NEOV 10-K & 10-Q changes, risk factors and insider trading

We formed our corporation in 2018. Since formation, we have focused on research, development and certification of our first energy storage system. We began marketing, sales, sales, and installations via our certified installers in May 2019 (although no sales were completed in the year ended June 30, 2019). We may never achieve commercial success with our energy solutions. We are presently transitioning from being a storage systems.manufacturer Weinto an integrated energy solutions leader, therefore, we have limited historical financial data upon which we may base our projected revenue and operating expenses. OurWhile relativelywe shortare operatingoptimistic historyon makesthe it difficultprospects for potentialsuccess investorsin to evaluate our technology or prospective operations andnew business prospects. Accordingly,model, we continue to be subject to many of the risks inherent inherent in business development, financing, unexpected expenditures, and complications and delays that often occur in a new business. Investors Investors should evaluate an investment in us in light of the uncertainties encountered by developing companies in a competitive environment. There There can be no assurance that our efforts will be successful or that we will ultimately be able to attain profitability.

We may encounter unanticipated challenges, such as supply chain or logistics constraints, that lead to delays in producing and ramping our energy storage products. Any significant delay or other complication in the production of our products or the development, manufacture, and production ramp of our future products, including complications associated with expanding our production capacity and supply chain or obtaining or maintaining regulatory approvals, and/or coronavirus impacts, could materially damage our brand, business, prospects, financial condition and operating results.

We are dependent on our two main component vendors vendors for our supplierssupplies of batteries,battery cells, inverters and other raw materials and the inability of these single-source suppliers to deliver necessary 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 financial condition and operating results.

Presently, our two main raw material material components, batteries and inverters, are imported from different suppliers in China and, until recently, were subject to fairly low tariff rates that had been in effect for several years. Beginning in April 2025, the Trump Administration implemented a significant increase 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 suspensiontariff rate was lowered in November 2025, subject hasto recentlyjudicial beenreview. extendedIn February 2026, the Supreme Court declared the tariffs to earlybe Novemberunconstitutional 2025.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 periodic stockpiling our inventory of these two components.components, As a result,which we dohave not anticipate havingcontinued to purchase apursue significantin levelany subsequent periods of suchtariff componentsabatements ator post-tariffreductions since pricesthen, forin order to reduce the nextimpact severalof months.the tariffs.

In the event, however, that such such a mutual trade agreement is not reached between the parties within the next several months and we find it necessary to begin purchasing a significant level of our inventory components from China at post-tariff prices, we would be faced with a decision as to whether we should attempt to pass along such tariff increases to our customers through higher prices for our products or absorbingabsorb them internally, or some combination of those two alternatives.

We are currently selling twomultiple primaryenergy storage products and if these products that we sell or install fail to perform as expected, our reputation could be harmed and our ability to develop, develop, market and sell our products and services could be harmed.

Due to our limited operating history, history, we depend on a relatively small number of wholesale dealers and installers in California and other states for our revenue. For the fiscal year ended June 30, 2026, our three largest dealers accounted for approximately 39%, 15% and 11% of our total revenues, respectively. For the fiscal year ended June 30, 2025, our two largest dealers accounted for approximately 41% and 23% of our total revenues, respectively. ForAs the fiscal year endedof June 30, 2024,2026, our twothree largest dealersdealers, accountednet forof expected credit losses, represented approximately 20%45%, 31% and 14% of our total revenues, respectively. As of June 30, 2025, our three largest dealers represented approximately 39%, 12% and 12% of ournet accounts receivable balance. Our limited customer base and concentration could expose us to the risk of substantial losses if a single dominant customer stops purchasing, or significantly reduces orders for, our products. Our ability to maintain close relationships with these top customers is essential to the growth and profitability of our business. If we fail to sell our products to one or more of these top customers in any particular period, or if a large customer purchases fewer of our products, defers orders or fails to place additional orders with us, or if we fail to develop additional major customers, our revenue could decline, and our results of operations could be adversely affected.

We are currently operating in a period of economic economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military military conflicts between Russia and Ukraine and between Gazathe U.S. and Israel.Iran. Our business, financial condition and results of operations may be materially and adversely affected by any negative impact on the global economy and capital markets resulting from these conflicts or any other geopolitical tensions.

