NeoVolta quarterly loss widens to $7.73M
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
NeoVolta Inc. (NEOV) reported quarterly revenue of $2,786,782, down from $6,650,258 in the three months ended September 30, 2025, and a net loss of $7,733,158 versus $1,243,322. Its new third-party ownership platform generated $2,702,839; management said federal tax-law changes hurt legacy product sales and prompted the shift.
Operating cash used was $6,617,414 and investing cash used was $7,349,818; financing provided $17,394,375. As of September 30, 2026, cash, restricted cash and cash equivalents totaled $28,779,118, and the secured note had $20,000,000 in principal. Based on recent trading volumes, NeoVolta expects volume-based principal payments to repay the note in full within 12 months. It has up to $19,000,000 in additional NVP contributions through June 30, 2027; if it cannot raise the funds, the foreign partner’s parent may bring in new members, diluting NeoVolta’s 80% stake. Management believes current resources will cover financing, investing and operating needs for at least 12 months.
Management concluded disclosure controls were ineffective at September 30, 2026 because of a material weakness in segregation of duties, and said additional personnel are required for remediation. On November 11, 2026, the board approved a December 31 fiscal year-end and a transition period from July 1 through December 31, 2026.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- None.
Negative
- Major pointDisclosure controls were ineffective at September 30, 2026 because of a material weakness in segregation of duties.
- Moderate pointRevenue fell to $2,786,782 from $6,650,258 in the comparable quarter.
- Moderate pointNet loss rose to $7,733,158 from $1,243,322 in the prior-year quarter.
- Moderate pointOperating cash use was $6,617,414, versus $2,494,069 a year earlier.
- Moderate point. Forward-looking: it has not happened yet and may not happen.Unfunded NVP contributions up to $19,000,000 could dilute NeoVolta’s 80% stake. 11% of market cap
Filing Explained
The loan already requires monthly principal payments and pledges substantially all assets; warrant exercise, not registration, would add shares.
The 10-Q reports that lenders received warrants for 1,454,545 shares alongside the outstanding
The warrants have a
Principal payments begin
Key Figures
Key Terms
third-party ownership platform financial
contract asset financial
volume-based principal amortization financial
embedded derivative financial
noncontrolling interests financial
material weakness regulatory
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were NEOV’s revenue and net loss for the quarter ended September 30, 2026?
How much cash did NEOV use in operations, and how much cash did it have?
When do NEOV’s secured note payments start, and how are they calculated?
How much in estimated SGIP rebates did NEOV record, and when are they typically collected?
When does NEOV’s fiscal year end after the 2026 change?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the Quarterly Period Ended
or
For the transition period from ________________ to ______________
Commission File Number:
(Exact name of registrant as specified in its charter)
|
(State or other jurisdiction of incorporation) |
(I.R.S. Employer Identification No.) |
|
|
||
|
(Address of principal executive offices) |
(zip code) |
Registrant’s telephone number, including
area code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol (s) | Name of each exchange on which registered |
| The Stock Market LLC | ||
| The Stock Market LLC |
Indicate by check mark whether the Registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No
The number of shares outstanding of Common Stock, par value $0.001 per share, as of November 12, 2026, was shares.
NEOVOLTA, INC.
FORM 10-Q
SEPTEMBER 30, 2026
INDEX
| Page | |
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | 3 |
| PART I. FINANCIAL INFORMATION | 4 |
|
Item 1. Financial Statements |
4 |
|
Consolidated Balance Sheets as of September 30, 2026 and June 30, 2026 (Unaudited) |
4 |
| Consolidated Statements of Operations for the three months ended September 30, 2026 and 2025 (Unaudited) | 5 |
|
Consolidated Statements of Stockholders’ Equity for the three months ended September 30, 2026 and 2025 (Unaudited) |
6 |
|
Consolidated Statements of Cash Flows for the three months ended September 30, 2026 and 2025 (Unaudited) |
7 |
| Notes to Consolidated Financial Statements (Unaudited) | 8 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 29 |
| Item 4. Controls and Procedures | 29 |
|
PART II. OTHER INFORMATION
|
30 |
| Item 1. Legal Proceedings | 30 |
| Item 1A. Risk Factors | 30 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 31 |
| Item 3. Defaults Upon Senior Securities | 31 |
| Item 4. Mine Safety Disclosures | 31 |
| Item 5. Other Information | 31 |
| Item 6. Exhibits | 32 |
| Signatures | 33 |
| 2 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We make forward-looking statements under the “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of this Report. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Report.
You should read the matters described in, and incorporated by reference in, “Risk Factors” and the other cautionary statements made in this Report, as being applicable to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the forward-looking statements in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements.
All forward-looking statements speak only at the date of the filing of this Quarterly Report. You should not rely upon forward-looking statements as predictions of future events. The reader should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Quarterly Report are reasonable, we provide no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our actual results to differ materially from our expectations under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the year ended June 30, 2026, as filed with the SEC on September 23, 2026. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. We do not undertake any obligation to update or revise publicly any forward-looking statements except as required by law, including the securities laws of the United States and the rules and regulations of the SEC.
| 3 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NEOVOLTA, INC.
