NeoVolta Inc.

Notes to Consolidated Financial Statements

June 30, 2026

Description of Business – NeoVolta Inc. (“we”, “our” or the “Company”) is a Nevada corporation, which was formed on March 5, 2018. We are a rapidly-growing U.S.-based energy technology company delivering scalable energy storage solutions. We are presently transitioning from being solely a manufacturer of high-performance energy storage systems for residential and commercial use into an integrated energy solutions leader. In August 2022, the Company completed an underwritten public offering of its equity securities resulting in our common stock and warrants becoming initially listed on a national exchange (see Note 4).

Basis of Presentation – The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).

*Principles of Consolidation -*The consolidated financial statements include the accounts of the Company and its two subsidiaries, NeoVolta Energy I, LLC and NeoVolta Power, LLC. The noncontrolling interests of our minority partner in the latter subsidiary, which are nonredeemable, will be accounted for as a separate line within stockholders’ equity whenever our minority partner has achieved the return thresholds required in order to receive equity distributions attributable to its ownership interest as a minority partner in NVP (see Note 8). All intercompany accounts and transactions have been eliminated in consolidation.

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 such as inventory.

Cash and Cash Equivalents – The Company considers all highly liquid accounts with original maturities of three months or less at the date of acquisition to be cash equivalents. Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $250,000. As of June 30, 2026, the Company maintained all of its accounts at one bank and the combined balances of all accounts at this bank were in excess of the FDIC insurance limit by $25,101,975.

*Restricted Cash * – Restricted cash consists of funds in a separate bank account that are restricted as to withdrawal or use under the terms of a bank credit agreement (see Note 3).

Inventory – Inventory consists of batteries and inverters purchased from Asian suppliers and delivered to a location near the Company’s offices, for assembly into ESS units. Inventory is stated at the lower of cost or net realizable value, cost being determined using the first-in, first-out (FIFO) method. The Company periodically reviews the value of items in inventory and records an allowance to reduce the carrying value of inventory to the lower of cost or net realizable value based on its assessment of market conditions, inventory turnover and current stock levels. Inventory write-downs are charged to cost of goods sold. The following table presents the components of inventory, respectively, as of June 30, 2026 and 2025 (net of obsolescence reserve as of June 30, 2026 of $1,119,013):

*Property and Equipment *– The Company capitalizes the cost of property and equipment and depreciates it over their estimated useful lives ranging from 1 to 7 years. No depreciation is recognized on construction in progress until the project is completed and placed in service.

Revenue Recognition – The Company recognizes revenue in accordance with Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). Revenues are recognized when control of the promised goods is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods or services. Revenue is recognized based on the following five step model:

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. In the year ended June 30, 2026, three such dealers represented approximately 39%,15% and 11% of the Company’s revenues, however, no other dealers accounted for more than 10% of the revenues in such period. Those same three dealers, net of expected credit losses, represented approximately 45%,31% and 14% of the Company’s net accounts receivable as of June 30, 2026, however, no other dealers accounted for more than 10% of the accounts receivable as of June 30, 2026. Our concentration in these few customers represents a significant exposure to us in the event that our accounts receivable from one or more such customers ultimately prove to be uncollectable. In the year ended June 30, 2025, two such dealers represented approximately 41% and 23% of the Company’s revenues. Under its present contracts with customers, the Company’s sole performance obligation is the delivery of products to the customer. Since all of the Company’s revenue is currently generated from the sales of similar products delivered to customers in domestic locations, no further disaggregation of revenue information for the years ended June 30, 2026 and 2025 is provided.

*Allowance for Expected Credit Losses *– The Company recognizes an allowance for credit losses based on themeasurement of lifetime credit losses expected to be incurred in the realization of a customer’s account. As of June 30, 2026 and 2025, our allowance for expected credit losses for accounts receivable was $2,961,000 and $314,200, respectively. There were no direct write-offs of accounts receivable in either year. The year-over-year increase was primarily caused by recent tax law changes and other regulatory developments which have had a major impact on the economic viability of many of our legacy customers who are distributors and installers of our residential and small commercial energy storage products. Additionally, we recognized anonoperating credit loss on a note receivable in the amount of $1,537,150, as further described below (see “Note Receivable”).

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 consisting of 2 years for software and information technology,5 years for licensed technology, and 10 years for owned technology.

Depreciation Expense – Depreciation expense applicable to property and equipment which is placed in service is recognized on a straight-line basis over their estimated useful lives ranging from 1 to 7 years.

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.

*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.

Income Taxes – The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of reported assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company must then assess the likelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

The Company accounts for uncertain tax positions in accordance with the provisions of Accounting Standards Codification (“ASC”) 740-10 which prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken, or expected to be taken, on its tax return. The Company evaluates and records any uncertain tax positions based on the amount that management deems is more likely than not to be sustained upon examination and ultimate settlement with the tax authorities in the tax jurisdictions in which it operates.

Stock Compensation Expense – Employee and non-employee share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period.