U.S. and global markets are experiencing experiencing volatility and disruption following the escalation of geopolitical tensions and the military conflicts between Russia and Ukraine, which began in February 2022, and between Gazathe U.S. and Israel,Iran, which began in OctoberFebruary 2023.2026. Although the length and impact of these ongoing military conflicts are highly unpredictable, they could lead to further market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. We are continuing to monitor the situations in both of these areas and globally and assessing any potential impacts on our business.

Although we believe we have designed designed our products for safety, product liability claims, even those without merit, could harm our business, prospects, operating results and and financial condition. Our risks in this area are particularly pronounced given that we have only recently begun to deliver energy storage products. Moreover, a product liability claim could generate substantial negative publicity about our products and business and could have a material adverse effect on our brand, business, prospects and operating results.

We rely rely on information technology (“IT”) systems, including third-party “cloud based” service providers, to keep financial financial records, maintain product support data, and corporate records, to communicate with staff and external parties and to operate other critical functions. This includes critical systems such as email, other communication tools, electronic document repositories and archives. Presently, archives.we do not have a formal cyber security policy due to our small size. If any of theseour third-party information technology providers experience security breaches or incidents due to computer viruses, unauthorized access, malware, ransomware, natural disasters, fire, terrorism, war, telecommunication failures, electrical failures, cyber-attacks or cyber-intrusions over the internet, then sensitive data, including personal information, trade secrets, and confidential business information could be compromised, exposed, or deleted. Similarly, we could incur business disruption if our access to the internet is compromised, and we are unable to connect with third-party IT providers. The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and delay of our product development and support efforts.

We are heavily reliant on the services of both both Ardes Johnson, our Chief Executive Officer, andJing Steve Bond,Nealis, our Chief Financial Officer, and Steve Bond, our Executive Vice President, and the departure or loss of eitherany officer could disrupt our business.

We depend heavily on the continued efforts of Ardes Johnson, our Chief Executive Officer, andJing Steve Bond,Nealis, our Chief Financial Officer, and Steve Bond, our Executive Vice President, who are essential to our strategic vision and day-to-day operations and would be difficult to replace. The departure or loss of eitherany Mr.of these Johnsonofficers, or Mr. Bond, or the inability to timely hire and retain qualified replacements, could negatively impact our ability to manage our business.

We intend to seek to raise additional additional funds, finance acquisitions or develop strategic relationships by issuing equity or convertible debt securities, which would reduce the percentage ownership of our existing stockholders. Our board of directors has the authority, without action or vote of the stockholders, stockholders, to issue all or any part of our authorized but unissued shares of common or preferred stock. Our articles of incorporation authorizes authorize us to issue up to 100,000,000 shares of common stock and 5,000,000 shares of preferred stock. Future issuances of common or preferred stock would reduce our stockholders influence over matters on which stockholders vote and would be dilutive to earnings per share. In addition, any newly issued preferred stock could have rights, preferences and privileges senior to those of the common stock. Those rights, preferences and privileges could include, among other things, the establishment of dividends that must be paid prior to declaring or paying dividends or other distributions to holders of our common stock or providing for preferential liquidation rights. These rights, preferences and privileges could negatively affect the rights of holders of our common stock, and the right to convert such preferred stock into shares of our common stock at a rate or price that would have a dilutive effect on the outstanding shares of our common stock.

The Nasdaq Capital Market requires that the trading price of its listed stocks remain above one dollar in order for the stock to remain listed. If a listed stock trades below one dollar for more than 30 consecutive trading days, then it is subject to delisting from Nasdaq. In addition, toTo maintain a our listing on Nasdaq, we must satisfy minimum bid price, financial and other continued listing requirements and standards, including those regarding director director independence and independent committee requirements, minimum stockholders’ equity, and certain corporate governance requirements. Additionally, we may become subject to an evolving set of compliance regulations pertaining to environmental, social and governance (“ESG”) matters as well as cybersecurity standards that are promulgated by Nasdaq or other regulatory bodies. If we are ableunable to maintain the listing of our securities on Nasdaq, weor may beare unable to satisfy these requirements or standards andstandards, we could subject our securities to delisting, which would have a negative effect on the price of our common stock and would impair our security holders’ ability to sell or purchase our common stock or Warrants when they wish to do so. In the event of a delisting, we would expect to take actions to restore our compliance with the listing requirements, but we can provide no assurance that any such action taken by us would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the minimum bid price requirement, or prevent future non-compliance with the listing requirements.