Consolidated Balance Sheets
(Unaudited)
| September 30, | June 30, | |||||||
| 2026 | 2026 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses (including prepaid inventory in amounts of $ | ||||||||
| Contract assets | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Construction in progress | ||||||||
| Leasehold improvements, net | ||||||||
| Other property and equipment | ||||||||
| Net property and equipment | ||||||||
| Intellectual property (net of accumulated amortization of $ | ||||||||
| Other assets: | ||||||||
| Lease right-of-use assets, net | ||||||||
| Prepaid service fee under third party platform | ||||||||
| Restricted cash and other noncurrent assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable - other | $ | $ | ||||||
| Accounts payable - related party | ||||||||
| Accrued liabilities | ||||||||
| Lease liabilities | ||||||||
| Short-term debt payable | ||||||||
| Derivative liability | ||||||||
| Total current liabilities | ||||||||
| Long-term debt payable | ||||||||
| Lease liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 7) | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, $ par value, shares authorized, shares and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to unaudited financial statements.
| 4 |
NEOVOLTA, INC.
Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Revenues from contracts with customers: | $ | $ | ||||||
| Cost of revenues | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| General and administrative | ||||||||
| Research and development | ||||||||
| Depreciation and amortization | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Nonoperating credit loss and other | ( | ) | ||||||
| Interest income | ||||||||
| Total other income (expense) | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Weighted average shares outstanding - basic and diluted | ||||||||
| Net loss per share - basic and diluted | $ | ) | $ | ) | ||||
See accompanying notes to unaudited financial statements.
| 5 |
NEOVOLTA, INC.
Consolidated Statements of Stockholders’ Equity
Three Months Ended September 30, 2026 and 2025
(Unaudited)
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock compensation expense | ||||||||||||||||||||
| Common stock warrants issued in secured debt financing | – | |||||||||||||||||||
| Other equity contribution | – | |||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock compensation expense | ||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
See accompanying notes to unaudited financial statements.
| 6 |
NEOVOLTA, INC.
Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operations: | ||||||||
| Stock compensation expense | ||||||||
| Amortization of debt discount | ||||||||
| Amortization of ROU asset | ||||||||
| Depreciation and amortization expense | ||||||||
| Provision for expected credit losses/bad debt expense | ||||||||
| Inventory obsolescence reserve | ||||||||
| Loss on derivative | ||||||||
| Changes in other assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Contract assets | ( | ) | ||||||
| Other current assets | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Other asset | ( | ) | ||||||
| Accrued liabilities | ||||||||
| Lease liability | ( | ) | ( | ) | ||||
| Net cash flows used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Additions to construction in progress | ( | ) | ||||||
| Additions to other property & equipment | ( | ) | ||||||
| Net cash flows used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Borrowing under secured debt facility (including allocated value of imbedded common stock warrants and derivatives) | ||||||||
| Borrowings under line of credit | ||||||||
| Borrowings under short-term notes payable | ||||||||
| Repayments of short-term notes payable | ( | ) | ( | ) | ||||
| Payment of debt financing costs | ( | ) | ||||||
| Advance received for stock subscription | ||||||||
| Net cash flows provided by financing activities | ||||||||
| Net increase in cash and restricted cash | ||||||||
| Cash, restricted cash and cash equivalents at beginning of period | ||||||||
| Cash, restricted cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | ||||||||
| Supplemental disclosures of financing and investing activities | ||||||||
| Transfers from construction in progress to other property and equipment | $ | $ | ||||||
| Warrant issued for debt discount | ||||||||
| Derivative liability recognized on debt issuance | ||||||||
| Other equity contribution for services | ||||||||
| Deferred debt issuance costs allocated to note and warrant | ||||||||
See accompanying notes to unaudited financial statements.
| 7 |
NEOVOLTA, INC.
Notes to Consolidated Financial Statements
(Unaudited)
(1) Business and Summary of Significant Accounting Policies
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 5).
Interim Financial Information – The Company has prepared the accompanying consolidated financial statements, without audit, in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, these consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the Company’s consolidated financial position as of September 30, 2026, the results of its consolidated operations for the three month periods ended September 30, 2026 and 2025, the changes in its consolidated stockholders’ equity for the three month periods ended September 30, 2026 and 2025, and consolidated cash flows for the three month periods ended September 30, 2026 and 2025. The consolidated balance sheet as of June 30, 2026 has been derived from the Company’s June 30, 2026 consolidated financial statements that were audited by an independent registered public accounting firm but does not include all of the information and footnotes required for complete annual financial statements. The consolidated results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. These consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended June 30, 2026, as filed with the SEC on September 23, 2026.
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 (see Note 2). The noncontrolling interests in the latter subsidiary, which are nonredeemable, will be accounted for as a separate line within stockholders’ equity when recognized in accordance with the vesting provisions of the underlying Technical Services Agreement pertaining to the services being performed by our minority partner as its capital contribution to 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 September 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 $
| 8 |
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 4). The following is a reconciliation of cash and restricted cash amounts by financial statement caption.
| September 30, | June 30, | |||||||
| 2026 | 2026 | |||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Restricted cash in noncurrent assets | ||||||||
| Total | $ | $ | ||||||
Inventory – Raw materials consist of batteries, inverters and assembly parts purchased from Asian suppliers and delivered to a location near the Company’s offices. Finished goods consist of assembled energy storage systems and a new proprietary battery storage module developed with technology acquired in an asset acquisition in October 2025 (see Note 6). Inventory in transit largely relates to our utility-scale battery manufacturing joint venture in Georgia and consists of containers for utility-scale batteries in the process of being shipped to that location (see Note 2).