Fair 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; and

Level 3 - Inputs are unobservable and considered significant to fair value measurement.

As more fully described in Note 5, 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.

Loss Per Common Share – Basic loss per common share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. As of June 30, 2026, the Company had total outstanding common stock equivalents of 5,503,209 shares as follows: (i)1,986,362 shares related to restricted stock units granted to officers and other employees since April 2024; (ii)1,081,150 shares related to warrants issued to investors in the public offering completed in August 2022; (iii)2,385,697 shares for Non-Qualified Stock Options granted to employees in August and December 2025 and to two executives in February 2026 in exchange for their surrendered RSUs; and (iv)50,000 shares related to restricted stock units granted to an officer in March 2022 (see Note 4).

Note Receivable – Note receivable consists of a loan in the original principal amount of $1,500,000 to a private solar project development company. The loan is in the form of a 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, by which time it was originally expected to be monetized in a corporate transaction between us and the borrower. Since the time the note was executed in December 2025, the priorities of the parties have shifted, therefore, it is not probable that such a transaction will be completed by that date. Accordingly, we have recognized anonoperating credit loss as of June 30, 2026 in the amount of $1,537,150, representing the principal of the note and previously accrued interest.

Related Parties - The Company accounts for related party transactions in accordance with ASC 850 (“Related Party Disclosures”). A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that it might be prevented from fully pursuing its own separate interests is also a related party.

Research and Development Costs – Research and development costs are expensed as incurred.

Use of Estimates – Management has made a number of estimates and assumptions in preparing these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.

Segment Information – Management has determined that the Company’s present operations constituteone operating and 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 that are reviewed less regularly by our CODM include research and development expenses and interest expense. Our CODM has not asked to be provided with specific asset information for his review.

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 2023-09,*Income Taxes (Topic 740): Improvements to Income Tax Disclosures,*and ASU 2024-03,Income Statement – Reporting Comprehensive Income – Expense disaggregation disclosures (Topic 220-40): Disaggregation of Income Statement Expenses, will not have a material impact on the Company’s financial position or results of operations upon adoption. We are currently evaluating the impact of adopting these standards on our financial statement disclosures. 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 consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern has been dependent upon our ability to obtain the necessary debt and equity financing to continue operations and the attainment of profitable operations. With the proceeds of our public and private equity financings in the year ended June 30, 2026 (see Note 4) and our existing financial resources, we believe we will have sufficient cash to operate for at least the next 12 months.

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 known as NeoVolta Power, LLC (“NVP”), a Delaware entity, to jointly own and operate a utility-scale battery manufacturing facility in the State of Georgia. Pursuant to these agreements, as amended in April 2026, 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 (subject to service-based vesting and forfeiture provisions), which is being accounted for as a capital contribution based on the estimated fair value of its services contributed to the joint venture. The noncontrolling interests of our minority partner, which are nonredeemable, has been accounted for in Paid-in capital as of June 30, 2026, and will be accounted for as a separate line within stockholders’ equity whenever our minority partner has achieved the return thresholds required in order to receive equity distributions attributable to its ownership interest as a minority partner in NVP.

We engaged a professional valuation consulting firm to perform an independent valuation of our minority partner’s contribution to NVP based on the estimated fair value of its services contributed to the joint venture using the backsolve method, a standard acceptable fair value methodology for valuations of this scope and type. The professional valuation consulting firm has calculated the fair value of our minority partner’s contribution to NVP as of the date of the evaluation to be approximately $1,422,000. The major assumptions underlying such valuation were: (i) The equity value breakeven points were determined based on the expected total cash capital contribution amount of $40 million in the formation agreements; (ii) Time to liquidity of 5 years was based on management’s expectations; (iii) The risk-free interest rate of 4.01% was based on U.S. Treasury Notes of comparable maturity; and (iv) The volatility rate of 93% was estimated based on the observed volatility for guideline companies.

Under the terms of the joint venture agreements, we made our initial capital contribution of $7,000,000 of cash to NVP in January 2026 and an additional capital contribution of $8,000,000 of cash in May 2026, in order to fund the startup of construction on the battery manufacturing facility. As of June 30, 2026, $6,364,051 of our initial cash capital contributions has been spent as capital expenditures on the manufacturing facility and is reflected on our consolidated balance sheet, mostly in the caption for Construction in progress. As of June 30, 2026, approximately $1,296,000 has been spent on administrative expenses for the joint venture and is included in our consolidated statement of operations in General and administrative expenses. Our minority partner is not required to make cash contributions and is instead contributing technical services to the joint venture based on its project development and supply chain expertise. As of June 30, 2026, we have recorded an initial capital contribution for the estimated fair value of our minority partner’s services to NVP, in the amount of $568,800. This amount was based on an estimate of the fair value of our minority partner’s services to be contributed to NVP, as performed by an independent valuation firm. In recording the initial capital contribution of our minority partner, we have recorded an offsetting entry to capitalize such amount in Construction in Progress on our Consolidated Balance Sheet, as all of our minority partner’s services performed for NVP up to that date, consisting of installation, testing, and validation of the equipment against technical specifications, were provided prior to commissioning of the equipment being purchased under the Asset Purchase Agreement and was determined in accordance with the underlying provisions of a Technical Services Agreement between NVP and our minority partner, as more fully described in Note 8.