The trading market for our common common stock depends in part on the research and reports that analysts and journalists publish about us or our business. If analysts or journalists journalists publish inaccurate or unfavorable research about our business, our stock price would likely decline. If we fail to meet the expectations expectations of analysts for our operating results, or if the analysts who coverscover us downgrade our stock, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

The following discussion should should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this report. Certain statements in in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements statements that are based on current expectations and involve various risks and uncertainties that could cause our actual results to differ materially materially from those expressed in these forward-looking statements. We encourage you to review the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections in this report.

Revenues - Revenues from from contracts with customers for the year ended June 30, 20252026 were $8,426,835$13,332,953 compared to $2,645,072$8,426,835 for the year ended June 30, 2024.2025. Such Such increase in our revenues was primarily due to the rapidcontinued expansion of various new sales channels outside of our traditional focus on the local installer market in the Southern California areaarea. sinceHowever, thesales engagementin ofboth our traditional as well as our new chiefchannels executive officerbegan to substantially decline in Aprilearly 2024.calendar Asyear a2026 result,due weto achievedfederal thetax highestlaw level of annual sales in our history.changes.

Cost of Goods Sold - Cost of goods sold for the year ended June 30, 20252026 were $6,920,130$11,194,754 compared to $2,134,725$6,920,130 for the year ended June 30, 2024.2025. The cost of goods sold in both periods reflected the cost of procuring and assembling the component parts of theour energy storage systems that were sold in each fiscal year and resulted in essentially comparable gross profits on such sales of approximately 18%16% and 19%18% in each year.year, with the decrease due to our recognition of a non-cash obsolescence reserve as of June 30, 2026 in the amount of $1,119,013, due to recent changes in the demand for our legacy products in the marketplace.

General and Administrative ExpenseExpenses - General and administrative expenses for the year ended June 30, 20252026 were $6,065,590$18,347,046 compared to $2,828,147$6,065,590 for the year ended June 30, 2024.2025. Such increase was mainly due to our appointmentcontinuing rapid expansion of aboth newour chief executive officer, who was engaged at an annual salary of $350,000marketing and alsoother receivedproduct adevelopment expenses, 4 year amortizing equity award of $2,854,000, as well asincluding the hiring of severala othersignificant employeesnumber sinceof April 2024.new employees. The addition of these personnel has resulted in a higher level of both cash compensation expense and other associated expenses, such as marketingpromotion and travel, as well as non-cash stock compensation expenses related to the Company’s equity incentive programs. We have also experienced increases in various other corporate expenses such as legal, insurance, occupancy and software costs. Additionally, we incurred an increase in the non-cash provision for expected credit losses in our legacy business in the year ended June 30, 2026 of approximately $2,647,000 as well as incremental administrative expenses in NVP of approximately $1,296,000 from its startup in early January 2026 through June 30, 2026.

Research and Development Expense Expense - Research and development expenses for the year ended June 30, 20252026 were $157,305$1,556,043 compared to $19,154$157,305 for the year ended June 30, 2024. 2025. Such increase was largely due to athe higherrecent levelacceleration of focus by our new chief executive officer on product development efforts.

Operating activities. Net Net cash used in operating activities forin the year ended June 30, 20252026 was $4,425,752$15,191,570 compared to $1,016,362$4,425,752 forin the year ended June 30, 2025. 2024. This increase was largely due to the current period increase in our comparative net loss, primarily resulting from an increase in our our previously noted cash operating expenses for personnel and related costs, as well as the relatively higher changes in our net working capital needs, including a recent stockpilingincrease andin prepaymentour ofoutstanding inventory,accounts on a comparative basis.receivable.