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 as of September 30, 2026 and June 30, 2026 (net of an obsolescence
reserve of $
| September 30, | June 30, | |||||||
| 2026 | 2026 | |||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Inventory in transit | ||||||||
| Total | $ | $ | ||||||
Property and Equipment
– The Company capitalizes the cost of property and equipment, including leasehold improvements, and depreciates it over their
estimated useful lives ranging from
| 9 |
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:
| · | Identification of the contract with a customer | |
| · | Identification of the performance obligations in the contract | |
| · | Determination of the transaction price | |
| · | Allocation of the transaction price to the performance obligations in the contract | |
| · | Recognition of revenue when, or as, the Company satisfies a performance obligation |
Historically, the Company
has generated revenues from contracts with customers, consisting of a relatively small number of wholesale dealers, distributors and installers,
in California and several other states. However, recent federal tax law changes have had a major impact on the economic viability of many
of our legacy customers, causing us to develop a new business model, beginning in the first quarter of fiscal 2027, of selling fully-installed
residential energy projects, which use our residential energy products as the main component, under a third-party ownership platform.
As further described in Note 3, we recognize revenue under this new platform, including any components of variable consideration, upon
reaching the substantial completion phase of each separate project, at which point the project has been installed and tested in accordance
with all applicable contractual requirements. Of the Company’s total revenues in the three months ended September 30, 2026, approximately
37% were processed through this platform and derived from a single wholesale customer and approximately 60% were processed through this
platform and derived from a state-sponsored rebate program. In contrast, four customers under our legacy model represented approximately
Allowance for Expected
Credit Losses – The Company recognizes an allowance for expected credit losses whenever a loss is expected to be incurred
in the realization of a customer’s account. As of September 30, 2026 and June 30, 2026, our allowance for expected credit losses
for accounts receivable was $
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
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
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.
| 10 |
Long Term Leases – The Company accounts for long term operating and finance 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.
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.
We have accounted for our acquisition of tangible and intangible assets from another company in October 2025, as described in Note 6, by allocating the total purchase price paid at closing to the fair value of the assets acquired.
Derivative Liability - The Company bifurcates embedded features from their host contracts when required under ASC 815. Bifurcated derivative liabilities are measured at fair value at each reporting date, with changes in fair value recognized in earnings.
Note Receivable –
Note receivable consists of a loan in the original principal amount of $
| 11 |
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 consolidated 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 constitute 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 include interest expense and research and development expenses. 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. We are currently evaluating the impact of recently issued and not yet effective standards, including ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense disaggregation disclosures (Topic 220-40): Disaggregation of Income Statement Expenses, on our financial statement disclosures. We have considered all other recently issued accounting pronouncements and do not believe the adoption of such pronouncements will have a material impact on our consolidated 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 remaining proceeds of our public and private equity financings in the year ended June 30, 2026 and our existing financial resources, we believe that we will be able to fully cover all of our financing, investing and operating needs for at least the 12 months following the issuance of these financial statements, including satisfying our anticipated capital contribution obligations to NVP discussed in Note 2 – NeoVolta Power, LLC below.
| 12 |
(2) NeoVolta Power, LLC
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 September 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 $
Under the terms of the joint
venture agreements, we made our initial capital contribution of $
With the completion of commissioning, NVP expects to transition to final certifications and production and ramp up thereafter. The company is currently focused on scaling product output and executing customer deliveries across commercial, industrial and utility-scale energy storage markets. 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 effective in June 2026, as it is presently under the control and direction of NVP (see Note 7).
We
anticipate making additional cash capital contributions to NVP through June 30, 2027 in total amounts of up to $
| 13 |
(3) Third Party Ownership Platform
In June 2026, we entered into a Platform Services Agreement (the “Agreement”) with a private development company to establish and operate a third-party ownership (“TPO”) platform for the sale of fully-installed residential energy projects, in which the Company’s residential energy products are a primary component. The purpose of the TPO platform is to enable us to establish a new business model and customer base which initially leverages a state-sponsored program serving low-income neighborhoods in California. We have contracted with a licensed, third-party installer for the installation of our residential energy projects in batches, under a ten-year installation workmanship warranty, mostly using the Company’s residential energy products as a component. As each batch is completed, we contract to sell the projects to a wholesale customer, who enters into retail power purchase agreements with the homeowners. The Company will be responsible for any product defects not covered by the installer’s workmanship warranty.
Based on the TPO
arrangement, we agreed to purchase an initial batch of residential energy storage projects from our licensed installer with an
aggregate purchase price of $
We are accounting for the sale of our residential energy projects on the TPO platform in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Based on the provisions of this accounting standard, we are considered to be the principal under the TPO arrangement as we have the ultimate decision-making control over all significant matters of determination as well as other factors, such as our primary responsibility for fulfillment, inventory risk and pricing discretion. For each TPO project, the sales consideration consists of two components; (a) An amount stipulated in our sales contract with the customer; and (b) An expected rebate from the State of California through the Self-Generation Incentive Program (“SGIP”), which is considered a variable form of consideration determined by the State. In addition to paying the upfront purchase cost of the installed residential energy projects to the installer, we are obligated to pay origination fees to both the development company, which operates our TPO platform, and to another company, which qualifies each installed project for an SGIP rebate, for each project sold.