The plant is being constructed in phases with the initial phase expected to be completed at the end of our fiscal 2027 first quarter, leading to limited production of batteries for sale to customers. The plant is located in an industrial structure that was originally leased by our minority partner in December 2025 and has been assigned to NVP, for all intents and purposes, effective in June 2026, as it is presently under the control and direction of NVP while a formal assignment from the landlord is underway (see Note 8).

Further, we anticipate making additional cash capital contributions to NVP through June 30, 2027 in total amounts of up to $25,000,000, pursuant to the joint venture agreements, to fund equipment purchases, working capital requirements and other items as may be needed by NVP. We presently anticipate funding our additional capital contributions largely from the proceeds of our underwritten public equity offering in the gross amount of $26,326,721 which closed in May 2026 (see Note 4) and, possibly, through future equity and debt financings, subject to market conditions. However, there can be no assurance that we will be successful in raising sufficient proceeds from any future financings in order to fully satisfy our obligations for the additional capital contributions to NVP. 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 NVP, the parent company of the same foreign entity will be permitted to bring in one or more new members to fund such additional capital contributions which would dilute our 80% majority ownership of NVP.

On September 3, 2024, we entered into an agreement with a newly formed financing entity whereby we obtained a line of credit for borrowings of up to $5,000,000. Under this agreement, we are obligated to make periodic 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 2028. In February 2026, we made full payment to the lender of our outstanding borrowings of $633,538, plus accrued interest of $100,779, and the line of credit borrowing arrangement was terminated.

In the month of November 2024, we initiated short-term borrowings from a commercial accounts receivable lender under a loan agreement allowing for borrowings, secured by certain property interests, of up to $4,000,000. In the year ended June 30, 2026, we made borrowings from this lender to finance customer shipments and related costs in the total amount of $6,697,612. The lender charged a placement fee of 1% on each borrowing and assessed interest at the rate of 2.5% per month on the outstanding borrowings. In the year ended June 30, 2026, we repaid $7,597,341 of such borrowings, including accrued interest and fees, and made three conversions of loan principal and accrued interest totaling $1,703,494 into equity (see Note 4) resulting in no remaining balance as of June 30, 2026 and the borrowing arrangement was terminated. Based on the fair value of our common stock at the time of the three conversions, we recognized non-operating losses on the debt exchanges during the year ended June 30, 2026 in the total amount of $1,266,030.

On April 8, 2026, we entered into a one-year revolving line of credit agreement with our depository bank providing for borrowings of up to $3,000,000 at an annual interest rate of 2% above the applicable secured overnight financing rate (“SOFR”), plus an adjustment of up to 0.1% per annum. The proceeds of any borrowings made under this credit agreement are being used for working capital purposes. In conjunction with thecredit agreement, we were required to transfer $3,150,000 of cash, representing 105% of the total credit amount, into a restricted account at our depository bank as collateral. As of June 30, 2026, we had outstanding borrowings and letters of credit of $1,120,000 and $1,095,424, respectively, leaving an available balance of $784,576 (see Note 9).

Common Stock –In order to provide funding for our capital contributions to the battery manufacturing joint venture and other needs, we completed several public and private offerings of our common stock in the year ended June 30, 2026, generating total net proceeds of approximately $48,600,000, as further disclosed below.

In November 2025, the Company entered into subscription agreements for a private equity offering with an accredited investor group under which the Company issued an initial tranche of 1,200,000 shares of its common stock to the investor group in December 2025 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 used the proceeds of this private offering to meet working capital needs and for other general corporate purposes.

In January 2026, we closed a securities purchase agreement with a group of institutional investors, 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 $9,301,844, after deducting offering expenses payable by the Company. We are using the net proceeds from this offering for working capital and general corporate purposes.

In February 2026, we closed the second tranche of our private equity offering in which we sold a total of 4,000,000 shares of our common stock at an offering price of $2.50 per share to an infrastructure investment firm, resulting in gross proceeds to the Company in the amount of $10,000,000 (see Note 9). We 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 (see Note 2), and are using the remaining proceeds from this offering for working capital and general corporate purposes.

In May 2026, we closed an underwritten public offering, pursuant to which the Company issued a total of 13,896,946 shares, including the underwriter’s overallotment of 1,701,824 shares of our common stock at an offering price of $2.05 per share. The gross proceeds to the Company from the underwritten public offering were $28,488,739 and the net proceeds were $26,326,721, after deducting offering expenses payable by the Company. We plan to use the net proceeds from this offering largely to make additional capital contributions to our 80%-owned joint venture in the coming year and for general corporate purposes.