As of June 30, 2025,2026, we had a abalance of cash balanceand restricted cash of approximately $0.8$25.4 million and net working capital of approximately $3.2$26.1 million. Currently, we are not generating a break-even level of net operating cash flow from our net sales. However, we anticipate that demand for our products will ultimately increase over time and that, with our current credit sources,sources and the proceeds of our equity financings in the year ended June 30, 2026, we will have sufficient cash to operate for at least the next 12 months.months (see “Other Developments” below).

We continue to monitor current international developments occurring in UkraineIran and Israel.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.

Presently, our two main raw material material components, batteries and inverters, are imported from different suppliers in China and, until recently, were subject to fairly low tariff rates that had been in effect for several years. Beginning in April 2025, the new Trump Administration implemented a significant increase 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 suspensiontariff rate was lowered in November 2025, subject hasto recentlyjudicial beenreview. extendedIn February 2026, the Supreme Court declared the tariffs to earlybe Novemberunconstitutional 2025.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.components, As a result,which we dohave not anticipate havingcontinued to purchase apursue significantin levelany subsequent periods of suchtariff componentsabatements ator post-tariffreductions since pricesthen, forin order to reduce the nextimpact severalof months.the tariffs.

The consolidated financial statements have have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our limited historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe that certain accounting policies, particularly those related to the recognition of revenues arising from the sales of our ESS products to customers of our business, could potentially affect our judgments and estimates used in the preparation of our consolidated financial statements. With regard to revenue recognition, the Company recognizes revenue in accordance with Accounting Standard Update ("“ASU"”) 2014-09, Revenue from Contracts with Customers (Topic 606), which was adopted on July 1, 2019 using the modified retrospective method, with no impact to the Company’s comparative consolidated financial statements. 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 stepfive-step model:

See “Note 1. Business and and Summary of Significant Accounting Policies” of the notes to our consolidated financial statements for the fiscal year ended June 30, 2025, 2026, set forth below under, “Index to Consolidated Financial Statements”, for a further description of our accounting policies and estimates. None of those policies are deemed to be critical accounting policies nor critical accounting estimates. As reflected in Note 1, Management has determined that the Company operates in only one reportable segment, which is the development and commercialization of energy storage products.

We are an emerging growth company, company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We elected to use this extended extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. We are using the extended transition period for any other new or revised accounting standards during the period in which we remain an emerging growth company.

This information should be read in conjunction with the interim unaudited consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q, and the audited financial statements and notes thereto and “Part II. Other Information - "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contained in our Annual Report on Form 10-K for the year ended June 30, 2025, filed with the Securities and Exchange Commission on September 29, 2025 (the “Annual Report”).

Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited consolidated financial statements included above under “Part I - Financial Information” - “Item 1. Financial Statements”.

We are a designer, manufacturer, and seller of high-end Energy Storage Systems (or ESS), primarily our NeoVolta NV14, NV14-K, and NV-24, which can store and use energy via batteries and an inverter at residential or commercial sites. We were founded to identify new ways to leverage emerging technologies with the dynamic changes that are taking place in the energy delivery space. We primarily market and sell our products directly to our certified solar installers and solar equipment distributors. We are also pursuing agreements with residential developers, commercial developers, and other commercial opportunities. Because we are purely dedicated to energy solarstorage systems, virtually all our current resources and efforts efforts go into further developing our flagship NV14, NV14-K, and NV-24 products, while focusing on specific industry needs for our next generation generation of products. We believe we are unique in the marketplace due to our low cost, our innovative battery chemistry, our product versatility versatility and our commitment to installer service. Because of these factors, we believe NeoVolta is uniquely equipped to establish itself as a major player in the energy storage market.

The following discussion reflects the Company’s revenues and expenses for the three and sixnine month periods ended DecemberMarch 31, 20252026 and 2024,2025, as reported in our consolidated financial statements included in Item 1.

Comparison of three months ended DecemberMarch 31, 20252026 versus three months ended DecemberMarch 31, 20242025

Revenues - Revenues from contracts with customers for the three months ended DecemberMarch 31, 20252026 were $4,645,517$2,023,718 compared to $1,071,581$2,014,105 for the three months ended ended DecemberMarch 31, 2024.2025. Such increasestatic inlevel ourof revenues was primarily due to the rapid expansion of various new sales channels outsideexpiration of our traditional focus on the localfederal installersolar markettax credit for individuals and various other macroeconomic factors arising in the Southerncurrent Californiaquarter areaimpacting whilenot maintaining essentiallyonly the samedomestic pricesolar pointsindustry sincebut the engagementoverall of our new chief executive officereconomy in April 2024.general.