We have reported the sales
of the completed TPO projects to our single wholesale customer, including the SGIP rebates, in our Consolidated Statement of Operations
for the three months ended September 30, 2026. Of our total recognized revenues under the TPO platform in the amount $
As provided for in the Agreement,
we are making contractual payments to the private development company of $
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(4) Debt
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 $
We have issued five-year warrants
to the lenders to purchase an aggregate of
We exclude the down-round feature when assessing whether the warrants are indexed to our common stock. If the feature is triggered, we will measure its effect as the increase in the warrants’ fair value resulting from the reduced exercise price. The feature was not triggered during the three months ended September 30, 2026.
Under a registration rights agreement, we must register the warrant shares for resale and keep the registration effective, subject to limited grace periods, until the shares may be sold without restriction under Rule 144. If we fail to do so, we must pay the holders, in cash, 1.0% of the market value of the registrable shares for each 30-day period until the failure is cured. The payments are not capped, so the maximum potential amount cannot be determined. A failure to maintain an effective registration statement for either the warrant shares or our at-the-market offering would also be an event of default under the loan agreement, permitting the lenders to accelerate the notes, with interest on the accelerated balance at the 18% default rate. We account for these provisions as a registration payment arrangement under ASC 825-20 and recognized no liability as of September 30, 2026 because payment was not probable. The resale registration statement was filed and declared effective in October 2026.
| 15 |
Upon closing of the note and
security agreement, we calculated the fair value of the detachable warrants as of the closing date using the Black Scholes model with
an expected volatility of %, a risk-free interest rate of %, an expected term of years and expected dividends. We determined
that the warrants are not liabilities within the scope of ASC 480-10, are indexed to our own stock and meet the conditions for equity
classification in ASC 815-40. Accordingly, the warrants are classified in stockholders’ equity and are not subsequently remeasured.
The volume-based principal amortization feature of the note is an embedded derivative that we bifurcated from the note under ASC 815-15
because it is not clearly and closely related to the debt host. We first recorded the embedded derivative at its fair value of $
The following table summarizes the carrying amount of the note and the components of interest expense for the three months ended September 30, 2026:
| Principal amount | $ | |||
| Less: unamortized discount and issuance costs | ( | ) | ||
| Net carrying amount of the note | $ | |||
| Contractual interest at 10% | $ | |||
| Amortization of discount and issuance costs | ||||
| Total interest expense | $ |
In
April 2026, we entered into a one-year revolving line of credit agreement with our depository bank providing for borrowings of up to $
In November 2024, we initiated
short-term borrowings from a commercial accounts receivable lender under a loan agreement allowing borrowings, secured by certain property
interests, of up to a principal amount of $
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(5) Equity
Common Stock –
We completed several public and private offerings of our common stock in the last three quarters of the year ended June 30, 2026, generating
total net proceeds of approximately $
In August 2022, the Company
completed an underwritten public offering of its equity securities in the form of Units with
Warrants – As
of September 30, 2026, we had a total of
The following table presents activity with respect to both tranches of the Company’s warrants for the three months ended September 30, 2026:
| Number | Wtd. Avg. | Wtd. Avg. | Aggregate | |||||||||||||
| of | Exercise | Remaining | Intrinsic | |||||||||||||
| Shares | Price | Term (Yrs.) | Value | |||||||||||||
| Outstanding at June 30, 2026 | $ | $ | ||||||||||||||
| Warrants issued | – | |||||||||||||||
| Warrants exercised/forfeited | – | – | ||||||||||||||
| Outstanding at September 30, 2026 | $ | $ | ||||||||||||||
| Exercisable at September 30, 2026 | $ | $ | ||||||||||||||
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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 three months ended
September 30, 2026, we made an issuance of Non-Qualified Stock Options to a non-executive employee to purchase shares of common
stock at the then-current stock price of $ per share. As with our previously issued Non-Qualified Stock Options to non-executive employees,
these options are exercisable for a period of years from the date of issuance and will become vested on a ratable basis over a period
of years from the date of issuance. Using the Black-Scholes valuation model, and assuming expected volatility of % and current interest
rate of %, we calculated that the total fair value of these options at issuance was approximately $
On February 23, 2026, we issued
Non-Qualified Stock Options to two executive employees to purchase a value equivalent total of shares of common stock at the
current stock price of $ per share, in exchange for surrender of their right to receive a total of shares of previously-issued
RSUs, which will vest at the rate of % per year for 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 % and current interest
rate of %, we calculated that the total fair value of these options at issuance was approximately $
The following table presents activity with respect to our Non-Qualified Stock Options issued to officers and employees in the three months ended September 30, 2026:
| Number | Wtd. Avg. | Wtd. Avg. | Aggregate | |||||||||||||
| of | Exercise | Remaining | Intrinsic | |||||||||||||
| Shares | Price | Term (Yrs.) | Value | |||||||||||||
| Outstanding at June 30, 2026 | $ | $ | ||||||||||||||
| Options issued | ||||||||||||||||
| Options exercised/forfeited | – | |||||||||||||||
| Outstanding at September 30, 2026 | $ | $ | ||||||||||||||
| Exercisable at September 30, 2026 | $ | $ | ||||||||||||||
In April 2024, we entered into an employment agreement with a new Chief Executive Officer (“CEO”), providing for an initial term extending 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 on February 23, 2026, in exchange for newly-issued options to purchase a total of 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.
