’s revenues and expenses for the three and nine month periods ended March 31, 2024 and 2023, as reported in our financial statements included in Item 1.
Current wording
The following discussion reflects the Company’s revenues and expenses for the three month periods ended September 30, 2024 and 2023, as reported in our financial statements included in Item 1.
Previous wording
Revenues - Revenues from contracts with customers for the three months ended March 31, 2024 were $283,900 compared to $629,010 for the three months ended March 31, 2023. Such decrease was primarily due tovarious macroeconomic and regulatory factors including the negative impact of new utility regulations in the State of California that we believe has caused a temporary economic disincentive for residential utility customers to acquire ourenergy storage systems since the December 2022 enactment date and continuing through the three months ended March 31, 2024.
Current wording
Revenues - Revenues from contracts with customers for the three months ended September 30, 2024 were $590,236 compared to $764,130 for the three months ended September 30, 2023. Such decrease was primarily due tothe impact of various macroeconomic factors, such as relatively high interest rates, and regulatory factors, such as utility regulations in the State of California that we believe may have temporarily caused an economic disadvantage for residential utility customers to acquire ourenergy storage systems not only prior to the April 2023 effective date of those regulations, but also subsequently, as certain implications of them because better known in the marketplace.
Previous wording
Cost of Goods Sold - Cost of goods sold for the nine months ended March 31, 2024 were $1,572,668 compared to $2,302,380 for the nine months ended March 31, 2023. 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 period. Due to efficiencies that we have realized from taking over responsibility for manufacturing of our products from a contract operator since last year, we have improved gross profit to $493,190 in the nine months ended March 31, 2024 compared to $431,571 in the nine months ended March 31, 2023.
Current wording
Cost of Goods Sold - Cost of goods sold for the three months ended September 30, 2024 were $497,389 compared to $642,958 for the three months ended September 30, 2023. 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 16% in both periods.
Previous wording
Research and Development Expense - Research and development expenses for the three months ended March 31, 2024 were $10,392 compared to $1,290 for the three months ended March 31, 2023. Such fluctuation was largely due to timing differences in the level of the Company’s recent product development efforts.
Current wording
Research and Development Expense - Research and development expenses for the three months ended September 30, 2024 were $8,617 compared to zero for the three months ended September 30, 2023. Such fluctuation was largely due to timing differences in the level of the Company’s recent product development efforts.
Previous wording
Other Income and Expense - Interest income for the three months ended March 31, 2024 was $10,892 compared to zero for the three months ended March 31, 2023. This increase was due to rising money market rates which have enabled the Company to earn interest on its investable cash in the three months ended March 31, 2024.
Current wording
Other Income and Expense - Interest income for the three months ended September 30, 2024 was $1,395 compared to $5,273 for the three months ended September 30, 2023. This decrease was due to the Company’s lower level of investable cash in the three months ended September 30, 2024.
Previous wording
Net Loss - Net loss for the three months ended March 31, 2024 was $589,473 compared to $632,812 for the three months ended March 31, 2023, representing the aggregate of the various revenue and expense categories indicated above. The Company has not recognized any income tax benefit for these net losses due to the uncertainty of its ultimate realization.
Current wording
Net Loss - Net loss for the three months ended September 30, 2024 was $964,494 compared to $428,715 for the three months ended September 30, 2023, representing the aggregate of the various revenue and expense categories indicated above. The Company has not recognized any income tax benefit for these net losses due to the uncertainty of its ultimate realization.
Previous wording
As of March 31, 2024, we had a cash balance of approximately $1.0 million and net working capital of approximately $5.1 million. Currently, we are not generating a break-even level of net operating cash flow from our net sales. However, we anticipate that demand for our products will ultimately increase over time and that we will have sufficient cash to operate for at least the next 12 months.
Current wording
As of September 30, 2024, we had a cash balance of approximately $0.4 million and net working capital of approximately $3.9 million. Currently, we are not generating a break-even level of net operating cash flow from our net sales. However, we anticipate that demand for our products will ultimately increase over time and that, in conjunction with our recently obtained line of credit noted above, we will have sufficient cash to operate for at least the next 12 months.
Previous wording
In April 2023, we made a 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”) units. 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 two employees of our contract manufacturer who previously performed contract manufacturing services for us. We are expecting to hire additional “assemblers” in the fairly near future.
Current wording
In April 2023, we made a 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”) units. 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.
Previous wording
Additionally, we continue to monitor current international developments occurring in Ukraine and Israel. However, we do not believe that they will have a significant impact on either the domestic markets for our products or the international supply chains for our product components, which are largely sourced from Asia.
Current wording
We continue to monitor current international developments occurring in Ukraine and Israel. However, we do not believe that they will have a significant impact on either the domestic markets for our products or the international supply chains for our product components, which are largely sourced from Asis.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Cost of Goods Sold - Cost of goods sold for the three months ended March 31, 2024 were $117,755 compared to $537,261 for the three months ended March 31, 2023. 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 period. The resulting improvement in our reported gross profit in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, however, was largely due to the reversal in the three months ended March 31, 2024 of an inadvertent overcharge of $93,000 that was made to Cost of goods sold in the three months ended December 31, 2023.
Previous report — wording carried elsewhere
Research and Development Expense - Research and development expenses for the nine months ended March 31, 2024 were $10,392 compared to $29,936 for the nine months ended March 31, 2023. Such fluctuation was largely due to timing differences in the level of the Company’s recent product development efforts.
Previous report — wording carried elsewhere
Net Loss - Net loss for the nine months ended March 31, 2024 was $1,574,232 compared to $2,318,927 for the nine months ended March 31, 2023, representing the aggregate of the various revenue and expense categories indicated above. The Company has not recognized any income tax benefit for these net losses due to the uncertainty of its ultimate realization.
Previous report — wording carried elsewhere
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.