In the year ended June 30, 2026, the Company entered into three voluntary exchange agreements with the commercial lender providing short-term financing for customer shipments and related costs whereby we issued a total of 648,065 shares of our common stock having a fair value of $2,969,524 to the lender in exchange for total reductions in our outstanding principal loan balance amounting to $1,703,494. The Company recognized non-operating losses on these three exchanges in the total amount of $1,266,030 (see Note 3).

In February 2025, the Company closed a private equity offering under which the Company issued a total of 543,500 shares of its common stock to the investors at an offering price of $2.00 per share resulting in gross proceeds to the Company in the amount of $1,087,000. The Company is using the proceeds of this private offering to meet working capital needs and for other general corporate purposes.

In August 2022, the Company completed an underwritten public offering of its equity securities in the form of Units with each Unit consisting of one share of common stock and one warrant (each, a “Warrant” and collectively, the “Warrants”) to purchase one share of common stock at an exercise price of $4.00 per share. The shares of common stock and the Warrants comprising the Units were immediately separated at closing of the offering and each is now independently listed on the NASDAQ Capital Market. Each Warrant became exercisable on the date of issuance and will expire five years from the date of issuance.

In the underwritten public offering, a total of 1,121,250 Units, including exercise of the underwriter’s overallotment option, were sold at an offering price to the public of $4.00 per Unit. The gross proceeds of the offering were $4,485,000 and the net proceeds, after deduction of underwriting discounts and other offering costs were approximately $3,780,000. The Company also granted the underwriter non-tradeable warrants to purchase a total of 58,500 shares of common stock at an exercise price of $4.40 per share for a period of five years.

Warrants – The Warrants for a total of 1,179,750 shares of common stock issued to investors and the underwriters are exercisable at any time after their original issuance and at any time up to the date that is five years after their original issuance, or August 1, 2027. The Warrants may be exercised upon payment of the exercise price in cash on or prior to the expiration date. Under the terms of the Warrant Agreement, we must use our best efforts to maintain the effectiveness of the registration statement and current prospectus relating to common stock issuable upon exercise of the Warrants until the expiration of the Warrants. If we fail to maintain the effectiveness of the registration statement and current prospectus relating to the common stock issuable upon exercise of the Warrants, the holders of the Warrants shall have the right to exercise the Warrants solely via a cashless exercise feature provided for in the Warrants, until such time as there is an effective registration statement and current prospectus. In June 2024, the Company filed an updated registration statement applicable to the exercise of the Warrants.

The following table presents activity with respect to the Company’s warrants for the years ended June 30, 2026 and 2025:

These warrants were issued in conjunction with an underwritten public equity offering, therefore, there was no employee or non-employee compensation expense recognized. In November 2024, the underwriter elected to exercise all 58,500 Warrants at an exercise price of $4.40 per share, via a cashless exercise, as permitted under the warrant agreement, resulting in the issuance of 15,312 shares of our common stock. Additionally, the holders of publicly issued Warrants to purchase an aggregate of 40,100 shares of our common stock elected to exercise their Warrants by a cash payment of a total of $160,400 resulting in the issuance of the underlying shares of our common stock in December 2024.

Stock Compensation Expense – Under our shareholder-approved 2019 Stock Option Plan, we make awards of Restricted Stock Units (“RSUs”), Non-Qualified Stock Options, and direct grants of Common Stock to our officers, employees, directors, and various consultants, as further described below.

In the year ended June 30, 2026, we made our initial issuance of 174,000 Non-Qualified Stock Options to a group of non-executive employees to purchase shares of common stock at the then-current stock price in the range of $3.04 -3.60 per share. These options are exercisable for a period of 5 years from the date of issuance and will become vested on a ratable basis over a period of 3 years from the date of issuance. Using the Black-Scholes valuation model, and assuming expected volatility in the range of 78.6-81.5% and current interest rate in the range of 4.1-4.3%, we calculated that the total fair value of these options at issuance was approximately $406,000 and are amortizing this total amount to stock compensation expense, as adjusted for forfeitures, on a straight-line basis over the 3-year vesting period of the options.

On February 23, 2026, we issued Non-Qualified Stock Options to two executive employees to purchase a value equivalent total of 2,232,697 shares of common stock at the current stock price of $3.54 per share, in exchange for surrender of their right to receive a total of 1,520,000 shares of previously-issued RSUs, which will vest at the rate of 25% per year for 4 years, subject to their continued service to the Company on each vesting date, with no incremental cost arising. Using the Black-Scholes valuation model, and assuming expected volatility of 81.5% and current interest rate of 4.1%, we calculated that the total fair value of these options at issuance was approximately $5,380,800 and the remaining unrecognized compensation cost of the surrendered RSUs is being expensed on a straight-line basis over the 4-year vesting period of the options.