Cost of Goods Sold - Cost of goods sold for the three months ended DecemberMarch 31, 20252026 were $3,872,995$1,095,895 compared to $747,670$1,499,597 for the three months ended DecemberMarch 31, 2024.2025. The cost of goods sold in both periods reflected the cost of procuring and assembling the component parts of the energy storage systems that were sold in each fiscal yearperiod and resulted in gross profits on such sales of approximately 17%46% and 30%,26%, respectively, with the decreaseincrease being largely being due to thean reversalupward out of period adjustment reflected in Decemberthe 2024current ofquarter arelated priorto yearhigher reserveinventory forcost recognition obsolescencein onthe componentimmediately partspreceding of our NV-14Ks of $90,000.quarter.

General and Administrative Expense - General and administrative expenses for the three months ended DecemberMarch 31, 20252026 were $5,081,966$3,021,127 compared to $1,228,517$1,857,531 for for the three months ended DecemberMarch 31, 2024.2025. Such increase was mainly due to our continuing rapid expansion of both our marketing and other product development expenses since the engagement of a new chief executive officer,officer whoin was engagedApril at2024, an annual salary of $350,000 and also received a 4 year amortizing equity award of $2,854,000 and other equity incentives, as well asincluding the hiring of severala othersignificant number employeesof sincenew April 2024.employees. The addition of these personnel has resulted in a higher level of both cash compensation expense and other associated expenses, such as marketingpromotion and travel, as well as non-cash stock compensation expenses related to the Company’s equity incentive programs.

Research and Development Expense - Research and development expenses for the three months ended DecemberMarch 31, 20252026 were $58,795$403,887 compared to $42,324$27,947 for the three three months ended DecemberMarch 31, 2024.2025. Such fluctuation was largely due to timing differences in the levelrecent acceleration of theour Company’s recent product development efforts.

Depreciation and Amortization Expense - Depreciation and amortization expenses for the three months ended DecemberMarch 31, 20252026 were $108,283$128,458 compared to zero for the three months ended DecemberMarch 31, 2024.2025. Such fluctuation was primarily attributable to our closing of an acquisition of intangible and tangible assets assets from Neubau Energy Inc., which closed in October 2025.

Other Income and Expense – Loss on debt exchanges for the three months ended DecemberMarch 31, 20252026 was $858,002$408,028 compared to zero for the three months ended DecemberMarch 31, 2024,2025, and resulted from twoan exchange agreementsagreement entered into with one of our lenders in OctoberJanuary and November 2025.2026. Interest expense for the three months ended DecemberMarch 31, 20252026 was $204,700$51,810 compared to $24,546$78,499 for the three months ended DecemberMarch 31, 2024,2025, reflecting interest attributable to a higherlower level of borrowings made under our lender credit arrangements obtained since September 30, 2024. Interest income for the three incomemonths ended March 31, 2026 was $57,085 compared to $138 for the three months ended DecemberMarch 31, 2025 was $425 compared to $339 for the three months ended December 31, 2024,2025, due to a slightly higher average level of investable cash in the three months ended DecemberMarch 31, 2025.2026.

Net Loss - Net loss for the three months ended DecemberMarch 31, 20252026 was $5,538,799$3,028,402 compared to $971,137$1,449,331 for the three months ended DecemberMarch 31, 2024,2025, 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.

Comparison of sixnine months ended DecemberMarch 31, 2026 2025 versus sixnine months ended DecemberMarch 31, 20242025

Revenues - Revenues from contracts with customers for the sixnine months ended DecemberMarch 31, 20252026 were $11,295,775$13,319,493 compared to $1,661,817$3,675,922 for the sixnine months ended DecemberMarch 31, 2024.2025. Such increase in our revenues was primarily due to the rapid expansion of various new sales channels outside of our traditional focus on the local installer market in the Southern California area while maintaining essentially the same price points since the engagement of our new chief executive officer in April 2024.