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In February 2025, we entered into an amended and restated employment agreement with our then Chief Financial Officer (“CFO”) through December 31, 2027 and is automatically renewable for additional one-year terms unless either party chooses not to renew the agreement. Pursuant to the agreement, we issued our him 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, he surrendered all of these RSUs on February 23, 2026, in exchange for newly-issued options to purchase a total of 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 RSUs which vests as follows: We are amortizing the grant date value of the RSUs in the amount of $ over the vesting period. She also received a performance-based RSU award equal to 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 the three months ended September 30, 2026, we granted a total of RSUs to three non-executive employees which vest as follows: We are amortizing the total grant date fair value of the RSUs in the amount of $ over the vesting period. As of September 30, 2026, we are recognizing amortization on a total of RSUs granted to both executive and non-executive employees with a weighted-average grant date value of $.
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 shares of our common stock to the two firms with a grant date value of $
In conjunction with the closing of an asset purchase in October 2025, as described in Note 6, we retained the two principals and granted each of them an award of RSUs ( RSUs in total), vesting over three years, of which a total of shares were issued in the three months ended September 30, 2026.
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. As of September 30, 2026 and 2025, we booked an accrual
of $
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In the three months ended September 30, 2026, we recognized total non-cash stock compensation expense of $ as follows: (i) $ for the amortized value of the RSUs granted to our executive and non-executive employees; (ii) $ for the amortized value of the stock portion of the compensation plan for our independent directors; (iii) $ for the amortized value of the Non-Qualified Stock Options issued to executive and non-executive employees; (iv) $ for the amortized value of the shares issued to the two investor relations firms noted above; and (v) $ for the amortized value of other contractually issued shares, mostly pertaining to a related party under a contract for strategic services, as further described in Note 8. There was a total of shares of our common stock that were issued to various grantees for services in the three months ended September 30, 2026, of which shares were previously expensed in the year ended June 30, 2026.
In the three months ended September 30, 2025, we recognized total non-cash stock compensation expense of $ as follows: (i) $ for the amortized value of the RSUs granted to our three executive officers; (ii) $ for the amortized value of the portion of the new compensation plan for our independent directors that is attributable to stock; (iii) $ for the value of the shares issuable to a distribution company pursuant to a April 2025 distribution agreement; and (iv) $ for the amortized value of the Non-Qualified Stock Options issued to non-executive employees in August 2025. There was a total of shares of our common stock that were issued to various grantees for services in the three months ended September 30, 2025, all of which were previously expensed in the year ended June 30, 2025.
Other Matters – In February 2019, the Company’s Board of Directors approved the establishment of the 2019 Stock Plan (“Plan”) with an authorization for the issuance of up to shares of common stock. In December 2024, the Plan was amended to increase the number of shares of common stock authorized for issuance by shares. The Plan is designed to provide for future discretionary grants of stock options, stock awards and stock unit awards to key employees, consultants, advisors, and non-employee directors. As of September 30, 2026, we have made total net awards of shares under the Plan as follows: (i) shares for the RSUs granted to our executive employees and non-executive employees; (ii) 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; (iii) shares granted to various consultants for their contracted services; and (iv) net shares for Non-Qualified Stock Options to purchase common stock granted to executive and non-executive employees beginning in August 2025. As of September 30, 2026, there were a total shares available for future issuance under the Plan.
(6) Asset Purchase Agreement
In October 2025, we closed
an Asset Purchase Agreement with Neubau Energy Inc. (“Neubau”), a privately-owned company
based in California, and its shareholders, whereby the Company acquired substantially all of Neubau’s assets consisting
mostly of intellectual property and other intangible assets along with a smaller amount of tangible fixed assets, for total consideration
paid at closing of approximately $
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(7) Commitments and Contingencies
Effective June 1, 2026,
NVP assumed the responsibility 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 $
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 September 30, 2026, are summarized as follows:
| Total | ||||
| Year ending June 30, 2027 | $ | |||
| Year ending June 30, 2028 | ||||
| Year ending June 30, 2029 | ||||
| Year ending June 30, 2030 | ||||
| Year ending June 30, 2031 | ||||
| Thereafter | ||||
| Total future minimum lease payments | ||||
| Less amounts representing interest | ( | ) | ||
| Present value of lease liability | ||||
| Current portion of operating lease liability | ( | ) | ||
| Long-term portion of operating lease liability | $ | |||
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In our legacy business, we have been 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 right to receive contingent consideration of up to 4,000,000 additional shares of our common stock if certain sales milestones related to Neubau’s proprietary battery storage product are met within specified time periods through December 31, 2028 (see Note 6).
In conjunction with our recently established third party ownership program, we have an aggregate purchase commitment to a licensed installer to purchase additional projects in the amount of $1,646,944, upon their completion subsequent to September 30, 2026 (see Note 3).
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.
(8) Related Party Transactions
As contemplated in the formation of our joint venture in the utility-scale battery manufacturing business disclosed in Note 2, we have 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 in technical services regarding battery energy storage systems to the joint venture as consideration
for its
| 22 |
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 $
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 recognition in the three months ended September 30,
2026 in the amount of $
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 $
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 shares of our common stock with a grant date value of $
| 23 |
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 $
As consideration for the Pre-Signing
Services, the Offtake Services and the entry into the Consulting Agreement, we have issued the investor shares of our common stock
(the “Signing Fee”) with a grant date value of $
Letter Agreement
(9) Subsequent Events
In October 2026, we issued a total of 89,937 shares of our common stock as follows: (i) 52,437 shares to the three independent members of our Board of Directors as consideration for their services rendered in the year ended June 30, 2026, which were expensed in the year ended June 30, 2026; and (ii) 37,500 shares to an officer due to the vesting of a portion of his RSU awards granted in October 2025, which was expensed in the three months ended September 30, 2026.