The following table presents activity with respect to our Non-Qualified Stock Options issued to officers and employees in the year ended June 30, 2026:

In April 2024, we entered into an employment agreement with our Chief Executive Officer (“CEO”), providing for an initial term through June 30, 2027, which will be automatically renewed for additional one-year terms unless either party chooses not to renew it. Pursuant to the agreement, our CEO received an initial equity grant equal to 1,280,000 RSUs. As approved by the Compensation Committee of the Company’s Board of Directors, our CEO surrendered all of these RSUs and earned performance grants of approximately $1.0 million on February 23, 2026, in exchange for newly-issued options to purchase a total of 1,880,166 shares of common stock, at the current stock price of $3.54 per share, which will vest at the rate of 25% per year for 4 years, subject to his continued service to the Company on each vesting date. Such number of options was calculated using a methodology intended to replicate the equivalent value of the cancelled RSUs and the remaining unrecognized compensation cost of RSUs of approximately $1.6 million is being expensed on a straight-line basis over the 4-year vesting period of the options.

In February 2025, we entered into an amended and restated employment agreement with our then Chief Financial Officer (“CFO”). The initial 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 CFO an award of 240,000 RSUs vesting in four annual installments on each anniversary. As approved by the Compensation Committee of the Company’s Board of Directors, our CFO surrendered all of these RSUs on February 23, 2026, in exchange for newly-issued options to purchase a total of 352,531 shares of common stock, at the current stock price of $3.54 per share, which will vest at the rate of 25% per year for 4 years, subject to his continued service to the Company on each vesting date. Such number of options was calculated using a methodology intended to replicate the equivalent value of the cancelled RSUs and the remaining unrecognized compensation cost of RSUs of approximately $0.6 million is being expensed on a straight-line basis over the 4-year vesting period of the options. We engaged a new CFO on May 18, 2026, and our former CFO was named Executive Vice President, without any change to his employment contract.

In May 2026, we entered into an employment agreement with our new CFO. Pursuant to the agreement, we issued our new CFO an award of 1,000,000 RSUs which vests as follows:33% on the one-year anniversary of the effective date, and the remaining 67% in eight quarterly installments thereafter, subject to her continued employment through each vesting date. We are amortizing the grant date value of the shares in the amount of $1,600,000 over the vesting period. She also received a performance-based RSU award equal to 25,000 shares, which will vest upon the successful completion of customer payments to NVP exceeding $1,000,000. We will recognize the grant date value of the award whenever the NVP sales collection threshold is deemed probable of being reached.

In January 2025, we entered into an employment agreement with our former Chief Business Officer, who resigned from the Company on January 31, 2026. Pursuant to the agreement, we issued an award of 150,000 RSUs to him vesting in three annual installments, of which 50,000 RSUs had been vested at the time of his resignation and the remaining 100,000 RSUs were surrendered. In October 2025, we entered into employment agreements with our new Chief Operating Officer 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 twelve quarterly installments (see Note 5). Additionally, we entered into employment agreements with two other individuals in June 2024 and October 2024, and we issued them a total of 136,362 RSUs vesting in four annual installments. We have calculated the grant date value of all RSU 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 years ended June 30, 2026 and 2025 in the amounts of $1,993,054 and $1,011,405, respectively.

In February 2025, we entered into a referral agreement with a marketing company to market our products to qualified solar and energy storage system installers. The term of the referral agreement ends on December 31, 2026. Pursuant to the agreement, the only compensation that the marketing company will be entitled to receive will be through the issuance of shares of our common stock in exchange for reaching specified target levels of product sales, up to a maximum total of 2,000,000 shares for reaching a total of 2,500 units sold and paid for. In accordance with ASC 718, we are accounting for this agreement based on our periodic assessments of the probability of reaching such target levels. Based on that approach, we have recognized stock compensation expense in the years ended June 30, 2026 and 2025, in the amounts ofzero and $165,000, respectively.

Since August 2022, we have provided annual stock compensation to each of our independent directors in the amount of $65,000 to be paid quarterly with not less than 70% of such amount paid in shares of our common stock, calculated based on the share price at the end of such prior fiscal quarter, and up to 30% paid in cash, with such final amounts to be determined by each director. In the years ended June 30, 2026 and 2025, we booked annual compensation expense of $195,000 (of which $175,500 will be settled through the issuance of shares) for our three independent directors under this plan.

In the year ended June 30, 2026, we recognized total non-cash stock compensation expense of $4,963,440 as follows: (i) $1,993,054 for the amortized value of the RSUs granted to our executive officers and key employees; (ii) $175,500 for the amortized value of the portion of the compensation plan for our independent directors that is attributable to stock; (iii) $723,394 for the value of the shares issuable to a distribution company pursuant to a distribution agreement and to various consultants; (iv) $327,352 for the amortized value of the Non-Qualified Stock Options issued to non-executive employees since August 2025 and to two executives in February 2026 in exchange for their surrendered RSUs; and (v) $1,744,140 for the amortized value of the 1,700,000 shares issued to two related parties under contracts for strategic services, as further described in Note 8. There was a total of 2,137,522 shares of our common stock that were issued to various grantees for services in the year ended June 30, 2026, of which 184,700 shares were previously expensed in the year ended June 30, 2025.