Cost of Goods Sold - Cost of goods sold for the sixnine months ended DecemberMarch 31, 20252026 were $8,946,001$10,041,896 compared to $1,245,059$2,744,656 for the sixnine months ended DecemberMarch 31, 2024.2025. The cost of goods sold in both periods reflected the cost of procuring and assembling the component parts of the energy storage systems that were sold in each fiscal year and resulted in gross profits on such sales of approximately 21% and 25%, respectively, with the decrease partially being due to the reversal25% in Decembereach 2024period, ofin a prior year reserve for obsolescence on component parts ofaccordance with our NV-14Ks ofcustomary $90,000.expectations.

General and Administrative Expense - General and administrative expenses for the sixnine months ended DecemberMarch 31, 20252026 were $7,456,634$10,474,212 compared to $2,278,636$4,136,167 for the sixnine months ended DecemberMarch 31, 2024.2025. Such increase was mainly due to our continuing rapid expansion of both our marketing and other product development expenses since the engagement of a new chief executive officer,officer whoin wasApril engaged at2024, an annual salary of $350,000 and also received a 4 year amortizing equity award of $2,854,000 and other equity incentives, as well asincluding the hiring of severala othersignificant employeesnumber of sincenew April 2024.employees. The addition of these personnel has resulted in a higher level of both cash compensation expense and other associated expenses, such as marketingpromotion and travel, as well as non-cash stock compensation expenses related to the Company’s equity incentive programs.

Research and Development Expense - Research and development expenses for the sixnine months ended DecemberMarch 31, 20252026 were $115,707$519,594 compared to $50,941$78,888 for the sixnine months ended DecemberMarch 31, 2024.2025. Such fluctuation was largely due to timing differences in the levelrecent acceleration of the Company’s recentour product development efforts.

Depreciation and Amortization Expense - Depreciation and amortization expenses for the sixnine months ended DecemberMarch 31, 20252026 were $108,283$240,290 compared to zero for the nine six months ended DecemberMarch 31, 2024.2025. Such fluctuation was primarily attributable to our closing of an acquisition of intangible and tangible assets from Neubau Energy Inc., which closed in October 2025.

Other Income and Expense -– Loss on debt exchangeexchanges for the sixnine months ended DecemberMarch 31, 20252026 was $858,002$1,266,030 compared to zero for the sixnine months ended DecemberMarch 31, 31, 2024,2025, and resulted from twothree exchange agreements entered into with one of our lenders insince October and November 2025. Interest expense for the the sixnine months ended DecemberMarch 31, 20252026 was $593,834$645,644 compared to $24,546$103,045 for the sixnine months ended DecemberMarch 31, 2024,2025, reflecting interest attributable attributable to a higher level of borrowings made under our lender credit arrangements obtained since September 30, 2024. Interest income for the sixnine months ended March 31, 2026 was $57,650 compared to $1,872 for the nine months ended DecemberMarch 31, 2025 was $565 compared to $1,734 for the six months ended December 31, 20242025, due to a lowerhigher average level of investable cash in the sixnine months ended DecemberMarch 31, 2025.2026.

Net Loss - Net loss for the sixnine months ended DecemberMarch 31, 20252026 was $6,782,121$9,810,523 compared to $1,935,631$3,384,962 for the sixnine months ended DecemberMarch 31, 2024,2025, 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.

Operating activities. Net cash used in operating activities in the sixnine months ended DecemberMarch 31, 20252026 was $4,578,069$8,156,853 compared to $1,451,330$3,501,515 in the sixnine months ended DecemberMarch 31, 2024.2025. This increase was largely due to the current period increase in our comparative net loss, primarily resulting from from an increase in our previously noted cash operating expenses for personnel and related costs, as well as the relatively higher changes in our net working capital needs, including a recent stockpilingincrease andin prepaymentour ofoutstanding inventory,accounts on a comparative basis.receivable.