On November 11, 2026, our Board of Directors, upon the recommendation and with the approval of the Audit Committee of the Board, approved a change in the Company's fiscal year end from June 30 to December 31. As a result of the change, the Company will have a six-month transition period from July 1, 2026 through December 31, 2026 (the “Transition Period”). The Company intends to file a transition report on Form 10-K covering the Transition Period. The Company's next full fiscal year will begin on January 1, 2027 and end on December 31, 2027.
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| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Introduction
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., 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, 2026, filed with the Securities and Exchange Commission on September 23, 2026 (the “Annual Report”).
Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited financial statements included above under “Part I - Financial Information” - “Item 1. Financial Statements”.
Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” “NEOV”, refer to NeoVolta, Inc. and its consolidated subsidiaries.
In addition, unless the context otherwise requires and for the purposes of this Report only:
| · | “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; | |
| · | “SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and | |
| · | “Securities Act” refers to the Securities Act of 1933, as amended. |
Overview
We are a rapidly-growing U.S.-based energy technology company delivering scalable energy storage solutions. We are presently transitioning from being a storage manufacturer into an integrated energy solutions leader. Since our founding in 2018 solely as a manufacturer of high-performance energy storage systems for residential and small commercial applications, we have evolved into a much more diversified storage technology company. Currently, our strategy is centered around building a multi-market energy solutions platform serving customer markets in the following three areas: (i) Residential; (ii) Commercial & Industrial (“C&I”); and (iii) Utility-Scale.
In January 2026, we formed NeoVolta Power, LLC (“NVP”), a joint venture with the U.S. affiliate of a foreign entity to jointly own and operate a new utility-scale battery manufacturing facility in the State of Georgia. We have an 80% ownership interest in the joint venture company, with the U.S. affiliate of the foreign entity having a 20% ownership interest (subject to service-based vesting and forfeiture provisions). In accordance with the joint venture agreements, as amended in April 2026, we have made initial capital contribution to NVP of $21,000,000 through September 30, 2026 and are obligated to make additional capital contributions of up to $19,000,000 through June 30, 2027. The installation and commissioning of the production equipment in the plant is anticipated to be completed shortly. Upon completion, NVP expects to transition to final certifications and production and ramp up thereafter. The company is currently focused on scaling product output and executing customer deliveries across commercial, industrial and utility-scale energy storage markets. Once production commences, this new facility is anticipated to provide the capacity for us to greatly expand our line of new energy storage products as an integrated energy solutions leader and, if successfully ramped to anticipated production levels, has the potential to generate substantial amounts of both customer revenues and net operating cash flows over an extended period of time. However, there can be no assurance that the facility will achieve its anticipated production capacity or timeline.
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Results of Operations
The following discussion reflects the Company’s revenues and expenses for the three-month periods ended September 30, 2026 and 2025, as reported in our financial statements included in Item 1.
Comparison of three months ended September 30, 2026 versus three months ended September 30, 2025
Revenues - Revenues from contracts with customers for the three months ended September 30, 2026 were $2,786,782 compared to $6,650,258 for the three months ended September 30, 2025. Revenues from our residential energy system sales through a third-party platform for the three months ended September 30, 2026 were $2,702,839 compared to zero for the three months ended September 30, 2025, when we had no such platform in place. Revenues from sales of our residential energy products were $83,943 in the three months ended September 30, 2026 compared to $6,650,258 in the three months ended September 30, 2025, largely due to federal tax law changes which negatively impacted sales of our legacy energy products beginning in calendar year 2026 and led us to implement a shift to a tax-advantaged third-party platform.
Cost of Revenues - Cost of revenues for the three months ended September 30, 2026 were $1,768,895 compared to $5,073,006 for the three months ended September 30, 2025. Cost of revenues from our energy system sales through a third-party platform for the three months ended September 30, 2026 were $1,655,364 compared to zero for the three months ended September 30, 2025, when we had no such platform in place. The cost of revenues from sales of our legacy energy products were $113,531 in the three months ended September 30, 2026 compared to $5,073,006 in the three months ended September 30, 2025, due to the shift to a third-party platform. On a combined basis, gross profits from revenues of our residential energy system sales plus revenues of our residential energy product sales increased to approximately 37% in the three months ended September 30, 2026 from approximately 24% in the three months ended September 30, 2025, due to our aforementioned shift to the new business model.
General and Administrative Expense - General and administrative expenses for the three months ended September 30, 2026 were $7,336,224 compared to $2,374,668 for the three months ended September 30, 2025. The increase of $4,961,556 was primarily due to (i) incremental administrative expenses in NVP of approximately $1,759,000; (ii) approximately $1,312,000 of expenses related to our recently-launched TPO platform, consisting of approximately $451,000 of amortization of prepaid platform services fees and approximately $861,000 of origination fees for the TPO projects that reached substantial completion during the quarter; (iii) higher non-cash stock compensation expenses of approximately $1,104,000 related to increased headcount and other compensation arrangements; and (iv) approximately $786,000 of other increases in corporate expenses, primarily due to higher cash compensation resulting from the hiring of a significant number of new employees.