In the year ended June 30, 2025, we recognized total non-cash stock compensation expense of $2,101,488 as follows: (i) $1,011,405 for the amortized value of the RSUs granted to our three officers and two other individuals; (ii) $175,500 for the amortized value of the portion of the new compensation plan for our independent directors that is attributable to stock; (iii) $515,498 for the fair value of the shares of our common stock issuable to two consultants for their advisory services in the area of energy regulatory and marketing matters; (iv) $234,085 for the grant date value of 78,565 shares of common stock to be issued to a distributor as a sales incentive pursuant to a February 2025 distribution agreement; and (v) $165,000 for the amortized value of the shares potentially issuable to a marketing company pursuant to a February 2025 referral agreement. There was a total of 289,870 shares of our common stock that were issued to various grantees for services in the year ended June 30, 2025, of which 125,620 shares were previously expensed in the year ended June 30, 2024.

Other Matters – In February 2019, the Company’s Board of Directors approved the establishment of a new 2019 Stock Option Plan with an authorization for the issuance of up to 2,500,000 shares of common stock. In December 2024, the Plan was amended to increase the number of shares of common stock authorized for issuance by 5,000,000 shares. The Plan is designed to provide for future discretionary grants of stock options, stock awards and stock unit awards to key employees and non-employee directors. As of June 30, 2026, we have made total net awards of 5,272,746 shares under the Plan as follows: (i)2,411,362 shares for the RSUs granted to our executive officers and two non-executive recipients, as noted above; (ii)209,943 shares for the services of our three independent directors in the years ended June 30, 2025, 2024 and 2023, pursuant to the compensation plan adopted for independent directors in August 2022; and (iii)265,744 shares granted to various consultants for their contracted services; and (iv)2,385,697 net shares for Non-Qualified Stock Options to purchase common stock granted to employees beginning in August 2025 and to two executives in February 2026 in exchange for surrendered RSUs. As of June 30, 2026, there were a total of 2,227,254 shares available for future issuance under the Plan.

In October 2025, we closedan 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 the second half of 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 bythe 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 new product. 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 recognized when estimable 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. For the tangible property and equipment acquired, we began recognizing depreciation expense from the acquisition date and have recorded depreciation expense in the amount of $21,819 as of June 30, 2026. For the intellectual property acquired, we began recognizing amortization expense from the acquisition date and have recorded amortization expense in the amount of $333,859 as of June 30, 2026. 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:

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, who has since resigned, in that capacity. 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 twelve quarterly installments (see Note 4).

The Company is subject to United States federal income taxes at an approximate rate of 21%. The Company has no taxable income or taxable losses sourced from any foreign operations. The reconciliation of the provision for income taxes at the federal statutory rate, compared to the Company’s income tax expense as reported, is as follows (rounded to the nearest $00):

Significant components of the Company’s deferred tax assets at the currently enacted corporate income tax rate are as follows (rounded to nearest $00):

The Company has a cumulative tax operating loss carry forward as of June 30, 2026 of approximately $22,521,000, with an indefinite expiration period.

In July 2025, Congress passed, and the President signed into law the One Big Beautiful Bill Act (“OBBBA*”).*Pursuant to the provisions of the OBBBA, we expect that our new utility-scale battery manufacturing joint venture plant in the State of Georgia to be eligible for the Advanced Manufacturing Tax Credit under Internal Revenue Code Section 45X, thus potentially reducing our periodic future consolidated tax expense, and to enable our customers to claim the Clean Electricity Investment Tax Credit under Internal Revenue Code Section 48E, once the facility goes into production (see Note 2).

Effective February 1, 2025, we relocated our corporate and manufacturing office space to a facility in Poway, California, under a sublease agreement with the sublandlord, at a base rental of $18,638 per month. We have accounted for the lease agreement as an operating lease under ASU 2016-02,Leases (Topic 842) and capitalized the present value of future lease obligations and amortized 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 term 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. As a result of the extension, which was accounted for as a modification, we remeasured the lease liability using the 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 year ended June 30, 2026. The rate implicit in the extended sublease agreement was not readily determinable and, therefore, we used the Company’s incremental borrowing rate of 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 sublease agreement are approximately $1.1 million as of June 30, 2026, exclusive of operating expenses and obligations under the existing sublease agreement.