Investing activities. Net cash used in investing activities in the sixnine months ended DecemberMarch 31, 20252026 was $500,000,$2,785,375, compared to zero in the sixnine months ended DecemberMarch 31, 2024.2025. Such fluctuation was entirely due to our initial capital expenditures on a jointly owned utility-scale battery manufacturing facility currently under construction in the State of Georgia (see “Other Developments” below) as well as the cash portion of our purchase price of an acquisition of intangible and tangible assets from Neubau Energy Inc., which closed in October 2025.

In the sixnine months ended DecemberMarch 31, 2024,2025, we made borrowings from theseour two private lenders in the total amount of $889,732$2,581,845 and repayments in the amount of $256,483.$778,191. In February 2025, we closed a private equity offering with accredited investors under which we issued a total of 543,500 shares of our common stock to the investors at an offering price of $2.00 per share resulting in gross proceeds of $1,087,000. In December 2024, we also received proceeds from the exercise of warrants issued in our August 2022 public offering in the amount of $160,400.

As of DecemberMarch 31, 2025,2026, we had hada aconsolidated cash balance of approximately $0.2$11.5 million and consolidated net working capital of approximately $4.1$19.5 million, an increase of approximately $1.4 $15.4 million in the recent quarter. Currently, we are not generating a break-even level of net operating cash flow from our net sales. However, we anticipate that demand for our products will ultimately increase over time and that, with our current credit sources and the proceeds of our registeredthree directequity offeringfinancings in Januarythe 2026nine (seemonths “Otherended Developments”),March 31, 2026, we will have sufficient cash to operate for at least the next 12 months.months (see “Other Developments” below).

In January 2026, we also executed a series of joint venture agreements with the U.S. affiliatesaffiliate 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 southeasternState Unitedof States.Georgia. Pursuant to these agreements, the Company has aan 60%80% ownership interest in the joint venture company, and the two U.S. affiliatesaffiliate of the foreign entity each havehas a 20% ownership ownership interest.

In accordance with the joint venture agreements, we made our initial capital contribution of $7,000,000 in January 2026 and expect to make an additional capital contribution of $8,000,000 in June 2026, which is primarily to fund the purchase of equipment. Further, we are expected to make additional capital contributions to the joint venture company through June 30, 2027 in total amounts of up to $33,000,000,$25,000,000, pursuant to the joint venture agreements. The next scheduled capital contribution we will be required to make will be in the amount of $8.0 million on or before April 30, 2026. We presently anticipate funding those additional capital contributions from the proceeds of one or more privateequity and/or debt offerings of our common stock,financings, subject to market conditions. However, there can be no assurance that we will be successful in raising sufficient proceeds from such private offerings in order to fully satisfy our obligations for the additional capital contributions to the joint venture company. To the extent that we may be unable to raise sufficient proceeds in order to fully satisfy our obligations for the additional capital contributions to the joint venture company, the parent company of the same foreign entity will be permitted to bring in one ofor more new members of the joint venture company to fund such additional capital contributions which would dilute our present 60%80% majority ownership of the joint venture company.

We continue to monitor current international developments occurring in UkraineIran and Israel.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.

Presently, our two main raw material components, batteries and inverters, are imported from different suppliers in China and, until recently, were subject to fairly low tariff rates that had been in effect for several years. Beginning in April 2025, the Trump Administration implemented a significant increase in tariff rates based on the authority of the International Emergency Economic Powers Act (“IEEPA”) on all goods imported from China, although it was temporarily suspended for 90 days in April 2025 and the tariff rate was lowered in November 2025, subject to judicial review. In February 2026, the Supreme Court declared the tariffs to be unconstitutional based on the authority of IEEPA, therefore, the Administration is considering alternative approaches to implementing tariffs that it believes would be sustained in a judicial review. Prior to the tariff escalation in April 2025, we had anticipated the likelihood of facing such a tariff increase and began stockpiling our inventory of these two components.components in order to reduce the impact of the tariffs.

Our discussion and analysis of our financial condition and results of operations are based on consolidated financial statements which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We believe that certain accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. See “Note 1. Business and Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements set forth above and under “Item 8. Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended June 30, 2025, as filed with the SEC on September 29, 2025, for a further description of our critical accounting policies and estimates. None of those policies are deemed to be critical accounting policies nor critical accounting estimates.