NeoVolta Inc.

Previous wording

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”).

Current wording

This information should be 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”).

Previous wording

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. Financial Statements”.

Current wording

Certain capitalized terms 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”.

Previous wording

We are a designer, manufacturer, and seller of high-end Energy Storage Systems (or ESS), primarily our NeoVolta NV14, NV14-K, and NV-24, which can store and use energy via batteries and an inverter at residential or commercial sites. We were founded to identify new ways to leverage emerging technologies with the dynamic changes that are taking place in the energy delivery space. We primarily market and sell our products directly to our certified solar installers and solar equipment distributors. We are also pursuing agreements with residential developers, commercial developers, and other commercial opportunities. Because we are purely dedicated to energy solar systems, virtually all 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.

Current wording

We are a designer, manufacturer, and seller of high-end Energy Storage Systems (or ESS), primarily our NeoVolta NV14, NV14-K, and NV-24, which can store and use energy via batteries and an inverter at residential or commercial sites. We were founded to identify new ways to leverage emerging technologies with the dynamic changes that are taking place in the energy delivery space. We primarily market and sell our products directly to our certified solar installers and solar equipment distributors. We are also pursuing agreements with residential developers, commercial developers, and other commercial opportunities. Because we are purely dedicated to energy 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.

Previous wording

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.

Current wording

The following discussion 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.

Previous wording

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 31, 2024. 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 of $90,000.

Current wording

Cost of Goods Sold - 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 31, 2025. 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 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.

Previous wording

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.

Current wording

General and Administrative 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 programs.

Previous wording

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.

Current wording

Research and Development 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.

Previous wording

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.

Current wording

Depreciation and Amortization 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.

Previous wording

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. Interest 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.

Current wording

Other Income and Expense – 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.

Previous wording

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 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 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. The Company has not recognized any income tax benefit for these net losses due to the uncertainty of its ultimate realization.

Previous wording

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 tothe 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.

Current wording

Revenues - Revenues 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 tothe 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.

Previous wording

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 31, 2024. 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 of $90,000.

Current wording

Cost of Goods Sold - 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 31, 2025. 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 25% in each period, in accordance with our customary expectations.

Previous wording

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.

Current wording

General and Administrative 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 programs.

Previous wording

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.

Current wording

Research and Development 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.

Previous wording

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

Current wording

Depreciation and Amortization 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.

Previous wording

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.

Current wording

Other Income and Expense – 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.

Previous wording

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 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 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. The Company has not recognized any income tax benefit for these net losses due to the uncertainty of its ultimate realization.

Previous wording

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.

Current wording

Operating activities. 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.

Previous wording

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.

Current wording

Investing activities. 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.

Previous wording

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.

Current wording

Financing activities. 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 2026; 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.

Previous wording

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. 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.

Current wording

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.

Previous wording

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. 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 registered direct offering in January 2026 (see “Other Developments**”)**, we will have sufficient cash to operate for at least the next 12 months.

Current wording

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).

Previous wording

In January 2026, we also 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.

Current wording

In January 2026, we executed a series of joint venture agreements with the U.S. 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 an 80% ownership interest in the joint venture company, and the U.S. affiliate of the foreign entity has a 20% ownership interest.

Previous wording

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.

Current wording

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 agreements. 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.

Previous 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 Asia.

Current wording

We continue to monitor current international developments occurring in Iran and Ukraine. 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.

Previous wording

Presently, our two main raw material components, batteries and inverters, are imported from different suppliers in China and, until recently, were subject to fairly low tariff rates that had been in effect for several years. Beginning in April 2025, the 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.

Current wording

Presently, our two main raw material components, batteries and inverters, are imported from different suppliers in China and, until recently, were subject to fairly low tariff rates that had been in effect for several years. Beginning in April 2025, the Trump Administration implemented a significant 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.

Previous wording

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. See “Note 1. 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.

Current wording

Our discussion and analysis 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. See “Note 1. 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.