Research and Development Expense - Research and development expenses for the three months ended September 30, 2026 were $766,928 compared to $56,912 for the three months ended September 30, 2025. Such fluctuation was largely due to the recent acceleration of our new product development efforts.
Depreciation and Amortization Expense - Depreciation and amortization expenses for the three months ended September 30, 2026 were $231,856 compared to zero for the three months ended September 30, 2025. Such fluctuation was largely attributable to our closing of an acquisition of intangible and tangible assets from Neubau Energy Inc., which closed in October 2025.
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Other Income and Expense - Interest expense for the three months ended September 30, 2026 was $521,310 compared to $389,134 for the three months ended September 30, 2025, reflecting a higher carrying cost of newer debt. Nonoperating credit loss in the three months ended September 30, 2026 was $28,955 compared to zero for the three months ended September 30, 2025. Interest income for the three months ended September 30, 2026 was $134,228 compared to $140 for the three months ended September 30, 2025. This increase was due to our higher level of investable cash in the three months ended September 30, 2026.
Net Loss - Net loss for the three months ended September 30, 2026 was $7,733,158 compared to $1,243,322 for the three months ended September 30, 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.
Liquidity and Capital Resources
Operating activities. Net cash used in operating activities in the three months ended September 30, 2026 was $6,617,414 compared to $2,494,069 in the three months ended September 30, 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 recent increases related to NVP and our new TPO business model.
Investing activities. Net cash used in investing activities in the three months ended September 30, 2026 was $7,349,818, compared to zero in the three months ended September 30, 2025. Such fluctuation was largely due to our capital expenditures which began in January 2026 on NVP, a jointly owned utility-scale battery manufacturing facility which is currently in the process of installing and commissioning production equipment in the State of Georgia (see “Other Developments” below).
Financing activities. Net cash provided by financing activities in the three months ended September 30, 2026 was $17,394,375, compared to $2,589,052 in the three months ended September 30, 2025. In September 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, primarily to provide interim working capital financing in conjunction with the anticipated startup of production operation at NVP. In the three months ended September 30, 2025 we made borrowings from prior lenders in the amount of $4,449,549 and repayments in the amount of $2,660,497.
As of September 30, 2026, we had a balance of cash and restricted cash of approximately $28.8 million and net working capital of approximately $13.7 million. Currently, we are not generating a break-even level of net operating cash flow from our net sales. In addition, the volume-based principal repayment feature of our secured note may require repayment of the full $20 million principal balance within the next twelve months based on recent trading volumes. However, we anticipate that, with our current cash balances and credit sources, we will have sufficient cash to operate for at least the next 12 months (see “Other Developments” below).
Other Developments
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.
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In accordance with the joint venture agreements, we have made initial capital contribution to NVP of $21,000,000 through September 30, 2026 and are obligated to make additional capital contributions of up to $19,000,000 through June 30, 2027. We presently anticipate funding our additional capital contributions largely from the proceeds of our underwritten public equity offering which closed in May 2026 and generated net proceeds of $26.3 million and, possibly, through future equity and debt financings, subject to market conditions. In that regard, we filed a prospectus enabling us to pursue an At the Money (“ATM”) public offering of our common stock in the amount of up to $30 million in March 2026, which we expect to utilize to fund working capital. However, there can be no assurance that we will be successful in raising sufficient proceeds from such offerings in order to fully satisfy our obligations for the additional capital contributions to the joint venture company. To the extent that we may be unable to raise sufficient proceeds in order to fully satisfy our obligations for the additional capital contributions to the joint venture company, the parent company of the same foreign entity will be permitted to bring in one or more new members of the joint venture company to fund such additional capital contributions which would dilute our present 80% majority ownership of the joint venture company.
We continue to monitor current international developments occurring in 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.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as defined in Item 303 of Regulation S-K.
Critical Accounting Policies and Estimates
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, 2026, as filed with the SEC on September 23, 2026, for a further description of our critical accounting policies and estimates.
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| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Information for this Item is not required as the Registrant is a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act.
| ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
We have established and maintain a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed with the Securities and Exchange Commission pursuant to the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including our Chief Executive Officer, who is our principal executive officer, and Chief Financial Officer, who is our principal financial and accounting officer, to allow timely decisions regarding required disclosures.
As of September 30, 2026, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as a result of the material weakness relating to the lack of segregation of duties, our disclosure controls and procedures as of the end of the period covered by this Quarterly Report, which includes multiple levels of review, were not effective. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible, rendering a full segregation of various disclosure control duties impractical. We will be required to hire additional personnel in order to remediate our material weakness.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Changes in Internal Controls over Financial Reporting
There was no change in our internal controls over financial reporting that occurred during the quarter ended September 30, 2026, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
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PART II. OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS |
Although we may, from time to time, be involved in litigation and claims arising out of our operations in the normal course of business, we are not currently a party to any material legal proceeding. In addition, we are not aware of any material legal or governmental proceedings against us, or contemplated to be brought against us.
| ITEM 1A. | RISK FACTORS |
Except as set forth below, there have been no material changes from the risk factors previously disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended June 30, 2026, as filed with the SEC on September 23, 2026 (the “Form 10-K”), under the heading “Risk Factors”, and investors should review the risks provided in the Form 10-K prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Form 10-K for the year ended June 30, 2026, under “Risk Factors”, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.