Effective June 1, 2026, NVP assumed the responsibility, for all intents and purposes, for a long-term lease on an industrial structure in Pendergrass, Georgia, that was originally leased by our joint venture partner from the landlord in December 2025. In accordance with the lease terms, NVP began making monthly payments on the lease in June 2026 in the amount of $120,218 per month, which will increase each year to as much as $155,555 per month at the time of the lease expiration on May 31, 2033, with an additional three-year renewal option available, which is presently uncommitted, As a result of the assumption, NVP recorded an operating lease liability and right-of-use asset in the amount of $7,196,086 using the Company’s discount rate as of June 1, 2026. For that discount rate, we used our incremental borrowing rate of 14.25% based on the Company’s borrowing capability over a similar term of the assumed lease agreement utilizing the effects of full collateralization. Future undiscounted lease payments under the assumed lease agreement are approximately $11.4 million as of June 30, 2026, exclusive of operating expenses and obligations under the assumed lease agreement (see Note 2).

Total future operating lease minimum payments under our operating lease obligations for both our California and Georgia facilities, together with their total present values as of June 30, 2026, are summarized as follows:

We are dependent on our two main component vendors for our supplies of batteries, inverters and other raw materials and the inability of these single-source suppliers to deliver necessary components of our products according to our schedule and at prices, quality levels and volumes acceptable to us, or our inability to efficiently manage these components, could have a material adverse effect on our consolidated financial condition and operating results. 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, which we have continued to pursue in any subsequent periods of tariff abatements or reductions since then, in order to reduce the impact of the tariffs.

In conjunction with the closing of our Asset Purchase Agreement with Neubau Energy Inc. in October 2025, we granted the sellers the rightto 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 5).

From time to time in the ordinary course of our business, the Company may be involved in legal proceedings, the outcomes of which may not be determinable. The Company is not involved in any legal proceedings at this time. The results of litigation are inherently unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. We are not able to estimate an aggregate amount or range of reasonably possible losses for those legal matters for which losses are not probable and estimable.

As contemplated in the formation of our joint venture in the utility-scale battery manufacturing business disclosed in Note 2, we have recently entered into agreements with various related parties for the provision of specialized strategic-level services to either the Company or NVP, as further described below.

Technical Services Agreement

On March 20, 2026, NVP and our minority partner entered into a Technical Services Agreement whereby our partner is contributing its expertise intechnical services regarding battery energy storage systems to the joint venture as consideration for its 20% equity interest in NVP. The initial term of the Agreement is for two years, and may be extended by mutual agreement of both parties. In accordance with the Agreement, the scope of services being provided by our minority partner to NVP consists of so-called “initial technical and commissioning support” services, which are those services provided prior to commissioning of the equipment being simultaneously purchased by NVP from our minority partner under the Asset Purchase Agreement (see below), as well as “continuing” services, which are those services provided following the commissioning of such equipment.

As indicated in Note 2, we are accounting for our minority partner’s contribution to NVP based on the estimated fair value of its services contributed to the joint venture. We engaged a professional valuation consulting firm to perform an independent valuation using a standard acceptable fair value methodology for valuations of this scope and type and that firm has calculated the fair value of our minority partner’s contribution to NVP as of the date of the Agreement to be approximately $1,422,000. The major assumptions underlying such valuation were: (i) The equity value breakeven points were determined from capital contribution amounts in the formation agreements; (ii) Time to liquidity was based on management’s expectations; (iii) The risk-free interest rate was based on U.S. Treasury Notes of comparable maturity; and (iv) The volatility was estimated based on the observed volatility for guideline companies.

In recognition of our minority partner’s services performed for NVP, we are recognizing a periodic portion of such amount as an equity contribution during the initial term of the Agreement. Accordingly, we have recorded a contribution for the initial recognition through June 30, 2026 in the amount of $568,800, with an offsetting entry to capitalize such amount in Construction in Progress on our Consolidated Balance Sheet, as all of our minority partner’s services performed for NVP up to that date, consisting of installation, testing, and validation of the equipment against technical specifications, were provided prior to commissioning of the equipment being purchased under the Asset Purchase Agreement.

Asset Purchase Agreement

On April 15, 2026, NVP, as buyer, and our minority partner, as seller, entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) pursuant to which the seller agreed to sell, convey, assign, transfer, and deliver to NVP certain manufacturing equipment used to manufacture battery energy storage systems. The aggregate purchase price consists of (i) an equipment price of $9,000,000, payable in milestone-based installments ($2,000,000 upon shipment of equipment, $3,000,000 upon delivery to the facility, and $4,000,000 upon completion of commissioning), and (ii) the excess portion of corresponding U.S. tariffs, customs duties, and related customs bond expenses arising from the import of the equipment. Title to the equipment transfers to NVP upon the seller’s receipt of the full purchase price. As of June 30, 2026, we have an outstanding payable balance to our minority partner under this Agreement of $233,910.

Management Services Agreement

On April 20, 2026, the Company entered into a Management Services Agreement with an affiliate of the minority partner in our NVP joint venture, pursuant to which that affiliate agreed to provide sales and marketing coordination services to the Company in connection with our commercial and industrial battery energy storage business. As consideration for the services, we issued the 1,200,000 shares of our common stock with a grant date value of $3,744,000 to the affiliate which vests in four equal semi-annual installments of 300,000 shares each on the 6-month, 12-month, 18-month, and 24-month anniversaries of the effective date.

Consulting Services Agreement

On May 12, 2026, the Company entered into a Consulting Services Agreement (the “Consulting Agreement”) with an infrastructure investment firm which invested $10,000,000 for the purchase of 4,000,000 shares of our common stock in the second tranche of our private equity offering in February 2026 (see Note 4), pursuant to which we engaged the investor to provide offtake origination and related advisory services in connection with our battery energy storage manufacturing operations being undertaken through NVP. Under the Consulting Agreement, the investor has provided, and will continue to provide, strategic advisory services to the Company, including services previously rendered in connection with the formation and development of NVP (the “Pre-Signing Services”) and ongoing offtake origination services (the “Offtake Services”). The Offtake Services include identifying and evaluating potential offtake counterparties, advising on the structuring of offtake arrangements and assisting in the negotiation of term sheets, letters of intent and definitive offtake agreements.

As consideration for the Pre-Signing Services, the Offtake Services and the entry into the Consulting Agreement, we have issued the investor 500,000 shares of our common stock (the “Signing Fee”) with a grant date value of $1,380,000, which we have recorded as stock compensation expense. In addition, the investor is entitled to receive a success fee (the “Offtake Fee”) for each qualifying offtake agreement attributable to its direct and material causal contribution, calculated as a percentage of gross revenue ranging from 3% to 5%, on a sliding scale based on capacity, received by us for energy storage equipment and associated hardware under the applicable offtake agreement. The maximum Offtake Fee payable with respect to any single offtake agreement is $3,000,000, and multiple offtake agreements with the same counterparty or as part of a single project are aggregated for purposes of determining applicable capacity thresholds and fee percentages. Each Offtake Fee is payable, at the mutual election of the Company and the investor, in cash, shares of our common stock (or prefunded warrants), or a combination thereof. As of June 30, 2026, there were no offtake agreements that had been executed or were probable of being executed.

Letter Agreement

On May 12, 2026, the Company also entered into a Letter Agreement (the “Letter Agreement”) with the same infrastructure investment firm, pursuant to which we granted the investor certain preemptive rights, registration rights, and board observation rights. During the period ending December 31, 2027, the investor has a preemptive right to participate in any financing by the Company, the proceeds of which are intended to fund any capital contribution to NVP, on the same terms and conditions as such financing is offered to other investors. The preemptive rights do not apply to financings for acquisitions or strategic transactions unrelated to NVP. The investor has the right, upon written notice to the Company, to designate a representative to attend all board and committee meetings as a non-voting observer, with the same notice of meetings and access to materials provided to directors. The Letter Agreement terminates at such time as the investor holds fewer than 250,000 shares purchased pursuant to the aforementioned private equity offering that was completed in February 2026. In accordance with the Letter Agreement, we offered the infrastructure investment firm the right of first refusal to participate in our underwritten public offering in May 2026, however, the firm agreed to not exercise its preemptive rights on this offering in exchange for a waiver fee in the amount of $250,000, which we paid in June 2026.

Effective July 1, 2026, we entered into consulting agreements with two separate investor relations firms whereby they agreed to provide strategic advisory, business development, and market intelligence services to the Company for a period of one year. In accordance with the agreements, we issued a combined total of 550,000 shares of our common stock to the two firms with a grant date value of $1,529,000, which we will amortize to expense over the one-year service period. Also, we issued 5,000 shares of our common stock to a previously retained consultant in settlement of a dispute.

On July 6, 2026, we arranged for the issuance of an irrevocable letter of credit to a vendor under ourrevolving line of credit agreement with our depository bank in the amount of $715,712. This letter of credit expires on June 30, 2027, and reduces the current availability under ourrevolving line of credit agreement to $68,864. In order to create availability for an anticipated additional letter of credit, we also repaid$868,000 under our revolving line of credit agreement with a bank (see Note 3). The additional letter of credit in the same amount was issued on July 31, 2026 to the landlord of the lease assumed by NVP from our minority partner in June 2026 (see Note 2).

On August 4, 2026, we issued 150,000 shares of our common stock to two officers due to the vesting of a portion of their RSU awards granted in October 2025, which were previously expensed in the year ended June 30, 2026 (see Notes 4 and 5).

On September 4, 2026, we entered into a note and security agreement with a private lending group for an amortizing, secured debt facility with an initial tranche of $20 million, less a 5% original issue discount of $1,000,000, and an optional tranche of an additional $10 million. Under the terms of this note, we are required to make principal payments in the greater of $1,250,000 per month, or 7.5% of the of the “value traded” in the Company’s common stock for the previous month, subject to a maximum amount of $2,000,000 per month. Outstanding borrowings under the note will accrue interest at the rate of 10% per annum and the note has a scheduled maturity date of no later than March 3, 2028. We have issued five-year warrants to the lenders to purchase an aggregate of 1,454,545 shares of our common stock at an exercise price of $3.30 per share, subject to adjustment in the event of certain issuances below the exercise price.