Our secured note requires volume-based principal payments that could require us to repay the entire $20 million principal balance within the next twelve months, and the note’s covenants and security interests restrict our operations and could result in acceleration and foreclosure upon an event of default.
On September 4, 2026, we entered into a note and security agreement with a private lending group providing for an initial tranche of $20,000,000, less a 5% original issue discount. Beginning on December 4, 2026, we are required to make monthly principal payments equal to the greater of $1,250,000 or 7.5% of the aggregate dollar value of our common stock traded during the preceding 30-day measurement period, subject to a maximum of $2,000,000 per month. Because these payments increase with the trading volume of our common stock, which is outside our control, our debt service obligations may be significantly higher than the contractual minimum. Based on recent trading volume, we expect the volume-based payments to repay the note in full within twelve months, and we have accordingly classified the entire note as a current liability. These payments will reduce the cash available to fund our operations, our new third-party ownership platform and our anticipated capital contributions to NeoVolta Power, LLC, and may require us to seek additional equity or debt financing sooner than anticipated, which may not be available on acceptable terms or at all, and which could be dilutive to our stockholders.
The note bears interest at 10% per annum, increasing to 18% per annum during an event of default, and is secured by a first-priority security interest in substantially all of our assets and the assets of our subsidiaries, which have guaranteed our obligations. The agreement contains affirmative and negative covenants, including requirements that we maintain unrestricted cash of at least $5.0 million and a minimum liquidity cushion, restrictions on mergers, changes of control and changes in the composition of a majority of our board of directors. These covenants may limit our flexibility in operating our business and pursuing strategic opportunities. If we fail to comply with these covenants or make required payments, the lenders could declare an event of default, accelerate all outstanding amounts and foreclose on our assets, including our interests in our subsidiaries, which would materially and adversely affect our business, financial condition, results of operations and stock price. In addition, the warrants issued to the lenders contain anti-dilution adjustments for certain issuances of common stock below the then-current exercise price, which could result in additional dilution to our stockholders.
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| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
In the three months ended September 30, 2026, we made the following unregistered issuances of new shares of our common stock: On July 1, 2026, we issued: (i) 400,000 shares of our common stock to an investor relations firm under a consulting agreement whereby it agreed to provide strategic advisory, business development, and market intelligence services to the Company for a period of one year; (ii) 150,000 shares of our common stock to another investor relations firm under a consulting agreement whereby it agreed to provide strategic advisory, business development, and market intelligence services to the Company for a period of one year; and (iii) 5,000 shares of our common stock to a previously retained consultant in settlement of a dispute. The issuances were made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
| ITEM 5. | OTHER INFORMATION |
During the period covered by
this Quarterly Report, none of the Company’s directors or executive officers has
On November 11, 2026, our Board of Directors, upon the recommendation and with the approval of the Audit Committee of the Board, approved a change in the Company's fiscal year end from June 30 to December 31. The change in fiscal year was not made by an amendment to the Company’s certificate of incorporation or bylaws. As a result of the change, the Company will have a six-month transition period from July 1, 2026 through December 31, 2026 (the “Transition Period”). The Company intends to file a transition report on Form 10-K covering the Transition Period, as required by Rule 13a-10 under the Securities Exchange Act of 1934, as amended. The Company's next full fiscal year will begin on January 1, 2027 and end on December 31, 2027.
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| ITEM 6. | EXHIBITS |
| Exhibit No. | Exhibit Description | |
| 3.1 | Amended and Restated Articles of Incorporation of NeoVolta, Inc. (incorporated by reference to exhibit 2.1 of the Company’s Form 1-A (file no. 024-10942)). | |
| 3.2 | Third Amended and Restated Bylaws of NeoVolta, Inc. (incorporated by reference to exhibit 1 of the Company’s Form 8-K filed October 30, 2026. | |
| 4.1 | Form of Warrant to Purchase Shares of Common Stock (incorporated by reference to exhibit 4.1 of the Company’s Form 8-K filed September 4, 2026) | |
| 10.1 | Loan, Security and Guaranty Agreement, dated as of September 4, 2026, by and among NeoVolta, Inc., as borrower, Horizon Technology Finance Corporation, as collateral agent and a lender, ROHO Capital Opportunity Fund LLC, as a lender, and Monroe Capital Management Advisors, LLC, as administrative agent (incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed September 4, 2026) | |
| 10.2 | Registration Rights Agreement, dated as of September 4, 2026, by and between NeoVolta, Inc., ROHO Capital Opportunity Fund LLC and Horizon Technology Finance Corporation (incorporated by reference to exhibit 10.2 of the Company’s Form 8-K filed September 4, 2026) | |
| 31.1* | Certification of Principal Executive Officer Pursuant to Section 302 of Sarbanes- Oxley Act of 2002 | |
| 31.2* | Certification of Principal Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Principal Executive Officer Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2** | Certification of Principal Financial Officer Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS * | Inline XBRL Instance Document | |
| 101.SCH * | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL * | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF * | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB * | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE * | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
______________________
* Filed herewith.
**Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| NEOVOLTA, INC. | ||
| November 12, 2026 | /s/ H. Ardes Johnson | |
| H. Ardes Johnson | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| November 12, 2026 | /s/ Jing Nealis | |
| Jing Nealis | ||
| Chief Financial Officer | ||
| (Principal Financial/Accounting Officer) |
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